25 June 2013


The cumulative effects of austerity can be described as a “slow motion train wreck.”

The Nation magazine has an article that gives examples of this train wreck. It discusses the pain suffered by people across the USA as federal politicians impose more and more austerity.

I won’t discuss the article, since you already know that things are bad and getting worse. The link is above, in blue letters.

A different article in The Nation focuses on the impact of austerity on one California town. (“Sequester” means austerity.)

Unfortunately these articles describe the pain of austerity, but they also champion the pain, since they promote the LIE that the federal government is limited in the amount of money it can create, and is dependent upon tax revenue.

This is often a lie of omission. The articles never truly examine where money comes from, or how the federal government creates it. They merely offer horror stories that quickly make you numb (which is a natural defensive posture).

It’s like reading endless tales of cancer patients. Unless you know there is a cure for cancer, you will switch off, and be resigned to permanent cancer.

Likewise, unless you acknowledge that the purpose of austerity is to increase the wealth gap between the rich and the rest, you will be resigned to permanent austerity.



Justifications for austerity are like zombies. No matter how much they are debunked, disgraced, and discredited, they keep coming back. Chop them up, mow them down, and blow them away – they keep coming forever. Austerity is the Undead of social memes.

Blogger Mark Gongloff in the Huffington Post says the Bank for International Settlements (BIS, which is basically the central banker for all the world’s central bankers) has published its latest annual report on the state of the global economy.

You and I know that the current depression is sustained by austerity, but the BIS claims that we have a depression because we have not had enough austerity. (!!!) Indeed, we have an austerity deficit!!!

Even worse, the BIS uses the universally discredited lies of Harvard stooges Carmen Reinhart and Kenneth Rogoff to prove it!

Now that is zombie economics!



austerity zombies a

In the BIS’ 76-page report is a chapter titled, “Fiscal sustainability: Where do we stand?” It says we need much more austerity. Always more. Like I said, the zombies keep coming forever.

austerity zombies C

From the BIS report:

“While progress has been made towards reducing fiscal deficits, many economies still need to increase their primary balances significantly to put their debt on safer, downward trajectories,” the BIS frets. “The success of these efforts relies crucially on measures to curb future increases in pension and health care spending.”

That’s absolute bullshit, because debt is a trivial matter for Monetarly Sovereign governments, which create their money out of thin air.





Standard economics textbooks define a recession as a general slowdown in economic activity – i.e. a widespread drop in spending and in demand, over six months or more.

This is correct.

The textbooks say that during a recession, macroeconomic indicators fall, such as GDP, employment, investment spending, household income, business profits, and inflation.  Simultaneously, bankruptcies and unemployment rise.

This is also correct.

The textbooks say a recession may be triggered by various events such as a financial crisis, an external trade shock, an adverse supply shock, or the bursting of an economic bubble.

This is also correct.

However the textbooks fail to note that recessions also happen when politicians impose austerity on the citizenry. Indeed, this is the main cause of recessions.  They happen when the business  cycle goes down, and politicians refuse to compensate via expansionary macroeconomic policies such as increasing the money supply, increasing government spending, and decreasing taxation.

This refusal is gratuitous austerity. Its sole purpose is to widen the gap between the rich and the rest. (One might call it “political austerity.”)

The textbooks pretend it does not exist.





Ed Miliband leads the Labour Party in the British government. He says that if Labour gets back into power, it will continue the current austerity programme.

An article in the U.K. Guardian notes that because Miliband now endorses austerity, all three major political parties in the British government want more austerity. (Conservatives, Labour, and Liberal Democrats.)

Hence the British government is more corrupt than ever, and has no “opposition party” whatever.  Everyone wants more austerity, except for the 63 million people that make up the U.K. population. British politicians are rapidly plunging them into their worst depression ever.

The Green Party is popular in some local zones, but in the House of Commons, the Greens have only one MP out of 648  (Caroline Lucas of Brighton Pavilion). Besides, they believe the pro-austerity LIE that the U.K. government has a “debt crisis.” Greens are concerned with pollution, climate change, nuclear power, nuclear weapons, etc — but not with austerity. Hence they will never have any money to do anything.


Above is Thomas Herndon, 28, the third-year graduate student at the University of Massachusetts Amherst who derailed the Reinhart-Rogoff lies.

He seems rather pleased with himself.

“It was really overwhelming,” recalled Herndon. “By noon, the story had gone viral and I started getting calls from the media from all over the globe. It was incredible.”

Herndon said he isn’t sure if he’ll turn his research into a doctoral thesis, though he plans to continue to study the effects of public debts on economic growth.

“It has been an incredible experience,” he said of the past few months. “It’s given me renewed enthusiasm for the work I do.”


If I were him, I would be very careful from now on. Most professors are paid to promote austerity, and they will not forget Mr. Herndon’s “heresy.”

Norman Finkelstein had much more academic credentials than does Mr. Herndon, but in 2000 Finkelstein published a book titled “The Holocaust Industry.” It went against established orthodoxy in academia, so in 2007 when Mr. Finkelstein applied for tenure at DePaul University in Chicago, the academics at Harvard (led by Alan Dershowitz) checkmated Finkelstein’s career for life.

They will not forget Thomas Herndon.

Dude, watch your back.



5 Responses to 25 June 2013

  1. Jerry B says:

    Thanks to this site I better understand monetary sovereign systems & why austerity kills economies and the necessity of federal deficits. I need all the help I can get-I live in a right-wing tea party occupied and religiously insane state, as is most of the South.

  2. Steve says:

    Before we have prosperity, we must have (more) austerity, always more… Consumption tax increase looms (to reduce the phantom menace of “red ink”, purportedly), as Abenomics commits to three-pronged stimulus…



  3. Steve says:

    This week’s dose of sky is falling nonsense about Social Security, courtesy of the liars @ WSJ:

    “10 things Social Security won’t tell you”

    By Jonnelle Marte


    Quatloosx-As we both know, the federal government can continually/endlessly give INSTRUCTIONS to mark up accounts to “pay for” SS. We also know that education is the KEY factor in supplying the technological advancements needed to meet future economic production, investment and marketplace needs. We also know that the production and availability of goods and services (throughput) for both SS recipients and for the rest of societal consumers is all that is necessary to sustain the program.

    ‘Nuf said.

  4. Steve says:

    Lavoie’s Critical Look at Modern Money Theory: A Reply

    By Joe (“He’;s not talking about me”) Firestone


    Joe brings up some great points…BUT wading through the overblown and utterly irritating commentary section on this blog piece is as usual- irritating and nauseous. And typically cited by the SAME half dozen blowhards, spouting obtuse, almost remedial presuppositions about FACTS that are completely beyond dispute.

  5. Steve says:

    Q-the comments are pretty few and far between on this blog (of course I know why)..so I decided to list a few articles that most interested me or irritated me this past week. Hopefully a bit more input here, couldn’t hurt. Thanks for your efforts. Steve

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