There, In the Shadows: The Grace of Art in a "River Runs Through It"

"Any man-any artist, as Nietzsche or Cezanne would say- climbs the stairway in the tower of his perfection at the cost of a struggle with a deunde-not with an angel, as some have maintained, or with his muse. This fundamental distinction must be kept in mind if the root of a work of art is to be grasped." -Frederico Garcia Lorc

The Glory of His Discontent: The Inconsolable Suffering of God

"He who is satisfied has never truly craved. And he who craves for the light of God neglects his ease for ardor." -Rabbi Abraham J. Hesche

"US 'Quantitative Easing' Is Fracturing the Global Economy"

The Federal Reserve's quantitative easing is presented as injecting $600 billion into "the economy." But instead of getting banks lending to Americans again—households and firms—the money is going abroad, through arbitrage interest-rate speculation, currency speculation, and capital flight. No wonder foreign economies are protesting, as their currencies are being pushed up.Exchange Rates; Asset-price Inflation; Monetary Policy

"How Brazil Can Defend Against Financialization and Keep Its Economic Surplus for Itself"

The post-1945 mode of global integration has outlived its early promise. It has become exploitative rather than supportive of capital investment, public infrastructure, and living standards. In the sphere of trade, countries need to rebuild their self-sufficiency in food grains and other basic needs. In the financial sphere, the ability of banks to create credit (loans) at almost no cost, with only a few strokes on their computer keyboards, has led North America and Europe to become debt ridden—a contagion that now threatens to move into Brazil and other BRIC countries as banks seek to finance buyouts and lend against these countries' natural resources, real estate, basic infrastructure, and industry. Speculators, arbitrageurs, and financial institutions using "free money" see these economies as easy pickings. But by obliging countries to defend themselves financially, they and their predatory credit creation are helping to bring the era of free capital movements to an end. Does Brazil really need inflows of foreign credit for domestic spending when it can create this at home? Foreign lending ends up in its central bank, which invests its reserves in US Treasury and euro bonds that yield low returns, and whose international value is likely to decline against the BRIC currencies. Accepting credit and buyout "capital inflows" from the North thus provides a "free lunch" for key-currency issuers of dollars and euros, but it does not significantly help local economies.Financialization; Economic Statistics; International Economics; International Finance; Economic Rent

"The Road to Debt Deflation, Debt Peonage, and Neofeudalism"

What is called "capitalism" is best understood as a series of stages. Industrial capitalism has given way to finance capitalism, which has passed through pension fund capitalism since the 1950s and a US-centered monetary imperialism since 1971, when the fiat dollar (created mainly to finance US global military spending) became the world's monetary base. Fiat dollar credit made possible the bubble economy after 1980, and its substage of casino capitalism. These economically radioactive decay stages resolved into debt deflation after 2008, and are now settling into a leaden debt peonage and the austerity of neo-serfdom. The end product of today's Western capitalism is a neo-rentier economy—precisely what industrial capitalism and classical economists set out to replace during the Progressive Era from the late 19th to early 20th century. A financial class has usurped the role that landlords used to play—a class living off special privilege. Most economic rent is now paid out as interest. This rake-off interrupts the circular flow between production and consumption, causing economic shrinkage—a dynamic that is the opposite of industrial capitalism’s original impulse. The "miracle of compound interest," reinforced now by fiat credit creation, is cannibalizing industrial capital as well as the returns to labor. The political thrust of industrial capitalism was toward democratic parliamentary reform to break the stranglehold of landlords on national tax systems. But today's finance capital is inherently oligarchic. It seeks to capture the government—first and foremost the treasury, central bank, and courts—to enrich (indeed, to bail out) and untax the banking and financial sector and its major clients: real estate and monopolies. This is why financial "technocrats" (proxies and factotums for high finance) were imposed in Greece, and why Germany opposed a public referendum on the European Central Bank’s austerity program.Debt Deflation; Neofeudalism; Economic Rent; Finance Capitalism; Classical Political Economy; Pension Fund Capitalism; Bubble Economy

"What Does Norway Get Out Of Its Oil Fund, if Not More Strategic Infrastructure Investment?"

For the past generation Norway has supplied Europe and other regions with oil, taking payment in euros or dollars. It then sends nearly all this foreign exchange abroad, sequestering its oil-export receipts—which are in foreign currency—in the "oil fund," to invest mainly in European and US stocks and bonds. The fund now exceeds $500 billion, second in the world to that of Abu Dhabi. It is claimed that treating these savings as a mutual fund invested in a wide array of US, European, and other stocks and bonds (and now real estate) avoids domestic inflation that would result from spending more than 4 percent of the returns to this fund at home. But the experience of sovereign wealth funds in China, Singapore, and other countries has been that investing in domestic infrastructure serves to lower the cost of living and doing business, making the domestic economy more competitive, not less. This paper cites the debate that extends from US 19th-century institutional doctrine to the approach of long-time Russian Chamber of Commerce and Industry President Yevgeny Primakov to illustrate the logic behind spending central bank and other sovereign foreign-exchange returns on modernizing and upgrading the domestic economy rather than simply recycling the earnings to US and European financial markets in what looks like an increasingly risky economic environment, as these economies confront debt deflation and increasing fiscal tightness.Sovereign Wealth Funds; Norway; Oil Fund

"Trade and Payments Theory in a Financialized Economy"

Ricardian trade theory was based on the cost of labor at a time when grain and other consumer goods accounted for most subsistence spending. But today's budgets are dominated by payments to the finance, insurance, and real estate (FIRE) sector and to newly privatized monopolies. This has made FIRE the determining factor in trade competitiveness. The major elements in US family budgets are housing (with prices bid up on credit), debt service, and health insurance-and wage withholding for financializing Social Security and Medicare. Industrial firms also have been financialized, using debt leverage to increase their return on equity. The effect is for interest to increase as a proportion of cash flow (earnings before interest, taxes, depreciation, and amortization, or EBITDA). Corporate raiders pay their high-interest bondholders, while financial managers also are using EBITDA for stock buybacks to increase share prices (and hence the value of their stock options). Shifting taxes off property and onto employment and retail sales spurs the financialization of family and business budgets as tax cuts on property are capitalized into higher bank loans. Payments to government agencies for taxes and presaving for Social Security and Medicare absorb another 30 percent of family budgets. These transfer payments to the FIRE sector and government agencies have transformed international cost structures, absorbing roughly 75 percent of US family budgets. This helps explain the deteriorating US industrial trade balance as the economy has become financialized.International Trade Theory; Financialization

The Dance of Truth

We want God to make sense, to be reasonable, to act according to how we think God should act. This kind of thinking, though, is not far from where we live today. If I give money to the church, then God will bless me financially. If I have my “quiet time” in scripture, then God will bless my day. If I raise my children right, then surely they will turn out right. In themselves these actions are good and right; however, we have to ask ourselves, “Do our motives emerge from the desire to give a place to the mystery of faith, or, rather, to conquer mystery?

A Test for Large-Scale Systematic Errors in Maps of Galactic Reddening

Accurate maps of Galactic reddening are important for a number of applications, such as mapping the peculiar velocity field in the nearby Universe. Of particular concern are systematic errors which vary slowly as a function of position on the sky, as these would induce spurious bulk flow. We have compared the reddenings of Burstein & Heiles (BH) and those of Schlegel, Finkbeiner & Davis (SFD) to independent estimates of the reddening, for Galactic latitudes |b| > 10. Our primary source of Galactic reddening estimates comes from comparing the difference between the observed B-V colors of early-type galaxies, and the predicted B-V color determined from the B-V--Mg_2 relation. We have fitted a dipole to the residuals in order to look for large-scale systematic deviations. There is marginal evidence for a dipolar residual in the comparison between the SFD maps and the observed early-type galaxy reddenings. If this is due to an error in the SFD maps, then it can be corrected with a small (13%) multiplicative dipole term. We argue, however, that this difference is more likely to be due to a small (0.01 mag.) systematic error in the measured B-V colors of the early-type galaxies. This interpretation is supported by a smaller, independent data set (globular cluster and RR Lyrae stars), which yields a result inconsistent with the early-type galaxy residual dipole. BH reddenings are found to have no significant systematic residuals, apart from the known problem in the region 230 < l < 310, -20 < b < 20.Comment: 8 pages, PASP, in press (Jan 1999