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This is not about capitalism, the theorized socio-economic system of production.  This is about the word “capitalism” itself.  The term, “capitalism” has been used, abused, reborn, and re-mutilated so many times that if one were to use the term, you have to immediately stop and define what you mean by “capitalism”. Why is that?  There aren’t multiple definitions of mercantilism or feudalism.  So what happened to “capitalism”? To find out, follow me through the comical history of “capitalism”, the word.
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You probably heard about Congressman(Republican - of course) Tim Huelskamp twitter rage during last night's State of the Union address AND then his meltdown on Rachel Maddow's show.  If you haven't, check out this diary that gives a good overview.

This won't be long, but wanted to add a "quick hit" on one of his tweets:

Oh wow, I could go on and on, about "where was he during the Bush years"?  I could write several pages of examples of Bush actually using the military as his political prop starting with his infamous "Mission Accomplished" onboard an aircraft carrier.

I could also go on and on how his administration actually tried to conflate criticisms of his administration as criticizing the military.  Or how Republicans charged anyone against the war as "not supporting the troops".  Yes indeed, I could go on, but I think it would take a better writer than myself to do that justice.

There is only one thing I wanted to add to the conversation.  When will someone in the media ask Congressman Huelskamp if he also condemns President Bush for "politicizing the military" in his 2007 State of the Union address?

From the official White House archives:

The chamber audience applauds Sgt. Tommy Rieman as the President recognizes him during his State of the Union Address at the U.S. Capitol Jan. 23, 2007. "He was shot in the chest and arm, and received shrapnel wounds to his legs -- yet he refused medical attention, and stayed in the fight. He helped to repel a second attack, firing grenades at the enemy's position,” explained the President. "For his exceptional courage, Sergeant Rieman was awarded the Silver Star. And like so many other Americans who have volunteered to defend us, he has earned the respect and the gratitude of our entire country."
Here is the youtube link that takes you to the exact minute and second that Bush also "politicizes the military" /snark.  Or you can watch the embedded player and manually skip ahead to 47minutes and 33 seconds into the video.

I don't think it's wrong to honor a soldier during a State of the Union is wrong, I would just like to see a reporter to force Huelskamp to either admit his hypocrisy or condemn - on camera - the last sitting Republican President.

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Glenn Beck just listened to his own crazy rantings.
Glenn Beck just listened to his own crazy rantings.
This is just too delicious.  The GOP civil war over the shutdown fiasco is still ramping up.  Right after the government opened back up, it felt like it was only the "establishment" Republicans that were declaring war on the TEA party and those other young rapscallions like Ted Cruz(Note: in GOP terms, he is pretty young).

The Tea Party has now fired back with their biggest Cannon: Glenn Beck.  And he has taken aim at the most established of all established Republicans: Grover Norquist.

In case you don't immediately recognize the name, his most infamous quote is "Our goal is to shrink government to the size where we can drown it in a bathtub".  Also Here's a little Wikipedia link about just how Republican and just how establishment he is.

Grover Norquist, who often keeps a low profile, spoke to the Washington Post about how Ted Cruz and the Tea Party messed everything up.  Here's some choice quotes:

Ted Cruz, from left field, said we have to defund Obamacare permanently in this CR. If they offered the Keystone pipeline and the privatization of Fannie and Freddie you couldn’t take that. We only want this, and we only want it on Tuesday -- Wednesday is no good. The debt ceiling is no good. So that got locked in as a principle. And people went out on talk radio and said if you’re not for this you’re a coward, you’re a RINO.
[snip]
Unlike some other institutions in this town, I work to give some reasonable advice to members of Congress and shape public opinion.
Glenn Beck has taken issue with this.  He responded on "TheBlaze (not-on-tv) TV".
Beck began by playing recent clips of Norquist calling out Sen. Ted Cruz (R-Texas) for his efforts to derail Obamacare, noting that while he used to joke about the left’s portrayal of Norquist as a “big power player,” he’s since revised his dismissive opinion in light of the warnings that you “don’t ever take this guy on unless you’re prepared.”
The shudder you felt down your spine was realizing you and Glenn Beck might agree on something.

So, how does Glenn Beck attack Grover Norquist?  Does he criticize Norquist's tactics?  Does he question his assessment?  Does he question even some of his free-market, anti-tax ideology?  Hell No! Glenn Beck goes full on crazy, check this out from his own website summarizing his show:

Beck’s show Monday primarily concentrated on Norquist’s alleged connections to Islamists. He invited Frank Gaffney, the president of the Center for Security Policy, and Daniel Greenfield of the David Horowitz Freedom Center, to weigh in.

“[Norquist] is the guy responsible for a lot of the Muslim Brotherhood stuff that goes on in the White House, isn’t he?” Beck asked the two.

I'm going to go grab a drink while you try to process that...
...
[insert generic elevator music]
...
Ready to keep reading?  Probably not, but I'll continue.

His "experts" kept the crazy going:

When asked why he would have such connections, Greenfield weighed in: “Well the Muslim Brotherhood, like the communists and the Nazis before them, are experts at setting up front groups with innocuous names and finding people who would be useful to them. Norquist was useful to them, and in some ways, they were useful to him.”
Setting up front groups with innocuous sounding names?  Isn't that what conservatives have been doing since the 70s?  "Americans for tax reform", "Christian Coalition", "Americans for Prosperity", etc...

Glenn Concludes his craziness thusly:

Beck concluded by saying this is a “complex issue,” but that it is time that somebody takes on the “establishment Republicans” and tell you “exactly who’s who.”
Oh Glenn, please, after having your experts compare your political foes to Nazis, tell me who it is that I need to hate!

I know the link is to "The Blaze!"(imagine that being said in a deep voice), but if you want to witness crazy without any self-awareness you should read the whole thing.  I don't know how this is going to turn out, but I love the idea of a lot of faux "free market" conservatives are going to war with the neo-John Birch Society crowd.

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It's so frustrating to know how the economy works(MMT), and then watch a bunch of (mostly) men who don't, try and improve the national economy. Here is a one line sentence explaining how to grow an economy.

People need to spend more money so that there will be the increased demand for new jobs and new business.
That's it.  But let's look at Obama's latest Grand Bargain proposal from a critical MMT perspective.  Obama's plan has 3 parts.
  1.    
  2. Simplify the corporate tax code   
  3. Try to coax companies to "repatriate" their foreign money holdings   
  4. Use the tax increase to fund infrastructure jobs.

The first plan is to simplify the corporate tax code in 2 steps.  First, it's going to eliminate several deductions and so-called "special interest" loop holes.  That will increase the amount of taxes the government collects.  The second step is to lower the tax rate to the point where the money gained by closing loopholes is roughly equivalent to what's lost by lowering the tax rate from 35% to 28%.  Overall this is "revenue" neutral.  Will this help the economy grow?  Hell no!  At best it might make the economy run more efficiently(always a good thing!), but it won't grow.   It won't grow because all they're doing is changing who pays what, and not the total amount taxed.  No growth.

The second part is to get companies with foreign money holdings to bring the money into the country.  Normally, there is, apparently, a tax on doing that.  Therefore, companies leave their earnings overseas.  This estimate says there are over a trillion dollars out there.  Obama's proposal is to try and get those companies to bring in the money by offering a one time, low tax, to do so.  From an MMT perspective this would be bad for the overall economy because it's taking money out of the economy.

The third and final part of the Obama plan is to start funding infrastructure and job training programs.  From an MMT perspective, increasing government spending will be good for the overall economy because it will increase demand for jobs and business.  Hooray!

The reason I call this plan a waste of time is because, the first part offsets itself and the good in the third part is offset by the harm of the second part.  Making these plans revenue neutral will never give the economy the boost it needs.  Infrastructure jobs that aren't offset with tax increases will.  Tax cuts that aren't offset by spending decreases will also do the trick.

If there is any redeeming part of the proposed 'grand bargain' is the possibility that money will be shifted from those who are letting it sit, to those who will spend it.  That's why I added the qualifier(mostly) into the title.  If that money is truly just sitting in a foreign bank, collecting low interest dust, then shifting the money to infrastructure and creating jobs for the unemployed will help some.  My guess is that only some of that money is "just sitting there", the rest is being reinvested into other enterprises and will only end up moving around who gets it.

The thing that Obama, along with the GOP that's already dismissed the whole thing, don't understand is that the government doesn't need that money to spend on infrastructure.  The government can't run out of money anymore than a stadium can run out of points on a scoreboard.  Therefore, we can grow this economy until unemployment is back to a non-embarrassing level.

Cross Posted

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Could someone please tell me exactly when following the constitution became optional?  In the last week I have heard Senators openly call on the president to violate a citizen's rights.  Some prominent figures have demanded that the government act like following the Bill of Rights is optional and can be decided on a case by case basis.  It is my humble opinion that every American citizen has certain unalienable rights that cannot be taken away without due process.  I never thought that would be a controversial opinion to hold in the United States, but apparently it is now.

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Are you kidding me? The TSA is now going to be allowing some small pocket knives on airplanes. Meanwhile I still can't take a decent tube of toothpaste through(and lord help you if you get caught with a sealed bottle of water or pop!).  Coming from someone who has lost a 20oz bottle of pop, a full tube of toothpaste, was "detained" for a 3 inch philips-head screwdriver, and who won a random "full baggage search" in front of everyone, I feel much safer now.  I might be stuck with overpriced soda for airport shops, off brand toothpaste, and limited hardware, but at least the guy sitting next to me on the airplane can stab me in the eye (with his 2 inch blade) when I tell him about all of America's "freedoms".

This also doesn't mean any other security will be loosened. If you want to ride on a plane in this country, You'll still have to decide between either someone taking naked pictures of you, or a full body pat down. (If you're really lucky, you'll be among the few who have to endure both!)  If you're among the 99% of americans who like to both ride an airplane and thinks their "right to privacy" extends to their body, there is some good, slightly less publicized news.  There is a small pilot(pun intended) program for those to have "expedited" screenings by going through a voluntary "pre-screening".  Of course, the program is currently only for frequent flyers and other "preferred" airline customers.  You'll be contacted shortly if you are eligible.  (Apparently when it comes to getting government permission to retain ones dignity at the airport, Jet-setting millionaires, corporate execs, and traveling sales people get to be in the front of the line)

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Thu Feb 28, 2013 at 10:54 AM PST

The Farce That is Sequestration

by Dustin Mineau

Brace yourselves, The effects of the so-called "Budget Sequestration" are about to hit.  The two parties aren't going to compromise so the automatic budget cuts are going to hit and hurt the economy.  The media will probably ultimately blame the two political parties for not coming together to fix something that EVERYONE knows is going to be bad for the economy.

The actual economic damage is compounded by the other deficit-reduction measures that have already slowed growth, including a 2 percent payroll tax increase. All told, economists expect the sequestration plus last month’s fiscal-cliff deal to slow the pace of GDP growth by 1.5 percentage points. That’s no small change for an economy growing about 2 percent a year, particularly one that appears to have lost steam in the fourth quarter of 2012.

The reality is that they are equally at fault: Both sides accepted the across-the-board cuts if they couldn’t agree to more sensible ones.

I don't blame the two parties for this mess.  I blame bad economics.  John T. Harvey has a good write-up of why this is going to be bad and why it's all unnecessary in his article Suicide by Sequestration.
As suggested above, many others have already gone into detail on where cuts will hit and how bad it will be. But, the overwhelming majority of this has been written based on the assumption that we do, in fact, need to cut the debt and deficit, just not this way. I therefore want to do what I’ve done so many times before in this blog: explain why this is a false and terribly dangerous premise. ANY reductions in the deficit are a mistake, not just those forced by sequestration. Below, I attack a number of the fallacies on which these contrary opinions are based (many of these have appeared before in this column–I’ll keep repeating it until President Obama listens!):

For God’s sake, we have so many difficult problems facing us today. Why add to that by shooting ourselves in the foot–no, the head–by purposely reducing economic activity even more? To see how well this brilliant economic-recovery strategy works, just look at Greece, Spain, and the UK. Better yet, look at the US in fourth quarter of 2012. That negative growth, correlated as it was with a big drop in government spending, is a precursor of things to come.

I highly recommend reading the rest.  John explains better than I could so I won't repeat his points.  Instead, I'll try to answer his question of Why do we keep trying to do this to ourselves?.

The economists that our leaders listen to keep telling them that budget deficits are always bad.  It's always bad to have debt for a household or business, so in theory, it should be bad for a national government.  It's a very powerful and emotionally convincing theory backed up by the metaphor of a household or business budget.  The people who keep pointing out that The Federal Budget is not Like Your Budget keep getting drowned out.

How powerful is this theory?  It's so powerful it drowns out common sense.  Let's take a different situation.  Let's say someone at the pet store tells you your fish tank should have no more than 3 snails for every 5 fish.  But your fish tank has 4 snails and 5 fish.  So you take away one snail.  But you notice that a week later your fish starting looking sickly and the water gets dirty.  You add back a snail and everything starts slowly recovering.  When you tell this to the pet store owner, he assures you "no no, you gotta take that snail away.  Your tank will get 'too clean'.  The 3 snails will eventually learn to clean more.".  So you go home and take the snail away again, but sure enough your tank gets dirty and the fish sickly.  How many times would you keep trying to take a snail away before you conclude that the pet store owner doesn't know what the hell he's talking about?  Well, if you're a congressman, at least more than 5 years!

We have experienced nearly 5 years of a trillion plus dollar budget deficit.  The entire time our economy has been slowly recovering.  The only times it has faltered is when congress has another budget or debt ceiling fight to cut the budget.  How long can this go one until more people start realizing that the economy is recovering and falters when we prematurely try to balance the budget?  If we were scientists and observed this many countervailing examples of our theory, we'd throw it out in a heartbeat.

But, we don't throw out the theory that "Budget Deficits are always bad".  Why?  Because the metaphor of the federal budget being like a household budget is just too strong.  We'll just keep telling ourselves that we "cut the 'wrong' things".  Apparently, we'll never conclude that it's the cutting itself that is 'wrong'.

Cross Posted at Our Dime

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By now you've no doubt heard that conservatives thought that a reporter's satirical question was real:  A reporter sarcastically asks if Hagel spoke in front of [insert fictional terrorist-like sounding organization] group.  The rumor then spread to the point where a sitting U.S. Senator was asking if Hagel had spoken to a group that didn't exist.

It turns out that conservatives, the group that wants to repeal the 20th century, is falling for 17th century satire.  The biggest joke is that the satirist from 300 years ago is still laughing because these guys haven't figured it out the joke yet.

There is a semi-popular 300 year old document circulated on the internet called the The Women's Petition Against Coffee from 1674.  It is a vulgar and playful petition written by "anonymous" on behalf of all women, asking the king to ban coffee houses in Britain.

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Since the end of the presidential election last week, I've been seeing a lot of tweets and blog posts that will say something like "takers outvoted the makers"(see here, here, and here for examples).  I find the "makers and takers" narrative fascinating.  I've found few other narratives that so quickly and easily divides Americans and get us to hate each other. I wanted to take a closer look at the supposed logic behind it.

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Did you know that 355,000 people were laid-off last week because Obama was re-elected?  Or, at least, that's what many Conservative activists would have you believe.  Apparently, there is this growing meme going around the internet that companies are laying people off because Obama and "Obamacare" is here to stay.  This is all likely to be typical partisan bull-crap.  I never thought I'd have to explain the inner-workings of the Free Enterprise System to the party that claims to love capitalism.  But... here we go.  We'll start with basic concepts and then move on to "the math".  By the end of this post, you'll know why this meme is likely to be crap, the numbers backing up that assertion, and when (and how) we'll have the numbers to prove it.

First of all, this is a huge country with a huge economy.  Large numbers of people are being hired and fired, laid-off and brought back every single day.  Additionally, large numbers of business are being started and bankrupted, growing and shrinking, every single day.  The beauty of free enterprise is that nothing ever stands still.  Things are moving and changing all the time which causes other things to move and change and so on.  This is the reason it is so hard to study macro-economies.  There are so many micro-economic things going on you can never be 100 percent certain of which event caused another event.

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Update 8:44 PM
Apparently the GOP is trying to defend Romney and attack Obama by pointing out actual usage of horses and bayonets by the military.  They are trying to change what Obama actually said "we have fewer" to what they wish he said "we have none".  Be sure not to let them do it.

I'll keep updating as I find more.

Tweets

Jon Stewart ‏@jonstewartshow

Obama just lost the Civil War re-enactment vote. #horsesandbayonets

Kinge ‏@Kbinge

Romney's plan to reduce gas prices: Bring back #horsesandbayonets #debates

Rich Gallup ‏@rich_gallup

My great-grandfather was a US Cavalryman in World War 1. We have his bayonet, if the government needs it back. #HorsesandBayonets

Teeveeproducer ‏@TeeVeeProducer

We need Binders and binders of bayonets! #horsesandbayonets

Pictures
Horses and Bayonets1
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This is unacceptable.  On December 12th(1983), our U.S. embassy in Kuwait was attacked by a suicide truck bomber.  This blatant act of terror killed 5 people.  Yet, the weak willed President Reagan refuses to call it an Act of Terror.

Here's what happened:

On December 12, 1983, a truck laden with 45 large cylinders of gas connected to plastic explosives broke through the front gates of the American Embassy in Kuwait City and rammed into the embassy's three-story administrative annex, demolishing half the structure. The shock blew out windows and doors in distant homes and shops.
The pitifully limp response from the Reagan White House below:
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