From a comment I made over at NC, but here on my own blog I can provide links, which improve the explanation somewhat:

Personally, I think the liquidity trap is a real thing and that we’ve been in one since the subprime problems in ’07. And you could see it coming before that, too.

Keynes and MMT are the ones who fundamentally misunderstand the government’s relation to money. The proper role of government wrt to money is to define a monetary unit of account and adminstrate it through bureaus of weights and measures.

The liquidity trap occurs when all that has been disregarded, the unit of account becomes fiat, and the bulk of a nation’s money is created through lending to individuals and businesses. Without a reference point at the bottom of it all, new money issuance is deemed satisfactory so long as loans are being repaid on schedule. In fact this is the only criterion for monetary balance in such a monetary system. When that changes, and loans are no longer being repaid on schedule, lending constricts, and it cannot be otherwise. It doesn’t matter how much liquidity you supply to lenders, they can’t make loans because the borrowing capacity of the populace has dried up. They are debt saturated.

The only answer for this that Keynsians have come up with is for the government to act as borrower of last resort. But in that case government deficits explode and you wind up with Greece and the EU.  With the UK and US not far behind.

In the system that we have, the fact that new money is loaned into existence is not discretionary. There is no other option. Thus if lending isn’t possible, no new money is possible either, and the money supply will stagnate or contract, which of course makes the repayment of existing outstanding loans more and more difficult.

This is why the “helicopter drop” remarks are intended to be funny. New money cannot be distributed that way. All newly created money must be owed back into the system; that is, someone must borrow it into existence and owe it back. It is the only way in a fiat system to regulate money issuance.

The subprime “crisis” signaled that the lending saturation point had been reached in the US.  Since the country had largely run out of qualified borrowers, loans were made to UNqualified borrowers. There is no one to blame for this except the people who instituted the monetary system in the first place, and they’re all long since dead. The system will always wind up in this spot after a few generations.

The WaPo article discusses the common MMT inspired idea that taxes are the method for managing the government deficits that occur as the government becomes the borrower of last resort in a liquidity trap, which is just what is happening now. The idea being that the government takes back more and more of the new money that has been issued to ameliorate the deficit issue.

This is a frighteningly stupid assertion. It seems to contemplate a monetary circle jerk where new money is created through a loan to the government, paid out to whomever as salary or pursuant to a contract, and then the recipient is heavily taxed so as to get most of the money back. At that point, the monetary system is not reflecting or facilitating or serving the real economy, rather it’s the reverse: the real economy is serving the monetary system. To say that this is pointless and perverse is an understatement.

No theory of money and credit is worth a largely hungry and homeless populace, yet this is what is happening all over the globe: the theory is more precious than reality to those who get to make the decisions. We have government by so-called “technocrats” who are devoted to an idea rather than their subjects. And the idea itself is ridiculous.

The answer to all this is redeemable money that can exist and be newly issued apart from being loaned. But to get there from where we are will require a jubilee, because all the debt that has piled up cannot be paid back.

And it will take a constitutional amendment.

But this is a good thing. People need to recover their sense of self-government.

You would be wrong.

There are arguments that traders in these formerly exotic but by now well known (not to say infamous) securities are really social benefactors, who contribute to “economic efficiency”.  Doubtful.  But even if it were true:

On Wall Street, Mr. Lippmann became known as “Bubble Boy,” and one of his traders wore a joking T-shirt that read, “I Shorted Your House.”

Buy low, sell high.  Foreclose.  Evict.  Then buy low again:

Despite the limited supply, prices remain cheap, in part because the assets are difficult to value. Hedge funds and big investors use computer systems to analyze the underlying loans and estimate, among other things, how many borrowers will default and how much money can be recovered in a foreclosure.

Difficult to value?  Not for the people who call the financial “asset” their home.

Fifty years ago the ultimate insanity of abdicating moral decision making to a “gigantic complex of computers” was the object of satire in a different context:

Does there come a point, ever, where the simple to understand human consequences of these demonstrably destructive and reckless financial activities registers?  Apparently not.  At least not until consequences far worse are visited upon the players.  But of course by then it is too late for everyone.

These people need to be saved from themselves.

From their webpage, the satirical self-description:

What is DoF?

“Without knowing what they ought to fear, US citizens might otherwise fail to support profitable national security initiatives.”

- Malcolm P. Stag III, Secretary of Fear

DoF was established by an Executive Order signed by the Vice President in January 2004. The mandate of the agency is to promote fear in the interest of national security.

This blog is operated as a public service of DoF. Its goal is to promote the agency’s agenda and increase public awareness of DoF and its mission.

Our moto “Timendi causa est nescire” (ignorance causes fear), was bestowed by the Vice President.

He and I never got along, but I always thought it was mainly due to miscommunication.  I’ve commented over on his blog but he never commented over here.  Don’t know why that is.  I exchanged a few emails with him.  We never spoke over the phone and never met.  I mostly don’t have a phone is probably the reason.

I feel like I know him somewhat, in other words, but not thoroughly.  You get to know people in a peculiar way through their writing.  In some ways you might know them better than people who are much more intimate with them on the surface, but don’t read what they write.  But obviously there would be big gaps, too.

When I started this blog I called myself “Atticus Finch”.  It was a tongue in cheek thing.  I did it because I had read some post of Scott’s, at some point, where he used it as an example of trite and pretentious monikers that some lawyer blogger might take.  I kind of agreed with that and thought it would be funny.  But he never got the joke and then the whole amusement thing was lost in a cascade of noise about it.

I guess it wasn’t that funny to begin with, either.

Still, some trial lawyers are in pounce mode reflexively, without much circumspection.  Any circumspection, sometimes.  It’s a flaw.  I may have a flaw going the other way:  not pouncing soon enough, thinking too much before I act.  That would figure.  It was my biggest problem as a naval officer, long ago.  Or at least many of my superiors felt that way.  I could tell you stories.

I think Scott made a good decision hanging it up.  A five year, almost 5,000 post ongoing rant, for the most part, about the criminal justice system.  Within the parameters he set for himself, I think he hit it out of the park in many ways.  He also exhausted it.  There is little left to be said or done, within those parameters.

I look on that as an accomplishment, a significant one.  Obviously, I also think that the set parameters Scott observed have locked CDL’s, their clients, and practically the entire 99% into a losing position, along what might be called an unsustainable trend line.  It’s past time to address that.  Scott seemed unwilling to do it, at least on SJ, so perhaps in a different venue, then.

Or perhaps, wisely, he’s just taking a little time to reflect before pouncing again somewhere else, in some way I have no hope of predicting or categorizing.  I don’t know Scott Greenfield well, as I said, but it seems to me that would be just like him.

Even if it’s exaggerated, you get the idea.

(h/t Propaganda Times)

Update:  This should go without saying, but it probably doesn’t.

Steve is a very good lawyer and a very good guy.  I’ll probably have more to say about this later.

Apparently Citibank wasn’t taking HUD lending restrictions seriously, like everyone else.  That’ll teach ‘em:  $158 billion million or, roughly, 1.5 years or so of Lloyd Blankfein’s income from Goldman Sachs.

And if lenders actually do start taking HUD restrictions seriously, they won’t be making any loans.  And if that’s the case there won’t be many buyers for homes, and more current owners will wind up “under water” and there will be more foreclosures and evictions.

Sounds like a deflationary spiral to me.

How despicable do you have to be before they won’t let you put on a uniform and a badge and claim the mantle of “law enforcement”?  Between all the schooling, the Navy, law school, years of practicing law and a wide array of family and friends I’ve met a lot of people, including a lot of criminals.

But I’ve never met anyone, as far as I know, as low and as morally revolting as Dana Carson.

It wouldn’t capture it to say he’s a rapist.  That title certainly belongs to Eric Harder, Carson’s informant and protege, but it’s not low enough for Carson.  There has to be some category lower than that, but even for men in prison at places like Auburn Correctional Facility, I have it on good authority that “rapist” is about the lowest appellation that can be applied to human beings.

Imagine, if you can, what Dana Carson has done.  He fabricated evidence and committed perjury through others, not having the courage to take the oath himself.  As if that would be somehow different.  The point of all this perjury and fabrication was to implicate and ultimately imprison Sephora Davis as “the driver” for an armed robbery as Eric Harder’s accomplice; whereas the truth was that Harder had put a knife to Sephora’s throat and raped her.  That was the only crime truly implicating Sephora Davis – and she was the victim of it, not the perpetrator.

Carson either knew this as he was engaged in all the perjury and fabrication, which makes him the lowly after-the-fact assistant to a rapist; or he didn’t know, which makes him stupider than Harder.  Not just a rapist, then, but in either case a rapist’s dupe.

In any case, Carson certainly knew what Harder had done well before Sephora Davis was ever sent to prison as a result of Carson’s fabrication and perjury.  All he had to do was come forward and confess what he did, to spare Sephora and her family, and me and my family, the suffering and destruction that would unjustly and inevitably result if he did not.

But of course he didn’t.  In fact he did the opposite:  he helped conceal and coverup for Harder.  And himself.  Protecting the rapist from his victim:  a sort of inverse chivalry.  Every single day for eight years he could have acted to begin atoning for what he did.  Every single day he has done otherwise.

You can get away with lying, even the most odious kind of lying imaginable, if you’re a cop or a District Attorney.  Judges will let you.  We’ll leave judges’ guilt, their place on ignominy’s hierarchy, aside for now; but I’ve always suspected, though I cannot prove, that Geneseo Police Chief Eric Osganian knows all about this and has from the beginning.  If so, does he lead the Geneseo Police Department, or make a mockery of it?

There are countless people who are in prison who have never done anything quite so fulsomely criminal and morally degenerate as Dana Carson did here, and yet Carson continues to wear a badge and bring faux moral opprobrium to others as “law breakers”, more than eight years later.

I don’t know how he does it.  The depravity of it is simply unfathomable to me.

Update:  “Clearly if the officer had made stuff up he would have been in hot water,” Sgt. Sean Whitcomb of the Seattle Police Department told ABCNews.com.

Apparently Sgt. Whitcomb is dissembling, or he’s not familiar with Geneseo or Dana Carson.  Or Pottawattamie County v. McGhee, where the nation’s prosecutors maintained that officers can, indeed, “make stuff up” and it doesn’t violate anyone’s rights, drawing no rebuke from the US Supreme Court.

Update:  “I like having it [the ball] at the end of the game.”  So do Knicks fans.  There were coaches, I can’t remember which ones, that used to say that wanting the ball in pressure moments at the end of a game was the sign of a great player.  This may just be the rather spectacular beginning of a storied NBA career for the very likeable Mr. Lin.