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What We Read Today 21 August 2017

Econintersect: Every day our editors collect the most interesting things they find from around the internet and present a summary "reading list" which will include very brief summaries (and sometimes longer ones) of why each item has gotten our attention. Suggestions from readers for "reading list" items are gratefully reviewed, although sometimes space limits the number included.

This feature is published every day late afternoon New York time. For early morning review of headlines see "The Early Bird" published every day in the early am at GEI News (membership not required for access to "The Early Bird".).

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Topics today include:

  • We Finally Know Which Groundbreaking Period in Earth's History Gave Rise to The First Animals

  • Fallen forensics: Judges routinely allow disavowed science

  • These Wall Street millionaires literally plotted to overthrow the president

  • The 1968 Kerner Report was a watershed document on race in America—and it did very little

  • Report of the National Advisory Commission on Civil Disorders:  Summary of Report

  • The Origin of Inflation:  New Positive Hypothesis

  • Global Interest Rates and the Taylor Rule

  • Five things to watch for in Trump's big speech

  • Interior halts study on health risks of mountaintop coal mining

  • The Real Story of How Bannon and Trump Got to The White House

  • Who Do You Think Was Most Responsible for Charlottesville?

  • Macroeconomics in Germany: The forgotten lesson of Hjalmar Schacht

  • Fungal disease spreads through UK hospitals – here’s what you need to know about Candida auris

  • German macroeconomics: The long shadow of Walter Eucken

  • Barcelona terror attack driver Younes Abouyaaquob shot dead by police

  • Iraq forces try to retake Islamic State-held city Tal Afar

  • And More

Articles about events, conflicts and disease around the world

Global

  • Global Interest Rates and the Taylor Rule (The Daily Shot)  This chart shows the widening gap between the overnight rates implied by the Taylor Rule and the actual central bank policy rates. The central banks are not tightening policy in tandem with the economic improvements.  Econintersect: The implication is that inflation will result.  We note that seven years after this condition started there is still very low inflation.  In the case of Japan (detail not shown in graphic), Taylor rule predicted inflation has not occurred for more than two decades,

Monday

U.S.

  • Five things to watch for in Trump's big speech (The Hill)  President Trump will unveil his long-awaited strategy for Afghanistan in a prime-time address on Monday night from Fort Myer, Va.  Trump wrestled for months with how to move forward with the 16-year-old war that top generals say has descended into stalemate.

The president was expected to make a decision on the strategy before his first NATO meeting in May. When that didn’t happen, Defense Secretary James Mattis promised Congress a decision would be made by mid-July.

But the final call wasn’t made until Friday, when Trump convened a high-profile meeting of his national security team at Camp David.

  • Interior halts study on health risks of mountaintop coal mining (Axios)  The Interior Department has ordered the National Academies of Sciences, Engineering, and Medicine to stop working on a study focused on the health risks of living near mountaintop coal mining sites in Central Appalachia. The National Academies made the announcement in a statement, and said it "believes this is an important study."

The reasoning: The department is reviewing all its grants and projects over $100,000 due to the changing budget situation.

The original request for the study came from the state of West Virginia in 2015.

Ever since Donald Trump won in November, Democrats and the media have been obsessed over the question of whether Russia colluded with the Trump campaign. But the real story behind Trump isn’t about Russia. It’s about Wall Street, and it’s about one billionaire in particular, whose political mercenaries pushed Donald Trump into the White House.

  • When presented with a verbatim quote from President Trump on Tuesday ("You had a group on one side that was bad, and you had a group on the other side that was also very violent"), more disagree (53%) than agree (43%).

  • Republicans agreed, 87%-11%. Democrats disagreed, 83%-15%. Independents disagreed, 59%-39%.

  • Far more blame "the far right groups" for Charlottesville (46%) than "the counter-protesters" (9%), but a remarkable 40% concur with Trump's assertion that both were equally responsible.

EU

  • Macroeconomics in Germany: The forgotten lesson of Hjalmar Schacht (Voxeu.org)  Hat tip to Roger Erickson.  See also article about Walter Euken in Germany section.  (Econintersect:  This is a story of a baby and the bathwater.  Hjalmar Schacht was President of the Reichsbank and Minister of Economics in the early years of Hitler's Third Reich, 1933-1938.  He fell out with Hitler when he opposed Germany's rearmament and was dismissed from the bank and the government as a result.  However, he has aways since been dismissed from history because of hos association with Hitler, despite being acquitted in the Nuremberg trials.)  From this article, here is a summary description of how Schact brought Germany out of the Great Depression by unconventional monetary olicy which the authors argue could be applied to the EU today:

Yet, from 1933-1938, thanks to Schacht, the economy recovered spectacularly (Figure 1).2Schacht’s objective to jumpstart the moribund economy required money. But money was not available, since savings were inexistent and production was so restricted that savings would not accumulate (Schacht 1967). Neither could money be printed, since lending to the government would have put the Reichsbank at risk of losing control of monetary policy.

Schacht then contrived a brilliant unconventional monetary solution. For payments, state contractors and suppliers received bills of exchange issued by a company called ‘MEFO’.3 The MEFO-bills were state guaranteed, they could circulate in the economy and could be discounted by their holders at the Reichsbank in exchange for cash.

Schacht believed that the duty of the central bank was to make available to the economy as much money as necessary to facilitate output production. The issuance of bills of exchange was instrumental to this end – as each bill stood against the sale of newly produced goods, and each issue of money was based on the exchange of the new goods, central bank money issuance against bills could not be inflationary. Indeed, the employees of MEFO checked that every MEFO-bill issued was tied to a quantity of newly produced goods, and only bills issued against the sales of these goods were granted. This way, the circulation of money and the circulation of goods remained in equilibrium.4

UK

Germany

  • German macroeconomics: The long shadow of Walter Eucken (Voxeu.org)  The austerity policy of Germany has been spectacularly successful.  This author argues that the success has come only because Germany has victimized its EU neighbors and the rest of the world.  Econintersect:  We would suggest that the austerity policy of the EU has created a shortage of money which Germany has profitted from by hoarding money.  Here is the article summary:

At first sight, it is difficult to explain why the macroeconomic debate and macroeconomic policy in Germany differ considerably from other countries, despite the same academic textbooks and models being used as elsewhere. This column explains how a specific paradigm of macroeconomics, developed by Walter Eucken and diametrically opposed to Keynesian economics, is behind the German formal theoretical apparatus. The success of German macroeconomic policy can be attributed to the openness of the German economy, which allows it to benefit from macroeconomic policies pursued in other major countries.

Spain

Iraq

  • Iraq forces try to retake Islamic State-held city Tal Afar (Sky News)  Hat tip to Marvin Clark.  Iraqi security forces have launched an offensive to take back the city of Tal Afar from the Islamic State group.  Tal Afar and the surrounding area is one of the last pockets of IS-held territory in Iraq after victory was declared in July in Mosul, the country's second-largest city.  The city, 50 miles (80 km) west of Mosul (toward Syria), sits along a major road that was once a key IS supply route.  Tal Afar had a pre-war population of about 200,000.

Other Scientific, Health, Political, Economics, and Business Items of Note - plus Miscellanea

  • We Finally Know Which Groundbreaking Period in Earth's History Gave Rise to The First Animals  (Science Alert)  Over half a billion years ago our planet experienced the mother of all ice ages. One that not only turned Earth into a giant snow ball, but, according to new research, probably gave complex life the kick in the pants it needed to flourish.  The Earth was frozen over for 50 million years and after that long period of glaciation ended there was an explosion of algae that evelved into mor complex life.

  • Fallen forensics: Judges routinely allow disavowed science (Associated Press)  Some science - analysis of bite marks, latent fingerprints, firearms identification, burn patterns in arson investigations, footwear patterns and tire treads - was once considered sound, but is now being denounced by some lawyers and scientists who say it has not been studied enough to prove its reliability and in some cases has led to wrongful convictions.  Even so, judges nationwide continue to admit such evidence regularly.

  • These Wall Street millionaires literally plotted to overthrow the president (Timeline)  Hat tip to Roger Erickson.  Hat tip to Roger Erickson.  Here is a great piece of historyfor conspiracy theorists.  Conspiracies really do happen.  When FDR messed with their money, a Wall Street  group self-named the American Liberty League began engineering a fascist military coup.  To hell with the country, just protect my wealth was the tinking.  Read this piece to understand the very different history the world might have had.  About the plot:

It is impossible to say exactly how close the Business Plot — also called the White House Coup and Wall Street Putsch — came to overthrowing the president. Nearly all we know about the plot is the result of an investigation conducted by the House McCormack-Dickstein Committee in November, 1934. Its chief whistleblower was one Major General Smedley Butler, a respected and tenured military leader with a talent for rallying support to his side. 

President Lyndon B. Johnson, who had already pushed through the Civil Rights Act and the Voting Rights Act, ignored the report and rejected the Kerner Commission's recommendations.[4] In April 1968, one month after the release of the Kerner report, rioting broke out in more than 100 cities following the assassination of civil rights leader Martin Luther King, Jr. [5]  

To mark the thirtieth anniversary of the Kerner Report, the Eisenhower Foundation sponsored two complementary reports, The Millennium Breach and Locked in the Poorhouse. The Millennium Breach, co-authored by former Senator and Commission member Fred R. Harris, found the racial divide had grown in the subsequent years with inner city unemployment at crisis levels.[6]

The Millennium Breach found that most of the decade that followed the Kerner Report, America made progress on the principal fronts the report dealt with: race, poverty, and inner cities. Then progress stopped and in some ways reversed by a series of economic shocks and trends and the government’s action and inaction.

Harris reported, “Today, thirty years after the Kerner Report, there is more poverty in America, it is deeper, blacker and browner than before, and it is more concentrated in the cities, which have become America’s poorhouses.”[6]

  • The Origin of Inflation:  New Positive Hypothesis (LinkedIn)  This is a report on an effort to unify the empircal data on productivity and quantity/velocity of money behind a comprehensive theory of inflation.  Econintersect:  We find some of the author's statements confusing.  For example:  "Monetary inflation is directly linked to the speed of money. If speed increases, inflation decreases and vice versa."  We would think that, with an increase in velocity (just as with an increase in quantity) of money, inflationary pressures would increase.  We will have to follow this work further to get a better understanding.

Click for larger image.


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