I understood what you meant with immunization and how you use it. My post tried to contrast what you're trying to do locally, teaching others to use pool extraction to immunize themselves economically, to what economic policy is doing nationally. Economic policy on the national level works to maintain a buffer of unemployed individuals at what is perceived to be the "non-accelerating inflation rate of unemployment". In other words, unemployment is used as an inflation sink. Unemployed individuals are at the maximum economic vulnerability, which using your terminology I refered to as having an immunodeficiency. I agree with your prognosis of another leg down in the markets running through various VE's before the eventual FTT. The time specification of another 10 - 12 years after the point 3 makes sense when compared with the duration of previous secular bear markets. I disagree however with your statement that no immunity will be available for governments. For as Modern Monetary Theory predicts (and Jem unintentionally brought up) those governments which have a monopoly on the issuance of currency (and that carry their liabilities in their own currency) are very similar to "paper traders", and "paper traders" do indeed have immunity from economic collapse.
I accept your analysis.... if you really believe you are a successful trader, you are spot on. But, after a decade on the internet or more, you have never once provided proof of profit only proof of loss. Being someone who trades real time, I know your analysis reeks of paper trader theory. so I know your immunity is paper trader immunity. Your contributions would be much more tolerable if you did not hold yourself out as a big time trader and you probably would not get any cracks out of me.
This is a really bad article. To summerize the article's critique on MMT: Technically the US government can't go bankrupt, but effectively it can when enough people shift their assets out of dollars and only convert back into dollars at the point of transaction (ie paying taxes). This destroys the value of the dollar and leads to defacto default by the government on it's liabilities. This overlooks the fact that according to MMT the value of a currency derives not from taxation per se but from a government's ability to use force to change people's behaviour. So if people start to shift out of dollars and into foreign currencies or other reserves then the US government can implement capital and price controls. The US government can do this because it has a monopoly of force and can create laws. This means that as long as the US government can use force to change people's behaviour it can honour its liabilities in any "defacto" sense.
You raise an interesting argument. The article also doesn't mention something which to me seems to be important as well - confidence in the monetary policy. Even when confidence falls in a monetary policy, and attempts are made at solving them through creating a surplus, or shifting into different asset classes like gold and silver, you run into the sound of inevitability. Politicians will have done more damage by following 30 year old "practice" than systematically following the procedure to get out of the mess -a monetary policy bent on gearing itself to political will. I think Bernanke's conundrum comes out of how he will deal with the balance sheet recession issue in dealing with the collapse of an asset bubble which led to a low rate of private savings (and now the opposite, a high rate of savings), as well as from a massive amount of private business capital sitting idle in offshore banks or riding speculative capital flows which is causing inflation in other sectors of the globe. The problem is a bit of one of responsibility, no politician can accept the consequences of a bubble brought on by political will, so they create a solution based on debunked economic ideas and think that they can achieve a surplus, create jobs that the private sector will not create, and balance a budget that has no hope in hell of budgeting just to save face. And this is an "inter-political party" issue which officials spanning both parties are responsible for. Rubin and Summers come to mind.
That's what I call a seriously truncated "summery"... you touched on one point of a multi-point-piece that was nowhere close to the main. Speaking to your second point, what you describe is the equivalent of the United States shifting from a free market system to a Hugo Chavez style jackboot regime. Such maneuvers would have an interesting impact on black markets and perceived opportunities for investment, in which case MMTs argument boils down to "the government can rip you off and enslave you," with the fallout both global and domestic that such a shift entails. And even then the assertion is questionable, because it isn't clear such policies would be tolerated in a democracy. Unless of course MMT is further saying fuck it, the government can chuck democracy too. So I guess you can say our government is immortal if it reincarnates itself as a fascist dictatorship (without accidentally crushing economic productivity).
"Paper traders have immunity from economic collapse..." is that like diplomatic immunity, where you flash a badge that keeps inflation from spiraling out of control or prevents a house-of-cards credit structure from imploding? And where was this immunity in 2008? p.s. Thank you for the demonstration of just how whacked out the MMT viewpoint actually is...
darkhorse, please take note that the discussion is shifting towards the point where MMT ends and political theory begins. First of all, MMT in no way entails the degeneration into a fascist style regime. This is just a dramatization on your part and no one will take it seriously. The aim of MMT is to provide an effective platform to policy makers to ensure price stability. Consequently, MMT also provides effective solutions that a government may take during a crisis. They are measures that maintain the purchasing power of a nation's currency, not to "enslave" you. One example of such a crisis was World War II. Capital and price controls were implemented in order to maintain purchasing power of the dollar in the face of the enormous government deficits that were needed for the war effort. A direct effect of those deficits were an end to the great depression, record GDP growth, full employment and even relatively low interest rates. Now despite those measures inflation was relatively high, but they were able to maintain the purchasing power of the currency in order to employ workers and business to manufacture arms and supply the troops. It's a classic example of how a government can employ monetary policy to enforce what in the article is called the "closed loop" by strengthening it's own position to exert force. I think you agree with me that in the end the result wasn't a "fascist dictatorship", but rather a free and prosperous democracy.
Capital is currently chasing emerging markets because that's where economic growth is highest. Because those economies are a lot smaller in size their ability to absorb that capital is limited. China is considering implementing capital controls, which is pretty much pulling out the "nuclear option". A less radical and more effective way would be to introduce taxes directed specifically at foreign capital. China is still very much a third world country when it comes to their tax system though and I think that they don't really have any finer tools than a "nuclear option". Bummer for the Chinese but they'll soon find out they can flip a switch from high inflation to deflation. Not really what you'd call "price stability".