Sub-prime Blowout Recordings
Con Man Exodus Recordings
Super Nano Thermite Recordings
Eugenics Assassin Recordings
Sub-prime Blowout Recordings ReverbNation
Unfluoridated Recordings
Rick Reuben Recordings
Friday, July 30, 2010
Friday, March 19, 2010
Higher Learning
A public conditioned through their television sets evolves into the docile, gullible, and ignorant population that the ruling class wants. They need soldiers, they need consumers, and first and foremost, they need people who are predictable. They have stated their ambition to mold humans into cattle for centuries, they have poured money into scientific tools that allow them to tinker with humans biologically and psychologically, they fund an extravagance of decadent and corrosive pop culture no matter what economic conditions are dominant. They are very upfront about engineering society to serve their needs. There should be no surprises.
Corporations give you what you need when it helps them control you, but they make you pay for what you need to control them. And that is why we have a costly profit-based higher education system.
Corporations give you what you need when it helps them control you, but they make you pay for what you need to control them. And that is why we have a costly profit-based higher education system.
Free College?
http://www.huffingtonpost.com/les-leopold/stop-student-loan-sharkin_b_505460.html
There is no political will for free higher education because the corporations that own America don't even want to pay the wage demands of Americans with high school diplomas. They can fill jobs that require advanced education with workers overseas who will cost them less per hour than a less-educated American.
Why are we still pretending in 2010 that corporations have it in their interest to lift up the educational level and earnings power of Americans, and would tolerate extra taxes to make that happen? They have spent the last forty years pursuing any other option they can find to replace Americans who hold strong earnings power. I think a trend has been established. Now that globalization has opened up numerous avenues to these replacement options for corporations, they will predictably put Americans on even tighter rations, and do more to starve the root system of American earnings, the education system.
There is no political will for free higher education because the corporations that own America don't even want to pay the wage demands of Americans with high school diplomas. They can fill jobs that require advanced education with workers overseas who will cost them less per hour than a less-educated American.
Why are we still pretending in 2010 that corporations have it in their interest to lift up the educational level and earnings power of Americans, and would tolerate extra taxes to make that happen? They have spent the last forty years pursuing any other option they can find to replace Americans who hold strong earnings power. I think a trend has been established. Now that globalization has opened up numerous avenues to these replacement options for corporations, they will predictably put Americans on even tighter rations, and do more to starve the root system of American earnings, the education system.
Thursday, March 18, 2010
Coconuts
Commodity money rides on communal agreement. Four castaways on a deserted island can form a commodity money system. Say the four castaways each claim a one quarter sector of the island for their own. One is a good gardener, one is a good fisherman, one is a good coconut picker, one is a good builder of thatch huts.
They need a commodity money so the fisherman doesn't have to carry his fish to the coconut picker when he wants coconuts. So instead, the fisherman carries a stick to see the coconut man. He takes four coconuts and the coconut man carves four notches in the stick. When the coconut man desires fish a month later, he carries his stick with the four notches back to the beach, hands it over, receives four fish in return.
Commodity money just has to be honest. The people on the island did not need to dig up gold to have a money system, just communal agreement. Fiat money fails not just because it is not directly convertible back into a real asset by the bank that issues it, but it also fails because its supply can be arbitrarily expanded outside the view of those using it for commerce, so the only people who can accurately fix its value are the counterfeiters of it.
They need a commodity money so the fisherman doesn't have to carry his fish to the coconut picker when he wants coconuts. So instead, the fisherman carries a stick to see the coconut man. He takes four coconuts and the coconut man carves four notches in the stick. When the coconut man desires fish a month later, he carries his stick with the four notches back to the beach, hands it over, receives four fish in return.
Commodity money just has to be honest. The people on the island did not need to dig up gold to have a money system, just communal agreement. Fiat money fails not just because it is not directly convertible back into a real asset by the bank that issues it, but it also fails because its supply can be arbitrarily expanded outside the view of those using it for commerce, so the only people who can accurately fix its value are the counterfeiters of it.
Clock
Commodities are not magic. Commodities are what we all want. Commodity money does not require 'magical powers' to cast a spell on users- that's fiat money, which has no intrinsic value of its own, but is magically accepted in payments for labor and goods despite being toilet paper.
The public doesn't have to acquire enormous amounts of gold to build a paper money system on top if it. 100 oz's of gold could form the basis of 10,000,000 pieces of convertible paper wealth. The known ratio of paper to gold adjusts the value of the paper and therefore the prices of everything in the economy denominated in the paper. There is no limit to how much liquidity ( in paper ) you can add to the system, because whenever you add, the ratio of paper to gold changes, and the prices adjust.
Think of it like a clock. You only need one accurate clock for a town of one million to set their watches by. The day is 24 hours no matter the number of people telling time by the one clock. The foundation of the paper money supply is like the clock, the 'known quantity'. The same quantity of gold 'sets the time' no matter if a paper money system for 1,000 or 1,000,000 is built on top of it. It is all about ratios of paper to gold which then set prices.
The public doesn't have to acquire enormous amounts of gold to build a paper money system on top if it. 100 oz's of gold could form the basis of 10,000,000 pieces of convertible paper wealth. The known ratio of paper to gold adjusts the value of the paper and therefore the prices of everything in the economy denominated in the paper. There is no limit to how much liquidity ( in paper ) you can add to the system, because whenever you add, the ratio of paper to gold changes, and the prices adjust.
Think of it like a clock. You only need one accurate clock for a town of one million to set their watches by. The day is 24 hours no matter the number of people telling time by the one clock. The foundation of the paper money supply is like the clock, the 'known quantity'. The same quantity of gold 'sets the time' no matter if a paper money system for 1,000 or 1,000,000 is built on top of it. It is all about ratios of paper to gold which then set prices.
Consumption
“>>"Isn't that what a depression is...a dramatic contraction of money and credit?"
Recessions today can be caused by numerous external or internal drivers like wars, bad trade policies, bad tax policies, population demographics, etc. but if we're talking about the role of money in recessions, then recessions under a credit money system are reactions to credit gluts offered to progressively higher risk customers. This causes price and wage distortions that warp the equation of supply and demand, as well as pooling of excess liquidity into speculative bubbles that further distort prices ( see housing bubble ).
Consumption cannot be increased exponentially forever and forever no matter how much fiat you pump into the system. People have a limited stomach for goods and services and when they're full, they're full. At a certain point, true demand is satisfied and you end up with a supply overhang. Inventories back up, production slows, demand for new credit stalls, bad debt heads for default, and the system attempts to recede to equilibrium. These are the boom and bust cycles that are so predictable when the elastic money supply is stretched beyond its safe limits.
Credit contraction can be a cause of a recession but it can also be a signal that the preceding credit expansion has overheated the economy and rest is required.
Overconsumption and underconsumption are less likely when prices are allowed to adjust without manipulation, as they are in a sound money system.
Fi At
All that needs to be done is to eliminate legal tender laws and taxes on market selected monies. Since we have several thousand years of history showing that Gold and Silver are typically selected as money, we should start by eliminating taxes on them. What this means is that when gold and silver hold value, they should not be punished by the taxman.
For example- once legal tender laws are repealed, precious metals will benefit, when measured in the receding quality of the Federal Reserve note that is being rejected as a medium of exchange.
If you are a farmer and you pay your bricklayer neighbor 100 ounces of silver in July for a brick wall when silver is $18 an oz. ( when measured in FRN's ) and then the silver has appreciated to $25 an ounce in FRN's by April when tax time comes, then the bricklayer cannot have the change in the FRN price of silver counted against him as a capital gain on his taxes, because that punishes him for choosing a stable commodity as a medium of exchange over the inferior FRN. If there is a push for a different medium of exchange, it should be treated in the same fashion.
For example- once legal tender laws are repealed, precious metals will benefit, when measured in the receding quality of the Federal Reserve note that is being rejected as a medium of exchange.
If you are a farmer and you pay your bricklayer neighbor 100 ounces of silver in July for a brick wall when silver is $18 an oz. ( when measured in FRN's ) and then the silver has appreciated to $25 an ounce in FRN's by April when tax time comes, then the bricklayer cannot have the change in the FRN price of silver counted against him as a capital gain on his taxes, because that punishes him for choosing a stable commodity as a medium of exchange over the inferior FRN. If there is a push for a different medium of exchange, it should be treated in the same fashion.
Fi at
Absent price controls, the market sets the price for shoes regardless of which monetary supply you use. The price is a calculation of costs ( raw materials, labor, distribution ) plus profits, and at every stage, the cost is impacted by the quality of the money in use.
You will have more price stability under a commodity money system, because the money's value will be a derivation of a known finite asset's ( or basket of assets ) value, rather than a derivation of something nobody knows- like America's ability to pay interest into perpetuity.
The reason why bread that was 50 cents a loaf not that long ago is now $3 a loaf is not because it became 6X more expensive in real terms to process wheat into a loaf on the market shelf- that price is a direct result of currency depreciation under a fiat system.
Whether you have a private central bank running a fiat money system or the government running a fiat money system, you have a counterfeiter in control of your money supply. If you like price instability caused by factors outside of the supply and demand for a product, go with a fiat money system- you'll get all the price instability you could ever ask for, thanks to the temptation to manipulate the money supply..
You will have more price stability under a commodity money system, because the money's value will be a derivation of a known finite asset's ( or basket of assets ) value, rather than a derivation of something nobody knows- like America's ability to pay interest into perpetuity.
The reason why bread that was 50 cents a loaf not that long ago is now $3 a loaf is not because it became 6X more expensive in real terms to process wheat into a loaf on the market shelf- that price is a direct result of currency depreciation under a fiat system.
Whether you have a private central bank running a fiat money system or the government running a fiat money system, you have a counterfeiter in control of your money supply. If you like price instability caused by factors outside of the supply and demand for a product, go with a fiat money system- you'll get all the price instability you could ever ask for, thanks to the temptation to manipulate the money supply..
FiatFiatFiat Fiat Fiat
“>>"China would receive greenbacks, they might object to their loss of leverage over our government
...but they wouldn't be losing anything else."
If all outstanding debt held by our creditors in the form of treasuries and all FRN's held as savings were converted into new fiat, then everyone would lose, because every real asset would reprice higher following the conversion. It would be a forced devaluation of the currency.
It's actually very similar to what FDR did with gold. FDR confiscated gold and paid $21 in FRN's per ounce for it- post conversion, gold went right to $35 an ounce. The Federal Reserve Note experienced a forced devaluation, which was borne by those who saved in real assets like gold in the hopes of escaping just such a devaluation.
If existing FRN's in the hands of US savers were returned to them as new Greenbacks, each unit of the new money would have less buying power than each FRN they held previously, because the new Greenback would belong to a currency pool swollen by the retirement of securities through the same issue of new money.
FiatFiatfiatFiat
“>>"You want a commodity backed money supply...how do you set the value of the commodity?"
You don't set the value of the commodity, the commodity sets its own price- the price of the commodity is determined by 'supply of the commodity' x 'demand for the commodity' x 'the quantity of money in circulation ( which determines the value of each individual unit of money )'. When the money supply is stabilized ( because it is recognizable as a representation of the tangible assets that underwrite it ), then the price is formulated from the three variables listed in the equation above.
What causes huge shifts in prices ( like in housing currently ) is the instability of the money supply. Houses don't go from 200K to 500K and then back to 200K in the course of ten years because the supply and demand for houses changed that radically- the price rose and fell sharply because the third variable ( the money supply, born of credit ) was manipulated. Those homes were not worth double at the peak of the bubble, they experienced a doubling in price- and price is not value. Price is value that has been modified by the value of the currency the price is denominated in.
FiatFiat Fiat
>>"I'm not sure about 100% reserve...
as it doesn't allow for easy growth..."
I think that's where we differ. What you see as 'easy growth', I see as 'easy spending'. You see 'easy expansion' of money supplies as essential to growth, and I see easy expansions of money supplies as damaging to sustainable growth.
I only consider growth to be legitimate if it comes from a reinvestment of earned/saved assets back into new production. The fiat system allows for growth to be enticed, with money loaned or printed into the system. It's the idea that 'if you dangle a fatter rabbit on a stick in front of the same pack of dogs, the dogs will run faster after the fatter rabbit ( the bigger money supply )'.
100% reserve cannot impact what I call legitimate growth that is derived from the reintroduction of profits/savings into the economy, but it does curtail easy spending over budget in the hopes of enticing growth. If you want to inject money backed by nothing into the economy ( as we do now ) in the hopes of stimulating production that will chase after the additional money, then forcing money to be created out of wealth that precedes it eliminates that demand-side stimulus crutch
FiatFiat
“>>"You still haven't told me what you would like to see in place of fiat money....Or how you prevent a total economic collapse if you switch to a commodity backed currency."
Why would switching to commodity money destroy the economy? The existing supply of commodities is not changed by the conversion of money from fiat to commodity-backed, and the commodity-backed money is superior because it regains its ability to store value.
Currently, fiat money is a fiction. It is alleged to serve as a stand-in for genuine wealth, but it only survives on trust and the government decree that demands it be considered legal tender. If people were given the choice between fiat and a money that held a claim on tangible assets, they would choose the second every time. That is why issuers of fiat outlaw competing forms of legal tender backed by a commodity- because the superior money will drive the weak fiat out of use.
Fiat
“>>"There is no commodity in the world than could underwrite the amount of M3"
Of course there is. If the money is required to pursue the goods, then there are sufficient goods to back the money. It's a two-way equation. Sound commodity-backed money is always convertible forward into goods for purchase and always convertible backwards into a tangible asset when it is held as savings. This is balance.
It is impossible for the demand for units of money to exceed the quantity of commodities and labor it is needed to purchase. There is no need to 'grow the stock' of money to keep pace with the demand for money in commerce. It is the prices that adjust up or down to reflect the ratio of money to goods.
To make a very rough example- if the money supply of a town is 100 dollars, then a dollar might be enough to buy a house, a dime a car, and a penny enough to buy food for a year. It is the prices that are elastic. The quantity of money does not need to be elastic.
100% reserve banking is entirely possible and is the only sound money, but the bankers' propaganda says it is impossible because without their freedom to create fiat or fractional reserve loans to make new revenue ( interest ) streams, the profits of banking are sharply curtailed.
Tuesday, March 16, 2010
Terminus
The potential terminus point for this fable of what happens when a snake begins his last meal by starting at his own tail could be interesting, especially if the Fed becomes the final resting place for a majority of foreign-owned Treasuries that are not rolled over. We could see most of the Treasuries in existence classified as liabilities on the books of the Treasury simultaneously classified as assets on the balance sheet of the bank empowered to auction them, the Fed.
The bonds could not have any value at that point, because the only way the Treasury could redeem its liabilities would be to borrow from the Fed- technically making the Fed responsible for reconstituting the Treasuries it is counting as assets.
I guess that's the point where they come to seize the collateral and wave bye bye to the fiat dollar. And that's exactly the terminus this centrifuge of funny money is pointing to.
The bonds could not have any value at that point, because the only way the Treasury could redeem its liabilities would be to borrow from the Fed- technically making the Fed responsible for reconstituting the Treasuries it is counting as assets.
I guess that's the point where they come to seize the collateral and wave bye bye to the fiat dollar. And that's exactly the terminus this centrifuge of funny money is pointing to.
Rollout
The 'recovery' is a product rollout campaign, it's marketed just like a car. The process builds in stages. At the beginning, they're just rubbing two sticks together to make a fire, hoping to create a buzz of positive feeling towards a product, which will then turn into a fire that casts a glow that will attract other moths.
It's natural for people to want a recovery, so it's not that hard to transition people from the 'wanting' state of mind to the 'belief in the recovery' state of mind- the architects of the marketing campaign are telling people to see something that they are hoping to see anyway. People who believe in a God will see signs of God's handiwork everywhere in their daily lives. People who think that UFO's exist will, predictably, be more receptive to reports of UFO's ( I'm not saying anything either way about God or UFO's here, just describing how wants intersect with beliefs ).
There's also a substantial amount of peer pressure at work- pessimists will be characterized as somehow 'anti-American' or 'anti-capitalism' ( which is funny, because we have statism, not capitalism ). Analysts who turn a more pessimistic eye to the economy will be treated more harshly by the dominant media . They'll be described as 'prophets of doom' as though they are scary monsters who have come to terrify us.
Basically- if reality contradicts with the message, dispense with reality and guard the message.
It's natural for people to want a recovery, so it's not that hard to transition people from the 'wanting' state of mind to the 'belief in the recovery' state of mind- the architects of the marketing campaign are telling people to see something that they are hoping to see anyway. People who believe in a God will see signs of God's handiwork everywhere in their daily lives. People who think that UFO's exist will, predictably, be more receptive to reports of UFO's ( I'm not saying anything either way about God or UFO's here, just describing how wants intersect with beliefs ).
There's also a substantial amount of peer pressure at work- pessimists will be characterized as somehow 'anti-American' or 'anti-capitalism' ( which is funny, because we have statism, not capitalism ). Analysts who turn a more pessimistic eye to the economy will be treated more harshly by the dominant media . They'll be described as 'prophets of doom' as though they are scary monsters who have come to terrify us.
Basically- if reality contradicts with the message, dispense with reality and guard the message.
Corporo-statism
fascism is the appropriate term for the corporate/state hybrid, but when people hear you refer to fascism, many seem to think you're making a specific analogy to Nazi Germany. There needs to be a better term that identifies 'corporo-statism' that avoids that, because the reluctance to identify 'corporo-statism' as fascism ( because of the reluctance to compare our system to the Nazi's ) definitely works in the favor of the corporo-statists.
In the aftermath of any designed economic contraction/ harvesting of wealth engineered by the most monopolist
If people like choosing saviors that don't exist to rescue us from completely misidentified problems, then they should choose big government to save them from the free market. Just ignore the fact that the free market is dead and government only grows to serve the needs of its owners, the corporations.
In the aftermath of any designed economic contraction/ harvesting of wealth engineered by the most monopolist
If people like choosing saviors that don't exist to rescue us from completely misidentified problems, then they should choose big government to save them from the free market. Just ignore the fact that the free market is dead and government only grows to serve the needs of its owners, the corporations.
Siphon
The speculative markets siphon capital away from the legitimate economy, where it is used to amass leverage against weaker competitors. It's an armory and a munitions depot for corporate raiders, just like you wrote.
Imagine two publicly traded companies, both in the business of making widgets. Now imagine that majority ownership of one of those two widget companies is obtained through purchase of a majority of their shares by a huge business conglomerate. Then imagine what might happen next- the huge conglomerate can use its considerable stockpile of funds to short the stock of the widget company it didn't buy, and use other funds to bid up the share price of the widget company that it bought. The market reacts to this by piling on, and soon other big institutional investors and hedge funds are jumping in on the widget company with the rising share price and shorting the independent widget company- maybe even using naked shorts.
This is an example of how the speculative markets can destroy business rather than grow business, by culling the market through leverage against share prices to reduce competition- which corporate conglomerates hate. The best widget maker may not win- if the share price is the barometer of your widget company's health and that share price is in a rigged game, you are going to be squeezed out of the widget business.
Imagine two publicly traded companies, both in the business of making widgets. Now imagine that majority ownership of one of those two widget companies is obtained through purchase of a majority of their shares by a huge business conglomerate. Then imagine what might happen next- the huge conglomerate can use its considerable stockpile of funds to short the stock of the widget company it didn't buy, and use other funds to bid up the share price of the widget company that it bought. The market reacts to this by piling on, and soon other big institutional investors and hedge funds are jumping in on the widget company with the rising share price and shorting the independent widget company- maybe even using naked shorts.
This is an example of how the speculative markets can destroy business rather than grow business, by culling the market through leverage against share prices to reduce competition- which corporate conglomerates hate. The best widget maker may not win- if the share price is the barometer of your widget company's health and that share price is in a rigged game, you are going to be squeezed out of the widget business.
Supervision
I think the way that you envision the equity markets is kind of rare, but it should be the dominant view- some would say that the markets discipline businesses to perform efficiently, because they are constantly observed by investors and pressured to meet expectations, but to expect Wall Street to only be in reactive mode to business conditions completely overlooks human nature. Wall St. does not just react to a moving market, Wall St. changes the currents of the river and the boats adapt.
The 'supervision' of investors generates an environment where companies act to satisfy the short-term profit goals of their investors, and this may totally sabotage their chance of having a sound long-term business plan that is good for their workers. People argue, 'But Wall Street just seeks profitable companies and buys their stocks', but that doesn't cover it- Wall Street sets expectations for companies and then companies try to hit those marks. Wall Street forces changes in business philosophy- companies that would normally not are outsourcing their labor force or cutting worker pensions or cutting their product quality, to hit short term expectations.
The 'supervision' of investors generates an environment where companies act to satisfy the short-term profit goals of their investors, and this may totally sabotage their chance of having a sound long-term business plan that is good for their workers. People argue, 'But Wall Street just seeks profitable companies and buys their stocks', but that doesn't cover it- Wall Street sets expectations for companies and then companies try to hit those marks. Wall Street forces changes in business philosophy- companies that would normally not are outsourcing their labor force or cutting worker pensions or cutting their product quality, to hit short term expectations.
Silly Putty
http://www.huffingtonpost.com/robert-reich/the-sham-recovery_b_497439.html
"they can't really determine their own potential losses."
Nor can they admit them even if they determine them. They call them losses when they beg for bailouts, they call them assets when they make their financial reports. Most they call neither liability or asset- they just pretend they don't exist, or that they 'can only be valued at some future date'. Which will never arrive.
Their books are made of silly putty.
Saturday, March 13, 2010
Commerce
>>"Gold is just a commodity, like oil, and like oil it's value is subject to constant fluctuation relative to money."
The value of the commodity is determined by its own supply and the demand for it. The fluctuation you refer to is not fluctuation in value but fluctuation in prices, which are nominal values. The money itself is fluctuating in value relative to its own quantity, not to the quantity of gold..
Every day, commodities like gold and oil establish a new price for the dollar, because they are of finite quantity and the fiat dollar is not. The dollar does not change the value of the gold; rather, the value of the dollar is always measured by how much gold or oil it can purchase.
Mouse
I can't believe there are still people insisting that a rescue of 'too big to fail' banks & AIG prevented a collapse of the whole economy. The collateral damage from their demise would have been incredibly minor if there was any political will to contain it properly. The reluctance to let bad banks fail was all about politics and not about logistics. The failure would have been a blessed purge of these tumors, and would have affected the narrow sliver of society that owns shares in these banks and little else.
The very narrow usefulness of these banks to the economy is proven by what we see in the aftermath of the bailout- boom times for the narrow Wall St. financial sector, and a continuing depression everywhere else. These banks do not carry the economy on their backs- we carry them!
Other lending institutions ( that played within the rules ) could have instantly filled in the market share of these zombie banks, because banks *produce nothing*. It's just digits on computer screens.
Availability of credit to the general public could have been rapidly restored in the wake of the failure of these overgrown casino banks. It would be the simplest task in the world for the Treasury to spread new money all around the country to all healthy remaining banks. Couple of clicks of the mouse and you're done. If the Fed balks, shut them down, too.
The very narrow usefulness of these banks to the economy is proven by what we see in the aftermath of the bailout- boom times for the narrow Wall St. financial sector, and a continuing depression everywhere else. These banks do not carry the economy on their backs- we carry them!
Other lending institutions ( that played within the rules ) could have instantly filled in the market share of these zombie banks, because banks *produce nothing*. It's just digits on computer screens.
Availability of credit to the general public could have been rapidly restored in the wake of the failure of these overgrown casino banks. It would be the simplest task in the world for the Treasury to spread new money all around the country to all healthy remaining banks. Couple of clicks of the mouse and you're done. If the Fed balks, shut them down, too.
Rules
This country is run on a long-term pro-corporate plan, and every four years, we elect a new set of drapes.
Frankly, we probably get all that we really deserve back for our votes. Half of the eligible citizens never register or vote regularly, and of the half that do vote, most of them take all their cues from the dominant media.
Let's face it- we became a spoiled nation. We developed a prosperous middle class very quickly in our history, and we became passive, sloppy and lazy about minding the store. We were not conscious about what an appetizing target we were for a takeover by organized financial power, and because we were not vigilant, we were taken down without much of a fight. Now we have regularly scheduled designed crashes by the financial manipulators and we walk around with these dazed expressions, asking 'What happened?"
Well, guess what, America- these are the new rules. While we were sleeping, the rules were changed. Not only are the 1950's not coming back, but the 1980's are not coming back and not even the 2000's are coming back. Here's what I would say to Americans looking ahead to the economy over next 20 years: expect unprecedented events.
Frankly, we probably get all that we really deserve back for our votes. Half of the eligible citizens never register or vote regularly, and of the half that do vote, most of them take all their cues from the dominant media.
Let's face it- we became a spoiled nation. We developed a prosperous middle class very quickly in our history, and we became passive, sloppy and lazy about minding the store. We were not conscious about what an appetizing target we were for a takeover by organized financial power, and because we were not vigilant, we were taken down without much of a fight. Now we have regularly scheduled designed crashes by the financial manipulators and we walk around with these dazed expressions, asking 'What happened?"
Well, guess what, America- these are the new rules. While we were sleeping, the rules were changed. Not only are the 1950's not coming back, but the 1980's are not coming back and not even the 2000's are coming back. Here's what I would say to Americans looking ahead to the economy over next 20 years: expect unprecedented events.
Pie
As we pass the anniversary of the beginning of the rally that climbed out of the March 2009 lows, we can see a little desperation from the market makers. They have spent a year building a low volume frothy rally with borrowed money and government welfare injected into their high frequency prop trading machine. They've been telling the small investors for a year that, "the water is fine, jump back in the pool, come on, dive in, dive in!", but so far, most small investors have not made that dive ( maybe the unemployment numbers tell us a lot about why? ).
The banks are giving no ground. They are paying less than inflation on money parked in savings. You can't go to bonds- the Fed is buying those up to keep yields low. Anyone who wants a decent yield is being teased by the equity markets. They're looking like the only game in town.
When will we know that the rally is over? When the small investors make that dive. They will be sold to, and then the floor will drop out.
Like any Ponzi scheme, you can't add a horde of new investors to the pool and keep the returns at the same level. The pie is cut into more pieces, and that means smaller pieces..
The banks are giving no ground. They are paying less than inflation on money parked in savings. You can't go to bonds- the Fed is buying those up to keep yields low. Anyone who wants a decent yield is being teased by the equity markets. They're looking like the only game in town.
When will we know that the rally is over? When the small investors make that dive. They will be sold to, and then the floor will drop out.
Like any Ponzi scheme, you can't add a horde of new investors to the pool and keep the returns at the same level. The pie is cut into more pieces, and that means smaller pieces..
Far Right, Far Out
If the Tea Party really is this 'fringe racist far right' movement, then why exactly are liberals and Democrats so infuriated by the Tea Party's success? If the Tea Party really is the far right movement they claim it is, then the Tea Party could only be drawing followers from the Republican party ( according to the logic of the liberals, who think that racism is only found on the right ).
Why does the left keep complaining about the Tea Party if it is only drawing members away from the GOP? Shouldn't they be popping champagne corks?
I think the real story is that Democrats know that their party is also losing members to the Tea Party, as people wake up to the fact that multinational corporate and financial interests own both the Dems and the GOP. The Democrats know that the TP is attracting pro-labor/
Liberals go on and on about 'the anger' in the Tea Party but liberals themselves are fuming that some Democrats are exploring their third party options. Their herd is restless. Why? Because Democrats talk a good game about fighting for the working class but don't follow through. Once they get in power, they work for the powerful.
Why does the left keep complaining about the Tea Party if it is only drawing members away from the GOP? Shouldn't they be popping champagne corks?
I think the real story is that Democrats know that their party is also losing members to the Tea Party, as people wake up to the fact that multinational corporate and financial interests own both the Dems and the GOP. The Democrats know that the TP is attracting pro-labor/
Liberals go on and on about 'the anger' in the Tea Party but liberals themselves are fuming that some Democrats are exploring their third party options. Their herd is restless. Why? Because Democrats talk a good game about fighting for the working class but don't follow through. Once they get in power, they work for the powerful.
Bus
A political movement is just a vehicle to get where you're going. It's like a city bus. You get on the bus because you have a destination. There are going to be people on the bus you don't like, but if you stand on the bus stop waiting for the bus with the perfect driver and the perfect collection of passengers, you are going to be stuck on the same street corner for a long time.
Does every Democrat like every other Democrat? Does every Democrat have to answer for every other Democrat? Why are the rules different for the Tea Party?
Does every Democrat like every other Democrat? Does every Democrat have to answer for every other Democrat? Why are the rules different for the Tea Party?
Colonies
The Revolutionary War was fought by primarily white colonists against the army of the white King of England, which was primarily made up of white soldiers. You can find the same racial demographics at work in the French Revolution or the Russian Revolution- the point is, just because you see a lot of angry white people grouped together, it does not mean that they are acting as racists.
The Tea Party movement is angry at the Washington/New York/globalist power structure, which is the property of overwhelmingly white power brokers. The people who are insisting that the anger of the Tea Party 'can only be about Obama and can only be about his skin color' are doing a great favor for the overwhelmingly white power brokers who funded the Obama campaign victory.
Those white power brokers couldn't ask for a better situation than to have any challenges to their power misrepresented as 'racism against Obama'. By putting Obama on point for their agenda, they give themselves a lot of extra breathing room.
The Tea Party movement is angry at the Washington/New York/globalist power structure, which is the property of overwhelmingly white power brokers. The people who are insisting that the anger of the Tea Party 'can only be about Obama and can only be about his skin color' are doing a great favor for the overwhelmingly white power brokers who funded the Obama campaign victory.
Those white power brokers couldn't ask for a better situation than to have any challenges to their power misrepresented as 'racism against Obama'. By putting Obama on point for their agenda, they give themselves a lot of extra breathing room.
Boomers
Boomers not only spent like crazy, but they were the generation that fertilized the greedy Wall Street culture. After the Great Depression, it took a long time for middle class folks to look at the stock market as the place to be- but when the baby boomers got their money, they jumped in with both feet. The financial sector rose to dominance over the US economy because baby boomers couldn't get enough of Wall Street. They threw their money at every pump and dump hustle Wall Street laid out for them:
Asian stocks- and then that bubble popped.
Tech stocks- and then that bubble popped.
Housing fraud- boomer money flooded into that.
Why is Wall Street so overgrown and out of control today? Why is 'share price' what dominates the business news today? Why do we have CNBC and Bloomberg news around the clock market coverage? Why do we have all these 'trade at home' brokerages? The boomers. They dreamed of fictional wealth like fiends.
What else did they do with their money instead of saving for retirement? Mountains of drugs. About all they liked more than the NASDAQ was cocaine.
Asian stocks- and then that bubble popped.
Tech stocks- and then that bubble popped.
Housing fraud- boomer money flooded into that.
Why is Wall Street so overgrown and out of control today? Why is 'share price' what dominates the business news today? Why do we have CNBC and Bloomberg news around the clock market coverage? Why do we have all these 'trade at home' brokerages? The boomers. They dreamed of fictional wealth like fiends.
What else did they do with their money instead of saving for retirement? Mountains of drugs. About all they liked more than the NASDAQ was cocaine.
Sticks
The 'recovery' is a product rollout campaign, it's marketed just like a car. The process builds in stages. At the beginning, they're just rubbing two sticks together to make a fire, hoping to create a buzz of positive feeling towards a product, which will then turn into a fire that casts a glow that will attract other moths.
It's natural for people to want a recovery, so it's not that hard to transition people from the 'wanting' state of mind to the 'belief in the recovery' state of mind- the architects of the marketing campaign are telling people to see something that they are hoping to see anyway. People who believe in a God will see signs of God's handiwork everywhere in their daily lives. People who think that UFO's exist will, predictably, be more receptive to reports of UFO's ( I'm not saying anything either way about God or UFO's here, just describing how wants intersect with beliefs ).
There's also a substantial amount of peer pressure at work- pessimists will be characterized as somehow 'anti-American' or 'anti-capitalism' ( which is funny, because we have statism, not capitalism ). Analysts who turn a more pessimistic eye to the economy will be treated more harshly by the dominant media . They'll be described as 'prophets of doom' as though they are scary monsters who have come to terrify us.
Basically- if reality contradicts with the message, dispense with reality and guard the message.
It's natural for people to want a recovery, so it's not that hard to transition people from the 'wanting' state of mind to the 'belief in the recovery' state of mind- the architects of the marketing campaign are telling people to see something that they are hoping to see anyway. People who believe in a God will see signs of God's handiwork everywhere in their daily lives. People who think that UFO's exist will, predictably, be more receptive to reports of UFO's ( I'm not saying anything either way about God or UFO's here, just describing how wants intersect with beliefs ).
There's also a substantial amount of peer pressure at work- pessimists will be characterized as somehow 'anti-American' or 'anti-capitalism' ( which is funny, because we have statism, not capitalism ). Analysts who turn a more pessimistic eye to the economy will be treated more harshly by the dominant media . They'll be described as 'prophets of doom' as though they are scary monsters who have come to terrify us.
Basically- if reality contradicts with the message, dispense with reality and guard the message.
Wednesday, March 10, 2010
HP Playing The Race Card Overtime
Here's what I don't get: if the Tea Party really is this 'fringe racist far right' movement, then why exactly are liberals and Democrats so infuriated by the Tea Party's success? If the Tea Party really is the far right movement they claim it is, then the Tea Party could only be drawing followers from the Republican party ( according to the logic of the liberals, who think that racism is only found on the right ).
Why does the left keep complaining about the Tea Party if it is only drawing members away from the GOP? Shouldn't they be popping champagne corks?
I think the real story is that Democrats know that their party is also losing members to the Tea Party, as people wake up to the fact that multinational corporate and financial interests own both the Dems and the GOP. The Democrats know that the TP is attracting pro-labor/anti-globalization/anti-open borders/anti-Wall Street former Democrats. Rather than make an honest attempt to earn back the support of such people, they show the worst kind of sour grapes, and scream insults like 'racist' at them.
Liberals go on and on about 'the anger' in the Tea Party but liberals themselves are fuming that some Democrats are exploring their third party options. Their herd is restless. Why? Because Democrats talk a good game about fighting for the working class but don't follow through. Once they get in power, they work for the powerful.
Why does the left keep complaining about the Tea Party if it is only drawing members away from the GOP? Shouldn't they be popping champagne corks?
I think the real story is that Democrats know that their party is also losing members to the Tea Party, as people wake up to the fact that multinational corporate and financial interests own both the Dems and the GOP. The Democrats know that the TP is attracting pro-labor/anti-globalization/anti-open borders/anti-Wall Street former Democrats. Rather than make an honest attempt to earn back the support of such people, they show the worst kind of sour grapes, and scream insults like 'racist' at them.
Liberals go on and on about 'the anger' in the Tea Party but liberals themselves are fuming that some Democrats are exploring their third party options. Their herd is restless. Why? Because Democrats talk a good game about fighting for the working class but don't follow through. Once they get in power, they work for the powerful.
Monday, March 8, 2010
Brakes
The reason why auto manufacturers must comply with safety standards for their vehicles is so we don't have an epidemic of car crashes caused by faulty equipment. If some auto manufacturer decided to make a cheap car that was affordable to lower income people who could not normally buy a car, but they hit their price point by using really bad brake systems that led to accidents, no one would be saying 'how dare those people dead on the highway buy those cheap but dangerous cars'. The banks created loans that did not meet safety standards, the brakes failed, and foreclosures ( car crashes ) soared.
It's all on the banks. Yes, there was a ton of mortgage fraud and shady home flippers who also had Christmas day for five years thanks to the cheap credit policies, but it all took place right under the banking industry's nose. They knew that money was pouring into real estate and they knew that the system was running without good safety standards.
It's all on the banks. Yes, there was a ton of mortgage fraud and shady home flippers who also had Christmas day for five years thanks to the cheap credit policies, but it all took place right under the banking industry's nose. They knew that money was pouring into real estate and they knew that the system was running without good safety standards.
Locomotive
>>"The lax lending standards and loose monetary policy was the effort by the federal govt and Federal Reserve to mitigate the crash following the tech-bubble."
I would disagree. They committed themselves to the creation of a new bubble to replace the dot-com bubble. They did this fully aware that the consequences at the tail end would be even worse, because the phony housing bubble would hit more average citizens right where they lived ( literally ) than the more speculator-oriented dot com bubble, which was more of a 'stock players' crash.
I don't care how many times the Fed tries to correct an economy overdriven by loose credit with more loose credit- it's the wrong prescription, every time. When the economy stalls after a credit-driven bubble, it is demanding rest and rehabilitation to return to equilibrium. The Fed prevents this by hurling even more coal into the locomotive.
It's like rushing to the accident scene where a drunk driver has just crashed his car, handing him whiskey and the keys to another car, and telling the drunk to 'Get back on the road and drive even faster!'
You have to let the economy sober up, not hand it more poison.
Greenspan
The 'deregulation' promoted by Greenspan, Rubin, Summers et al was not to free the markets, though, but to empower an entrenched club of insiders to manipulate the markets. Because monopolistic control of the monetary supply is in the hands of a banking cartel, it is a manifestation of centralized oligarchical power, and it supplants free competition with organized 'competition' within a framework established by a single entity, the Fed cartel.
It's analogous to something like the NFL- the Bears and the Packers players will play a competitive game on the field, but the two business organizations are partners in a league, the NFL, where their overriding concern is the financial success of the league as a whole, not points on the game scoreboards. All the major banks are partners in the Fed system, and they would not behave in ways that would put themselves individually above the success of their league ( cartel ).
Greenspan manipulated the monetary supply not to set the markets free, but to create a shared profit opportunity for the 'teams' inside their league.
When Greenspan was still listening to Rand, he was writing things like this:
"In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value." AG, 1967.
And then he went on to head the single largest generator of inflation and wealth confiscation through fiat.
It's analogous to something like the NFL- the Bears and the Packers players will play a competitive game on the field, but the two business organizations are partners in a league, the NFL, where their overriding concern is the financial success of the league as a whole, not points on the game scoreboards. All the major banks are partners in the Fed system, and they would not behave in ways that would put themselves individually above the success of their league ( cartel ).
Greenspan manipulated the monetary supply not to set the markets free, but to create a shared profit opportunity for the 'teams' inside their league.
When Greenspan was still listening to Rand, he was writing things like this:
"In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value." AG, 1967.
And then he went on to head the single largest generator of inflation and wealth confiscation through fiat.
Jackson
The Federal Reserve is actually more privately-owned and less subject to government supervision than the Second Bank of the United States, which was defeated by President Jackson.
Funny how Jackson became the target of assassination attempts for challenging bankers who, according to ThunderclapNewman, are already government employees working for no profit... ;-)
I wonder why the bankers always seem to react so violently when their allegedly 'pro bono government job' of tending to the monetary supply is challenged
Funny how Jackson became the target of assassination attempts for challenging bankers who, according to ThunderclapNewman, are already government employees working for no profit... ;-)
I wonder why the bankers always seem to react so violently when their allegedly 'pro bono government job' of tending to the monetary supply is challenged
Explode
Not only did the Fed's owners explode the market for CDO's and MBS and derivatives as soon as they purchased the repeal of Glass Steagall from the government, but then they immediately used the government to distort the risk equations of their new financial products, by using Fannie and Freddie to backstop the crap mortgages they were bundling. Then the ratings agencies rolled over and slapped AAA on them and then the credit default swaps exploded because after all, who wouldn't write insurance on a government-backed debt?
The rest is history. Organized manipulation of the markets by a financial sector/government partnership. The markets were not free. Just like when termites invade your foundation, they are collaborating with a single goal: to eat the pilings out, harvest the profits, and leave the carcass for the taxpayers to clean up.
The rest is history. Organized manipulation of the markets by a financial sector/government partnership. The markets were not free. Just like when termites invade your foundation, they are collaborating with a single goal: to eat the pilings out, harvest the profits, and leave the carcass for the taxpayers to clean up.
Two Masters
It is impossible for a man to serve two masters. All the governors are from the banking industry, and they cannot arbitrate between what would be best for the citizens and what would be best for the success of the bank. They don't even try. It is a long slow burn and transfer of wealth that they patiently execute at a pace that does not scare the golden goose or kill it.
The Fed exists to make the citizens pay retail prices for access to money that the founding fathers established should be created at wholesale.
The Fed exists to make the citizens pay retail prices for access to money that the founding fathers established should be created at wholesale.
Reptilian Slime Lords
http://www.huffingtonpost.com/2010/03/07/fed-to-keep-bank-oversigh_n_489477.html
I'm not trying to feed any paranoia, but take a look at the big photo of the Fed building that is/was on the HuffPo front page. Count the long glass windows on the building's face. 10 to the left of the center entrance, 10 to the right of the center entrance, and three around the entrance itself. Total of 23. Lots and lots to do with 23's and 10+13 in various numerology/symbology
Fed established in 1913. December 23, 1913, to be exact. This probably breaks the rules of numerology, but (19) 1+9=10, plus 13, you reach 23.
I wonder if the Fed will finish collapsing the dollar at the end of the Mayan calendar. Which comes on December 23, 2012. 20 + 1 + 2=23
Reptilian slime lords have got our number.
I'm not trying to feed any paranoia, but take a look at the big photo of the Fed building that is/was on the HuffPo front page. Count the long glass windows on the building's face. 10 to the left of the center entrance, 10 to the right of the center entrance, and three around the entrance itself. Total of 23. Lots and lots to do with 23's and 10+13 in various numerology/symbology
Fed established in 1913. December 23, 1913, to be exact. This probably breaks the rules of numerology, but (19) 1+9=10, plus 13, you reach 23.
I wonder if the Fed will finish collapsing the dollar at the end of the Mayan calendar. Which comes on December 23, 2012. 20 + 1 + 2=23
Reptilian slime lords have got our number.
Sunday, March 7, 2010
Tea Party
The major candidates of both the Democratic Party and the Republican Party are approved by groups like the CFR, Trilateral, Bilderberger, organizations dominated almost exclusively by old, rich, powerful white males- so how racist does that make the two major parties?
Compression
The metastatasizing tumor of elite money power has our constitutional system of government pinned to the ground and is choking the last breaths right out of it. Big Business and Big Government have formed a symbiotic hybrid beast and anyone who still discusses them as adversaries is living way way back in the past.
Continental
A private corporation like the Fed would have no interest in operating such a system without the profit motive. The Treasury could default on the debt brokered by the Fed and replace it with a constitutional monetary system, but if it established a fractional reserve/fiat system, inflation worse than ever would result, just like with the Continental after the Revolutionary war or the Greenbacks after the Civil War. Fractional reserve by definition is a constant expansion of the monetary supply that translates into currency depreciation and then price inflation.
Money must be convertible into a tangible asset or it is unsound. Paper fiat will always return to its intrinsic value: zero.
Money must be convertible into a tangible asset or it is unsound. Paper fiat will always return to its intrinsic value: zero.
Back To The Debt
>>"The GOP ran up $10 trillion in debt during the Reagan and Bush years."
That's twenty years across three presidential administrations. I looked up the numbers.
Reagan, 80-88, added $1.7 trillion to the public debt.
Bush 41, 88-92, added $1.4 trillion to the public debt.
Bush 43, 2000-2008, added $4 trillion to the public debt.
Total of $7.1 trillion not $10 trillion.
$7.1 trillion into 20 years is only an average of $350 billion in debt each year.
Obama will probably add around $6 to 8 trillion in four years, for an average of well over a trillion in new debt each year. Even adjusting for inflation, Obama's deficit numbers are no improvement.
Friday, March 5, 2010
Profound Insult
“>>"it's a profound insult to the richest country on Earth. " http://www.huffingtonpost.com/les-leopold/why-are-we-afraid-to-crea_b_487041.html
When the distribution of wealth is so out of wack , it's hard to believe that calling us 'the richest country on Earth' really means anything. America has the widest income distribution of any industrialized country on the planet. The wealthiest 1 percent of families owns roughly 34.3% of the nation's net worth, the top 10% of families owns over 71%, and the bottom 40% of the population owns way less than 1%.
Rather than saying 'America is the richest country on Earth', I think it is more accurate to say this: 'America is a country that contains a number of very very rich people.' A big part of the population is using some form of government assistance, and a majority require credit to supplement their income. As a country, we borrow more than any on Earth. So I don't know how 'rich' we really are.
We got to this point because America's rich have successfully underpaid labor or outsourced it, for a long time. We are not going to create good high-paying jobs because the sliver of Rich People do not want to reverse this process. They won. They bought the politicians and the media and they're not going to start creating American jobs again unless it works for their bottom line.”
Wednesday, March 3, 2010
Funhouse
Have you ever stopped to consider that your view of the Tea Party is through the lens of the dominant media?
The bread and butter of the dominant media's political coverage is the phony Coke vs. Pepsi duopoly of the two corporate major parties. The corporations that buy ads on the dominant media are all affiliated with the two major parties. The dominant media has every motive in the world to present a funhouse mirror view of the Tea Party.
The Tea Party opposes the Fed, Wall Street, foreign wars and globalization. The dominant media has delivered nothing but a sanitized view of the Fed, hypes foreign wars, and sold us the hoax of globalization. The Tea Party is not only opposed to the sellout leaders of both corporate globalist major parties, but is also a threat to the propaganda machine of the mass media.
It greatly serves the needs of the ruling power structure to destroy any upstart movements, because if they don't destroy them, then they have to buy them off and neutralize them, like they have done with the Democrats.
The bread and butter of the dominant media's political coverage is the phony Coke vs. Pepsi duopoly of the two corporate major parties. The corporations that buy ads on the dominant media are all affiliated with the two major parties. The dominant media has every motive in the world to present a funhouse mirror view of the Tea Party.
The Tea Party opposes the Fed, Wall Street, foreign wars and globalization. The dominant media has delivered nothing but a sanitized view of the Fed, hypes foreign wars, and sold us the hoax of globalization. The Tea Party is not only opposed to the sellout leaders of both corporate globalist major parties, but is also a threat to the propaganda machine of the mass media.
It greatly serves the needs of the ruling power structure to destroy any upstart movements, because if they don't destroy them, then they have to buy them off and neutralize them, like they have done with the Democrats.
More
I'm not sure /don't know if the only reason that the Left embraced BHO is because of race,
but I do think that race is the glue that keeps many Democrats from breaking their embrace of Obama, though.
Why? Because the Left thinks racially at all times, at least as much as the Right, whether they admit it or not. They are largely unable to see Obama as an individual. They see him as a 'representative' of his race, and therefore, they view a repudiation or rejection of Obama as an attack on all who share his ethnicity ( which is made even more ridiculous by the fact that he's half white ).
This inability to judge someone as an individual separate from his race is a cornerstone of race-based thinking, and it's an inability that is epidemic in the Left. When the left plays the race card on Obama's behalf and paints that Teflon shield on him, they are exhibiting racism of their own. By forcing all judgments of his policies to be filtered through the issue of race, they send a very strong message that Obama's ethnicity handicaps his abilities. That's racist.
but I do think that race is the glue that keeps many Democrats from breaking their embrace of Obama, though.
Why? Because the Left thinks racially at all times, at least as much as the Right, whether they admit it or not. They are largely unable to see Obama as an individual. They see him as a 'representative' of his race, and therefore, they view a repudiation or rejection of Obama as an attack on all who share his ethnicity ( which is made even more ridiculous by the fact that he's half white ).
This inability to judge someone as an individual separate from his race is a cornerstone of race-based thinking, and it's an inability that is epidemic in the Left. When the left plays the race card on Obama's behalf and paints that Teflon shield on him, they are exhibiting racism of their own. By forcing all judgments of his policies to be filtered through the issue of race, they send a very strong message that Obama's ethnicity handicaps his abilities. That's racist.
Fear-mongering
>>"where were the teabaggers when the far-right endorsed and supported a massive increase in the size of government, unitary executive power grabs and unconstitutional measures fueled by fear-mongering over the very remote threat of terrorism? " from http://www.huffingtonpost.com/bob-cesca/the-tea-party-is-all-abou_b_484229.html
Do we need to even count how many times the Left either laid down for the same fear-mongering, or worse, amplified it in lockstep with GWB?
This past week, the Democratic majority passed and President Obama signed an extension of the Patriot Act for another year. Without making any revisions to it. So I guess that counts as a 100% endorsement of the Bush DOJ's Patriot Act by Obama and the Democrats.
98 Senators voted for the Patriot Act in 2001. Were they all 'far-right'?
89 Senators voted for the renewal in 2006. Were they all 'far-right'?
Democrats never succeeded in blocking any of Bush's war appropriation bills. Even after they took a majority in 2006. Even after we all learned that the intel was concocted. Even after the WMD's never appeared.
Democrats never brought impeachment charges against Bush or Cheney. Even after we heard about the torture and rendition and wiretapping.
The Democrats are up to their necks in blame for the Bush attacks on civil liberties and the Bush war crimes.
Monday, March 1, 2010
Demographics
The number one factor pointing towards a long period of economic stagnation is the one factor that cannot be altered by the government or obscured with monetary manipulation- it's population demographics.
The peak spending years of the baby boomers are over. The generation following them cannot fill their shoes as spenders. Not only that, but the baby boomers are transforming from spenders into savers more rapidly, as they come to recognize that Social Security is becoming insolvent faster than predicted, and as they recognize that pension funds are either underfunded or holding bad investments. They will drain buy money out of the stock market to maintain their accustomed standard of living.
All the very bad deficit projections for the next 4-6 years are not bad enough. Bond yields will soar and that will be that. We will miss the days of $1.6 trillion annual deficits then. We are entering a perfect storm. These cycles cannot be broken.
The peak spending years of the baby boomers are over. The generation following them cannot fill their shoes as spenders. Not only that, but the baby boomers are transforming from spenders into savers more rapidly, as they come to recognize that Social Security is becoming insolvent faster than predicted, and as they recognize that pension funds are either underfunded or holding bad investments. They will drain buy money out of the stock market to maintain their accustomed standard of living.
All the very bad deficit projections for the next 4-6 years are not bad enough. Bond yields will soar and that will be that. We will miss the days of $1.6 trillion annual deficits then. We are entering a perfect storm. These cycles cannot be broken.
Fed Aids Foreign Banks
The Fed has been aiding foreign banks for nearly as long as there has been a Fed. During the Great Depression ( in 1931, to be specific ), the Fed made loans to the Bank of England, Germany's Reichsbank, and to Austrian and Hungarian banks. The Fed is part of an international network of central banks, and the heart of this cooperative is the BIS ( Bank of International Settlements ) .
Harrison was George Harrison of the NY Fed, Eccles was Marriner Eccles, Fed Chairman.
There's nothing bizarre about Paul's questions- not if you understand that the Fed is not an agency of US government but of international finance.
"The BIS account was opened in 1931 in the sum of $10 million...
In a letter from Mr. Harrison to Chairman Eccles in September 1936 it was stated that “The deposit was made for the same purpose, essentially, as the credits which the Federal Reserve Banks extended to foreign central banks during 1931. It was made in lieu of our having to respond to requests for assistance on behalf of various smaller European central banks.”
Harrison was George Harrison of the NY Fed, Eccles was Marriner Eccles, Fed Chairman.
There's nothing bizarre about Paul's questions- not if you understand that the Fed is not an agency of US government but of international finance.
Sunday, February 28, 2010
Trade Deficit
The trade deficit cannot be fixed by forcing a weak dollar policy in the hopes of selling more exports, because over 50% of our trade deficit is related to petroleum. Any slump in the dollar will push up what we pay for oil, canceling out any increase in exports we might hope for.
We are already an import-dependent nation, so any debasement of our currency amplifies the costs of what we're already hooked on ( imports ) more than it amplifies the appeal of whatever products we still export.
Trade deficits are only broken one way: through tariffs and other protectionist measures.
We are already an import-dependent nation, so any debasement of our currency amplifies the costs of what we're already hooked on ( imports ) more than it amplifies the appeal of whatever products we still export.
Trade deficits are only broken one way: through tariffs and other protectionist measures.
The Myth That Weak Exports Are Caused By A Strong Dollar
The Dollar is not strong, so why make arguments based on that falsehood?
The currency cannot be adjusted and then become some magic wand that makes trade deficits vanish. Here's an analogy. Imagine if Florida and Michigan had their own separate currencies. Could Michigan debase its currency and steal a large share of the orange market away from Florida? No, because Michigan could not deliver a supply of oranges from their soil and climate. No amount of currency trickery could change Michigan's supply problem.
America once had a 'soil' that could produce not only enough consumer goods for her own population, but goods that were competitive in overseas markets. No more. First America lost overseas markets, then America lost its ability to supply itself ( all by design, of course, thanks to the hijacking of our government by parties who think internationally, not nationally ).
How do we we back out of this trap? First, our internal supply chain must be rebuilt, so Americans have a choice between homegrown and imports. Then, American consumers must unlearn all the lies they were told about globalization and relearn the principle of 'buy American, put Americans to work, build America'. Then, if we have the patience to retrace our steps back out of the folly of fake free trade and make a new marriage between the US consumer and the US manufacturer, only then will it be time to worry about how much we export.
“Baker: "The reason that the United States consistently runs large trade deficits is that its currency is overvalued."
The currency cannot be adjusted and then become some magic wand that makes trade deficits vanish. Here's an analogy. Imagine if Florida and Michigan had their own separate currencies. Could Michigan debase its currency and steal a large share of the orange market away from Florida? No, because Michigan could not deliver a supply of oranges from their soil and climate. No amount of currency trickery could change Michigan's supply problem.
America once had a 'soil' that could produce not only enough consumer goods for her own population, but goods that were competitive in overseas markets. No more. First America lost overseas markets, then America lost its ability to supply itself ( all by design, of course, thanks to the hijacking of our government by parties who think internationally, not nationally ).
How do we we back out of this trap? First, our internal supply chain must be rebuilt, so Americans have a choice between homegrown and imports. Then, American consumers must unlearn all the lies they were told about globalization and relearn the principle of 'buy American, put Americans to work, build America'. Then, if we have the patience to retrace our steps back out of the folly of fake free trade and make a new marriage between the US consumer and the US manufacturer, only then will it be time to worry about how much we export.
Trade
We can't keep trading borrowed paper for real commodities forever either without creating economic conditions just as dire, so unless you have a better idea for weaning Americans off imports other than by protecting US manufacturers from outside predators, I guess you just better ignore the trade deficit. Manufacturing is not going to grow again in America until Americans commit to buying American again, and Americans are not going to commit to buying American again until American-made is given preferential treatment in our marketplace.
Social Security
“>>"It is an intergenerational transfer or resources.
Exactly.
>>"they choose to perpetuate this myth that the money comes from the government"Right, they have to promote that falsehood, because then they can characterize all efforts to restrain government borrowing and spending as 'threats against Social Security', when government does not create the retirement benefits, it transfers them, like you say. Government is just the mailman here.
The problem is, government is like a mailman who steals from the mail while it's in route. There was supposed to be a larger surplus put aside for babyboomers from previous taxpayers, but the government mailman steamed upon the envelopes and took the extra money as it came in and spent it.
Social Security
Warning about deficits is something that you have to do, if you care about delivering retirement benefits:
Excess government borrowing today swells our deficits tomorrow which will make our future credit more expensive. If our future credit is more expensive, then it will be MORE difficult for the government to borrow enough to cover the gap between what future wage earners are able to transfer to future retirees and what future retirees need..
Because of demographic and economic trends, we are going to reach a point very soon where a much larger portion of what gets paid out in benefits will have to be covered by new government borrowing, because the scales are tipping towards a bigger and bigger surplus of eligible retirees. Running massive deficits into the future is very stupid, because the yield demanded by our creditors is going to rise. If the government tries to monetize its own debt to supplement the social security deficits, the dollar will be demolished and people will be getting benefit checks that can't keep pace with inflation.
Excess government borrowing today swells our deficits tomorrow which will make our future credit more expensive. If our future credit is more expensive, then it will be MORE difficult for the government to borrow enough to cover the gap between what future wage earners are able to transfer to future retirees and what future retirees need..
Because of demographic and economic trends, we are going to reach a point very soon where a much larger portion of what gets paid out in benefits will have to be covered by new government borrowing, because the scales are tipping towards a bigger and bigger surplus of eligible retirees. Running massive deficits into the future is very stupid, because the yield demanded by our creditors is going to rise. If the government tries to monetize its own debt to supplement the social security deficits, the dollar will be demolished and people will be getting benefit checks that can't keep pace with inflation.
Founders
Democracy is Majority-over-Man, which the founders were sworn opponents of- thus, the Bill of Rights, among other protections from mob rule.
Federalist paper number 10 will tell you all you need to know about Madison's view on democracy.
The US was designed as a Republic that guarded the rights of the individual first and foremost. Representation was created to control the majority, not to act on behalf of the majority.
Federalist paper number 10 will tell you all you need to know about Madison's view on democracy.
The US was designed as a Republic that guarded the rights of the individual first and foremost. Representation was created to control the majority, not to act on behalf of the majority.
Narrow Peak, Double Dip
Why is only a very narrow sector of the economy ( the financial sector ) turning huge profits currently amid a sea of otherwise mediocre to awful economic data?
Because the rescue only rejuvenated a very narrow sector of the economy. If the rest of the economy really was glued to Wall Street's backside like a saddle on a horse, then we would see evidence of an immediate collateral lift to the rest of the economy as Wall St. lifted off again. But no. They have headed for higher altitudes again, and we have stayed pinned to the mud at ground level.
Wall Street does not pull the economy up when it is gifted with welfare, and it would not drag us into a pit of ruins if it was denied welfare.
We should have cut that tape worm loose and rebuilt a real constitutional monetary system on their cadavers. By saving them, all we did was put ourselves right back in the crosshairs for their next pump and dump con game.
Because the rescue only rejuvenated a very narrow sector of the economy. If the rest of the economy really was glued to Wall Street's backside like a saddle on a horse, then we would see evidence of an immediate collateral lift to the rest of the economy as Wall St. lifted off again. But no. They have headed for higher altitudes again, and we have stayed pinned to the mud at ground level.
Wall Street does not pull the economy up when it is gifted with welfare, and it would not drag us into a pit of ruins if it was denied welfare.
We should have cut that tape worm loose and rebuilt a real constitutional monetary system on their cadavers. By saving them, all we did was put ourselves right back in the crosshairs for their next pump and dump con game.
Simon Johnson On China
http://www.huffingtonpost.com/simon-johnson/should-we-fear-china_b_476339.html
Johnson's premise seems to be that a China-propelled steep depreciation of the dollar will have a substantial upside and cause only minor pain. But the US has not only lost much of its export business, it has lost the means to produce exports in many cases. The factories are gone- or the horses have left the barn, as you write.
Waving a weak dollar across the land is not going to work like a magic wand and make factories pop out of the ground like corn stalks. I'm not sure Johnson has factored in what a weak dollar will mean for US energy costs. Factories need oil to heat them, and the goods have to be trucked to port- a weaker dollar is going to immediately push those costs right up.
This article just seems to be one long sell job on how much we're really really going to love a weaker dollar, but if we're already dependent on imports ( as we are ), why should be encouraging a faster loss of the dollar's purchasing power?
Johnson has not convinced me that China selling treasuries in volume would not mean serious trouble.
Johnson's premise seems to be that a China-propelled steep depreciation of the dollar will have a substantial upside and cause only minor pain. But the US has not only lost much of its export business, it has lost the means to produce exports in many cases. The factories are gone- or the horses have left the barn, as you write.
Waving a weak dollar across the land is not going to work like a magic wand and make factories pop out of the ground like corn stalks. I'm not sure Johnson has factored in what a weak dollar will mean for US energy costs. Factories need oil to heat them, and the goods have to be trucked to port- a weaker dollar is going to immediately push those costs right up.
This article just seems to be one long sell job on how much we're really really going to love a weaker dollar, but if we're already dependent on imports ( as we are ), why should be encouraging a faster loss of the dollar's purchasing power?
Johnson has not convinced me that China selling treasuries in volume would not mean serious trouble.
Unity
Both the Democrats and the Republicans are in favor of a weaker dollar, but it's got nothing to do with exports. Both parties are in sync with the quantitative easing and monetization of debt policies of the Fed ( the real power over both parties ), because they are trying to stiff our creditors by paying down our enormous debt with depleted dollars. Clearly, the decision to try and hide M3 data beginning a few years ago was part of this plan.
Until I see rates on short-term Treasuries climb above 5%, I will assume that a weak dollar policy is our policy. whether we admit it or not, or admit to the motives or not.
Until I see rates on short-term Treasuries climb above 5%, I will assume that a weak dollar policy is our policy. whether we admit it or not, or admit to the motives or not.
Colony Of Loans Of The Damned
Fannie Mae Requests Another $15 Billion
Fannie and Freddie were made into floating offshore zombie garbage scows, a colony for Loans of the Damned to be exiled to.
Wednesday, February 24, 2010
The Myth
>>"Saving the economy from complete meltdown - another Great Depression "
Stating this as fact is really getting old. The idea that Wall Street is a domino that takes out the whole economy if it falls is a myth.
Why is only a very narrow sector of the economy ( the financial sector ) turning huge profits currently amid a sea of otherwise mediocre to awful economic data?
Because the rescue only rejuvenated a very narrow sector of the economy. If the rest of the economy really was glued to Wall Street's backside like a saddle on a horse, then we would see evidence of an immediate collateral lift to the rest of the economy as Wall St. lifted off again. But no. They have headed for higher altitudes again, and we have stayed pinned to the mud at ground level.
Wall Street does not pull the economy up when it is gifted with welfare, and it would not drag us into a pit of ruins if it was denied welfare.
We should have cut that tape worm loose and rebuilt a real constitutional monetary system on their cadavers. By saving them, all we did was put ourselves right back in the crosshairs for their next pump and dump con game.
Monday, February 22, 2010
Hijacking
The middle class was built from the manufacturing base. American workers and American consumers and American businesses grew in tandem, shared a symbiotic momentum. Build American, buy American, spend American, save American, invest American, the circuit of supply and demand. Labor costs and profits and prices, all traveling on the deck of the same vessel, none could get too far out of line without capsizing the ship entirely.
And then the equilibrium was destroyed.
American businesses were offered access to overseas workers, and took them.
American businesses were offered access to cheaper imported laborers, and took them.
American consumers were offered access to cheaper imports, and took them.
America's middle class was offered new speculative opportunities based on the tricked-up short-term profits derived from the trends listed just above, and took them.
American workers lost their voice in government, when the Democrats turned into centrist/globalist/finance sector stooges.
Protectionism became a dirty word. We were taught that globalization was 'an inevitability'. What made globalization an inevitability? The inability to find more than ten people in Washington or in the MSM telling the truth about it.
Government, hijacked by traitors, destroyed the middle class.
And then the equilibrium was destroyed.
American businesses were offered access to overseas workers, and took them.
American businesses were offered access to cheaper imported laborers, and took them.
American consumers were offered access to cheaper imports, and took them.
America's middle class was offered new speculative opportunities based on the tricked-up short-term profits derived from the trends listed just above, and took them.
American workers lost their voice in government, when the Democrats turned into centrist/globalist/finance sector stooges.
Protectionism became a dirty word. We were taught that globalization was 'an inevitability'. What made globalization an inevitability? The inability to find more than ten people in Washington or in the MSM telling the truth about it.
Government, hijacked by traitors, destroyed the middle class.
Sunday, February 21, 2010
Whiplash
Manipulation of the money supply is something that is done to conceal dominant economic trends. Currently, the Federal Reserve is attempting to overrule the dominant deflationary trend by generating reams of money. This will fail, and will produce a whiplash effect on prices, a quick reversal from deflationary prices to inflationary prices.
The demand for credit and the price of credit will always be what they should be, when the quantity and the price are reached through mutual agreement between debtor and creditor. When government intervenes in this process and boils the pot of lending and borrowing by offering an artificial 'set' price of credit backed by government guarantees ( like on the upside of the housing bubble ), this will always lead to malinvestment, unwise speculation and runaway leverage, followed by a seizure of the credit system and a collapse in the value of debt-backed assets.
The demand for credit and the price of credit will always be what they should be, when the quantity and the price are reached through mutual agreement between debtor and creditor. When government intervenes in this process and boils the pot of lending and borrowing by offering an artificial 'set' price of credit backed by government guarantees ( like on the upside of the housing bubble ), this will always lead to malinvestment, unwise speculation and runaway leverage, followed by a seizure of the credit system and a collapse in the value of debt-backed assets.
Axis
The US government, financial establishment, and citizens are not all allies on the same team, with a shared, mutually beneficial agenda. There is no dominant national self-interest at work through government and finance in America, and there hasn't been in decades. Citizens are resource gatherers, labor; and soldiers; government and finance are resource users, bosses, and warmongers. They can't be on the same team. One wants to get paid more when it delivers more, one wants to pay less for the same product.
The US government and the US financial system are spokes of a global government
'Competition is a sin', said JD Rockefeller, but managed ( phony ) competition between controlled adversaries is essential, because managed competition produces predictable outcomes. America 2010 is the predictable outcome of managed multi-national competition between multiple controlled populations.
Cattle are not fed endlessly by ranchers until they grow old and die peacefully. Cattle are fed until the time is right to slaughter them and sell the meat. America was fattened to serve as global military enforcer for the international financial agenda, but we are being phased out. The feed bag will shrink, the herd will be thinned, prime cuts of beef will be sliced off and delivered to our creditors.
The US government and the US financial system are spokes of a global government
'Competition is a sin', said JD Rockefeller, but managed ( phony ) competition between controlled adversaries is essential, because managed competition produces predictable outcomes. America 2010 is the predictable outcome of managed multi-national competition between multiple controlled populations.
Cattle are not fed endlessly by ranchers until they grow old and die peacefully. Cattle are fed until the time is right to slaughter them and sell the meat. America was fattened to serve as global military enforcer for the international financial agenda, but we are being phased out. The feed bag will shrink, the herd will be thinned, prime cuts of beef will be sliced off and delivered to our creditors.
Best Interests
>>"Waiting for the private banks to voluntarily act against their best interests is insane."
Yes, I know. That's why I base my explanations of the economy on the assumption that any private for-profit monetary system will always work in competition against the public, and there's absolutely nothing the government can do about that, other than make their system illegal and exile or incarcerate all its operators.
People are always saying, "America's economy is not working". But they're wrong. It all depends on where you're standing when you look at it. To break it down to the most basic level, just answer these two questions:
Who has title to real assets?
Who endures a growing debt burden to maintain occupancy/rental of real assets?
The answer to the first is 'the winners', the answer to the second is 'the losers'.
The economy is working for the first group and draining the second. All debt-backed monetary systems have one purpose: confiscation of assets in return for paper that will eventually return to its intrinsic value, zero.
Yes, I know. That's why I base my explanations of the economy on the assumption that any private for-profit monetary system will always work in competition against the public, and there's absolutely nothing the government can do about that, other than make their system illegal and exile or incarcerate all its operators.
People are always saying, "America's economy is not working". But they're wrong. It all depends on where you're standing when you look at it. To break it down to the most basic level, just answer these two questions:
Who has title to real assets?
Who endures a growing debt burden to maintain occupancy/rental of real assets?
The answer to the first is 'the winners', the answer to the second is 'the losers'.
The economy is working for the first group and draining the second. All debt-backed monetary systems have one purpose: confiscation of assets in return for paper that will eventually return to its intrinsic value, zero.
Scale
>>"I'm a fan of a debt-free country, because I think what's good on the small scale is also good on the large scale."
I like that sentence. There aren't many behaviors that flip from bad to good when you increase scale. Here's another example of what you're talking about:
Does the government ever encourage people to think that committing a murder every now and then is okay? No, of course not. But increase the scale, and suddenly, rationalizations for wars with enormous casualty count appear everywhere.
It's another case of the government telling you to do what they don't want to do themselves. Corporations operate a credit rating system that constantly reminds people of what will befall them if they ruin their credit histories, and governments write bankruptcy laws to mop up what happens when people crash on too much debt, but when it comes to debt, the government sets boundaries for itself vastly different than what they set for you.
Why? Because they're spending your money.
Bars
I'm afraid that the only real answer is a new monetary system. The current monetary system exists to extract new interest payments on old loans. We can't win this struggle if we stay on the current monetary system. Cutting all over the place will not solve the core issue: we have a monetary system that is built on self-perpetuating debt.
The citizens of the US would be wise to plan for an intentional debt default. Otherwise, the schedule is set by our creditors.
As a nation, we are faced with two doors every year, and we keep picking the wrong door every year. We walk through the wrong door and spend another year renting our money supply from a private corporation. Then we look at all our taxes and look at the debt, and they both grew again. That should send a message. We cannot tax our way out of this, we cannot grow our way out of this.
The compound interest is the variable that we cannot control. The interest is the prison bars.
The citizens of the US would be wise to plan for an intentional debt default. Otherwise, the schedule is set by our creditors.
As a nation, we are faced with two doors every year, and we keep picking the wrong door every year. We walk through the wrong door and spend another year renting our money supply from a private corporation. Then we look at all our taxes and look at the debt, and they both grew again. That should send a message. We cannot tax our way out of this, we cannot grow our way out of this.
The compound interest is the variable that we cannot control. The interest is the prison bars.
Food Chain
We used to have a fairly compact food chain in this country, owners at the top, labor at the bottom, but since the owners and bosses were still integrated into our society together for the most part, workers were able to see with their own eyes when those at the top of the food chain were taking too large of a helping. The ownership class of America knew that if they got too fat, political movements and labor movements would rise up, there would be conflict, and the pie would be reapportioned.
This familiarity among all those eating from the same table certainly did not produce harmony between the richest and poorest, but each side knew that the other was watching. This served to govern greed and callousness to a welcome degree. The boundaries of allowable exploitation were always tested, but they were also often respected, because they could be determined. Like in a tug of war, the workers and the owners could feel their counterpart when they pulled on the rope.
Now we have an elongated globalized food chain. The ownership class is often multinational, distant and secluded from the observing eyes of the worker ants. Layers of empire surround financial power like moats. Against the worker of today stands a machine, a system. We are not all in the mix together, we will not pass on the street. When the food chain is elongated, it is easier to walk away from the social contract that binds a society.
This familiarity among all those eating from the same table certainly did not produce harmony between the richest and poorest, but each side knew that the other was watching. This served to govern greed and callousness to a welcome degree. The boundaries of allowable exploitation were always tested, but they were also often respected, because they could be determined. Like in a tug of war, the workers and the owners could feel their counterpart when they pulled on the rope.
Now we have an elongated globalized food chain. The ownership class is often multinational, distant and secluded from the observing eyes of the worker ants. Layers of empire surround financial power like moats. Against the worker of today stands a machine, a system. We are not all in the mix together, we will not pass on the street. When the food chain is elongated, it is easier to walk away from the social contract that binds a society.
Independence
The question 'How much independence does the Federal Reserve deserve?' avoids the real question, which is, "What right does the Federal Reserve have to control the money supply at all?"
It's a basic misconception to think that the Fed's mission is to operate the monetary system to the advantage of the citizens. Even John Maynard Keynes will tell you this:
It's a basic misconception to think that the Fed's mission is to operate the monetary system to the advantage of the citizens. Even John Maynard Keynes will tell you this:
"The best way to destroy the capitalist system is to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens." - John Maynard Keynes
Horse Story
Credit is a gamble that lenders make. Bets on a horse race are a response to the quality of the horses, the speed of the horses is not a response to the gambling action they attract. Think of it like this: do you think you could make a slow horse win the Kentucky Derby by encouraging everyone to bet on that horse? Of course not. Same thing with credit. Credit flows towards opportunity.
The US workforce is a slow horse, because it has been handicapped and starved through a coordinated government/ finance sector agenda to gut the engine of the US standard of living. The rejuvenating powers of deficit spending promised by the Keynesians do not work if the patient is now missing several vital organs.
The fast horses are in Asia. That's where you will find investors pouring money into the real street level economy, where they can watch their money run. These investors view America as a dry patch of land for new growth, a gimpy slug of a horse that eats too much and builds too little. They know that America is this hobbled horse, because they're the ones who broke her down.
I hope Americans now realize that the phony prosperity created by globalization was just a stage curtain that allowed the cartels to change the set while you weren't looking. Now the mirage is burning off like morning fog.
The US workforce is a slow horse, because it has been handicapped and starved through a coordinated government/ finance sector agenda to gut the engine of the US standard of living. The rejuvenating powers of deficit spending promised by the Keynesians do not work if the patient is now missing several vital organs.
The fast horses are in Asia. That's where you will find investors pouring money into the real street level economy, where they can watch their money run. These investors view America as a dry patch of land for new growth, a gimpy slug of a horse that eats too much and builds too little. They know that America is this hobbled horse, because they're the ones who broke her down.
I hope Americans now realize that the phony prosperity created by globalization was just a stage curtain that allowed the cartels to change the set while you weren't looking. Now the mirage is burning off like morning fog.
Full Blast
The US government is running a deficit 4x larger than any before, and the world's central banks have flooded commercial and investment banks with unprecedented levels of new liquidity in their panic response to the collapsing debt and corresponding deflationary pressures. Money is being created, full blast, with quantitative easing and zero interest rate policies.
The full blast money that has poured into the system over the past 18 months is circulating in tight rotations in equity markets, in bond markets, in carry trade, or to overseas markets. This will continue.
Deficit hawks and inflation hawks are both correct, because they both recognize that wealth created by expanding the money supply is just an illusion: the amount of wealth has not changed- prices have changed in response to the quantity of money.
The government thinks it can force economic trends by manipulating the money supply, when that does not work. If that was possible, the Weimar Republic would have bought the planet. Leave the money supply alone, let the markets dictate the cost of credit, and let the money supply respond to economic trends, not attempt to drive them.
The quantity of money will always settle at a level appropriate for the execution of commerce if it is not meddled with.
The full blast money that has poured into the system over the past 18 months is circulating in tight rotations in equity markets, in bond markets, in carry trade, or to overseas markets. This will continue.
Deficit hawks and inflation hawks are both correct, because they both recognize that wealth created by expanding the money supply is just an illusion: the amount of wealth has not changed- prices have changed in response to the quantity of money.
The government thinks it can force economic trends by manipulating the money supply, when that does not work. If that was possible, the Weimar Republic would have bought the planet. Leave the money supply alone, let the markets dictate the cost of credit, and let the money supply respond to economic trends, not attempt to drive them.
The quantity of money will always settle at a level appropriate for the execution of commerce if it is not meddled with.
Friday, February 19, 2010
Un-sustain
>>"When does deficit spending become "unsustainable?"
When government has made promises it will not be able to deliver on. Social Security and Medicare are heading into a pool of red ink. The days when the population of wage earners was significantly larger than the population of retirees are over, and they're not coming back. Demographics are not working in our favor.
The generation of wage earners following behind the baby boomers is not going to be able to pay for the bulge in retirees AND the overseas military presence. Unless government intends to renege on promises to retirees, the public debt will expand rapidly. We are not going to enjoy our current low cost of credit when that happens. Every extra percentage point of yield owed will be felt.
As we borrow more, the dollar will weaken considerably, the benefits paid to retirees will not be adequate for a decent standard of living, and the retirees will be forced to cash out of their investments to supplement- not only will the retirement of the baby boomers put unprecedented strain on our tax system and on our ability to borrow, but it will drain plenty of price support out of the equities markets.
This was all predictable 30 years ago and 30 years ago was when we should have begun paring down the defense budgets , but on we went, into multi-trillion dollar wars. Not smart.
Scale
>>"I'm a fan of a debt-free country, because I think what's good on the small scale is also good on the large scale."
I like that sentence. There aren't many behaviors that flip from bad to good when you increase scale. Here's another example of what you're talking about:
Does the government ever encourage people to think that committing a murder every now and then is okay? No, of course not. But increase the scale, and suddenly, rationalizations for wars with enormous casualty counts appear everywhere.
It's another case of the government telling you to do what they don't want to do themselves. Corporations operate a credit rating system that constantly reminds people of what will befall them if they ruin their credit histories, and governments write bankruptcy laws to mop up what happens when people crash on too much debt, but when it comes to debt, the government sets boundaries for itself vastly different than what they set for you.
Why? Because they're spending your money.
Wednesday, February 17, 2010
Response
EH?
That was during the entire Bush administration.
You did know that neither Afghanistan or Iraq was on the books - not ONE CENT - until Obama put them back on as expenses?
If you have somehow concluded that only a Republican would point out the problems on my list, let me assure you: I complained about them during the Bush Presidency, the Clinton Presidency, the earlier Bush Presidency and the Reagan Presidency- basically, ever since I recognized that a globalist/Wall St. power alliance had displaced our two party system.
That is not a partisan list of problems. It's not an anti-Obama list of problems, it's not a pro-Bush list of problems. It's a list of problems that we will have to face together as a nation as long as a globalist/Wall St. power alliance makes the agenda, and as long as people invest their energy into an utterly compromised two party system in hopes of fixing them.
Field Of Vision
http://www.huffingtonpost.com/bob-cesca/happy-anniversary-recover_b_466089.html
This all sounds wonderful- as long as you shrink your field of vision to exclude:
Federal Budget Deficit
U.S. Foreign Trade Deficit
U.S. Dollar Weakens As Foreign Reserve Currency
Global Commercial Real Estate Slump
Social Security Entitlements
Medicare Entitlements
Health Insurance Costs
State, County and Municipal Red Ink and Defaults
Underfunded Corporate Pensions
Underfunded Government Pensions
Consumer Debt
War Budgets
All The Trashed Derivatives And Corpse Loans Hidden From Balance Sheets Everywhere By Phony Accounting
When was the last time people used the DJIA and rigged employment and GDP numbers to declare that the economy was heading in the right direction?
I remember. It was during the housing bubble.
This all sounds wonderful- as long as you shrink your field of vision to exclude:
Federal Budget Deficit
U.S. Foreign Trade Deficit
U.S. Dollar Weakens As Foreign Reserve Currency
Global Commercial Real Estate Slump
Social Security Entitlements
Medicare Entitlements
Health Insurance Costs
State, County and Municipal Red Ink and Defaults
Underfunded Corporate Pensions
Underfunded Government Pensions
Consumer Debt
War Budgets
All The Trashed Derivatives And Corpse Loans Hidden From Balance Sheets Everywhere By Phony Accounting
When was the last time people used the DJIA and rigged employment and GDP numbers to declare that the economy was heading in the right direction?
I remember. It was during the housing bubble.
Cutting Through More Nonsense
http://www.huffingtonpost.com/2010/02/16/fed-president-great-depre_n_464760.html
>"when the Fed agrees to make a loan to a financial firm it does so knowing that if it sours, the loss ends up on the Fed's balance sheet. "It has every incentive to do a good job in assessing the borrower quality," Kocherlakota said."
The Fed creates all loans from the balance sheet of the American public. The risk of 'souring loans' is always carried by the taxpayers, not the shareholders of the Fed. The Federal Reserve itself cannot actually 'absorb' a loss on a bad loan, because the Fed corporation never contributes its own funds to these loans.
Every year, the supposedly 'non profit' Federal Reserve returns its annual profits to the Treasury. Here's the report from this past year:
"The Federal Reserve says it made a record profit of $46.1 billion last year. The windfall gets turned over to the U.S. Treasury."
Now ask yourself this question: if the Fed turns over 'the profits' to the US Treasury, who do you think the losses are turned over to as well?
Same Treasury.
Mr. Kocherlakota's description of the risk to the Fed corporation posed by bad loans is false.
'the loss ends up on the Fed's balance sheet'
Nope. The Fed just runs your collective national bank account. They no more lend 'their own money' than does the loan officer at your local bank write mortgages out of his own pocket.
Tuesday, February 16, 2010
Recalibrate
The whole political spectrum needs to be recalibrated.
If real liberals are sick of voting for phony centrist 'lesser of two evils' types, then I would encourage them to think about where 'liberal' and 'liberty' cross paths. The words come from the same place, and 'liberal' used to stand for freedom.
Think about what libertarianism might have in common with liberalism. Stop being scared of promoting individual liberties ahead of state power. Stop jumping for 'Bigger Government' as the answer for everything. It's exactly the choice that Big Business wants you to make, because they own The State.
The State is a conservative institution, and it grows more conservative the larger it gets. A bigger state *has to* take away more individual freedoms. It cannot be made into a liberal institution, because the bigger you make it in pursuit of some 'liberal utopia' , the more that Big Business and the ruling class will pay to own it.
It's a temptation they can't resist. A huge, powerful tool for pushing people around and micromanaging their lives? OF COURSE the ruling class is going to buy that right out from under you. It's the superweapon they've always dreamed of.
Stalin: Big State.
Hitler: Big State.
Mao: Big State.
On and on.
If real liberals are sick of voting for phony centrist 'lesser of two evils' types, then I would encourage them to think about where 'liberal' and 'liberty' cross paths. The words come from the same place, and 'liberal' used to stand for freedom.
Think about what libertarianism might have in common with liberalism. Stop being scared of promoting individual liberties ahead of state power. Stop jumping for 'Bigger Government' as the answer for everything. It's exactly the choice that Big Business wants you to make, because they own The State.
The State is a conservative institution, and it grows more conservative the larger it gets. A bigger state *has to* take away more individual freedoms. It cannot be made into a liberal institution, because the bigger you make it in pursuit of some 'liberal utopia' , the more that Big Business and the ruling class will pay to own it.
It's a temptation they can't resist. A huge, powerful tool for pushing people around and micromanaging their lives? OF COURSE the ruling class is going to buy that right out from under you. It's the superweapon they've always dreamed of.
Stalin: Big State.
Hitler: Big State.
Mao: Big State.
On and on.
Three Agents
"While O was involved in the TARP negotiations, he was not the "decider". That was Hank, Ben and Timmy, (with Bush's blessing)(?)"
And there's the crux of the matter- you have two agents of a private corporation, Ben and Tim of the Federal Reserve, and a third, Hank, who was pretty much working for Goldman the entire time he was in DC, and they're the three people running the 'government' response.
I don't see a public servant in the group. Zero. Worse than zero. They're not even straddling both camps, banking and government. They're only in the government camp as much as they are so they can loot it.
Monday, February 15, 2010
Cascade Effect Part I
The 'cascade effect' was wildly exaggerated by the banks with the most mud on them from the fraud, to scare up welfare for themselves. The toxic assets were toxic, but they were toxic almost entirely to two classes of people: owners of the banks, and people who own bank shares or other speculative products related to the financial sector.
If Washington had chosen to, they could have spent less, spent more wisely, and cleaned up more, by just quarantining the whole area like a hazmat site, locking down the financial product divisions and trading accounts of the banks pleading for assistance, and then backing up dumpsters for the paper ( that doesn't mean buy it ) and paddy wagons for the con artists.
95% of Americans get through their economic lives just fine if Goldman Sachs is trading for $2 a share or $100 a share. These investment banks are not cogs in the economy. They don't 'supply' anything (they claim they supply liquidity, but mostly, they drain liquidity ). They don't bring us milk, they don't cut our lawns, they don't teach our children. The numbers they deal with makes them look huge and important, but they can be downsized without crashing the whole house on top of us. Some turbulence, sure, but banks don't cause depressions by having weak profits. They mostly cause depressions by what they do when they're healthy, not when they're sick.
If Washington had chosen to, they could have spent less, spent more wisely, and cleaned up more, by just quarantining the whole area like a hazmat site, locking down the financial product divisions and trading accounts of the banks pleading for assistance, and then backing up dumpsters for the paper ( that doesn't mean buy it ) and paddy wagons for the con artists.
95% of Americans get through their economic lives just fine if Goldman Sachs is trading for $2 a share or $100 a share. These investment banks are not cogs in the economy. They don't 'supply' anything (they claim they supply liquidity, but mostly, they drain liquidity ). They don't bring us milk, they don't cut our lawns, they don't teach our children. The numbers they deal with makes them look huge and important, but they can be downsized without crashing the whole house on top of us. Some turbulence, sure, but banks don't cause depressions by having weak profits. They mostly cause depressions by what they do when they're healthy, not when they're sick.
Cascade Effect
http://www.huffingtonpost.com/dean-baker/obama-and-the-savvy-banke_b_463063.html
When debating what we bought for ourselves with a rescue sold on avoiding the 'cascade effect', we have to ask ourselves, "What is unleashed by a rejuvenated Goldman-Sachs?" Damage that is more corrosive but also more gradual, so less perceptible to people who aren't looking for it?
As Baker writes above, "Goldman's success is inherently parasitic.
To me, that is true, but I'll go a step beyond that- the system is constructed in a way that only parasites can succeed. Back in 2008, it was hard not to fall into the trap of believing the cascade effect was going to throw us all into some post-capitalist wasteland if we didn't step in to prevent it, but in the frenzy of thinking about how much bad could happen, we squandered a golden opportunity to make something really good happen.
I completely believe that if Obama immediately leveled with people and told them, "We're going to clean up this mess the right way and there will be some very strange moves in the equity markets and the bond markets and the dollar may plummet but just hold on, we'll be better off for doing it", I think the American public would have said, "Go for it, we're with you."
Do I think he ever considered doing that? Nope. I think he decided to fake it.
When debating what we bought for ourselves with a rescue sold on avoiding the 'cascade effect', we have to ask ourselves, "What is unleashed by a rejuvenated Goldman-Sachs?" Damage that is more corrosive but also more gradual, so less perceptible to people who aren't looking for it?
As Baker writes above, "Goldman's success is inherently parasitic.
To me, that is true, but I'll go a step beyond that- the system is constructed in a way that only parasites can succeed. Back in 2008, it was hard not to fall into the trap of believing the cascade effect was going to throw us all into some post-capitalist wasteland if we didn't step in to prevent it, but in the frenzy of thinking about how much bad could happen, we squandered a golden opportunity to make something really good happen.
I completely believe that if Obama immediately leveled with people and told them, "We're going to clean up this mess the right way and there will be some very strange moves in the equity markets and the bond markets and the dollar may plummet but just hold on, we'll be better off for doing it", I think the American public would have said, "Go for it, we're with you."
Do I think he ever considered doing that? Nope. I think he decided to fake it.
Liberals Hate The Tea Party But Want It To Do Everything They Should Have Been Doing Themselves Decades Ago
http://www.huffingtonpost.com/dean-baker/obama-and-the-savvy-banke_b_463063.htmlprompted this comment:
>>"Why aren't the teabaggers venting their rage where it really needs to go?"
Well, I don't know anything about the 'Teabag' movement ( which seems to be some kind of Glenn Beck/Sarah Palin AstroTurf that the phony left/phony right/dominant media have concocted to short circuit a growing anti-Washi
The genuine constitutional movements that have now been grouped loosely together under the 'Tea Party' label, that crowd has a lot of overlap with the Ron Paul people, who have long records of opposition to the financial establishment and the central bank. Decades longer than just about anyone in what is called the 'progressive left' these days- most of that crowd first took notice of Wall Street shenanigans in late 2008, when their stock portfolios took a hit. Before that, they were good salesman for the globalization policies of Clinton/Gore, and very very few of them complained about the housing bubble while it was inflating, because they were flipping houses and spending the phony wealth created by the juiced credit markets.
Pretty much just like Goldman Sachs was. The modern left really didn't even break with Wall Street as the housing bubble was popping, because they turned right around and voted in Obama, who got four times more Wall street money than McCain.
Sharks
The US and the City of London form the nexus of financial gangsterism. Everyone should be trying to escape the 'leadership' coming from Washington, NY, London- Humpty Dumpty broke because Humpty Dumpty is bad. Unless you want Humpty Dumpty, Jr. to take over, it would be smart to exclude the sharks from your next ocean.
Notional
Derivatives are a sick joke. Even though their notional value exaggerates how much money is actually tied up in them, I think that might be the point. People see numbers like 'one and a quarter quadrillion dollars' tossed around in relation to derivatives and they think, "How in the world do we unwind *that*??'
Derivatives are like sticks of dynamite tied around the waist of a hostage taker- they might be fake, they might not actually blow the whole building up, but they do keep you guessing.
Personally, I think they could be and should be unraveled and wound down. A team of computer programmers and accountants could vaporize them right out of the system if all the counterparties took arbitrated payoffs and walked away.
But I think they like waving the dynamite around better.
Derivatives are like sticks of dynamite tied around the waist of a hostage taker- they might be fake, they might not actually blow the whole building up, but they do keep you guessing.
Personally, I think they could be and should be unraveled and wound down. A team of computer programmers and accountants could vaporize them right out of the system if all the counterparties took arbitrated payoffs and walked away.
But I think they like waving the dynamite around better.
Back To Greece
>>"Let me understand this article. Those investors who bought Greece's debt need to take it in the kisser and let Greece default."
Greece needs to stiff them. Greece should look to Iceland for guidance in how to proceed. The citizens of the US would be wise to plan for an intentional debt default as well. Clearly, the US Constitution prohibits a privately-owned central bank operated for profit, so any purchases of Treasury debt brokered by the Federal Reserve are null and void, and any attempt to enforce leins or collect collateral on those bonds should be interpreted as an act of war.
The parties that purchased US debt instruments in the past century were either conscious or unconscious participants in a great fraud, and even though they may be defrauded by a debt default themselves, that is how the system works. Claiming 'I didn't know' doesn't allow you to keep a stolen car you bought.
If criminals took over all the officer positions of your local bank and then wrote checks to their friends on the banks' deposits, those checks would not be honored, and neither should any credit agreements made by a central bank in unlawful supervision of the citizens' monetary system.
Bretton
>>"People will work, sell, panhandle, lie, cheat, steal, and even kill to obtain the government's dollars. I wish my IOUs were so desirable."
The dollar's hold over the top spot among international reserve currencies is not earned through worldwide affection for the dollar, but through worldwide intimidation by the dollar's issuers. A lot of people outside of America are scornful of what America has done with Bretton Woods in the post-WWII world. The trillions of loan-backed fiat dollars force-fed into the global economy to pay for our gluttonous appetite for imports ( like oil ) equate to a form of asset seizure through currency manipulation. Our trading partners remain bound to the dollar because the international financial establishment has made them 'an offer they can't refuse'.
This hegemony of the dollar comes from military threat and ongoing destabilization of any foreign country that attempts to conduct oil business without the dollar. Bombs and missiles circling oil supplies are the backbone of the dollar's enduring convertibility. It floats on threats, extortion, bribery, espionage, and assassinations, not on international enthusiasm for America's policies.
Your neighborhood grocery would take whatever debt-backed fiat currency you offered them, too, if you surrounded their store with tanks, aircraft carriers, and ICBM's, and they would recycle the paper that stuffed their cash register back into the debt of their most powerful customer, because they just wouldn't see a way out of the arrangement that didn't fix a crosshairs on their forehead.
Sunday, February 14, 2010
Yield
You're backpedaling. Here's what you wrote originally:
That sentence, as written, claims that the debt is wiped out each year by tax revenue. You know that isn't true, so you revised it in your next post:
( Emphasis on the word 'if' added by me. )
Totally erroneous. If government spends more than it taxes, the government covers the budget gap with borrowing ( through the auction of Treasuries ) and the citizen is not the creditor, but the debtor, because the government pledges a revenue stream generated by the citizens to make the Treasuries marketable and to service their yield.
Wray: "On your question about a $1M check. YES that would certainly end the recession"
That is ridiculous. If the money supply was expanded by 300,000,000 citizens x $1,000,000, the Federal Reserve Note would be instant Weimar/ Zimbabwe toilet paper. That million dollars would give you extra purchasing power for all of about three seconds, before a volcano of hyperinflation exploded.
Wray: "Next you pay your tax, wiping out your debt, your asset, the govt's debt and the govt's asset"
That sentence, as written, claims that the debt is wiped out each year by tax revenue. You know that isn't true, so you revised it in your next post:
Wray: "there would be no outstanding debt IF taxes exactly equaled govt spending in each and every period"
( Emphasis on the word 'if' added by me. )
Wray: "If government spends more than it taxes, it is a debtor and you are creditor."
Totally erroneous. If government spends more than it taxes, the government covers the budget gap with borrowing ( through the auction of Treasuries ) and the citizen is not the creditor, but the debtor, because the government pledges a revenue stream generated by the citizens to make the Treasuries marketable and to service their yield.
Wray: "On your question about a $1M check. YES that would certainly end the recession"
That is ridiculous. If the money supply was expanded by 300,000,000 citizens x $1,000,000, the Federal Reserve Note would be instant Weimar/ Zimbabwe toilet paper. That million dollars would give you extra purchasing power for all of about three seconds, before a volcano of hyperinflation exploded.
China
This may be the DUMBEST statement ever written on the internet! CHINA IS LENDING US MONEY TO BUY THEIR STUFF!!! So what you are saying is that in essence they are just GIVING us the real goods
You are leaving out several other critical motives for China's purchases of US debt- it is not simply to support their exports.
1- The US Treasuries earn China a yield- when they recycle US dollars back into US Treasuries or rollover their existing stock, they gain a little more every time. Remember, they are the creditor, we are the debtor, we pay interest. China is like a bank that lets a homeowner refinance his mortgage over and over and over and over- the bank risks no real assets, but continues to keep the homeowner on the interest-paying treadmill.
2- China needs dollars to buy oil.
3- China needs dollars to make other Forex moves related to the renminbi- that's too involved to type out here.
>>"How stupid do you think China is.? "
Who is saying that China is stupid?
Multinational capitalism has successfully removed a huge amount of productive capacity from a high labor cost market, the US, and transplanted it to a market where slave labor and prison labor is common, China.
You need to look at the big picture about why China would prop up US consumer demand with their debt purchases- the globalization crowd needs to hide from Americans their flat or declining standard of living by giving them cheap imports, fooling the Americans into thinking they have as much spending power as ever. In this manner, you can keep the US population docile while all the meat is cleaned off the bones.
Money Creation
Wray: "OK Praxis be prepared to be amazed by elemental accounting:
Govt is first a creditor: it imposes a tax on you which is your liability and its asset.
Next govt is a debtor: it issues currency to buy what it wants, and now you are creditor
Next you pay your tax, wiping out your debt, your asset, the govt's debt and the govt's asset
If it spends more than it taxes, it is a debtor and you are creditor. it pays no interest unless you want to exchange a bank deposit for a treasury (or if your bank wants to exchange reserves for a bond). in that case it will pay interest and does so by crediting bank accts.
You're talking about something totally separate from what I'm talking about. Your explanation isolates the debt to a transaction between taxpaying citizen and taxing government, and completely excludes purchasers of US treasuries, who are often not taxpaying citizens and are definitely not our taxing government. Your story is not the story of our debt. It's like a book missing half of its chapters.
Speaking specifically about the sale of US Treasuries to finance expansion of the US monetary supply, do you identify the US government as the debtor in these transactions and the purchasers of the securities as the creditors?
I'll ask another question of those who insist that the 'US creates its own money' , or who insist that we do not borrow to pay for government operations:
If the US does in fact 'make its own money' free of restrctions placed by the credit market, then why doesn't President Obama request that the Federal Reserve send every American $1,000,000 in cash each, and end our recession?
Please explain why that would not work, without using the phrases
'because no one would lend us that much'
or
'because that would wipe out the asset value of the Treasuries sold to finance all our previous debt'.
Saturday, February 13, 2010
Euro
With a single currency like the Euro shared among many nations, the countries with production above the median are contributing more to the value of the Euro than the countries in the euro bloc with production below the median. The inverse is true for deficits- countries with deficits above the median are causing a greater drag on the Euro.
It's like if you have twelve people rowing one boat. Germany and France are the strongest rowers, but all those in the boat get to the destination at the same time.
It's like if you have twelve people rowing one boat. Germany and France are the strongest rowers, but all those in the boat get to the destination at the same time.
Greece
>>"A budget deficit, by contrast, is just a number. It's akin to blaming the thermometer when it registers that someone has a flu bug. Any doctor would legitimately be called a quack if he proposed a cure for influenza by sticking the thermometer in a bucket of ice until we got the right "reading" that was deemed to be acceptable to him." http://www.huffingtonpost.com/marshall-auerback/greece-signs-its-national_b_458621.html
This make no sense. The way you get the right reading on a thermometer is to cure the fever. Any economist who said that the way you cure a deficit is to ignore measurements of the deficit would be called a quack.
A budget deficit is not 'just a number'. It is the essential measurement that determines borrowing costs for a country seeking to pay its bills with loans. This is proven by the fact that every country that ignores deficits for long enough always ends up destroying their currency, leading to capital flight, a loan default and/or a forced restructuring of their debt.
Centrifuge
>>"money spent on interest is money spent generating nothing; no revenue, no government programs, no jobs, no tax relief, nothing"
Not only that, but there's another downside- when a country with the world's largest economy develops a large and growing appetite for credit, this generates demand for people and institutions with capital who will lend to this government and collect that interest.
Both sides of the scale ( credit demand/credit supply ) must balance for the system to move forward.
So not only is productive capital being sucked out of the economy BY the government to pay the interest, but on the other side of the ledger, productive capital is being diverted out of the real economy to supply the nation's increasing appetite for credit.
Because the government is now applying new credit to service interest charges carried over from older borrowing, this trend feeds on itself. More and more capital is occupied inside the centrifuge of interest payments/interest collection
Growing and compounding interest has a gravitational pull that segregates more and more capital away from the real economy of supply and demand. This is not 'growth', it's just a mindless cyclical rotation of money- more like a tumor than growth.
Diabolic
Money is a measurement of prices, not of value.
The clever ( some would say diabolical ) purpose of an elastic fiat monetary system created out of fractional reserves is to create a tool for manipulating the population into an addiction to credit. As the monetary supply is inflated, prices of goods rise to a level that makes them unattainable for most people using only their wages, so they supplement their standard of living by making purchases on credit. This 'feeling' you have of always playing catch up is not just some feeling, it's reality. The system is designed to trap you into a buy now, pay later mindset.
Since credit is the only 'product' issued by the banks, this creates permanent demand for their services. This is why the banking cartel is fanatical about capturing or installing their own central bank. The government must be eliminated as a lender of credit into the economy. Likewise, all competing forms of money must be outlawed, because any legal tender backed by something real like a precious metal will always drive the weak paper fiat of the central bank out.
The clever ( some would say diabolical ) purpose of an elastic fiat monetary system created out of fractional reserves is to create a tool for manipulating the population into an addiction to credit. As the monetary supply is inflated, prices of goods rise to a level that makes them unattainable for most people using only their wages, so they supplement their standard of living by making purchases on credit. This 'feeling' you have of always playing catch up is not just some feeling, it's reality. The system is designed to trap you into a buy now, pay later mindset.
Since credit is the only 'product' issued by the banks, this creates permanent demand for their services. This is why the banking cartel is fanatical about capturing or installing their own central bank. The government must be eliminated as a lender of credit into the economy. Likewise, all competing forms of money must be outlawed, because any legal tender backed by something real like a precious metal will always drive the weak paper fiat of the central bank out.
Stealth
Inflation caused by currency depreciation is both a stealth tax and a wealth killer, and worse than that, it's a flat tax. When the Federal Reserve generates inflation through expansion of the monetary supply, the purchasing power of all dollars in circulation declines evenly. A bus driver who makes thirty thousand annually may lose 5% of his purchasing power to inflation over the course of a year, and so will a corporate lawyer who makes 300,000 dollars a year. Two people in very different income brackets, paying the exact same currency depreciation penalty .
For this reason alone, progressives ( who are allegedly defenders of the working class ) should hate the fact that the government and the central bank work in tandem to pay government bills with money born from debt.
Government hides from the unpopular task of taxing the wealthy harder to pay for its current operating costs ( because the wealthy are their donors ), and instead, shifts more and more of its bills off onto future generations, through its reliance on credit.
For this reason alone, progressives ( who are allegedly defenders of the working class ) should hate the fact that the government and the central bank work in tandem to pay government bills with money born from debt.
Government hides from the unpopular task of taxing the wealthy harder to pay for its current operating costs ( because the wealthy are their donors ), and instead, shifts more and more of its bills off onto future generations, through its reliance on credit.
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Natural money is completely sound. The cessation of interest collection and fractional reserve lending does not produce deflation but a cancellation of inflation. When inflation is corrected, that is a good thing.
You must distinguish between prices and value. In an inflationary monetary system, prices are constantly out of sync with value, because of the distortions introduced by interest charges and the fractional reserve multiplier. Prices are constantly forced to adjust because the supply of money is growing faster than the value of the underlying assets. We can see that this is so by observing the prices of debt-backed assets during a crash- prices plummet, because the prices are fictions distorted by unnatural money.
In a natural money system, the medium of exchange ( the currency ) is convertible into a tangible asset. Prices remain an honest depiction of value, and without the torque of interest on the money supply, prices and value remain in sync.
The reason why the propaganda against honest money is so strong is this: the bankers' only product is dishonest money that has no real value and thus distorts prices. This distortion of prices provides opportunities for speculators to buy assets low and then sell at a higher price once inflation distorts prices. The paper profits are then moved into assets that survive the inevitable credit-driven collapses.
http://www.naturalmoney.org/introduction.html