In early 1943, Nazi officials requested that Bulgaria deport its Jewish population to German occupied Poland. The request caused a public outcry, and a campaign whose most prominent leaders were Parliament Vice-Chairman Dimitar Peshev and the head of the Bulgarian Orthodox Church, Archbishop Stefan, was organized…. Boris refused to permit the extradition of Bulgaria's 50,000 Jews…. The Bulgarian government utilized Swiss diplomatic channels to inquire whether possible deportations of the Jews can happen to British-controlled Palestine by ships rather than to concentration camps in Poland by trains…. However, this attempt was blocked by the British Foreign Minister, Anthony Eden. Eventually, Boris did succumb to the German demand for the extradition of 11,343 Jews from those territories re-occupied by Bulgaria, but the extradition of the Jews from pre-war Bulgaria was stopped.
These two decisions have led to a position today where a large number of people regard Boris as a hero for saving Bulgaria's Jews, and a large number criticize him for condemning those from the occupied new territories…. Bulgaria paid for the transport to Treblinka….
Most irritating for Hitler, however, was the Tsar's refusal to declare war on the Soviet Union or send Bulgarian troops to the Eastern front. On 9 August 1943, Hitler summoned Boris to a stormy meeting at Rastenburg, East Prussia, where Tsar Boris arrived by plane from Vrazhdebna on Saturday, 14 August. While Bulgaria had declared a 'symbolic' war on the distant United Kingdom and the United States, at that meeting Boris once again refused to get involved in the war against the Soviet Union, giving two major reasons for his unwillingness to send troops to Russia — first, that many ordinary Bulgarians had strong Russophile sentiments; and second, that the political and military position of Turkey remained unclear. The 'symbolic' war against the Western Allies, however, turned into a disaster for the citizens of Sofia as the city was heavily bombarded by the US and the British Royal Air Force in 1943 and 1944….
Shortly after returning to Sofia from a meeting with Hitler, Boris died of apparent heart failure on 28 August 1943. Conspiracy theories instantly sprang up, many choosing to believe that he was poisoned by Hitler in an attempt to put a more obedient government in place. The evening before the illness occurred, Boris had an official dinner in the Italian embassy. The question has never been settled and many people remain of the belief that Boris was murdered, in spite of no evidence being available. According to the diary of the German attache in Sofia at the time, Colonel von Schoenebeck, the two German doctors who attended the king – Sajitz and Hans Eppinger – both believed that the king had died from the same poison that Dr. Eppinger had allegedly found two years earlier in the postmortem examination of the Greek prime minister Ioannis Metaxas, a slow poison which takes weeks to do its work, and which causes the appearance of blotches on the skin of its victim before death…. Boris was succeeded by his six-year-old son Simeon II under a Regency Council headed by Boris's brother, Prince Kyril of Bulgaria.
One of the things you always heard, back when we were actually talking about stimulus rather than fighting a rearguard action against destructive austerity, was the claim that stimulus spending would inevitably end up becoming a permanent fixture of the economy. This was always said with an air of worldly wisdom--of course that’s how these things work!--even though history said very much the opposite. But anyway, the invaluable FRED now has a series on exactly that subject…. So next time someone goes on about how we had this huge stimulus that failed, you can tell him that the “huge” stimulus--in response to the worst financial crisis in three generations--peaked at a whopping 1.6 percent of GDP, and was effectively gone in a bit over two years.
Cf. to the CE's start-of-2009 judgment that the economy needed a 4% of GDP stimulus for three years…
Whether one agrees or not with the current policy of sending US ships into harms way, one thing should never be questioned; is the respect for the men and women that stand aboard those ships. Let alone their families which they leave behind, sometimes in a communications “black out” condition. Currently there are 4 destroyers [...]
Good Saturday morning. Here are my favorite long form readings to start off your 3 day weekend:
• Trigger: The life of a guitar. This was my favorite read this week (Texas Monthly)
• The Man Who Invented Modern Probability: Mathematics & Chance encounters in the life of Andrei Kolmogorov (Nautilus)
• Microsoft’s Lost Decade (Vanity Fair)
• Familiar faces: ”Super recognizers” never forget a visage, an unusual ability that can be put to good use (ScienceNews)
• The God of Comedy Will See You Now: Lorne Michaels (NYT)
• In search of the real thing: Recognizing talent is far easier when it’s accompanied by its occasional companion, success (FT Magazine)
• The Wonderbrewer of Nowheresville: On a 230-year-old family farm in a remote corner of Vermont, an enigmatic young brewer quietly stirs up some of the most acclaimed beers in the world. (Narratively)
• To Protect Its Empire, ESPN Stays on Offense (NYT)
• The Rise and Fall of a Spammer (Medium)
• What’s Wrong With Wine on the Web (WSJ)
In the summer of 2002, after I had written an article in Esquire that the White House didn’t like about Bush’s former communications director, Karen Hughes, I had a meeting with a senior adviser to Bush. He expressed the White House’s displeasure, and then he told me something that at the time I didn’t fully comprehend — but which I now believe gets to the very heart of the Bush presidency.
The aide said that guys like me were ”in what we call the reality-based community,” which he defined as people who ”believe that solutions emerge from your judicious study of discernible reality.” I nodded and murmured something about enlightenment principles and empiricism. He cut me off. ”That’s not the way the world really works anymore,” he continued. [now?] And while you’re studying that reality — judiciously, as you will — we’ll act again, creating other new realities, which you can study too, and that’s how things will sort out. We’re history’s actors . . . and you, all of you, will be left to just study what we do.”
Joseph Goebbels would be proud. No, Joseph Goebbels would be awed. And, back in 2004, what was, pre-Obama, regarded as the left blogosphere, bloggers rose en masse to claim the mantle “proud member of the reality-based community.” We know how that worked out. But a little over a decade on, we can ask the question: Was Bush’s “senior advisor” right? Do we, as imperialists, create our own reality? I’d argue that the current Syrian fiasco shows that the answer is No.
Let’s assume that the reality we, as imperialists, were attempting to create was whatever the outcome of The Rummy’s Nutty Plan to invade seven Middle East countries in five years was supposed to be; rainbows and ponies, lots of lovely moolah for cronies, heaps of dead far away brown people, a death grip on that oil, also too Israel. Or some combination thereof! General Wesley Clark on “how things will sort out” (full interview):
Because I had been through the Pentagon right after 9/11. About ten days after 9/11, I went through the Pentagon and I saw Secretary Rumsfeld ["Rummy"] and Deputy Secretary Wolfowitz. I went downstairs just to say hello to some of the people on the Joint Staff who used to work for me, and one of the generals called me in. He said, “Sir, you’ve got to come in and talk to me a second.” I said, “Well, you’re too busy.” He said, “No, no.” He says, “We’ve made the decision we’re going to war with Iraq.” This was on or about the 20th of September. I said, “We’re going to war with Iraq? Why?” He said, “I don’t know.” He said, “I guess they don’t know what else to do.” So I said, “Well, did they find some information connecting Saddam to al-Qaeda?” He said, “No, no.” He says, “There’s nothing new that way. They just made the decision to go to war with Iraq.” He said, “I guess it’s like we don’t know what to do about terrorists, but we’ve got a good military and we can take down governments.” And he said, “I guess if the only tool you have is a hammer, every problem has to look like a nail.”
So I came back to see him a few weeks later, and by that time we were bombing in Afghanistan. I said, “Are we still going to war with Iraq?” And he said, “Oh, it’s worse than that.” He reached over on his desk. He picked up a piece of paper. And he said, “I just got this down from upstairs” — meaning the Secretary of Defense’s office — “today.” And he said, “This is a memo that describes how we’re going to take out seven countries in five years, starting with Iraq, and then Syria, Lebanon, Libya, Somalia, Sudan and, finishing off, Iran.” I said, “Is it classified?” He said, “Yes, sir.” I said, “Well, don’t show it to me.” And I saw him a year or so ago, and I said, “You remember that?” He said, “Sir, I didn’t show you that memo! I didn’t show it to you!”
Now, it’s clear if “Iraq, and then Syria, Lebanon, Libya, Somalia, Sudan and, finishing off, Iran” was The Plan, the plan was implemented… Well, about as well as ObamaCare. Requirements got dropped, and deadlines were slipped. Afghanistan wasn’t on the list at all, and Syria didn’t come after Iraq, maybe because Iraq turned out not to be a cake walk, and we blew past Somalia (or not) and the Sudan (or not). But it’s certainly suggestive that Bush crossed Iraq off the list, and Obama took out Libya, and is going after Syria. And everybody knows Iran’s in the crosshairs. So I think we can accept that there’s a huge honkin’ binder with a version of Rummy’s Nutty Plan in it, lovingly kept up to date by the national security nomenklatura , and the national security and political classes are following it. No, we don’t know that, but then, we wouldn’t, would we? So how’s that working out for the imperialists, I mean, us?
Badly. Consider the following declension: Iraq, Libya, Syria. Let’s lay out some comparisons in the form of a table:
US, UK, Australia (26 countries)
France, UK, US (19)
200,000 ground troops
Aircraft, naval blockade
“Stand up” a “young democracy”
In each case, as we move forward in time, power declines. Fewer allies. A smaller force. Fewer deaths and maimings. Less ambitious objectives. Hubris, meet nemesis; we are, one might almost think, looking at a bad case of imperial overstretch and subsequent decline. It seems that, rather defining reality, reality is defining us.*
However, there’s a second reason why we don’t seem to be nearly as effective in defining our reality as we thought we were: We’ve got competition. Consider this curious statement at the end of a New Yorker article on Syria:
Above: In a photo authenticated based on its contents and other A.P. reporting, Syrians inspect buildings damaged by heavy shelling from Syrian government forces in Aleppo, on Monday, August 26th. Aleppo Media Center AMC/AP
Why would the famously fact-checked New Yorker even have to explain the provenance of one of its photos? Well, because there’s a boatload of mis- and disinformation floating about in the form of pictures and YouTubes, that’s why. The administration unwittingly confirms (with emptywheel providing context):
[C]onsider how the number and location of sites plays in the [administration's] case [for war] itself.
Local social media reports of a chemical attack in the Damascus suburbs began at 2:30 a.m. local time on August 21. Within the next four hours there were thousands of social media reports on this attack from at least 12 different locations in the Damascus area. Multiple accounts described chemical-filled rockets impacting opposition-controlled areas.
We have identified one hundred videos attributed to the attack…
We assess the Syrian opposition does not have the capability to fabricate all of the videos, physical symptoms verified by medical personnel and NGOs, and other information associated with this chemical attack.
That is, the USG points to the sheer number of social media reports as proof that the attacks really happened, because the Syrian opposition couldn’t have faked them all.
And yet the USG’s own case suggests that those locations may be inaccurate, even though the locations are portrayed in the videos.
In fact, the administration”s assessment is quite wrong. The Syrian “opposition” has this exact capability, in spades. Maybe because there aren’t any English majors on Our President’s national security team, nobody read this fascinating and instructive article in the London Review of Books. The author was embedded with several units of the Syrian opposition, and this is what he saw:
How to Start a Battalion (in Five Easy Lessons)
‘Where will you go?’
‘A very good man, a seeker of good deeds – he is from our town but he lives in the Gulf – told me he would fund my new battalion. He says he will pay for our ammunition and we get to keep all the spoils of the fighting. We just have to supply him with videos.’
‘But why would he do that? What’s he getting in return?’
‘He wants to appease God, and he wants us to give him videos of all our operations. That’s all – just YouTube videos.’
‘So he can get more money.’
‘Well, that’s up to him.’
So how do you form a battalion in Syria? First, you need men, most likely young men from the countryside, where the surplus of the underemployed over the centuries has provided for any number of different armies and insurgencies. Weapons will come from smugglers, preferably via Iraq or Turkey. You will also need someone who knows how to operate a laptop and/or a camcorder and can post videos on the internet – essential in applying for funds from the diaspora or Gulf financiers.
So, in fact, YouTubes are essential to the Syrian “opposition” and used for fund-raising. And if you can make a video, you can fake a video. One can only speculate as to the quantity of funds that will be raised on a video that makes it to whitehouse.gov, even when aggregated with a hundred others. Eh?**
* * *
Summing up: Two reasons why the wheels of our imperial reality-creating machine have gone missing:
1. Reality creates us just as much as we create it, as Aeschylus and Euripides would have understood at once, and
2. Nimbler competitors are stealing our wheels for their own machines.
Too bad, so sad, but although the transition might be painful, we as a country will certainly be better off when we aren’t blowing faraway brown people to pink mist and waiting for blowback, and when the organs of state security aren’t a swollen sac of pus that’s waiting to burst. If we don’t end our imperial experiment, it will be ended for us. Best to get on with it.
* * *
NOTE * One might speculate that the reason Obama will put no “boots on the ground” in Syria also explains his fondness for drones: The Bush and Obama administrations between them broke the Army with poorly conceived missions, PowerPoint generalship, corrupt contractors, and constant re-ups, such that it is not necessarily a reliable fighting force. Certainly Army suicides are troubling, and inexplicable (or maybe not). And then there’s the public relations risk of more collateral murders.
NOTE ** As far as the twitter, I’m sure that all sides in the Syrian conflict are just as capable of Hasbara as the Israelis are.
NOTE I assume the Assad regime is issuing its own fakes. I just don’t have any evidence for that. Readers?
And on this side of the pond, Obama Derangement Syndrome, once again, is paying off in a satisfying way. As much as Republicans love wars, they despise Democrats generally, and Obama in particular, enough that many are likely to join Barbara Lee, Alan Grayson, and 50-odd other mostly liberal Democrats calling for at least a constitutionally-required consultation with Congress.
[N]ot for the first time, the teabaggers are lining up to save the rest of us from another ruinous bout of Presidential bipartisanship. Just as they scuttled a Grand Bargain on Social Security and Medicare, they’re hauling out the peace bong now, and for that we should all be grateful to Aqua Buddha and the gang.
“[T]hey’re hauling out the peace bong now…” BWA-HA-HA-HA-HA-HA-HA!!! But it’s true, it’s true. Meanwhile, the post-Red Wedding Catelyn Stark-like Nancy Pelosi calls for war, just as she called for the bailouts. It’s a funny old world.
By Dan Kervick, who does research in decision theory and analytic metaphysics. Originally posted at New Economic Perspectives.
Some people believe in endogenous money. They believe we live in a monetary system is which money is generated and extinguished as part of the ordinary flow of everyday economic activity. The economy tends to generate the money it needs in order to satisfy the exchange desires and saving preferences of participants in the economy, and to extinguish the money it doesn’t need.
The endogenous money picture is in some considerable tension with the idea that the monetary system is controlled by the government. The alternative exogenous money picture holds that the issuance and destruction of money is a task reserved for government alone, and that the total amount of money present in the economy is therefore a government policy choice.
We can achieve a happy medium between the endogenous money and exogenous money pictures by viewing things this way: Due to a combination of deliberate policy choices and historical contingencies, societies have chosen to institute complex monetary and credit systems in which the generation of the most commonly used means of exchange is primarily a market-driven phenomenon, but one that is heavily regulated and supplemented by government agencies that also issue their own forms of money. We can also note that those latter forms of narrow government money usually play a foundational role in constraining and underpinning the broader forms of money, since they are needed to settle the obligations that are incurred by issuing those broader forms of money.
So there is truth in each picture, and it is a mistake to adopt either extreme. One of those extremes is a view that I have sometimes called “hyper-endogeneity.” Hyper-endogenists systematically exaggerate the role of commercial bank money in our existing monetary system, treating the banks as possessing certain powers that are actually reserved to the federal government alone. Hyper-endogenists view banks as, in effect, operating their own fiat printing presses. They claim commercial banks manufacture money cost-free “from thin air” and therefore reap seigniorage profits from the exercise. I tried to point out the errors of hyper-endogeneity in my essay “Do Banks Create Money from Thin Air.” But since it was a long essay, let me recapitulate the main points as briefly as possible here.
Seigniorage is the profit earned by a money issuer from the spread between the real cost of creating the money and the real value of any assets that can be fetched for that money in markets. For example, suppose for whatever reason, you were privileged to own a perfectly legal and licensed government printing press (maybe it was awarded to you in a lottery.) The printing press makes $500 bills, and you are permitted to print 100 of these bills each year. Suppose the cost of each additional bill you print (the ink and paper you use) is 25 cents, and that this is a cost you have to bear yourself. Let’s say you print up a $500 bill, and use it to buy a fancy new tablet device that costs exactly $500. You have just reaped $499.75 in seigniorage profits.
But now let’s think of a different kind of printing. You don’t have a printing press for $500 bills, but only a printing press that creates IOU’s, which again cost you 25 cents apiece to print out. You print up a $500 IOU, sign it, and give it to a stranger in front of a witness in exchange for a $2 package of chewing gum. Have you made $1.75 in seigniorage profits? No of course not. You have lost $478.25, since in addition to the 25 cent cost of printing the IOU, you now have a debt of $500. Of the total cost of $500.25, only $2 was offset by the pack of gum. The stranger will at some point press the claim for the $500 you owe.
A typical bank loan transaction is like the second case, not the first. Commercial banks don’t earn seigniorage. Rather, they make money by charging interest on lending, in more or less the same way any of us could make money by charging interest in lending. Banks just do it on a much larger scale. Say you want to borrow $10,000 at 5% interest, with repayment due after one year. The bank creates a deposit account for you and credits it with $10,000. In exchange, you give the bank a promissory note for $10,000 plus the $500 in interest. Bank deposits are debts of the bank payable on demand, and the bank has thus incurred a $10,000 cost in the form of a debt. If things go well, they will have made $500, not $10,500.
Those bank debts represented by deposit balances are negotiable, and widely accepted at face value, and so drafts on those deposits function as a form of money in our economy. But the banks routinely have to make good on the debts they have incurred by issuing those deposits. They make good on the debts by making payments with a form of money that they, themselves do not issue and so must obtain through market transactions. The payment assets they use are issued by the government. They consist in both physical currency and deposit balances in the banks’ own deposit accounts at the central bank.
Hyper-endogenists sometimes go even further and suggest that governments have enslaved themselves to the banks, because the government somehow needs to obtain bank deposit money to carry out its operations. But this is erroneous. Governments choose to accept drafts on bank deposits in payment of taxes because the settlement of those payments is carried out with bank reserve balances or cash, which are a form of money that the government itself issues. In other words, payments to the government simply extinguish some of the money that the government itself has issued.
But government currency and central bank deposit balances are also usually classified as liabilities of the government that issues them. So are they debts in exactly the same sense as the liabilities issued by the commercial banks? No, they are special. Those government liabilities are not debts for anything that the government does not itself control and that it can’t manufacture at negligible cost. The possession of a $100 bill or a $100 balance in a Fed account doesn’t entitle you to anything more than another $100 bill (or a combination of bills and coins of smaller denominations). And the government has an infinite money well. It does have a printing press and it does reap seigniorage. It is limited in doing this only by its own policy choice not to destroy the market value of the currency it issues.
It is true that the government can also impose tax obligations on you, and that the government’s money discharges those obligations. So doesn’t that mean that a $100 bill is a bona fide liability of the government worth $100 in real terms, since issuing it deprives the government of $100 in tax revenue it would otherwise have received? Not quite. While the nominal asset value of a $100 tax obligation for the government is $100, its real marginal value to the government is zero, since the government has an infinite money well and doesn’t need additional cash. And while the nominal liability value of a $100 Fed deposit balance for the government is $100, its real marginal value to the government is zero, since again the government has an infinite money well and can always afford to part with any amount of cash. The government taxes dollars to remove them from private hands, and spends dollars to put them in private hands. And the ability to impose enforceable tax obligations is part of what fulfills the government’s policy purpose of creating a market demand for its currency.
So is bank lending constrained by the need for the government’s money, whether in the form of currency or deposit balances at the central bank? In one sense clearly, yes. Banks need that government money to fulfill the payment and withdrawal obligations that their lending and creation of deposit balances incurs. But for a given particular expansion of lending they might not need to acquire any additional reserves at all. And even if they do need more reserves, they don’t need to acquire the reserves first, before making the loan. They can make the loan and then acquire the reserves. Of course, the fact that they might not need to acquire additional reserves doesn’t mean that creating the deposit carries no cost. It does carry a cost because it is an additional claim against their exiting assets, and they will therefore lose assets as they settle those claims.
The truth in the endogenous money picture is that the processes by which the most widely accepted means of payment are introduced into the economy are driven by the demand for that money. Banks seek to satisfy that demand by making loans, and the government then satisfies the increased demand for government issued money that results. But the commercial banks don’t have their own printing presses.