Welcome to Saturday's Potluck - 4-16-22
“Learn the rules like a pro, so you can break them like an artist.”
As we watch avenues for social commentary and protest opportunities become more restricted are there other possibilities if these disappear. Fiction has been used successfully in the past, often the stories end up as traditional childhood tales. Not sure if an attempt to teach future generations or to trivialize the message.
Last week we looked at The Wizard of Oz as an allegory for the financial system. Mother Goose rhymes became popular in the 17th century as alternative commentary for English government and Royalty. The 1800's was Charles Dickens writings on plight of the poor. The tipping point was in 1843 the publication of The Christmas Carol.
Watching so many variation in film has made it part of the invisible background of our culture. It become simply another version of be nice at Christmas. Never actually read the original. After watching this Townsends video on the changes in English and American society after its publication it is one the reading list. Along with American Notes for General Circulation by Dickens. The book was a little too critical of America and sales of his books plummeted after its publication.
All readings are done by volunteers and is a project that can be done at home. The organization is very supportive of getting someone started on a project.
The possible future of an alternative International financial system bypassing the US dollar is coming into better focus. Now the question is will it happen or go the way of Libya after creating a plan to stop selling Libyan oil in U.S. dollars.
Exclusive: Russia's Sergey Glazyev introduces the new global financial system The Cradle April 14, 2022
Currently, the US is fighting to maintain its dominance, but just as Britain previously, which provoked two world wars but was unable to keep its empire and its central position in the world due to the obsolescence of its colonial economic system, it is destined to fail. The British colonial economic system based on slave labor was overtaken by structurally more efficient economic systems of the US and the USSR. Both the US and the USSR were more efficient at managing human capital in vertically integrated systems, which split the world into their zones of influence.
In the first phase of the transition, these countries fall back on using their national currencies and clearing mechanisms, backed by bilateral currency swaps. At this point, price formation is still mostly driven by prices at various exchanges, denominated in dollars. This phase is almost over: after Russia’s reserves in dollars, euro, pound, and yen were “frozen,” it is unlikely that any sovereign country will continue accumulating reserves in these currencies. Their immediate replacement is national currencies and gold.
The second stage of the transition will involve new pricing mechanisms that do not reference the dollar. Price formation in national currencies involves substantial overheads, however, it will still be more attractive than pricing in ‘un-anchored’ and treacherous currencies like dollars, pounds, euro, and yen. The only remaining global currency candidate – the yuan – won’t be taking their place due to its inconvertibility and the restricted external access to the Chinese capital markets. The use of gold as the price reference is constrained by the inconvenience of its use for payments.
The third and the final stage on the new economic order transition will involve a creation of a new digital payment currency founded through an international agreement based on principles of transparency, fairness, goodwill, and efficiency. I expect that the model of such a monetary unit that we developed will play its role at this stage. A currency like this can be issued by a pool of currency reserves of BRICS countries (Brazil, Russia, India, China, and South Africa), which all interested countries will be able to join. The weight of each currency in the basket could be proportional to the GDP of each country (based on purchasing power parity, for example), its share in international trade, as well as the population and territory size of participating countries.
You correctly highlight potentially central roles of China and Russia in the genesis of the new world economic order. Unfortunately, current leadership of the CBR (Central Bank of Russia) remains trapped inside the intellectual cul-de-sac of the Washington paradigm and is unable to become a founding partner in the creation of a new global economic and financial framework. At the same time, the CBR already had to face the reality and create a national system for interbank messaging which is not dependent on SWIFT (Society for Worldwide Interbank Financial Telecommunication), and opened it up for foreign banks as well. Cross-currency swap lines have been already set up with key participating nations. Most transactions between member states of the EAEU (Eurasia Economic Union) are already denominated in national currencies and the share of their currencies in internal trade is growing at a rapid pace.
A similar transition is taking place in trade with China, Iran, and Turkey. India indicated that it is ready to switch to payments in national currencies as well. A lot of effort is put in developing clearing mechanisms for national currency payments. In parallel, there is an ongoing effort to develop a digital non-banking payment system, which would be linked to gold and other exchange-traded commodities – the ‘stablecoins.’
I tend to be a long range planner. One of the areas I monitor for potential upcoming opportunities and challenges in life is California. There has always seemed to be a time lag of about 20 years for the California experience to reach the local area. Part of the delay of changes is migration of California residents with a desire to keep the aspects of their new home from not repeating the problems they hoped to escape by moving. I have noticed transplants often fight harder to keep life the same than those who have lived in an area for multiple generations.
It has been several years since I visited the state. Counted the years, was a bit surprised so much time has passed. Would appreciate some feedback from those living various areas of the state.
California's Vanished Dream, by the Numbers Real Clear Investigations April 13, 2022
Even today amid a mounting exodus among those who can afford it, and with its appeal diminished to businesses and newcomers, California, legendary state of American dreams, continues to inspire optimism among progressive boosters.
Laura Tyson, the longtime Democratic economist now at the University of California at Berkeley, praises the state for creating “the way forward” to a more enlightened “market capitalism.” Like-minded analysts tout Silicon Valley’s massive wealth generation as evidence of progressivism’s promise. The Los Angeles Times suggested approvingly that the Biden administration’s goal is to “make America California again.” And, despite dark prospects in November’s midterm elections, the President and his party still seem intent on proving it.
But most Californians, according to recent surveys, see things differently. They point to rising poverty and inequality, believe the state is in recession and that it is headed in the wrong direction. Parting with the state’s cheerleaders, the New York Times’ Ezra Klein, a reliable progressive and native Californian, says the Golden State’s failures are “making liberals squirm.”
California also faces growing inequality. By the Gini index, a measure of the distribution of income across a population, California has the third-highest inequality behind New York and Louisiana, and has experienced the fifth largest expansion of inequality since 2010, according to American Community Survey data. California also suffers the widest gap between middle- and upper-middle-income earners of any state.
California’s population growth has fallen below the national average for the first time, and the state appears to have even possibly lost population the last two years. The pandemic seems to have accelerated this movement. Last year California was home to three of the five large regions over one million with the highest percentage population loss – San Francisco, San Jose and Los Angeles. Both San Francisco and Los Angeles school districts face large decreases in enrollment; the LA district, the state’s largest, projects a 20% cut in this decade.
This outmigration trend cannot be dismissed as “white flight.” An analysis of minority population flows shows that Latinos and African Americans are settling increasingly west of the Sierra, particularly in the south, Texas, and parts of the Midwest. Similarly, the foreign-born population – so critical to the state’s economy – has declined in Los Angeles over the past decade, and stagnated in the Bay Area while swelling in places like Dallas-Ft. Worth, Austin, Houston, Nashville and even midwestern cities like Columbus, Des Moines and Indianapolis.
Simply put, California is in danger of losing its youthful mojo. Many of those leaving, according to IRS data, come from young, middle and working class families. When these people leave, birthrates plummet. Los Angeles and San Francisco rank last and second-to-last in birthrates among the 53 U.S. major metropolitan areas. Among California's big metros, only Riverside/San Bernardino exceeds the national average in women aged between 15 and 50 with births. California’s total fertility rate, long above the national average, is now the nation’s 10th lowest. Los Angeles County alone has lost three quarters of a million people under 25 over the past twenty years.
What is on your mind today?