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Forum Post: "Both The Market and Government Are Irrational", by Paul Craig Roberts.

Posted 6 years ago on March 16, 2012, 9 a.m. EST by shadz66 (19985)
This content is user submitted and not an official statement

March 15, 2012 "Information Clearing House" ( http://www.informationclearinghouse.info/ ) -*-

One of the great economic myths is that markets are rational. Not a day passes without this myth being disproved scores of times, but the myth persists.

For example, today (March 14) Bank of America/Merrill Lynch reported that “yesterday US markets started the day off with a strong rally after the solid retail sales report. . . . tailwinds are helping boost global equity markets today.”

The "solid retail sales report" for February consists of 1% nominal gain. That is, the increase is not deflated by the month's inflation rate, which will be released on March 16. In other words, if very much of the 1%nominal gain in retail sales is due to higher prices, the inflation adjusted gain will not be statistically significant. The "rational market" took off without waiting to find out whether the gain was real.

Moreover, as statistician John Williams has established, the official Consumer Price Index (CPI) understates inflation. If an honest measure of inflation was used, retail sales could be in negative territory.

The “rational market” loves deception as long as it provides an excuse for equities to rise. The Federal Reserve’s focus on “core inflation,” which does not include rising food and energy prices, allows Federal Reserve officials to maintain that the inflation rate remains below target. By pretending that there is no inflation, the Federal Reserve continues to support banks with near zero interest rates while depriving savers and retirees of interest income. With no income from savings, people are forced to consume their capital. Thus, the Federal Reserve’s policy makes bankers richer and the country poorer.

Meanwhile, those whose old age security is based on pensions are confronting insecurity. Many with private pensions were harmed by the financial crisis. Those dependent on Social Security and Medicare are finding that these programs are being blamed for budget deficits caused by multi-trillion dollar wars of choice. Those expecting pensions from state and local governments are finding that governments are unable to make good on underfunded pension benefits.

State and local governments counted on a growing economy and rising consumer incomes to provide the tax base to make good on underfunded pensions. These governments did not foresee that US corporations would destroy their tax base by moving manufacturing, engineering, IT, research and design jobs overseas. The absence of growth in real incomes for the vast majority of the people and the capture of productivity gains by capital at the expense of labor have added to the budget woes of most state and local governments.

John Rauh at Northwestern University estimates that the unfunded obligations of state and local governments amounts to $4,400,000,000,000, an amount that is within the ballpark of Joseph Stiglitz and Linda Bilmes’ estimate of the cost of the Iraq and Afghanistan wars.

Money that could have saved Americans’ pensions instead was allocated to profits for armament corporations and to advance Israel’s territorial hegemony.

When the Occupy Wall Street movement says that Washington rules for the benefit of the 1%, OWS is not far off the mark.


veritas vos liberabit ...


Paul Craig Roberts was Assistant Secretary of the Treasury for Economic Policy and associate editor of the Wall Street Journal. He was columnist for Business Week, Scripps Howard News Service, and Creators Syndicate. He has had many university appointments. His internet columns have attracted a worldwide following. ( http://www.paulcraigroberts.org/ )

[This article is copied verbatim under "Fair Use" from : http://www.informationclearinghouse.info/article30822.htm ]



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[-] 3 points by rayl (1007) 6 years ago

this has been obvious for quite a while and it's only a matter of time before people wake up and demand change. keep on keepin' on!

[-] 2 points by shadz66 (19985) 6 years ago

Re. "KOKO" : Two Trax to soothe and rouse ...

Soul Music !!

[-] 2 points by rayl (1007) 6 years ago


[-] 2 points by Demian (497) from San Francisco, CA 6 years ago

Hey check this guy out.


[-] 2 points by shadz66 (19985) 6 years ago

D : Gar Alperovitz is ahead of the curve 'less well travelled' and he has much to say that is important, intelligent and informed. I saw him on "DemocracyNow!" ( http://www.democracynow.org/ ) not so long ago. Indeed, here's the link :

fiat lux ...

[-] 2 points by shadz66 (19985) 6 years ago

Further to the PCR article above, please also consider :

multum in parvo ...

[+] -5 points by DKAtoday (33468) from Coon Rapids, MN 6 years ago

The Propaganda Machine Continues to Spin.

But the people are beginning to catch on.

We are done with manipulation.

[-] 2 points by shadz66 (19985) 6 years ago

On the matter of "The Propaganda Machine" ...

a) "The Myth of the Liberal Media" : http://www.informationclearinghouse.info/article6435.htm ;

"If you want to understand the way a system works, you look at its institutional structure. How it is organized, how it is controlled, how it is funded." -Noam Chomsky

"The Mainstream media really represent elite interests, and what the propaganda model tries to do is stipulate a set of institutional variables, reflecting this elite power, that very powerfully influence the media." -Edward Herman

& ...

b) "OUTFOXED" : http://video.google.com/videoplay?docid=6737097743434902428 . A film which examines how media empires, led by Rupert Murdoch's Fox News, have been running a "race to the bottom" in television news. This film provides an in-depth look at Fox News and the dangers of ever-enlarging corporations taking control of the public's right to know.

ad iudicium ...