When we think about the money supply, we typically think about the Fed's measures of actual money (M1, M2, etc.) along with the various things that can affect how this money sloshes around the system (multipliers, fed funds rates, reserve requirements, etc.). But debt matters too. If banks tighten up on the amount they're willing to loan, that affects the money supply as well.

And it's not just traditional banks. The shadow banking system burst into public consciousness after the 2008 financial collapse, and the best estimates suggest that it's now about as big as the entire traditional banking system. So if the shadow banking system slows down its lending, that affects the money supply too, and due to its fundamental nature the shadow banking system is heavily reliant on ultra-safe collateral. The less collateral there is, the less new debt it will create.

Over at FT Alphaville, Cardiff Garcia summarizes a new Credit Suisse report on exactly this issue, which expands on the previous work of Manmohan Singh. When a particular type of debt gets devalued — when creditors are required to take a haircut on, say, Greek bonds or mortgage-backed CDOs — that entire category of debt is worth less as collateral. Think of it this way: If you hold an ultra-safe bond worth $100, that's $100 in cash you don't need since you can instantly use your bond as collateral to raise $100 in the shadow banking system. But if your category of bond takes a haircut of 20%, suddenly you can only use it to raise $80. That means you're going to hoard an extra $20 in cash. And that's cash that's not available to anyone else. Effectively, the money supply has shrunk. The chart below shows what happened during the financial panic of 2007-08:

Private shadow money dropped off a cliff, but this was made up for by a vast expansion of public shadow money: "A sharp fiscal easing [] created a flood of safe collateral that caused the public shadow money (Treasuries, MBS, agencies) to soar, fully offsetting the contraction in private shadow money (corporate bonds, asset-backed securities, and non-agency mortgages)."

So is this just a history lesson? No. We're still living through it, according to Credit Suisse:

We expect [private shadow money] to contract further in 2012, driven by negative net issuance of financial debt of nearly half a trillion dollars....This potential fall in 2012 is tiny compared to 2008, but it comes at a time when fiscal deficits are shrinking.

The moral of the story is that we're unlikley to face significant inflationary pressure until the total supply of money, both public and private, gets back to its pre-crisis trend level. What's more, as Garcia says, "that does lead to an argument against tightening fiscal policy too quickly: fiscal consolidation tightens monetary policy also."

There's much more at the link, all well worth reading. We live in a wildly complex financial world these days, and we're still groping our way toward understanding it fully. But if the shadow banking story is as important as it now seems to be, public policy needs to take it far more seriously. It's not time yet for austerity.

Via Tyler Cowen.

As a political reporter, I spend most of my waking hours deleting emails from various campaigns asking for money. I know that sounds really glamorous, but after opening the nth email with an authentic-sounding subject line (a smattering, from Buzzfeed) only to find a stock-photo-laden pitch, it starts to wear on you.

That is what makes this pitch, from Sen. Al Franken (D-Minn.), and featuring a stock photo of a woman picking fruit at a supermarket, stand out:

Hello, I'm Woman Picking Out Fruit In Supermarket. And I'm writing to you today on behalf of Al Franken—a Senator who stands up for real people (including those of us who make a living posing for stock photos).

You've seen us shaking hands in business suits, posing together on college campuses, and laughing while we eat salads. You've seen us on billboards, in magazines, and on pretty much every political website. We are the people in stock photos.

I know the people in stock photos don't typically write emails, but Al isn’t your typical politician—he's a progressive fighter who puts people first. Will you stand with us by making a small contribution to his grassroots campaign right now?

There's a reason I'm standing with Al. You see, I'm not just Woman Picking Out Fruit In Supermarket. I am also an actual woman worried about the right-wing attacks on my access to health care.

And when Republicans tried to put my boss in charge of what health care treatments I can and can't get, Al stood up and fought back— just like he did when Republicans tried to destroy Planned Parenthood, and just like he has every time Republicans launch an attack on my rights.

Al's a Senator I can count on to stand up for all women—whether they're walking a golden retriever in the park, pointing at a chart in an important meeting, or simply staring into the camera.

Your contribution will help keep Al's campaign strong so he can keep fighting for us—click here to give today!

I hope I can count on you for a contribution. After all, the rights to stock photos aren't cheap. And neither is the actual grassroots organizing Al’s team does every day, fighting to keep progressive values -- and the middle class -- alive and well.

And whether you're a Tattooed Guitar Player, a Guy Wearing Hard Hat, or an Elderly Couple Sitting At Kitchen Table, there's no better way to show your support than by making a contribution today.

Thanks for standing with Al.


Woman Picking Out Fruit In Supermarket

Co-Chair, People in Stock Photos for Franken (PSPF)

P.S. As someone who eagerly reads every email I get from Al, I have to be honest: I don't really understand why he's under the impression that adding an "extra ask" in the P.S. of every message is helpful. But I asked my friends Scientist Looking At Line Graph and Doctor With Stethoscope Hanging Around Her Neck, and they both agreed it works. So: Would you click here to make a contribution of $5, $10, or $25 today?

Since halting his work as a satirist to run for Senate, Franken's gone to great lengths to cultivate an image as a serious policy wonk. It's good to see that career change hasn't caused any lasting damage to his sense of humor.

Tennessee congressional candidate Lou Ann Zelenik.

If you live in Middle Tennessee, get ready for another four months of overheated rhetoric about Islam. On Thursday, tea partier and anti-Shariah activist Lou Ann Zelenik announced that she's challenging incumbent Rep. Diane Black (R), setting up a rematch of a 2010 GOP primary that focused heavily on the question of whether Muslims in Murfreesboro should be allowed to build a new mosque.

In that campaign, Zelenik lashed herself to the mosque issue, speaking at a march to protest the construction, and accusing Black of being soft on Shariah. As she told Talking Points Memo, "This isn't a mosque. They're building an Islamic center to teach Sharia law. That is what we stand in opposition to." Zelenik feared that a new mosque in Murfreesboro would be a stepping stone to a more sinister end—the encroachment of radical Islam into Middle Tennessee. It wasn't a winning issue, it turned out, but Zelenik's argument resonated in the city. Later that year, a handful of residents filed a lawsuit to block the construction of the mosque, arguing that Muslims weren't protected by the First Amendment because Islam is a totalitarian political system, not a religion (the Department of Justice was forced to file an amicus brief noting that, yes, Islam is a religion).

Although Black took a relatively moderate stance on the mosque when she ran for Congress, promising to respect Tennesseans' freedom of religion, she has an anti-Islam history, too: as a state Senator, she sponsored Tennessee's 2010 law designed to ban Islamic law from being enforced in state courts.

The added wrinkle here, which should give the primary an added degree of out-in-the-open animosity, is that until two weeks ago, Zelenik was being sued by Black's husband. The suit centered on an ad Zelenik ran during the 2010 pointing out that then-state Sen. Black had steered contracts to her husband's forensic science business. Black and his company, Aegis Sciences, considered this charge defamatory, but the court ruled that Zelenik's spot was accurate, and in this case the truth was the only defense necessary. So: drama.

One quibble, though: The Murfreesboro News-Journal notes that Zelenik will step down from her job at the Tennessee Freedom Coalition, "a nonprofit 501(c)4 organization that has been instrumental in sounding the alarm over the growing Islamic movement in America and the threat of Sharia Law." That's not quite accurate, as there is no real threat from Shariah law in the United States. More accurately, TFC has been instrumental in running around stirring up fears over a phantom menace. This would be a small point, except that Murfreesboro is ground-zero for the Islamophobia movement, so it's something the local newspapers really ought to get right.

Want to Stop Rape? There's an App for That.

So, April is Sexual Assault Awareness month—a good time to consider the following: You're stranded at a party one late night. The last bus has left, you're miles from home, and now, a creepy stranger has you cornered at the bar. What would you do?

Get your smart phone out.

That's according to a new app called Circle of 6, which won the White House "Apps Against Abuse" technology challenge last November. Released in March by The Line Campaign, an organization that creates dialogues around sexuality, relationships, consent, and sexual violence, and ISIS, a social and mobile media nonprofit, the app marries social networking with sexual assault prevention. While Circle of 6 is being marketed mainly toward college students, it's gained broader support: In just two weeks since becoming available at the iTunes store, 20,000 people have downloaded the app.

The Circle of 6 app isn't for everyone—you need an iPhone, for one, and some nice, supportive friends—but it could help teenagers and twentysomethings talk about abuse and sexual assault. According to the Center for Disease Control, nearly 1 in 5 women and 1 in 71 men in the US have been raped at some point in their lives. More than half of female rape survivors of all ages reported being raped by an intimate partner and 40 percent by an acquaintance.

Here's how you use it: Download the app (it's free but currently only available for iPhone). Invite six people you trust to join your "circle." Then, next time you're feeling unsafe out late or stranded in an unfamiliar place, press the car icon. This will text your GPS location to your circle and ask them to pick you up. And if you find yourself stuck in an uncomfortable conversation? You can use the app to ask the people in your circle to call with a distraction. The app also lets you program a local hotline or emergency number.

Behind the app is Nancy Schwartzman, a filmmaker and violence prevention activist. Inspired by the stories of friends who've had to make some "hard choices"—whether to stay the night at a party, walk home alone, or take a ride with someone they might not know very well. And that's for men, too. The app's look is intentionally colorful and game-like—so it can be used openly. And even if men aren't using the app for their own safety, Schwartzman says, they can still use it to help friends in need. "Guys will realize prevention is stepping in and being on call."

By Chris Mooney

I want to thank Kevin for the opportunity to post here, and to answer some questions that naturally arise in discussions of my new book, The Republican Brain. Kevin poses a number of them, and poses them well—I have a lot of critics who get the argument completely wrong, so this is a breath of fresh air.

At the outset, I want to clear the air about a few things, where confusion seems too often to prevail. I deal with these nuances in depth in the book, but it will help to restate them here more briefly:

Psychological Needs Do Not Have Substantive Content. This is something I discussed earlier this week in a piece at Salon.com, with respect to the role of authoritarianism in conservatives’ distrust in science.

When you talk about the psychological, physiological, or biological underpinnings of political views, you have to understand that such dispositions are inherently content free. They clearly “push” individuals towards accepting certain views and certain arguments that feel right to them—thus, a person highly sensitive to fear threat may be less likely to worry about civil liberties in the wake of 9/11, or to naturally feel support for the death penalty. But the precise views that feel appealing to such a person would also be very different in the U.S. at the present moment than they would be in, say, China. And they would also change over time in the U.S. itself.

This is something that we must always bear in mind; and therefore, when I talk about a political phenomenon like U.S. conservatives denying science or fact, you are inevitably talking about a mélange of underlying psychology—which appears to have some universal human elements to it—and the specifics of our unique political culture and discourse.

Nevertheless, certain psychological traits or needs do match up well with certain ideologies, on average. The research shows this repeatedly.

We Are Pre-Disposed To Have Certain “Political” Traits; But That Doesn’t Make Them Destiny. There is also a confusion about the issue of, essentially, determinism. I’m saying that our political views are partly the product of “nature,” and then showing the role of psychology, physiology, and even some genetic influences. However, none of this stuff is deterministic; and the account is not reductionist. Even when it comes to genes, which do seem to influence our political views, the influence is indirect, statistical, and there is a feedback with the “environment” at every single step of the way.

When Kevin uses the word “innate” in his piece, which he does repeatedly, I worry that he may not be crediting this complex reality. Other people use phrases like “genetically wired” or “hardwired,” which are flatly wrong.

With all that in mind, then, let’s go on to answer Kevin’s questions. He says he has three reasons for being skeptical of my argument. In particular, he isn’t convinced that conservatives naturally tend towards being anti-science.

1. Just a Few Issues? First: Kevin notes that conservatives only really bash science today on two issues, evolution and climate change. I agree that these are the two leading issues of the moment, but doesn’t Kevin remember stem cell research? It was quite prominent up until recently, and in the 2004 election it led the pack of science issues. And doesn’t contraception count as a science issue? In my book I detail numerous cases of conservatives denying science whenever it has something to do with reproductive health, contraception, or abortion.

And for that matter, who said it was just science we’re talking about? I deliberately subtitled the book “The Science of Why They Deny Science—and Reality” so as to include belief that President Obama is a Muslim, or a socialist, or wasn’t born in the United States; the huge array of false claims about health care reform and the economy; falsehoods about American history, and much else.

Precisely because we are talking about something that is partly dispositional about conservatives, there is no reason to think that their denial of reality would begin and end with science issues. Rather, there is every reason to think that this behavior—springing in part, I argue, from psychological traits like more rigidity or fixity of views, less openness to new information, more authoritarianism, and so on—would infect all areas where they had an emotional stake.

So when Kevin says “I really don’t think you need the sledgehammer of innate cognitive traits to explain” conservatives denying science on evolution and climate change—well, the picture is much broader than those two issues. And again, I’m wary of that word “innate.”

2. Too Many Steps? That’s Kevin’s first objection; to answer his second, I need to hearken back to my “Psychological Needs Do Not Have Substantive Content” point.

Kevin asks, “What’s the cognitive trait that makes you anti-science? Not just skeptical of one or two particular results, but skeptical of science in general.” Well, there’s no such trait—because, again, these traits are content free, and Kevin is using the word “science” in a way that denotes content (a body of knowledge, a methodology, and so on).

It’s totally possible that science could be framed in a way that an authoritarian conservative would support. Maybe that was what occurred under Stalin, when the Soviet regime touted the anti-genetic pseudoscience of Lysenko. However, it isn’t very likely that, in a democracy like ours, science and basic conservative traits are going to get along very well, for very long. They are, as I explain in Salon, “just such deeply opposed ways of thinking—and being. You could argue that the clash between science and authoritarianism dates all the way back to the time of Galileo, if not farther.”

The point is that science and liberalism alike are rooted in a style of thinking that is nuanced, complex, tolerant of uncertainty. These characteristics don’t mesh so well with the body of traits—quick-thinking, decisiveness, less openness to experience—that tend to go along with conservatism. So while in certain contexts you might find allegiances, there is a deep seated tension there that, in the long run, would tend to push them apart.

3. Liberals Do It Too. There’s no denying that liberals have their own occasional issues with science. But do they have the same issues, or the same kinds of issues, and do they deal with them in the same way? I don’t think so.

Kevin cites the “science wars,” noting that they emerged from the academic left. Yes, but what a classically liberal way of challenging science, replete with incomprehensible jargon (“deconstruction”), layer upon layer of nuance and complexity, and more than a whiff of “hey, over here” attention seeking.

The “science wars” were liberal in another way, too—faddish. Temporary. Fleeting. They didn’t last, we moved on to other things. Meanwhile, conservatives are going on a century of active anti-evolutionism in the United States, and climate change denial is now also decades old.

Similarly, I don’t think liberals are nearly as opposed to “sociobiology” or “evolutionary psychology” as they once were, because again, liberals change and shift their views more easily. I, as a liberal, find such explanations essential.

Kevin concludes with a series of statements I utterly agree with, at least up to the end:

There's a complex interplay of biology and culture that produces liberals and conservatives in the first place. But once a conservative movement is in place, it's inevitable that it will attack conclusions it doesn't like and institutions that aren't on board with the conservative agenda. That includes the institutions of science to some extent and a few specific scientific results to a very large extent. But that's just common sense. I don't think you need evolutionary psychology to explain it.

I would put it a little differently. It’s not really that you need these factors to give an explanation; people give the sorts of explanations featured here all the time. Rather, it’s that you can’t ignore dispositional or psychological factors any longer if you want to truly understand politics. You have to start to see beneath the surface.

All the studies discussed in my book show that these factors are having a substantial effect on political views and behavior. The burden of proof is really on those who would continue to discount them.

Is a two-state peace settlement between Israel and the Palestinians in the West Bank still possible? Zvika Krieger says it might be, because most of the large Israeli settlements are fairly close to the 1967 green line. In order to create a viable Palestinian state, Israel would have to uproot a fair number of the more distant settlements, but it wouldn't have to uproot a large number of people. Robert Wright pushes back:

OK, fine. But, according to Krieger's numbers, this would still involve uprooting 125,000 settlers! If anyone considers this a readily doable project, I recommend going to Hebron, where fewer than one percent of those 125,000 live, and asking the settlers whether they'd go peacefully. Compounding their assured intransigence is that the Israeli army, which would be doing the extracting, is itself increasingly populated by intensely religious settlement supporters, some of whom say they won't carry out settler-eviction orders.

All of this helps explain why last week at the J-Street Conference, the Israeli scholar Menachem Klein, who was an adviser to the Barak government, opined that a two-state deal could spark a civil war within Israel. "Yitzhak Rabin was assassinated during an interim agreement when he had not evacuated a single settlement," he said. "Israelis will use arms to resist an agreement even if there were a referendum supporting it."

But this is almost beside the point. Warning how hard it would be to uproot the settlements is like warning how hard it would be for the American government to confiscate the TV sets of all citizens. No government is going to try to do it anyway!

But a one-state solution is hardly possible either. Even now, Arabs make up about 30% of the population of a combined Israel and the West Bank. In 50 years that will be up to 40% or so. At the same time, about a third of the Jewish population will be ultra-orthodox. I don't think anyone believes this is a recipe for a peaceful democratic state.

So there is no longer any plausible future except for perpetual occupation. Welcome to hell.

From Time's Belinda Luscombe at the end of an interview with South Carolina governor Nikki Haley, who was born and raised as a Sikh:

In New York City, which you're visiting for a couple of days, a lot of our taxi drivers are Sikhs. If you get one, are you going to give him a slightly bigger tip?

This is outrageous. Why does Luscombe casually accept the gender normative view that all taxi drivers are male?

(By the way, Haley answered that she gives the same tip to everyone. She also quite charitably refrained from slugging Luscombe.)

This is an outrage. On Tuesday Judge Jerry Smith, incensed over President Obama's stated hope that the Supreme Court wouldn't overturn his central domestic achievement, gave the Justice Department a homework assignment. And he was very clear about that assignment. He wanted to know if Obama supports the concept of judicial review, and he wanted the president's position explained in "at least three pages single spaced, no less." Well, the letter is out. Here it is:

Does that look like three pages to you? Half of the first page is pure filler, there's only one paragraph on the last page, and the margins are obviously extra big. This is at most two single-spaced pages.

The arrogance of this administration and its contempt for the rule of law truly know no bounds. I demand a bench warrant for Obama's arrest.

The 8 Most Notorious Greenwashers

Everyone seems to be promoting themselves as "green" or "natural" in some way or another these days, tapping into the zeitgeist of sustainability. That includes things that aren't really green by any stretch of the imagination—things like fossil fuel trade groups, car companies, and big box stores.

The Green Life, a website designed to help people make greener consumer choices, decided to host a competition in honor of the recently passed April Fool's Day to recognize the biggest "greenwashers" out there. Perhaps it's no surprise, but the list their readers came up with includes some familiar faces for Mother Jones readers:

  1. America’s Natural Gas Alliance claims to protect air, water, and land, while actually lobbying against common-sense safeguards.
  2. Canadian Association of Petroleum Producers, which uses odd food analogies and meaningless claims.
  3. Walmart, which used a much-hyped going-green campaign to hide its core unsustainable business.
  4. Fiji Water was found guilty of greenwashing for calling its water "carbon-negative."
  5. CBS’s EcoAd program, which puts a leafy green logo on any company’s ad for a fee.
  6. The Malaysian Palm Oil Council, which causes rainforests to be cut down, yet sells itself as sustainable.
  7. The Sustainable Forestry Initiative, which too often promotes just the opposite through a deceptive label.
  8. Mazda, for partnering with The Lorax to sell an SUV.

See our features on the dubious "greenness" of natural gas, Walmart, Fiji water, and Mazda for more.

CO2 Makes Us Hotter

Maybe this will come across as not a huge surprise for many Blue Marble readers, but a new scientific paper confirms that an excess of carbon dioxide in the atmosphere makes the planet warmer. The paper, published this week in the highly respected scientific journal Nature, isn't really focused on our current warming problem. Instead, it looks at a period 55.5 million years ago when the Earth also started warming up.

Way back then, the earth was coming out of an ice age. That warming caused the release of carbon dioxide from the melting permafrost and other carbon reserves, and the release of that carbon dioxide in turn caused the planet to heat up even faster. The Guardian explains the conclusions:

The researchers analysed a series of sudden and extreme global warming events called hyperthermals, occurring about 55 million years ago, linked to rising greenhouse gas concentrations and changes in the Earth's orbit, which led to a massive release of carbon into the atmosphere, ocean acidification, and a 5 degrees Celsius rise in global temperature within just a few thousand years.
Previously, researchers thought that the source of the extra carbon was the oceans, in the form of frozen methane gas in ocean-floor sediments, but from this research they conclude that the carbon came from the polar regions.
Andrew Watson, a fellow of the Royal Society and professor at the University of East Anglia, said: "The paper shows that the increase in atmospheric CO2 was very important and drove the global temperature rise, but it also suggests that the initial trigger for the deglaciation was something different – a slight warming and associated slow-down of the Atlantic Ocean circulation. This caused carbon dioxide to start being degassed from the deep oceans, and that in turn drove the global change."

This is important for several reasons. For one, some corners of the climate skeptic world have tried to claim that it's not the CO2 that's heating up the planet—it's just that CO2 rates are increasing as the planet warms for other reasons (sun spots, earth's orbit, God hugging us tighter). But this study affirms that a slight, gradual warming caused the release of CO2, which in turn triggered rapid warming.

The paper also supports the concern among scientists that our current warming will only get worse as the earth releases stored carbon from things like the icecaps. This is sometimes referred to as a "feedback loop" or "runaway" global warming—as in, even if humans start putting the brakes on burning fossil fuels right now, we might already be careening off the cliff.