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The imaginary axis, and the real

By Owen Paine on Monday May 9, 2011 11:18 PM

My beloved butch Beltway brawler and Wall Street flack Laura Tyson wants us trade-gap Chicken Littles to cool our jets about unfixing the Asian dollar block. It's no time for a forex rectification, sez our Laura, even as a powwow nears between Uncle and jobster America's main enemy, the import death star China.

"The United States and China will hold their annual strategic and economic dialogue discussions next week in Washington, and the exchange rate between the dollar and the renminbi, China’s currency, is again likely to top the agenda ...Added to the mix this year is some offensive, sophomoric and embarrassing name-calling of the Chinese by Donald Trump...."

"The demand for tough action by American policy makers fails to recognize that the renminbi has already appreciated significantly relative to the dollar, exaggerates the benefits of a stronger renminbi for the United States and overlooks the benefits of a stronger renminbi for China itself."

The wheel comes round and round on all this, but the bank that bought Laura's mouth had this in mind, as Dean Baker puts it so nicely:
"It is likely that Morgan Stanley would benefit from having the dollar remain high against the Chinese yuan,since this means that its dollar assets will go further in China. In other words, the position being advocated by Ms. Tyson in this piece happens to coincide with the interests of the company on whose board she sits."
Yes, the currents flow both ways, and the imperial export dollar can find new emerging landing fields when the long uptaper of the yuan reaches the glory moment -- when it's unofficially welcomed into the advanced currency club like Japan was welcomed in the 90's and South Korea is about to be welcomed.

Complexity and contradiction is rife; but through it all, through the ups downs and sideways, the flips and flops, the unders and overs, the key question remains the same, and so does the answer:

Who's the first decider here? Who designs and redesigns the global forex structure and its dynamics through the system of central banks?

No answer necessary, eh? It's Wall Street, and every central bank on earth knows that, and has known since Ike crossed the Rhine.

So what's Wall Street's view today? Tyson's view: hold the forex structure in place; no big adjustments. Seems that reflects our cross-border corporate types' bottom-line best interests here and now.

By the way, two popularly written papers by Stanford's own Ronald Macdonald McKinnon might throw light on the whys of this:



Ron's another friend of Wall Street. Paper one sez trade gaps should be closed by variable rates of import absorption, i.e. by a policy of stagnating the north deficit traders' domestic economies and booming the emerger surplus traders' home markets.

Okay, so he makes his argument in Wonderland, of course. He doesn't try to model anything like a stylized real world system. We're to accept the analogy between these two worlds -- the real one and the impossible one -- because they are twins aspectually speaking, that is, with respect to trade dynamics.

What is absorption? Its the ability to buy imports. Get it? Reduce that ability, you reduce imports. Since income is the basis of everything dynamic, you clip disposable income, or goose it, depending on the direction you want to move the old exim -- the export-import gap.

In Wonderland, absorption reduction (disposable income reduction ) can be accomplished without unemployment and the sacrficed income can be extracted by gubmint through a fair and popularly designed tax, just as absorption increase can be produced by a tax cut.

In addition, in Wonderland these policy moves can be co-ordinated on both sides to hit simultaneously. Beautiful!

Of course, here on the real side of the looking glass, we just had and are still having the real world analogy to this pure absorption policy, right? China booms while America swoons -- but not beacuse of taxes.

It could be otherwise. The asian crisis of '97 was a mirror-image drama. Asia swooned while Clintonian america boomed.

The job class might prefer a fast recovery and a huge forex adjustment; but Ronald's second paper suggests international investors are better off with as much fixity and certainty in the ongoing forex as possible.

This includes, of course, national price level movements too better the price structures retain glacial Elmer Fudd rates of metabolism. All the better for them damn corporate wabbits scurrying about plucking the low-hanging fruit slow adjustment always produces.

Comments (44)


I hear this year Mizuno's introducing a new baseball cleat with 12 studs on its sole, rather than 14. This little adjustment will enable players to steal 0.0003 more bases per game and catch 0.017 more fly balls by running them down rather than watching them fly past. A blogger writing about sports equipment opined,

I went to Stanford on a baseball scholarship and averaged .267 at the plate with a career total of only 16 fielding errors, playing shortstop. After rigorous testing of this new Mizuno cleat, I can assure you that 84.27% of players will see their games improve with its use.

Games will be won or lost depending on the use (or not) of this new Mizuno cleat.


btw, an interesting paper (PDF) that's generating commentary.



if this ridiculously bald and simple diagramatics
suggests roundiung error level marginal insight
i'm glad your Brobdingnagian mind
can live up there among the mighty and titanic
notions of purely world historical signifigance


"this system sucks if you have to find and hold a job to get by "

"the corporations are out to scalp us job holders"

"the greedy fuckers are killing the planet "

"they are blood thursty wanton killers"

its my completely unconsidered opinion
benighted conventional pink wisadom
in all its humanist innumerate fatuity
is a ridiculous source for

self confident mockery

when some day the glass towers of limited liability
crash to the side walk
as they have else where and will again
somewhere on our browning planet
--perhaps even in your life time ---

know nothing anarchics
will have but brief time for
capering in liberty

as the masses begin to consider
"what next ?"

guys like our dear corporal crow
will say
"let us simply cut each others toe nails
and wear each others under pants
exchange back rubs and
home cooked meals.."

in words more abstract

exchange the freely produced
goods and services of our own collective and individual devising
in a communitarian setting
of flat civic equalities
mediated only by open marketplaces
and all
leafed in the over soul
of freedom humanity and the beatitudes

"the answer to corporations comrade is simple just don't rebuild em"

and yet sure as hell has horned and tailed dancers

they will be rebuilt
and one way or other
in some more or less unsublated
or sublated form
if not
as they say
the splenidid genteel hamlet like coven
of a liberated zone
will be crushed under
an outside utterly unsublated
revanchist corporate heel

Clio shows us many examples

if untutored hands rebuild
in unsublated ways
we'll be back where you are now karlo

happily sour and bleak
in a mental cell dark drippy

in flickering candle light
grumbles and scoffs bouncing off
the stoned walls like wedding rice


to believe in the possibility
of finite step by step stage by stage
social progress out of class captivity
a path of negations
deft enough is themselves
to found a new rectified
--not simply renewed--

total social organization

to aim for this
is not all together
a corrupting condition
of any innocent would be class agent's mind ...eh ??

to understand the motions of the present corporate global system
====at least in outline ===
makes you makes us ..
if not better movie critics
at least
more incisive social critics

perhaps even able to discover
better points of attack
more precise methods of mobilization
in the light of a clearer vision
of the shapes of things just round the bend

i'm sure you agree
give or take 100%



why not do a piece for us on this ???

i'm sure the reverend father
would willing post it up here

I'd suggest that you tire of jousting with yourself, Owen. But you obviously don't. Please, Quixote, invent more opponents like the dear imaginary corporal. It amuses.

But, not as much as the idea that fiddling with the exchange rates between fiat currencies will result in a better world...


Yeah, who cares about poverty? Much better to study the deeply meaningful art of being a failed lawyer who is very very serious about playing with toys in the woods.


sure, walter wriston covered part of central banks' loss of power around 20 years ago but didn't [couldn't] bring up the autotrade fx systems which have developed a 'better world' for goldman et al -

but right, planned exim solutions based on long term currency differentials strike me as more than problematic.


Oh look! FB tries a caricature! The Economist Army is getting slightly perturbed at commentary which criticizes their silly pastime-for-pay.

What a development!

Bethune, your greatest skill is boring pedantry, so if I seem pointless and bitter to you, I'm not the least bit abraded by it.

At to you Paine, I think you'd do better adding ethanol to your gasoline. Zero point zero zero zero six percent better for the environment.


More seriously to Bethune:

"Poverty"? Go on then, imagine currency trades affect "poverty" because you can define "poverty" however you like, but always focused on consumer purchase power at bottom, which says your perspective values life based on what toys you can buy.

Grand irony, that, when viewed in the tin frame of your attempt at belittling someone who is hardly littler than you in any dimension, figurative or physical.

Nice parchments you have, though. Really keen.


More seriously to Paine:

When I moved Grain A of Fungible Sand Substance from Pile 123 to Pile ZYZ, I really helped Pile ZYX in its struggle to have more grains than Pile 123.

Such moments are the stuff of life's improvement, I know.

How do I know?

I heard The Noam pronounce it, ergo it is true.


electric Al
convinced me long ago the pwog Dembot cut outs
serve serious party purposes
as here
in subborning the anti war movement

just how indy leftists inter act with these cut outs is constantly in need of additional updating and review

any broad untutored spontaneous forces
in the absence of persistent challenges
seem to end up sucked
into these profoundly anti militant
draining devices

Poverty will be "fixed" by the poor or not at all, Fred - not by managerial technocrats who play with imaginary numbers.


juan :

"planned exim solutions based on long term currency differentials strike me as more than problematic."

not sure i follow u here

the north south dynamic forex tilt
has produced well for the big MNCs over the years

it needs to be viewed in its full dynamics of course

and ppp versus forex prices compared over cycles and of course between emergers at different stages of emergence

one ought not forget either
the intra north forex volitility is not a feature of post '71
the MNCs look to with pride

the flux between the imperial dollar and the euro is surely too great for prefered
global "investors/traders and players "

the systemic restructuring necessary to speed up the gap closing aspects of the system
ie exactly what the MNCs don't want to do even if possible would need to be total earth wide obviously

so policy now must be national in platform

the point is to pull anti open trade forces together nationally
and point them at the forex system
and cry fraud

barriers national barriers
off sets collected at the border by the state of dividending to the people
of any and all corporate contrived
price differentials

trigger an inter-national trade war ??

well lets only hope such an outcome is possible

i think a key here is a concerted MNC policy
to keep state trade policy in the proper hands ..theirs'

like with monetary/credit policy

we demand a people's trade policy and currency policy

to conceptualize
thru existing econ con theorems

the trans nats by price discriminations arbitrage on tax and wages and regs
capture the non factor specific
dynamic gains from trade
the state could socialize
by using second best policy

using privately formulated
discriminatory pricing policies
that set off one bordered area against another
has proven marvelously destructive and profitable all at once

fabulous example of simple multiy pricing

in fact the lack of anything
like global drug price convergence
makes the model assumtion
of one big world market price
---even as an abstraction---
more then merely confusing
out and out misdirecting

for lots of advanced world marketed products
carried about passed border after border
by a few oligops
pricing is as partitioned as in a marketing exercise
on optimal profit maximal air fare
pricing systems


"Poverty will be "fixed" by the poor or not at all, Fred - not by managerial technocrats who play with imaginary numbers."

Wow. that's deep, yo



karl "the poor dear" as Al might say

has no notion of the magnitude of this does he ???

i guess 30 years of
national de industrialization
strikes him as a secondary nuance
of cruel ole capitalism

the real part
the part that isn't marginal
is what ??

well for group A types

homelessness starvation
racism sexism
social disease
wanton neglect of young minds

state terror torture and slaughter housing

for group B types however

its personal
all that on the job bossing
and meaningless routine
and uncreative effort we sub merit class jobsters take 40 per week in our
post schoolery pre nursing home living years

and speaking of nurse ratchet
all those damn airs
the corporate's petty agents
get to
put on

and that damn flouncing around
to meetings and
the captain crunch evaluations

that over look real talent
reward suck butts
and and and

or type C

the kultur kampfers
the angry men with parts in their heads
and greeniacs
this composite type seem to infest
SMBIVA like spiders on a banana boat

i suspect karl has a grander view he's from
group C
if i'm wrong it really matters not

he and corporal crow can fife off into the lost horizon knowing they know nothing
and on a moonless midnight
all cows are black


fixing poverty

the work of the poor themselves ??



the locus classicus here sez the working class will liberate itself
is this some melodramatic redaction ??

if so

its a perfect display of your usual
corporal crow parade ground of one
ill shaped duffle bag like
moral tableaux

passions govern values
but its best they don't devour them

for vaues from herr corporal
we get this sentimental
lumpen baritone
barf up

gurgling gargling chunky goo goo

no its not quixotic

though the countenance is woeful

its an old fool
orphan in the storm

dondi in senility


the north south dynamic forex tilt
has produced well for the big MNCs over the years 

I'm quite willing to believe this, but I wish somebody would explain it in terms that I can understand.


It's easy to deride "Karl" by using straw-men assigned as "Karl's" views.

I suggest more tinkering with statistical analysis and enhanced attempts at increasing the "reality" of the pretense that such tinkering actually matters.


i just promoted corporal crow to lance corporal crow



if you buy with an over valued currency you under pay and pocket the difference if dynamics worked as ricardo assumed
over valued currencies would quickly bid up the value of under valued currencies by converting into those currencies to buy the cheap stuff for export to the over valued currency markets

if the under valued currency is credit based and can be indefinately expanded to hold down the forex
then the undervalued currency area needs to have a faster rate of price level change then the over valued currency zone's price level

if the undervalued system can bottle up the extra currency keep it from buying on the product markets indefinately
the process continues to produce the wind fall arbitrage profit of starting with over valued
money exchanging it for undervalued currency buy products in the undervalued system
and selling em back in the over valued system

you have two currencies and two price levels

play around with em
and its pretty straight forward


so how do you get a south hemi state system to run undervalued ??

convince the policy types
the export markets will be open up north
if you do and the cutting edge techniques transfered to allow world class prroduction
with a tribute paid in arbitrage profits

for commodities producing southies
oil ore food fiber timber etc
you convince the domestic resource owning class
they will protect their ground rents domestic purchasing power in wagelings services
by the undervalued forex creating
over priced foreign commodity prices
local producers are protected or better subsidized
if they keep their currency undervalued that will allow them to
benefit along side the MNCs

i note the gulf oilers as a prime example

off set luxury north products are over priced
for these compradors

now we get into the cycle
brazil right now is in that cycles up draft and ouching
the asian crisis saw a relative appreciation in under valued currencies that burst and collapsed
this part of the cycle though nifty i suspect emerged as a nice surprise
after the post 71 nixon coup started these ingenious dynamics into motion



yes my friend you are made of straw

try holding a match close to your elbow


Well, it's a good thing that reality (as opposed to "reality") isn't defined by your whiffenpoof whimsy, Paine.

Though I'm sure your "reality" is an interesting place for those who like to imagine their futility is profundity.


"Wall Street's appetite for profits is insatiable. Don't expect the titans of finance to say "Enough" when it comes to their "earnings." The word isn't in their vocabulary."
sam webb

marx has a nice line apropos

"this passage demonstrates both the strengths and weaknesesesof the kind of criticism
which knows how to judge and condemn the present but not how to comprehend it "

in this case one needs to seperate institutional compulsions and its motivation of its agents
and the essentially epiphenomenal passions
of the agents

one thinks of ole broken lance crowguy
imagine i've cuffed him to the nerf stalinoid in chief

i'm a teh-wibble teh-wibble critter i am i am i am



karl can you say
cipher ??
one nice thing about a fist fight the loser gets the message

unfortunately i'm both a piss poor brawler
unlike my laura
and a legendary falstaffian

ah yes shrewsbury fields forever


"planned exim solutions based on long term currency differentials strike me as more than problematic."

not sure that you follow [me] there'

but am only saying that fx differentials are trader - not cb - determined, that this is an at least relatively new phase w/increasingly developed tech foundations and that [a] govt's attempt to overcome trade deficit[s] through currency 'revaluation' is 'more than problematic'

not that there is no control but that which exists has shifted to different hands

last instance i'm not thinking of 'rebalancing' as a function of currency relations and accounting but to do with solving the unequal exchange of labor values.


At least I don't pretend my chosen field of bullshittery (in the case of OP and FB, "economics") is so rarefied and air-thin that the reason it's criticized is the stupidity of the critic.

That emperor sure does have some gilded finery on, doesn't he, Mastuh Eeekahn?

"But you are mocking something vital to the elimination or at least reduction of poverty!" screams FB...


..."you are immature and self-directed because you fail to see this is highly momentous conceptual material, discernible only to the finest minds of a generation or an entire species history," grumbles OP.

Yeah, moving grains of sand from one pile to the other is surely the way to fix human social problems.

Assuming, that is,

that the problem needing repair is the lack of employability for statistics-massaging "academics" and various related "experts."


why not do a piece for us on this ???

Methinks David Peterson's piece (2nd link) is a good starting point for our own tête-à-tête:

...in the United States, the anti-war/peace movement is much narrower and more shallow than many believe..."While Obama's election was heralded as a victory for the antiwar movement," Heaney and Rojas conclude, "Obama's election, in fact, thwarted the ability of the movement to achieve critical mass".

Much the same damning lesson could be extended to the effect that Obama's election has had on domestic issues of grave import to the vast majority of U.S. citizens, such as health care (forget single-payer; advance the insurance sector), education (forget public education; advance the elite-serving private system), the environment (forget alternative energy sources or challenging climate-changing practices; advance Big Oil and Nukes), and the financial, insurance, and real estate sectors (forget re-regulation and prosecution; bail out the banks), and the protection of New Deal-and Great Society-type policy innovations.


interesting fact

the dollar value of the US manufacturing sector
is about two trillion
and so is the chinese manufacturing sector

we have 11 million employed
in manufacture

china has 100 million

yankee value added per head
is 9 times higher

imagine the field day MNCs still face
" helping in the technical updating "
china's production system

thse who think fb and i are
"focused on consumer purchasing power "
our " perspective values life based on what toys you can buy."
oughta consider the 5 billion folks on this planet that might not be in that reference group
of toy chasers

vast increases in hourly productivity and
efficiency in resource use
are crucial parts of earth wide liberation


"fx differentials are trader - not cb - determined"
only if the cb's as a group so choose

i think in line with the prime directive
"let us wally worlders decide"
the decision by cb's to float or not to float amounts to cb's deciding whether to abdicate to wally world or not

"unequal exchange of labor values"
notice the above comment on relative va per head usa /prc

btw i'm very careful on labor value issues tends to look like you got marxist fangs
in your mouth
to regular viewers

juan i really appreciate your responses as i'm sure comrade fb does as well

i wish we attracted 100 of you to each econ con post


"my chosen field of bullshittery "
which in your case is what ???

peak individualism ??

what ??

tell us your tale
straw man

btw if you are a youth
it would explain a lot
i was shocked to find an adult crying
"you don't even know me "

of course we don't until u reveal yourself

there's no evidence i know for expecting us to
refuse to listen or modify our take

once you remove the hood

here's me hoodless btw


ooh yes i'm with wig here

au natural
i'm fabulous and glabrous

the cigar was my first of the week
i promise



really this is a great subject

i wish big Al was here he is the mine shaft vulture on this one
so far as organized milling of activistism into a thin party dust easily blown away


" fiddling with the exchange rates between fiat currencies will result in a better world.. ?? "

my my
private first class crow

you toss that about like
a past master
of global monetary dynamics

why am i dubious

why do i wonder
if you really have that notion
fully domesticated
up there
just of the nordic trails
that run past
chez crowtrap

stick to ....what is it ???

window insurance ???

Phil Anders:

plenty of words hard sold on two people you give the pretense of disdaining


wounded and cut by two line incisiveness you bleed out for pages your frail dignity at a loss in the face of casual accurate dismissal



An old man acting like a neo-pubescent lad of 12 is pitiful. But it's what I expect from you when cornered on an issue where your and FB's absurd navel-gazing, own-back-patting is front and center.

No, economics couldn't be a farce: you and FB do it, believe in it...

...one might even see a religious quality in your self-deception (which is obvious given your noggin horsepower) and your exaltation of doctrine over what is.

That you can spend a lifetime poring over micro and macro and models and statistics and pretend to be divining great meaning in it looks little different to me from the cast of characters obsessing over the Rosicrucians in Foucault's Pendulum.

Why so brittle?

Chinks in the armor?


my thread access has been sporatic


"pretense of disdaining"
i distain only evasive nit wits

these two self exposing wounded knees
i adore

and as to just two
don't they represent many similar types eh ??

" frail dignity" ??
don't i wish
at this point if i had
any dignity worth a shit
to be frail about
why i'd toast you ...

"a loss in the face of casual accurate dismissal"

loss ??
of what ??

dismissal ??
and just how is that to amount to anything here ?? where am i to be dismissed from
my own toilet seat ??


"An old man acting like a neo-pubescent lad of 12 is pitiful"
that is weak eh ?
and yet
i'll confess its hard to resist
shooting a puerile kick at a ovderly exposed
glass ass hole

"a religious quality in your self-deception "

i'll have to think that one over
this i can offer
self deception doesn't strike me
as the worse fate i can imagine
seems the few moments of self realization
contain all the slings and arrows

"cornered on an issue"
cornered ??? me ??
come now

why one would be as likely
to catch a fart in a butterfly net

"exaltation of doctrine over what is.."

that seems to me
an unintended project co extensive
with self concious life itself ...

"the cast of characters obsessing over the Rosicrucians in Foucault's Pendulum"
that reference is lost on me
its author
what's his name
umberto "lou " costello ??

strikes me as a cheap euro zone fraud

"Why so brittle?"
that might be a good question
if i could see myself reacting differently
if say i wasn't brittle
but i can't

its all just me
not a pose

bare this in mind
i enjoy this sort of thing
recall the pig and mud caution

"Chinks in the armor"

oh yes nothing but chinks

and ...

How thoroughly depressing. Karl apparently doesn't think there's a difference between any kind of economics and astrology. Crow continues to crank out teenaged slogans and fancy that rebellion. Bureaucrats can't reduce poverty? OMG. Two words: Hugo Chavez.

My thesis is that this whole poseur infection at SMBIVA is of a piece with the so-called "peace movement." The left is far, far smaller than even we hardened vets surmise.

The only good news is that the culture somehow absorbs our point, albeit not nearly fast enough.


Nice caboosing there, Dawson. Straw man built: "apparently thinks" ________; strawman condescendingly attacked.

You should try reading my comments for once, Dawson. Just once. I assure you that you'll finally see how wrong you are in every one of your juvenile "putdowns" of the ghosts you claim to be me and/or my thoughts.

All it takes is a read without The Dawson Bias. Are you capable? Can you actually read without assumption, projection, and outright disregard of plainly written American English words?



Sorry but I've said my piece and have no more interest in hearing you listen to yourself talk. The above advice to Dawson applies to you as well. And of course, to Bethune.

Hugo Chavez is a strong man. Not a bureaucrat. Christ. And he hasn't cured, fixed or eliminated poverty in Venezuela, whatever other good he's helped to accomplish. There are deep and abiding class divisions in that country, which Chavez cannot address without losing his government, either by internal stasis, or because of outside intervention.

Chavez as an example of bureaucrat? Unreal gods, that's dumb.

Typical Crow. Unsuccessful hair-splitting in service of a solipsistic platitude. The question at hand is whether government and policies can ever reduce poverty. They absolutely can and do, as they are doing in Venezuela.

As to you Karl, go back and read your own shite here. "Silly pastime-for-pay" is economics.

Them's just sour grapes.

Interesting how the US left has at least as many people with NPD as any other political flavor. The society must be pretty damned ill.

Heh heh.

Methinks you don't know how to properly employ the terms "solipsistic" and "platitude." But keep up the good work, Mikey. You'll eventually beat back the infection.


Look! Dawson Bias got The Last Word against me!

How satisfying it must be for him. He didn't even have to read my posts, he just cherry-picked a phrase and decided that he, rather than I, was the author of its meaning.

Peter Ward:
The left is far, far smaller than even we hardened vets surmise.
And the sooner its demise the better...based on what I've experienced of it here and in the UK.

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