"'SAUL, MY BROTHER, REGAIN YOUR SIGHT. THE GOD OF OUR ANCESTORS HAS CHOSEN YOU TO KNOW HIS WILL, TO SEE THE RIGHTEOUS ONE, AND TO HEAR THE SOUND OF HIS VOICE. FOR YOU WILL BE HIS WITNESS BEFORE ALL TO WHAT YOU HAVE SEEN AND HEARD. NOW, WHY DELAY? GET UP AND HAVE YOURSELF BAPTIZED AND YOUR SINS WASHED AWAY, CALLING UPON HIS NAME.'"
 ACTS 9:14-16

Bernanke Killed The World Economy, New Academic Study Confirms

From Zero Hedge:

This column has contended for several years, based on empirical data observations from several countries, that low interest rates worldwide were killing productivity growth. A University of Chicago paper finally provides some academic back-up for this contention and suggests a mechanism through which it takes place. There are other mechanisms also, and I would suggest that the Ben Bernanke-inspired wild monetary experimentation from 2008 on has done more damage to the world economy than any other initiative in the history of mankind.

The paper,“Low interest rates, market power and productivity growth” by Ernest Liu, Atif Mian and Amir Sufi, examines the behavior of firms in a competitive marketplace as interests decline, and demonstrates that, although lower interest rates at first increase competitiveness through increased investment, they also increase the comparative advantage of large firms, thus after a time discouraging the smaller firms from investing and making the market less competitive. If low interest rates persist and approach zero, eventually even the larger firms stop investing, because they are no longer subject to significant competition and thus do not need to invest.

The paper provides theoretical backing to and a possible mechanism for the observation set out in this column on several occasions in the last few years: that ultra-low interest rates in Japan, the Eurozone, Britain and the United States were closely correlated with unprecedented declines in the rate of productivity growth in those countries. In all the high-income industrial countries where interest rates were held artificially low after 2008, productivity growth by 2016 had effectively disappeared altogether, or close to it. The worst effects were seen in the eurozone and in Britain, where inflation continued, making real interest rates sharply negative. Even in Japan, where interest rates have been held artificially low for two decades, the productivity dearth worsened substantially after 2009...

Debt of all kinds has proliferated, whether in auto loans at the consumer end (less so in home mortgage loans since 2008) or in corporate leveraged loans used by the innumerable buyout artists at the high end. Default rates on all these debts are beginning to rise; they will cause massive losses before we are much older.

In Britain, Switzerland and the EU, interest rates have sunk so low that even investments without any profit at all have been attractive, provided money can be borrowed against them. I have written in the past about the possibility of a flood of Babylonian ziggurats in the major financial centers – technically religious buildings, thus exempt from local property taxes, but serving a religion with no current believers, thus making them a pure speculative asset suitable for the ultra-Keynesian New Age.

Not content with the damage they have already done, some extreme aficionados of low interest rates are devising schemes to drive them even lower, confiscating ordinary people’s cash holdings so that there was no longer any alternative to their diabolical financial schemes. Truly Ben Bernanke’s inspiration of 2002 to drop money from helicopters, uttered at a meeting of the National Economists Club at which I was present, has been among the most economically damaging ideas in all of history.

One competitor for that prize, I suppose, is Karl Marx’s Communism, so banally celebrated by the functionaries of the of the EU at last year’s bicentenary. However, that great fallacy never affected more than about a quarter of the world’s population, and eventually exploded under its own weight. Bernanke’s folly, on the other hand, shows no sign of correcting itself. Although a few more years of U.S. success with President Trump and higher rates might do the job of correcting it worldwide, our chances of getting this necessary combination are currently less than 50-50, I would say.

Another such competitor for Worst Idea was the invention of agriculture. Yes, it enabled the planet to support more people, but at what a cost! Instead of devoting only a modest portion of their time to finding and killing woolly mammoths, humanity was now forced to devote itself night and day to back-breaking manual labor in the fields. In the short term, this was truly an unspeakably bad trade-off. In the long term, of course, it led to civilization and industrialization, but it took several thousand miserable years to do so. We can however be sure that Bernanke’s brainwave will lead to no such economic breakthrough, however many millennia we wait.

Perhaps the most likely competitor to Bernanke’s contribution as a destroyer of economic value is Maynard Keynes’ “General Theory.” It unmoored us from the established truths such as the Gold Standard and balanced budgets and enabled greedy and unscrupulous politicians to waste ever more of our money in the name of “stimulus.” The California High Speed Rail scheme was just one $77 billion example of such folly; to misquote Oscar Wilde, a man would need a heart of stone not to laugh at its demise this week.

We do not yet know whether negative real interest rates or trillion-dollar budget deficits will be more ultimately destructive of our civilization, and Keynes, not Bernanke, is responsible for the latter. Unlike Marxism and like Bernankeism, Keynesianism has affected the entire planet; indeed, it seems irrefutable, the fallacy that will not die. However, Keynesianism’s effect on productivity is indirect; it merely grows government, a low-productivity activity, rather than destroying productivity directly. If I had to bet, therefore, I would bet that Bernanke, even more than Keynes, Marx or the inventor of agriculture, will be the chief destroyer of economic value in our long-term future.

By promoting ever-lower interest rates, set completely artificially by meddling bureaucrats, Bernankeism’s proponents have gone far to killing the engine of prosperity that is capitalism itself.Contrary to Keynes’ belief, the level of interest rates is the central variable in a well-functioning capitalist system. By meddling with it, politicians and bureaucrats are attempting to act as Gosplan, the central planning agency of the Soviet Union. It doesn’t work, and the attempt to meddle in this way is morally wrong as was Communism.

It is good to have some respectable academic backing for this column’s battle against the monetary folly of Bernankeism. The struggle continues!

www.zerohedge.com/news/2019-02-23/bernanke-killed-world-economy-new-academic-study-confirms

Trump To Sign Order Banning Chinese Telecom Equipment Next Week

From Zero Hedge:

What is a quick, efficient way for Trump to signal to China, ahead of the upcoming March 1 deadline to reach a trade deal with Beijing, that contrary to media speculation that the US president will "drop tariffs without any concessions" from Beijing, he will do no such thing? One way is by signing an executive order banning Chinese telecom equipment from US wireless networks just a few days before March 1. And, according to Politico, that's exactly what Trump plans on doing, right before a major industry conference at the end of February, and also just before the March 1 deal deadline.

According to three sources, the administration plans to release the directive, part of its broader effort to protect the U.S. from cyber threats, before MWC Barcelona, formerly known as Mobile World Congress, which takes place Feb. 25-28; the actual signing of the long-delayed order may take place as soon as next week.

“There’s a big push to get it out before MWC,” said an industry source familiar with the matter, who also requested anonymity to speak candidly.

By signing the order ahead of the world’s largest conference for the wireless industry, the White House hopes "to send a signal that future contracts for cutting-edge technology must prioritize cybersecurity." The order will surely also further roil the Trump administration’s already tense relationship with Beijing, especially if the U.S. push erodes Chinese firms’ significant European market share.

The reason behind the White House's push is because with many countries eager to deploy next-generation 5G wireless networks to power the rapidly proliferating internet of things, Chinese firms such as Huawei and ZTE are aggressively pushing to build these networks — at a lower cost than virtually all of their competitors. And so, with these 5G build-outs looming, Trump admin officials want “to move the needle” with their security messaging, said the source close to the administration.

https://www.zerohedge.com/news/2019-02-07/trump-sign-order-banning-chinese-telecom-equipment

"FOR THERE IS NOTHING HIDDEN WHICH WILL NOT BE REVEALED, AND NOTHING SECRET THAT WILL NOT BE MADE KNOWN. THOSE WHO HAVE EARS TO HEAR LET THEM HEAR. BUT TAKE CARE TO WHAT IT IS THAT YOU LISTEN. THE MEASURE WITH WHICH YOU MEASURE WILL BE MEASURED OUT TO YOU, AND YET EVEN MORE OF THAT MEASURE WILL BE GIVEN." 
MARK 4:22-24

Millionaire-Driven Education Reform Has Failed. Here’s What Works.

From Naked Caitalism:

Journalist Andrea Gabor’s new book heralds a “quiet revolution” in education you didn’t know was happening.

Journalist Andrea Gabor, author of “After the Education Wars: How Smart Schools Upend Business Reform,” is among the growing chorus concluding that the application of outdated, market-based models to a complex process like education has done more to exacerbate social problems than improve the performance of American children. As she sees it, the widespread embrace of approaches obsessed with the production of math and English language test scores “over civics and learning for learning’s sake” even helped spawn an electorate susceptible to the demagoguery of Donald Trump.

So that’s the bad news.

But Gabor has good news, too. While dilettante corporate reformers were making headlines with their quick-and-dirty education schemes, some far-sighted educators, active citizens, and imaginative thinkers across the nation have been swimming against the tide of the top-down, millionaire-driven reform movement with approaches to learning that are not only much more democratic, but remarkably effective and better attuned to the needs of 21st century students.

They’ve enjoyed less attention than their market-oriented counterparts, but they’ve gotten something better: results.

Gabor offers a trip through far-flung regions of country where vastly different public school systems have bucked the market-focused trends, including the state of Massachusetts and the Leander district in Texas, north of Austin.

Instead of prodding teachers and students with sticks and carrots, inflicting them with an endless grind of test preparation, the schools focus on creating a rich setting for learning, exploring, and developing human potential. And they manage to do so with greater efficiency, better outcomes, and certainly more enjoyment for everybody involved than what is often found in corporate reform-modeled schools...

However, the schools have several things in common: a respect for democratic processes and participatory improvement, a high regard for teachers, clear strategies with buy-in from all stake-holders, and accountability frameworks that include room to innovate. They also feature robust leadership and strong teacher voice. Their success underscores the importance of equitable funding and suggests that problems like income inequality are far more detrimental to education that the usual suspects, like bad teachers.

Something seems to have shifted on the education battle lines in the last couple of years. First, reports emerged that even once-enthusiastic proponents of corporate-style reform, like former education secretary Arne Duncan, had started to voice second thoughts about things like standardized testing. Parents across the ideological spectrum began to opt out and rebel against testing regimes like Common Core.

Then came the election of Donald Trump, a man of decidedly undemocratic values, whose appointment of Betsy DeVos — the wealthy architect of Detroit’s disastrous charter system — as education secretary galvanized critics of privatization and market-oriented education models.

In 2018, media coverage started to turn from heralding tech millionaires as the intrepid “disrupters” of schools to highlighting the boldness of teachers, especially those in non-union states, engaged in strikes, walkouts, and protests around the country. The American public was supportive of the strikes and resonated with teachers who didn’t make a living wage and yet poured their hearts into doing their best for high-risk children under terrible conditions with few resources.

Critics like Gordon Lafer are now warning that if antidemocmratic forces and deep-pocketed elites continue to set the agenda for what children should learn, American schools will turn into places where inequality is not only exacerbated, but actually inculcated — something quite different from what most of us grew up understanding as their purpose. Instead of being prepared for lives as healthy and productive citizens, most will be groomed for a life of lowered expetations and servitude.

Gabor sees in all this an opportunity to push to restore democratic principles and participative decision-making to education reform and champion a more humane, sustainable model for success. She views what happens under Trump as the catalyst for better approaches and a recognition that preparing young people for a competitive global marketplace and life democratic society do not have to be at odds: schools can and must do both.

Fortunately, as Gabor’s book demonstrates, we don’t have to invent the wheel: there are plenty of great examples and strategies to choose from.

The stakes could not be higher. If America can begin to issue more tickets to prosperity through education, the country will most certainly survive the current turmoil and chart an optimistic path to the future. If not, the U.S. becomes just another oligarchy.

https://www.nakedcapitalism.com/2019/02/millionaire-driven-education-reform-failed-heres-works.html