Polanyi
Main Page on Polanyi, with links to all related pages, articles, videos and posts
Unfinished Projects on Polanyi: Money --- War -- discussed below
Polanyi: Three Artificial Commodities characterize the market: Land Labor Money. See Summary of Polanyi's Great Transformation.
See Markets & Society for a recent paper on Polanyi's theories applied to current environmental issues.
Williamson: Breakdown of Gold Standard, Bretton Woods & its breakdown, Contemporary Chaos
My paper on: Sunspot Equilibria of Baby Sitting Cooperatives -- shows that monetary lessons derived from BSC coop are wrong.
High Frequency Trading is just gambling and must be elimiinated -- A proposal by Trond:
For a discussion of Polanyis Methodology which is radically different from conventional, see: Polanyi's Methodology
Mechanism by which wealth is siphoned to the RICH. [LINK}
CHICAGO PLAN READING:
Is A Banking Ban The Answer? by Paul Krugman
Henry Simon & A Debt Free World by Mian & Sufi -- Split the two banking functions deposit & investing.
Relation between Money & War:
Extract from an article by Harold James of Princeton University History Department. see The Wests Financial Arsenal.
Putin’s public speeches reveal his conviction that the EU and the US cannot possibly be serious about their financial war, which, in his view, would ultimately hurt their highly complex and interconnected financial markets more than Russia’s relatively isolated financial system. After all, the link between financial integration and vulnerability was the main lesson of the crisis that followed the US investment bank Lehman Brothers’ collapse in 2008.
In fact, Lehman was a small institution compared to the Austrian, French, and German banks that have become highly exposed to Russia’s financial system through the practice of using deposits from Russian companies and individuals to lend to Russian borrowers. Given this, a Russian asset freeze could be catastrophic for European – indeed, global – financial markets.
Putin’s plan for destabilizing Ukraine is thus two-pronged: capitalize on linguistic or national animosities in Ukraine to foster social fragmentation, while taking advantage of Western – especially European – financial vulnerabilities. Indeed, Putin sometimes likes to frame it as a contest pitting him against the power of financial markets.
The arms race that preceded World War I was accompanied by exactly the same mixture of military reluctance and eagerness to experiment with the power of markets. In 1911, the leading textbook on the German financial system, by the veteran banker Jacob Riesser, warned that, “The enemy, however, may endeavor to aggravate a panic…by the sudden collection of outstanding claims, by an unlimited sale of our home securities, and by other attempts to deprive Germany of gold. Attempts may also be made to dislocate our capital, bill, and securities markets, and to menace the basis of our system of credit and payments.”
Politicians began to grasp the potential consequences of financial vulnerability only in 1907, when they faced a financial panic that originated in the US but that had serious consequences for continental Europe (and, in some ways, prefigured the Great Depression). That experience taught every country to make its own financial system more resilient to ward off potential attacks, and that attacks could be a devastating response to diplomatic pressure.
That is exactly what happened in 1911, when a dispute over control of Morocco spurred France to organize the withdrawal of DM200 million invested in Germany. But Germany was prepared and managed to ward off the attack. Indeed, German bankers proudly noted that the crisis of confidence hit the Paris market much harder than markets in Berlin or Hamburg.
Countries’ efforts to protect their financial systems often centered on increased banking supervision and, in many cases, enlarging the central bank’s authority to include the provision of emergency liquidity to domestic institutions. Subsequent debates about financial reform in the US reflected this imperative, with some of the US Federal Reserve’s founders pointing out the military and financial applications of the term “reserve.”
At that time, financial-reform efforts were driven by the notion that building up financial buffers would make the world safe. But this belief fueled excessive confidence among those responsible for the reforms, preventing them from anticipating that military measures would soon be needed to protect the economy. Instead of being an alternative to war, the financial arms race made war more likely – as it may well be doing with Russia today.
Sweden is according to new statistics from Statistics Sweden in a state of deflation. The inflation rate was -0.6 percent in March.
To a large extent the deflation is caused by tight monetary and fiscal policies pursued by Sweden’s Central Bank and the government. With a very defensive fiscal policy and a targeted inflation rate set at a very low level, real inflation has during the last 2-3 years been very close to zero, and now even negative. Another consequence of the austere fiscal and monetary policies is that overall unemployment is still at almost 9 % and youth unemployment close to 26 %.
This is deeply worrying.
So yours truly thought he should give the Swedish Fed and the Swedish finance minister - Anders Borg – a suggestion for reading …
Zoltan Pozsnar and Paul McCulley have written an absolutely splendid essay on what a liquidity trap means and why mainstream neoclassical economics has nothing to offer in way of solving the problems that it brings along – and why it is so important to get hold of the insights that Fisher, Keynes, Minsky and Krugman have given us on debt-deflation processes and liquidity traps: Read more…
Sugar Daddies of Global Finance - In the summer 2014 issue of World Policy Journal, we have a piece about various financial crises and the government's role in them. Stanley Pignal of The Economist examines the history of bailouts worldwide and future banking trends. He warns that regulations and bailouts that were the immediate consequence of the 2008 financial crisis are only bringing government and banking more closely and dangerously together.