Look: I am eager to learn stuff I don't know--which requires actively courting and posting smart disagreement.

But as you will understand, I don't like to post things that mischaracterize and are aimed to mislead.

-- Brad Delong

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Monday, January 2, 2012

Andrew Samwick Does Not Exactly Tiptoe Around the Rentier Issue

Though he still doesn't quite confront it head on.   Following up on the Delong post I cited here, Samwick says:

The larger context of Brad's post is to question whether the financial sector's increased share of GDP over the past six decades has contributed to economic growth.  Given how much of the financial sector is no more socially useful than a casino, I don't see how that could be the case.  Worse, the "house" and several of the "players" in this casino have used their growing resources to subvert our political institutions into believing that their institutions are "too big to fail."

Recognizing the casino aspect is valuable in its own right. The important next step is to recognize that these rentier activities are not only socially useless but overtly harmful.

I feel like a voice crying out in the wilderness.


The Arthurian said...

"I feel like a voice crying out in the wilderness."

But your words are empty today. Or Andrew Samwick's are, anyway: "Given how much of the financial sector is no more socially useful than a casino..."

What kind of argument is that? there's nothing to it but spit and venom.

Where is the evidence that the financial sector is a problem?

Jazzbumpa said...

Feeling a bit vengeful today?

You've read and commented here enough to know what I'm talking about.





I think I have a pretty coherent narrative. And, anyway, you started it.



Jazzbumpa said...

The pretty coherent narrative.



BadTux said...

I would also add, effectively *negative* interest rates paid on Treasury notes. This isn't occurring because investors are feeling charitable towards the U.S. government. It is occurring because the investors themselves have recognized the "Grand Casino" nature of the financial marketplaces -- and, especially, the way that the house has rigged the games so that the house always wins and investors always lose -- and rather than see their money simply evaporate into the next financial scam a' la' Dot-com or Bundled Liar Loan Securities that come along, have decided to park it somewhere that at least they know the actual return on their money rather than rely on the munificent generosity of the house to get even a dime back.

At the very least the financial markets must be regulated to return consistency and predictability to them, because it is clear just by looking at Treasury bills that the current financial system in no way is functioning well enough to account for over 8% of US GDP... otherwise investors wouldn't be fleeing for the stability of Treasuries. Can anybody point to any other time since the Great Depression when the financial markets functioned so poorly that people would accept *negative* interest on Treasuries rather than invest their money via the financial markets? No? I think that's your answer, then...

- Badtux the Casino Penguin

Jazzbumpa said...

Good point, Tux.