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.
Sunday, February 28, 2010
The Myth That Weak Exports Are Caused By A Strong Dollar
The Dollar is not strong, so why make arguments based on that falsehood?
“Baker: "The reason that the United States consistently runs large trade deficits is that its currency is overvalued."
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.
Friday, February 12, 2010
Nixon
>>your mortgage and the govt. debt aren't at all the same thing"
They are both borrowed money. The only difference is that a mortgage is borrowed from one source and US debt is borrowed from a multiple of sources.
Your wikipedia entry supports my argument. Government overspending on wars, etc, forced the government to end convertibility of dollars into gold for foreign holders. It was the government's long prior history of spending beyond taxation that inflated the supply of dollars *in advance of* Nixon closing the gold window.
Nixon did not close the gold window, and then debt-backed spending followed. You have it backwards. Debt-backed spending preceded the closing of gold window, and forced it to be closed.
China
China doesn't lend us anything. China sells us goods. We give them US dollars. Those US dollars are parked in China's savings account at the Fed. China wants to make some interest on those dollars rather than have them sit there (since China isn't buying much back from the US with those dollars). So China buys govt' paper and the Fed moves the dollars from China's savings account to China's checking account at the Fed. There's your debt. Note it had nothing to do with deficits. When China's "debt" comes due, the Feds move the dollars out of China's checking account and back into their savings accounts with the interest added. All of this is done by a computer marking up the accounts at the Fed. Your tax dollars never pay for it. Welcome to the modern monetary system.
I think you have conflated the trade deficit and the budget deficit somewhat. Each influences the other but they also function separately. The trade deficit is caused by US consumers overspending on imports, the government budget deficit is caused by the government borrowing to cover operating costs that exceed tax revenue.
Chinese demand for US Treasury debt is fueled by their trade surplus with the US, like you wrote, but not all the excess dollars they accumulate return to purchase notes and bonds. Many of those dollars are converted into other currencies by China, or into precious metals, or into the bonds of other governments, or into commodities.
Intragovernmental
Intragovernmental holdings are debt obligations of the US citizens, just like any other Treasury that is auctioned.
The bonds held in the Social Security trust fund have no present value. They can only be redeemed if taxes are collected to redeem them. They represent a commitment made by future wage earners to future retirees. They exist as an accounting trick, a promise that the government has not yet had to fulfill. A bond is either an asset or a liability, it cannot be both, and those IOU's in the SS trust fund are most assuredly liabilities, and they belong in the total debt figures.
The US Treasury's own site includes them in the debt figures:
http://www
The bonds held in the Social Security trust fund have no present value. They can only be redeemed if taxes are collected to redeem them. They represent a commitment made by future wage earners to future retirees. They exist as an accounting trick, a promise that the government has not yet had to fulfill. A bond is either an asset or a liability, it cannot be both, and those IOU's in the SS trust fund are most assuredly liabilities, and they belong in the total debt figures.
The US Treasury's own site includes them in the debt figures:
http://www
The FED Is A Contractor
The Fed is a contractor, not 'part of' government, and certainly not a branch of government. It supplies a private product that serves as legal tender ( the Federal Reserve Note ). They are in the same category with a defense contractor. Lockheed Martin is a government contractor that supplies F-16 jets. It is not part of government.
If our money was government-issued ( as some people erroneously claim ), the government could never fall into debt through use of a fiat system, because obviously, you can't charge interest to yourself, and you can't be on both ends of a loan simultaneously, as debtor and creditor. If the government retained the exclusive right to originate legal tender into the economy via loans with interest, the government could generate a revenue stream for itself, but instead, this profit mechanism has been captured by the banking cartel.
The disappearance of lawful money in America:
On the older bills, the FRN was clearly identified as distinct from lawful money. Now it is neither identified properly or redeemable in lawful money.
If our money was government-issued ( as some people erroneously claim ), the government could never fall into debt through use of a fiat system, because obviously, you can't charge interest to yourself, and you can't be on both ends of a loan simultaneously, as debtor and creditor. If the government retained the exclusive right to originate legal tender into the economy via loans with interest, the government could generate a revenue stream for itself, but instead, this profit mechanism has been captured by the banking cartel.
The disappearance of lawful money in America:
Language on a Federal Reserve Note in the 1930's: "This note is legal tender for all debts, public and private, and is redeemable in lawful money at the United States Treasury, or at any Federal Reserve Bank."
Language on a Federal Reserve Note today: "This note is legal tender for all debts, public and private."
On the older bills, the FRN was clearly identified as distinct from lawful money. Now it is neither identified properly or redeemable in lawful money.
The FED Is A Private Bank
“Wray: "The Fed is a part of government. It was created by an act of congress (1913). Congress can tell it what to do. " from http://www.huffingtonpost.com/l-randall-wray/the-federal-budget-is-not_b_457404.html
Can you please provide documentation of an instance where Congress issued an order to the Fed on interest rate policy or anything else?
The Fed was created by the consortium of private banks that own it. The Federal Reserve Act did not create it, the Federal Reserve Act hired it. The Federal Reserve Act is a government contract that grants the Fed an exclusive franchise as the only private lender allowed to declare its debt instruments as US legal tender.
Alan Greenspan on PBS in 2007, speaking with Jim Lehrer:
""Well, first of all, the Federal Reserve is an independent agency, and that means, basically, that there is no other agency of government which can overrule actions that we take. So long as that is in place and there is no evidence that the administration or the Congress or anybody else is requesting that we do things other than what we think is the appropriate thing, then what the relationships are don't, frankly, matter.”
http://www
Zombie GSE's
What is going on with all these people on the left who keep wetting themselves over falling home prices? Don't people understand that the bubble prices were a fiction, created out of a juiced-up money supply and artificial demand cooked up with fraudulent loan writing? The prices are falling because they are incorrect. They do not reflect real value.
Why do people want home prices to be propped up by these zombie GSE's? Like you say: get it over with. When prices fall to within reach of potential buyers, they will need to *borrow less*. This is known as a GOOD thing. Sorry to the people who thought they were going to 'house-flip' their way to prosperity, but that was a silly dream that you should have never had.
Why do people want home prices to be propped up by these zombie GSE's? Like you say: get it over with. When prices fall to within reach of potential buyers, they will need to *borrow less*. This is known as a GOOD thing. Sorry to the people who thought they were going to 'house-flip' their way to prosperity, but that was a silly dream that you should have never had.
Repeal
HR 1207, the bill to force a full independent audit of the Federal Reserve, now has over 300 co-sponsors. I wonder why people think 300 legislators are working to compel an audit of an institution that some claim they already control?
Unless I'm missing something, the crown jewel of our political system ( for better or worse ) is the US Congress. How can a political animal like Congress be credited with controlling a central bank that Ben Bernanke calls 'nonpolitical' and 'independent'?
The Congress can repeal the Federal Reserve Act, just like it can cancel contracts with other corporations like Blackwater or Halliburton. But it does not hold ( or claim to hold ) a supervisory role over the Fed while the Federal Reserve Act is law. Even getting a legitimate audit of this corporation has been a struggle that has lasted decades.
Wray: "(The Fed ) is a creature of Congress."
Ben Bernanke, in an op-ed in the Washington Post, 11/09: "Now more than ever, America needs a strong, nonpolitical and independent central bank with the tools to promote financial stability and to help steer our economy to recovery."
Unless I'm missing something, the crown jewel of our political system ( for better or worse ) is the US Congress. How can a political animal like Congress be credited with controlling a central bank that Ben Bernanke calls 'nonpolitical' and 'independent'?
The Congress can repeal the Federal Reserve Act, just like it can cancel contracts with other corporations like Blackwater or Halliburton. But it does not hold ( or claim to hold ) a supervisory role over the Fed while the Federal Reserve Act is law. Even getting a legitimate audit of this corporation has been a struggle that has lasted decades.
A Long Leash For A Dumb Country
They key to the enormous profits generated out of the private Federal Reserve's control of the monetary system is not the 6% dividend that all the corporation's shareholders receive annually- the incredible windfall to the Fed comes out of what a debt-backed monetary system permits: excess spending.
By hiring the Fed to provide the nation's monetary supply, the government frees itself from
the restrictions of funding wars out of taxes. If the US government was forced to pay for overseas wars out of tax revenue instead of shoving the costs out into the future through money borrowed from the Fed, the numerous military involvements would not only be fiscally impossible, but politically impossible. There would be a citizens' revolt if war costs were extracted from current revenues.
The international financial establishment requires a large military to expand and defend emerging markets, crush popular resistance in developing countries, and capture and guard oil supplies- these and many other destructive missions of conquest are funded through the arrangement that the US government has with the private banking cartel. Ownership of the largest banks is integrated with ownership of the petroleum cartel and the network of defense contractors, and they all work towards symbiotic hegemony by making nations dependent on their credit system for access to money.
By hiring the Fed to provide the nation's monetary supply, the government frees itself from
the restrictions of funding wars out of taxes. If the US government was forced to pay for overseas wars out of tax revenue instead of shoving the costs out into the future through money borrowed from the Fed, the numerous military involvements would not only be fiscally impossible, but politically impossible. There would be a citizens' revolt if war costs were extracted from current revenues.
The international financial establishment requires a large military to expand and defend emerging markets, crush popular resistance in developing countries, and capture and guard oil supplies- these and many other destructive missions of conquest are funded through the arrangement that the US government has with the private banking cartel. Ownership of the largest banks is integrated with ownership of the petroleum cartel and the network of defense contractors, and they all work towards symbiotic hegemony by making nations dependent on their credit system for access to money.
Quantity Of Money
The quantity of money does not need to be adjusted to suit the size of the population. Prices and wages in the economy adjust to the known value of good money, like money exchangeable for a precious metal.
An ounce of gold was something like $30 in 1930. Someone with ten ounces of gold could buy a Ford Model T for three hundred dollars in 1930.
Today, using the exact same quantity of gold, ten ounces at around $1100 an ounce, a person could buy a Ford Focus.
The quantity of money is exactly the same in 1930 and 2010, ten one ounce coins.
The purchasing power of the money is the same- you can afford one automobile.
All that changed was the digits on the price tag- $300/$11,000.
Prices change in relation to the value of the money ( if the money does in fact have intrinsic value ).
You can play a game of Monopoly with three people or with six. Doubling the number of players does not render the money supply that comes with the game unusable. The quantity of monetary units held by everyone is divided in half when there are six players, but in a real economy, the prices of the hotels would drop in half because the money supply is finite. If each individual unit of money is twice as scarce in a six player Monopoly game, then the buying power of each unit is double.
An ounce of gold was something like $30 in 1930. Someone with ten ounces of gold could buy a Ford Model T for three hundred dollars in 1930.
Today, using the exact same quantity of gold, ten ounces at around $1100 an ounce, a person could buy a Ford Focus.
The quantity of money is exactly the same in 1930 and 2010, ten one ounce coins.
The purchasing power of the money is the same- you can afford one automobile.
All that changed was the digits on the price tag- $300/$11,000.
Prices change in relation to the value of the money ( if the money does in fact have intrinsic value ).
You can play a game of Monopoly with three people or with six. Doubling the number of players does not render the money supply that comes with the game unusable. The quantity of monetary units held by everyone is divided in half when there are six players, but in a real economy, the prices of the hotels would drop in half because the money supply is finite. If each individual unit of money is twice as scarce in a six player Monopoly game, then the buying power of each unit is double.
The Only Thing That's Colossal Is The Debt
“>>"the 300 million potential working members of the federal government revenue generating family members"
Please explain something to me- you're boasting about the 'colossal revenue generating power' of the American workforce, but how can you enter that into evidence when our fiscal situation contradicts you? A 12 trillion dollar accumulated debt and many more trillions in unfunded liabilities tells us that we are chronically unable to generate the revenues demanded by government from our working population.
If we have the revenue-generating power you brag about...
why are we borrowing ourselves into bankruptcy?
There's No Demand Shortage
When the government spends too much borrowed money to juice consumer demand, that's bad in nearly all circumstances, but when a government spends too much borrowed money to juice consumer demand inside a nation that has had its productive capacity transplanted overseas, that's especially bad.
The trade deficit is proof that we have inadequate production to satisfy native demand. If the government is going to spend borrowed money on anything, it should dedicate 100% of the spending towards rebuilding US manufacturing. You don't rebuild an economy by burying the citizens deeper in debt so they can go buy more at Wal Marts full of imported goods. Build manufacturing, add tariffs to foreign goods, get people working, and spending will take care of itself.
Borrowing to fuel demand in a country with our trade deficit is just dumb. It only makes sense to people who still believe globalization is good for America.
The trade deficit is proof that we have inadequate production to satisfy native demand. If the government is going to spend borrowed money on anything, it should dedicate 100% of the spending towards rebuilding US manufacturing. You don't rebuild an economy by burying the citizens deeper in debt so they can go buy more at Wal Marts full of imported goods. Build manufacturing, add tariffs to foreign goods, get people working, and spending will take care of itself.
Borrowing to fuel demand in a country with our trade deficit is just dumb. It only makes sense to people who still believe globalization is good for America.
Thursday, February 11, 2010
Sovereignty
Definition of sovereignty:
* government free from external control ( from http://wor
United states debt- foreign ownership:
"The US debt in the hands of foreign governments was 25% of the total in 2007, virtually double the 1988 figure of 13%." ( from http://en.
If foreign governments held a lien on 27% of your house, would you consider yourself a sovereign homeowner?
* government free from external control ( from http://wor
United states debt- foreign ownership:
"The US debt in the hands of foreign governments was 25% of the total in 2007, virtually double the 1988 figure of 13%." ( from http://en.
If foreign governments held a lien on 27% of your house, would you consider yourself a sovereign homeowner?
The Act, Part III
>>"The US government is the monopoly issuer of the currency"
Really? According to your understanding of the monetary system, on which side of the loans that create our money supply is the US government on?
Is the US government
the debtor
the creditor
or both?
If your answer is 'debtor', please explain how the US ended up paying interest on money that you claim it issues.
If your answer is 'creditor', then please explain how the US ended up with a 12 trillion dollar debt by issuing its own money.
If your answer is 'both', then I'll look forward to an amazing explanation for that.
Wednesday, February 10, 2010
The Act, Part II
Wray: "The Fed is a part of government. It was created by an act of congress (1913). Congress can tell it what to do. "
Can you please provide documentation of an instance where Congress issued an order to the Fed on interest rate policy or anything else?
The Fed was created by the consortium of private banks that own it. The Federal Reserve Act did not create it, the Federal Reserve Act hired it. The Federal Reserve Act is a government contract that grants the Fed an exclusive franchise as the only private lender allowed to declare its debt instruments as US legal tender.
Alan Greenspan on PBS in 2007, speaking with Jim Lehrer:
""Well, first of all, the Federal Reserve is an independent agency, and that means, basically, that there is no other agency of government which can overrule actions that we take. So long as that is in place and there is no evidence that the administration or the Congress or anybody else is requesting that we do things other than what we think is the appropriate thing, then what the relationships are don't, frankly, matter.”
http://www
The Act
The Fed is a contractor, not 'part of' government, and certainly not a branch of government. It supplies a private product that serves as legal tender ( the Federal Reserve Note ). They are in the same category with a defense contractor. Lockheed Martin is a government contractor that supplies F-16 jets. It is not part of government.
If our money was government-issued ( as some people erroneously claim ), the government could never fall into debt through use of a fiat system, because obviously, you can't charge interest to yourself, and you can't be on both ends of a loan simultaneously, as debtor and creditor. If the government retained the exclusive right to originate legal tender into the economy via loans with interest, the government could generate a revenue stream for itself, but instead, this profit mechanism has been captured by the banking cartel.
The disappearance of lawful money in America:
Language on a Federal Reserve Note in the 1930's: "This note is legal tender for all debts, public and private, and is redeemable in lawful money at the United States Treasury, or at any Federal Reserve Bank."
Language on a Federal Reserve Note today: "This note is legal tender for all debts, public and private."
On the older bills, the FRN was clearly identified as distinct from lawful money. Now it is neither identified properly or redeemable in lawful money.
If our money was government-issued ( as some people erroneously claim ), the government could never fall into debt through use of a fiat system, because obviously, you can't charge interest to yourself, and you can't be on both ends of a loan simultaneously, as debtor and creditor. If the government retained the exclusive right to originate legal tender into the economy via loans with interest, the government could generate a revenue stream for itself, but instead, this profit mechanism has been captured by the banking cartel.
The disappearance of lawful money in America:
Language on a Federal Reserve Note in the 1930's: "This note is legal tender for all debts, public and private, and is redeemable in lawful money at the United States Treasury, or at any Federal Reserve Bank."
Language on a Federal Reserve Note today: "This note is legal tender for all debts, public and private."
On the older bills, the FRN was clearly identified as distinct from lawful money. Now it is neither identified properly or redeemable in lawful money.
Lincoln
>>"I do think that you're overlooking how much suffering the innocent victims of the recession must endure for your purity."
It's not purity. There's a right way and a wrong way to run a monetary system, and what is wrong will always be wrong. The wrong way to run a monetary system is *always* the wrong way. You don't resort to flawed, short-sighted policies to repair a system broken by flawed, short-sighted policies.
If the founding fathers wanted the government to depend on a private banking cartel to feed them credit during a recession, they would have included that option in the Constitution. They did not. They knew that once you take that easy shortcut, you are destined to lose all sovereignty.
Lincoln turned down the banking cartel when he needed to issue currency during the Civil War. If Lincoln couldn't be persuaded to prostrate himself before the banks during a civil war, then I hardly see why we should increase our dependence on creditors during something less cataclysmic, like this recession.
Tuesday, February 9, 2010
4X
>>"It would be easier for Democrats to tell folks "we're on your side" if more of them actually were."
True. Obama collected 4X what McCain collected from the financial sector during the 2008 campaign. Are the Democrats going to slit their own throats and throw that gravy train away trying to make a real marriage with real independents? I highly doubt it. The Democrats might promote a fake populist/independent movement to try and corral their disaffected members, similar to some of the fake libertarian movements being cultivated by Republican corporate interests.
Instead of two globalist/corporate parties ( Dem and GOP ), maybe we'll have four Pied Piper movements leading voters right off the nearest cliff?
1- current globalist Democratic party of Wall Street
2- current globalist Republican party of Wall Street
and the two new masks:
3- fabricated fake 'left wing' populist party
4- fabricated fake 'right wing' populist party
The control apparatus always likes to have that yin and yang duality of controlled opposition working for them. They can't fit three parties into that ( odd number, no good ), so they'll attempt to crush a legitimate third party movement by creating two more controlled opponents in false opposition, for a yin and yang 'quadrality'- old Dems, new 'independent' left vs. old GOP, new 'independent' right.
Once the sheep are properly rebalanced across the political spectrum, the bulldozer of the financial elite can continue on its way.
The ObamaNation Continues To Believe In Magic Money Mountain
>>"We can reign in spending"
Why do we need to rein in spending? Why can't we just re-allocate to the national economy what we are spending to support globalization and empire overseas? Spend the same, but differently? If your answer to that question is:
"But our foreign creditors will stop buying our treasuries if we stop being Cop Of The Globe."
then what does that tell you? It tells me that we're a servile nation already, taking our young people's lives and the economic future of America, throwing them into the battlefield and into the sinkhole of the military budget, all to obtain current credit. We need to break that relationship ASAP, unless we like being prostitutes.
>>"house prices will decline even faster"
What is the objective here? To make homes more affordable, or to protect the phony wealth built into home prices by the inflated money supply? If everyone needs a place to live, then there's only two ways to get them an affordable home- first is to make home prices drop, and deflation accomplishes that. Second is to keep home prices high by inflating the money supply and make people take on large mortgages to buy them. Who does that help, but the piggish crooks and lenders who already pulled that con on us once this past decade?
Potatoes And Bricks
>>"If you print more of it you don't increase wealth."
Exactly. You only change prices.
Here's a simple way of looking at it.
A potato farmer and a bricklayer are neighbors. For thirty years they do business without money. The farmer trades potatoes for brick walls on his property.
Then, a bank appears in town, and paper money is introduced into the economy. The residents begin using it to conduct commerce. Instead of the bricklayer promising to build a wall on Friday for the supply of potatoes he received on Monday, the potato farmer sells his potatoes at market on Sunday, takes cash money in payment, and then, when the bricklayer comes to build the wall on Friday, he pays the mason cash money for the wall out of what he earned at market.
This is how paper money serves the economy. We don't have to pick up and carry the potatoes at the same time we build a wall. We take paper money in its place, which we can spend on potatoes at a later date.
If the bank inflates the money supply , this increase in paper money will change the prices of potatoes and brick walls. But this inflated money supply cannot make the farm produce more potatoes, or make the bricklayer make more walls. It only changes the prices attached to the goods and services. The wealth of the community is a product of human endeavor. The paper money cannot change that wealth equation.
Convergence
The collapse in new home construction is because the prices of existing homes rose too high in the phony bubble. This has caused a surplus in existing homes, and stalled demand for new homes. This inventory of homes must be cleared before new home construction can rebound. Throwing more fiat money from monetized Treasuries into the economy will delay the repricing of existing homes. This oversupply is larger than we even realize because banks are hiding a giant shadow inventory of homes that have delinquent mortgages but have not been pushed through the foreclosure process.
Prospective homeowners need to soak up the inventory created during the bubble. Home prices must fall so the price point will be in reach of consumers, who are facing much more of a struggle to obtain credit. Inflationary policies will stall the necessary convergence of home prices and consumer buying power.
How can you condemn the economic mismanagement of Greenspan and Bernanke and then suggest re-applying the same tool of cheap money that they misused?
You can't support clearing the inventory of existing homes AND support a new construction cycle at the same time using the tool of cheap money. Cheap money will reverse the falling home price trend and that will instantly cancel out any hoped-for surge in new construction.
More cheap money cannot remedy value distortions produced by a lengthy cheap money binge. Deflation is the friend of the prospective homeowner today, not inflation.
Prospective homeowners need to soak up the inventory created during the bubble. Home prices must fall so the price point will be in reach of consumers, who are facing much more of a struggle to obtain credit. Inflationary policies will stall the necessary convergence of home prices and consumer buying power.
How can you condemn the economic mismanagement of Greenspan and Bernanke and then suggest re-applying the same tool of cheap money that they misused?
You can't support clearing the inventory of existing homes AND support a new construction cycle at the same time using the tool of cheap money. Cheap money will reverse the falling home price trend and that will instantly cancel out any hoped-for surge in new construction.
More cheap money cannot remedy value distortions produced by a lengthy cheap money binge. Deflation is the friend of the prospective homeowner today, not inflation.
Sunday, February 7, 2010
CO2 and Deficits
Apparently, we're supposed to be paralyzed in fear over carbon dioxide, but completely relaxed over annual deficits 4X larger than any we've seen previously. There is no evidence in history of men seizing control of the climate away from the sun and producing a mass extinction event. There are multiple examples of men inflating fiat money supplies until they collapse under the weight of accumulated debt.
Despite all that, the crowd insists that a carbon dioxide tipping point is imminent, but a debt tipping point can be avoided indefinitely.
Despite all that, the crowd insists that a carbon dioxide tipping point is imminent, but a debt tipping point can be avoided indefinitely.
Projections
People who think we can outrun our debt through growth are severely misguided. Our economy is not growing, and the debt burden created by excess borrowing and spending today will further encumber its growth. We are adding new quicksand to old quicksand.
Growing economies are productive economies, and productive economies do not rely on credit to fund their government. All the current optimistic projections about how much of our GDP we will be able to dedicate to debt service are wrong, because they are based on interest rate projections that are going to fall apart.
Growing economies are productive economies, and productive economies do not rely on credit to fund their government. All the current optimistic projections about how much of our GDP we will be able to dedicate to debt service are wrong, because they are based on interest rate projections that are going to fall apart.
Grasshopper
It is partly on all of us. We wanted flat screen tv's. We didn't want to build them. We wanted iPods. We didn't want to build them. We wanted cheap, fuel-efficient cars. We didn't want to build them. We voted for politicians who seduced us with cheap imports and rising speculative markets, and we didn't want to believe that these were narcotics that would keep us sedated while our manufacturing capacity was transplanted overseas.
( There's a heavy dose of sarcasm in the above, obviously. Obviously, millions of Americans wanted to keep manufacturing inside America- but they were drowned out and demonized as 'nationalists' and 'protectionists' by those hustling the 'free trade'/globalization myth, from both parties and from Wall Street. )
There's a famous fable about the ant and the grasshopper. We're the grasshopper.
( There's a heavy dose of sarcasm in the above, obviously. Obviously, millions of Americans wanted to keep manufacturing inside America- but they were drowned out and demonized as 'nationalists' and 'protectionists' by those hustling the 'free trade'/globalization myth, from both parties and from Wall Street. )
There's a famous fable about the ant and the grasshopper. We're the grasshopper.
Stimulation
You can't stimulate growth with borrowed money, because the borrowing commits a larger share of your future profits to pay the debt service, and because interest compounds faster than profits, this is a losing proposition. It has one sure outcome: default.
Picture this equation: a borrower and a bank. The borrower intends to borrow all he needs to live on. The bank intends to lend all it can as long as the interest payments come in. Who do you think has the competitive advantage in this relationship? The bank, of course. The borrower only exists as long as the bank permits him to exist.
Proposing a massive increase in borrowing during a recession created by excessive leveraged debt is like tearing open a case of bourbon when the bottle of bourbon just gave you a huge hangover. It's the mindset of an addict. The only reason the Federal Reserve cooperates with this lunacy is because the lenders who feed us this debt own title to a larger and larger percentage of collateral with each new round of lending.
They are trading you paper they create out of thin air with a computer for title to every real asset under your feet. Good luck with that.
Picture this equation: a borrower and a bank. The borrower intends to borrow all he needs to live on. The bank intends to lend all it can as long as the interest payments come in. Who do you think has the competitive advantage in this relationship? The bank, of course. The borrower only exists as long as the bank permits him to exist.
Proposing a massive increase in borrowing during a recession created by excessive leveraged debt is like tearing open a case of bourbon when the bottle of bourbon just gave you a huge hangover. It's the mindset of an addict. The only reason the Federal Reserve cooperates with this lunacy is because the lenders who feed us this debt own title to a larger and larger percentage of collateral with each new round of lending.
They are trading you paper they create out of thin air with a computer for title to every real asset under your feet. Good luck with that.
Trained
The only reason we even need to consider the merits of these wars is because of all the far-flung commitments we have made throughout our integration into a global government run by international plutocrats.
I don't like their chess board, I don't like how they move the pieces. I'd like to turn the clock back a long way.
I don't feel like many of these wars would have been sold to Americans of the 1700's or 1800's, but over the last century, we have been conditioned through fearmongering and propaganda to believe that we have an investment in everything that happens good or bad around the globe.
I don't like being trained for life as a 'global citizen', because I don't have the tools I need as a citizen to control a global government. It seems obvious to me that we are just being used. We got rich and powerful as a nation very fast, and that made us the object of international envy. They couldn't conquer us on our soil so they did the next best thing: they conquered us by maneuvering us into life as the 'world's superpower'- a role we should have never desired, which has thrust us into too many dubious, budget-busting wars that have killed too many of our young people and made victims of our war machine everywhere.
I don't like their chess board, I don't like how they move the pieces. I'd like to turn the clock back a long way.
I don't feel like many of these wars would have been sold to Americans of the 1700's or 1800's, but over the last century, we have been conditioned through fearmongering and propaganda to believe that we have an investment in everything that happens good or bad around the globe.
I don't like being trained for life as a 'global citizen', because I don't have the tools I need as a citizen to control a global government. It seems obvious to me that we are just being used. We got rich and powerful as a nation very fast, and that made us the object of international envy. They couldn't conquer us on our soil so they did the next best thing: they conquered us by maneuvering us into life as the 'world's superpower'- a role we should have never desired, which has thrust us into too many dubious, budget-busting wars that have killed too many of our young people and made victims of our war machine everywhere.
Talking Points
The funniest anti-Tea Party talking point out there has got to be the one that claims that it's a proxy movement created by Wall Street and Big Corporations. Wall Street and Big Corporations are petrified of a decentralization of power. Decentralized power is much harder to corral and command. The financial elite built a powerful central government because a powerful central government allows them to price fix and collude and contract rig and soak up corporate welfare. Big central governments police markets in favor of the insiders' club.
Why do drug dealers attempt to pay off cops and turn them corrupt? Because it's good for business. Business runs much smoother for criminals when you have the cops in your pocket. Corporations paid off the cops of Washington and made them strong so they can sic them on their competitors and stomp on any citizen movement that threatens them.
Corporate power in America is based on crony capitalism that is oligarchical and anti-competition. This power would crumble if they didn't have a strong government guarding their castle.
People will be complaining that 'the rich are going to dismantle government' forever, and it will never happen. When the wealth is being consolidated into a smaller and smaller number of hands, simple logic tells you that they're not going to shrink their security force. All tiny minorities surround themselves with large armies and large police forces.
Why do drug dealers attempt to pay off cops and turn them corrupt? Because it's good for business. Business runs much smoother for criminals when you have the cops in your pocket. Corporations paid off the cops of Washington and made them strong so they can sic them on their competitors and stomp on any citizen movement that threatens them.
Corporate power in America is based on crony capitalism that is oligarchical and anti-competition. This power would crumble if they didn't have a strong government guarding their castle.
People will be complaining that 'the rich are going to dismantle government' forever, and it will never happen. When the wealth is being consolidated into a smaller and smaller number of hands, simple logic tells you that they're not going to shrink their security force. All tiny minorities surround themselves with large armies and large police forces.
I V
>>"That is why just about every company and individual in the United States takes on debt at one time or another. "
Companies and individuals make things and perform services. They have cash flows. Governments do not have cash flows. Governments are leaky buckets.They live off an IV transfusion from the people who make things and perform services. They water their own beaks with these taxes and then they sprinkle the rest over their constituencies and campaign contributors. What goes back out is always less than what comes in.
Governments redistribute wealth, they do not create it. If they could create it, they would stop taxing. This is why the rules of debt are different for governments- government can only shove responsibility for its loans onto the backs of those capable of servicing them: those who work.
A government does not borrow on its own. No bank would lend to a government standing on its own. Governments only have borrowing power because they use the collateral provided by the citizens to convince their creditors to give them loans.
Deflation
There are two ways to give people more economic power.
1- Increase the power of the money they already have. Contract the money supply, allow assets purchased with unserviceable debt to reprice- this deflation adds buying power to the money we already have in circulation. This rewards the people who saved and this punishes the people who chose to exist off credit, but only initially. Once you flush all the bad lending out of the system, the economic power added to the savers through deflation will cause a rebirth of a real supply and demand system, in place of the fantasy 'borrow today, pay in ten years system'.
This is the honest way of repairing an economy with prices distorted by a bloated money supply. It rewards those who lived within their means, and delivers a well deserved wake up call to those who treated cheap loans like cheap cocaine.
2- The dishonest way to repair an economy wrecked by a bloated money supply is to reward the government that borrowed too much and the individuals who borrowed too much, by shoving even more loans at them. This rewards all the bad habits that have brought us to this point.
This is the method favored by the banks. They will gladly let the government and the American people get overextended on credit again. When it crashes again, they will own even more of America as collateral and you will be even more frozen into life as a debt slave.
1- Increase the power of the money they already have. Contract the money supply, allow assets purchased with unserviceable debt to reprice- this deflation adds buying power to the money we already have in circulation. This rewards the people who saved and this punishes the people who chose to exist off credit, but only initially. Once you flush all the bad lending out of the system, the economic power added to the savers through deflation will cause a rebirth of a real supply and demand system, in place of the fantasy 'borrow today, pay in ten years system'.
This is the honest way of repairing an economy with prices distorted by a bloated money supply. It rewards those who lived within their means, and delivers a well deserved wake up call to those who treated cheap loans like cheap cocaine.
2- The dishonest way to repair an economy wrecked by a bloated money supply is to reward the government that borrowed too much and the individuals who borrowed too much, by shoving even more loans at them. This rewards all the bad habits that have brought us to this point.
This is the method favored by the banks. They will gladly let the government and the American people get overextended on credit again. When it crashes again, they will own even more of America as collateral and you will be even more frozen into life as a debt slave.
2004 Krugman Debates 2010 Krugman
I would like to watch a debate between 2004 Krugman and 2010 Krugman.
Opening act should be Campaign Obama debating President Obama over ending the Iraq War in 2009, renegotiating NAFTA, keeping lobbyists out of his administration, using presidential statements, televising health care negotiations, and allowing the public to see all legislation for five days before a vote.
Opening act should be Campaign Obama debating President Obama over ending the Iraq War in 2009, renegotiating NAFTA, keeping lobbyists out of his administration, using presidential statements, televising health care negotiations, and allowing the public to see all legislation for five days before a vote.
Compound
It is that simple when it comes to compounding interest. It's definitely that simple from the banks' point of view. They only give you new loans so they can keep you upright and paying compound interest, because compound interest is how they capture real assets. Once you are no longer paying down the principal and taking on new borrowing to service older interest charges, they've got you. You're in the net, but you're not yet on the boat.
Debt And Spending: Not The Same
Government spending and government debt are two entirely different things. Governments can build roads and bridges all day long without borrowing, by taxing only what is necessary to build them and not a cent more. Governments do need to spend, for many things. No one argues that. But they do not need to borrow to spend. Spending and debt are not necessarily linked, nor are they interchangeable terms
Duplication
Let me see if I've got this straight.
Bush creates record deficits handing money over to the rich ( tax cuts ), expanding wars, and increasing the defense budget... and these deficits are BAD.
Obama creates even larger record deficits handing money over to the rich ( bailing out banks and brokerages and insurance companies ), expanding wars, and increasing the defense budget... and these deficits are GOOD.
If the Left really wants to have more money for 'stimulus' ( whatever that is ), why don't they recommend doing the opposite of everything Bush did, like: immediately withdraw troops and end wars, cancel out all TARP loans in circulation ( $23 + trillion ), and decrease the defense budget?
Bush creates record deficits handing money over to the rich ( tax cuts ), expanding wars, and increasing the defense budget... and these deficits are BAD.
Obama creates even larger record deficits handing money over to the rich ( bailing out banks and brokerages and insurance companies ), expanding wars, and increasing the defense budget... and these deficits are GOOD.
If the Left really wants to have more money for 'stimulus' ( whatever that is ), why don't they recommend doing the opposite of everything Bush did, like: immediately withdraw troops and end wars, cancel out all TARP loans in circulation ( $23 + trillion ), and decrease the defense budget?
No Laissez Faire
Laissez faire had nothing to do with 2008. The government prodded the banks to use loan writers of questionable ethics to push mortgages on people with questionable incomes. The Fed fed them the cheap money to lend. Frannie and Freddie stepped in to backstop these risky mortgages. This government stamp of approval was the thin justification used by the ratings agencies to call these securitized bundles AAA.
Government played crucial, pivotal roles every step of the way. Rubin and Summers and Greenspan were among those who promoted the OTC derivatives wound around the bad bundles.
This was not a failure of laissez faire, this was a prime example of government intervention into markets distorting prices and risk equations.
Government played crucial, pivotal roles every step of the way. Rubin and Summers and Greenspan were among those who promoted the OTC derivatives wound around the bad bundles.
This was not a failure of laissez faire, this was a prime example of government intervention into markets distorting prices and risk equations.
The Beans
The mainstream media has a real big problem when it comes to analyzing the economy: anyone with a room temperature IQ knows that the economy is thoroughly manipulated top to bottom by an entrenched kleptocracy, mostly in ways that only benefit them. It's their carnival ride. We're just passengers. But the mainstream media is not allowed to include any of that in their economic reporting. They have to sanitize anything that points towards conspiratorial orchestration. It's bad for the mythology of America to confirm that we have a ruling class and a shadow government.
These restrictions produce a lot of vague 'up might be down unless it goes back up blah blah blah' economics reporting, like you quoted. They need to fill space and airtime and convince you that they're all over this economy- but they really can't spill all the beans.
These restrictions produce a lot of vague 'up might be down unless it goes back up blah blah blah' economics reporting, like you quoted. They need to fill space and airtime and convince you that they're all over this economy- but they really can't spill all the beans.
Froth
Program trading by a cluster of giant houses has taken over the market. It's a big churning pool of froth. Small investors are hardly in it, like you said. The Fed needs to auction a lot of treasuries real soon. A good way to scare some customers towards the 'safety' of bonds is to throw a few big red numbers on the wall.
Krugman
Would that be the same Paul Krugman who said this about the Bush deficits in 2003?
"I'm terrified about what will happen to interest rates once financial markets wake up to the implications of skyrocketing budget deficits..
Sometime right after January 20, 2009, Paul Krugman seemed to have misplaced the hammer he uses to ring the deficit alarm bell.
http://www
"I'm terrified about what will happen to interest rates once financial markets wake up to the implications of skyrocketing budget deficits..
Sometime right after January 20, 2009, Paul Krugman seemed to have misplaced the hammer he uses to ring the deficit alarm bell.
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Corruption
Americans generally suspect that there is some degree of insider manipulation controlling our economy. Many suspect there is a large degree. But the difference between knowing this and deciding to tear the system down is huge, as big as an ocean.
I think that many Americans are convinced that the current level of corruption and even much more is tolerable, as long as the tv has 200 channels and gas is around $3 a gallon and the markets are stuffed with food. 20% unemployment is not going to tip the scales against the system. 30% won't. There will need to be breakdowns in the supply of basic goods or rapid inflation or riots and looting before Americans will say, "We've had enough."
Americans are mostly convinced that any attempt to tear this system down will imperil their families, maybe get them thrown in prison or shot. Beyond this system lies The Unknown. They can't predict the unknown. They can't face the unknown. So they hire politicians who they hope will 'tweak' the system around the edges.
If the outright extortion and robbery of 2008 did not make people march on NY and DC, well, we'll probably see the gangsters try the whole TARP scam all over again. An honest audit of the Fed should make people blind with rage. But it won't. People need to have their world turned upside down before they take steps as individual citizens against this system.
I think that many Americans are convinced that the current level of corruption and even much more is tolerable, as long as the tv has 200 channels and gas is around $3 a gallon and the markets are stuffed with food. 20% unemployment is not going to tip the scales against the system. 30% won't. There will need to be breakdowns in the supply of basic goods or rapid inflation or riots and looting before Americans will say, "We've had enough."
Americans are mostly convinced that any attempt to tear this system down will imperil their families, maybe get them thrown in prison or shot. Beyond this system lies The Unknown. They can't predict the unknown. They can't face the unknown. So they hire politicians who they hope will 'tweak' the system around the edges.
If the outright extortion and robbery of 2008 did not make people march on NY and DC, well, we'll probably see the gangsters try the whole TARP scam all over again. An honest audit of the Fed should make people blind with rage. But it won't. People need to have their world turned upside down before they take steps as individual citizens against this system.
Greece
Of course, the hedge funds will say that they're not making the crisis, only stepping into the fray of a crisis already begun and using CDS to force Greece into concessions that it needs to make anyway...
always trying to help with the tough love, those hedge funds.
always trying to help with the tough love, those hedge funds.
Food Bought With Stamps
If the unemployment stats were still calculated as they were pre-1983, this cover up would be harder to manage.
The biggest thing holding up the bottom rung today is food stamps. We didn't have those in the Great Depression.
The biggest thing holding up the bottom rung today is food stamps. We didn't have those in the Great Depression.
Conflate
I'm not trying to conflate the two, because I would really need to conflate all three- modern Democrats, modern Republicans, and prominent collectivists in history.
I find the statism promoted by both wings of the modern American corporate party to be appalling.
The modern Republicans try and convince people to relax restrictions on corporations by scaring them about the power of government.
The modern Democrats try and convince people to relax restrictions on government by scaring them about the power of corporations.
But behind the curtain, government and corporate power merged long ago, and Big Business and Big Government are partners. Neither provides the true restraint necessary against the other, because they are both running the same dialectical 'problem>reaction>solution' strategy leading to their desired synthesis solution.
Russia gave people one choice: Red.
America gives people two choices, Coke and Pepsi, and that's what has kept our public controlled for longer than Soviet Russia's: as long as people think they are choosing between Coke and Pepsi, they don't feel trapped in a centrally-planned economy.
I find the statism promoted by both wings of the modern American corporate party to be appalling.
The modern Republicans try and convince people to relax restrictions on corporations by scaring them about the power of government.
The modern Democrats try and convince people to relax restrictions on government by scaring them about the power of corporations.
But behind the curtain, government and corporate power merged long ago, and Big Business and Big Government are partners. Neither provides the true restraint necessary against the other, because they are both running the same dialectical 'problem>reaction>solution' strategy leading to their desired synthesis solution.
Russia gave people one choice: Red.
America gives people two choices, Coke and Pepsi, and that's what has kept our public controlled for longer than Soviet Russia's: as long as people think they are choosing between Coke and Pepsi, they don't feel trapped in a centrally-planned economy.
Tripod
As long as we are trapped in this cycle of reflex reactions, we're not going to make headway against the real power structure of this country, which stands on the tripod of:
military/industrial/petroleum complex
military/industrial/petroleum complex
financial sector
government enforcement arm
The reflex reaction to any skepticism of government power is so often: "Oh, you just want the corporations to run wild!"
The reflex reaction to any skepticism of corporate power is so often: "You just want a dominant central government!"
There is a whole growing class of people who view business and government power as a symbiotic Siamese twin entity, and they are not promoting either of the Siamese twins as the antidote for the other.
I think we need to downsize both and promote individual power. Growing one larger to deal with the other and then growing the other larger to deal with the former has not worked. It's a death sentence for individual freedoms.
government enforcement arm
The reflex reaction to any skepticism of government power is so often: "Oh, you just want the corporations to run wild!"
The reflex reaction to any skepticism of corporate power is so often: "You just want a dominant central government!"
There is a whole growing class of people who view business and government power as a symbiotic Siamese twin entity, and they are not promoting either of the Siamese twins as the antidote for the other.
I think we need to downsize both and promote individual power. Growing one larger to deal with the other and then growing the other larger to deal with the former has not worked. It's a death sentence for individual freedoms.
Friday, February 5, 2010
Profits
Governments don't make profits, that's why they can't take profits. The only reliable source of profit for a government would be for government to be the original lender of all legal tender into the monetary system, but the private corporation of the Federal Reserve has hijacked that profit stream away from the citizens.
>>"Governments do in fact borrow money directly from banks. They are called treasury bills and they are the linchpin of the economy."
No bank would lend to a government unless the government used the power of taxation to make the payments. The credit rating of a government without the power to tax is zero. Governments do not borrow on their own, they borrow as the agents of the citizens they tax.
>>"Governments do in fact borrow money directly from banks. They are called treasury bills and they are the linchpin of the economy."
No bank would lend to a government unless the government used the power of taxation to make the payments. The credit rating of a government without the power to tax is zero. Governments do not borrow on their own, they borrow as the agents of the citizens they tax.
Economic Power
There are two ways to give people more economic power.
1- Increase the power of the money they already have. Contract the money supply, allow assets purchased with unserviceable debt to reprice- this deflation adds buying power to the money we already have in circulation. This rewards the people who saved and this punishes the people who chose to exist off credit, but only initially. Once you flush all the bad lending out of the system, the economic power added to the savers through deflation will cause a rebirth of a real supply and demand system, in place of the fantasy 'borrow today, pay in ten years system'.
This is the honest way of repairing an economy with prices distorted by a bloated money supply. It rewards those who lived within their means, and delivers a well deserved wake up call to those who treated cheap loans like cheap cocaine.
2- The dishonest way to repair an economy wrecked by a bloated money supply is to reward the government that borrowed too much and the individuals who borrowed too much, by shoving even more loans at them. This rewards all the bad habits that have brought us to this point.
This is the method favored by the banks. They will gladly let the government and the American people get overextended on credit again. When it crashes again, they will own even more of America as collateral and you will be even more frozen into life as a debt slave.
1- Increase the power of the money they already have. Contract the money supply, allow assets purchased with unserviceable debt to reprice- this deflation adds buying power to the money we already have in circulation. This rewards the people who saved and this punishes the people who chose to exist off credit, but only initially. Once you flush all the bad lending out of the system, the economic power added to the savers through deflation will cause a rebirth of a real supply and demand system, in place of the fantasy 'borrow today, pay in ten years system'.
This is the honest way of repairing an economy with prices distorted by a bloated money supply. It rewards those who lived within their means, and delivers a well deserved wake up call to those who treated cheap loans like cheap cocaine.
2- The dishonest way to repair an economy wrecked by a bloated money supply is to reward the government that borrowed too much and the individuals who borrowed too much, by shoving even more loans at them. This rewards all the bad habits that have brought us to this point.
This is the method favored by the banks. They will gladly let the government and the American people get overextended on credit again. When it crashes again, they will own even more of America as collateral and you will be even more frozen into life as a debt slave.
Leaky Bucket
>>"That is why just about every company and individual in the United States takes on debt at one time or another. "
Companies and individuals make things and perform services. They have cash flows. Governments do not have cash flows. Governments are leaky buckets.Th
Governments redistribute wealth, they do not create it. If they could create it, they would stop taxing. This is why the rules of debt are different for governments- government can only shove responsibility for its loans onto the backs of those capable of servicing them: those who work.
A government does not borrow on its own. No bank would lend to a government standing on its own. Governments only have borrowing power because they use the collateral provided by the citizens to convince their creditors to give them loans.
Talking Point
The funniest anti-Tea Party talking point out there has got to be the one that claims that it's a proxy movement created by Wall Street and Big Corporations. Wall Street and Big Corporations are petrified of a decentralization of power. Decentralized power is much harder to corral and command. The financial elite built a powerful central government because a powerful central government allows them to price fix and collude and contract rig and soak up corporate welfare. Big central governments police markets in favor of the insiders' club.
Why do drug dealers attempt to pay off cops and turn them corrupt? Because it's good for business. Business runs much smoother for criminals when you have the cops in your pocket. Corporations paid off the cops of Washington and made them strong so they can sic them on their competitors and stomp on any citizen movement that threatens them.
Corporate power in America is based on crony capitalism that is oligarchical and anti-competition. This power would crumble if they didn't have a strong government guarding their castle.
People will be complaining that 'the rich are going to dismantle government' forever, and it will never happen. When the wealth is being consolidated into a smaller and smaller number of hands, simple logic tells you that they're not going to shrink their security force. All tiny minorities surround themselves with large armies and large police forces.
Why do drug dealers attempt to pay off cops and turn them corrupt? Because it's good for business. Business runs much smoother for criminals when you have the cops in your pocket. Corporations paid off the cops of Washington and made them strong so they can sic them on their competitors and stomp on any citizen movement that threatens them.
Corporate power in America is based on crony capitalism that is oligarchical and anti-competition. This power would crumble if they didn't have a strong government guarding their castle.
People will be complaining that 'the rich are going to dismantle government' forever, and it will never happen. When the wealth is being consolidated into a smaller and smaller number of hands, simple logic tells you that they're not going to shrink their security force. All tiny minorities surround themselves with large armies and large police forces.
Wars Of The Last Century
The only reason we even need to consider the merits of these wars is because of all the far-flung commitments we have made throughout our integration into a global government run by international plutocrats.
I don't like their chess board, I don't like how they move the pieces. I'd like to turn the clock back a long way.
I don't feel like many of these wars would have been sold to Americans of the 1700's or 1800's, but over the last century, we have been conditioned through fearmongering and propaganda to believe that we have an investment in everything that happens good or bad around the globe.
I don't like being trained for life as a 'global citizen', because I don't have the tools I need as a citizen to control a global government. It seems obvious to me that we are just being used. We got rich and powerful as a nation very fast, and that made us the object of international envy. They couldn't conquer us on our soil so they did the next best thing: they conquered us by maneuvering us into life as the 'world's superpower'- a role we should have never desired, which has thrust us into too many dubious, budget-busting wars that have killed too many of our young people and made victims of our war machine everywhere.
I don't like their chess board, I don't like how they move the pieces. I'd like to turn the clock back a long way.
I don't feel like many of these wars would have been sold to Americans of the 1700's or 1800's, but over the last century, we have been conditioned through fearmongering and propaganda to believe that we have an investment in everything that happens good or bad around the globe.
I don't like being trained for life as a 'global citizen', because I don't have the tools I need as a citizen to control a global government. It seems obvious to me that we are just being used. We got rich and powerful as a nation very fast, and that made us the object of international envy. They couldn't conquer us on our soil so they did the next best thing: they conquered us by maneuvering us into life as the 'world's superpower'- a role we should have never desired, which has thrust us into too many dubious, budget-busting wars that have killed too many of our young people and made victims of our war machine everywhere.
Obama Nation Convinced That Quadrupling Deficits Guarantees Future Solvency
>>'"At the current economic rate we'll never eliminate the deficit."
You can't stimulate growth with borrowed money, because the borrowing commits a larger share of your future profits to pay the debt service, and because interest compounds faster than profits, this is a losing proposition. It has one sure outcome: default.
Picture this equation: a borrower and a bank. The borrower intends to borrow all he needs to live on. The bank intends to lend all it can as long as the interest payments come in. Who do you think has the competitive advantage in this relationship? The bank, of course. The borrower only exists as long as the bank permits him to exist.
Proposing a massive increase in borrowing during a recession created by excessive leveraged debt is like tearing open a case of bourbon when the bottle of bourbon just gave you a huge hangover. It's the mindset of an addict. The only reason the Federal Reserve cooperates with this lunacy is because the lenders who feed us this debt own title to a larger and larger percentage of collateral with each new round of lending.
They are trading you paper they create out of thin air with a computer for title to every real asset under your feet. Good luck with that.
Obama Nation Overrun By Deficit Deniers
A $1.8 trillion annual deficit is four times larger than any previous annual deficit. If I wanted to state debt-to-GDP, I would have. Those numbers are scary also, especially since the GDP is being propped up by the same massive government spending that is swelling the debt. This is not sustainable.
People who think we can outrun our debt through growth are severely misguided. Our economy is not growing, and the debt burden created by excess borrowing and spending today will further encumber its growth. We are adding new quicksand to old quicksand.
Growing economies are productive economies, and productive economies do not rely on credit to fund their government. All the current optimistic projections about how much of our GDP we will be able to dedicate to debt service are wrong, because they are based on interest rate projections that are going to fall apart.
People who think we can outrun our debt through growth are severely misguided. Our economy is not growing, and the debt burden created by excess borrowing and spending today will further encumber its growth. We are adding new quicksand to old quicksand.
Growing economies are productive economies, and productive economies do not rely on credit to fund their government. All the current optimistic projections about how much of our GDP we will be able to dedicate to debt service are wrong, because they are based on interest rate projections that are going to fall apart.
The Obama Nation Is Full Of Deficit Deniers
Apparently, we're supposed to be paralyzed in fear over carbon dioxide, but completely relaxed over annual deficits 4X larger than any we've seen previously. There is no evidence in history of men seizing control of the climate away from the sun and producing a mass extinction event. There are multiple examples of men inflating fiat money supplies until they collapse under the weight of accumulated debt.
Despite all that, the crowd insists that a carbon dioxide tipping point is imminent, but a debt tipping point can be avoided indefinitely.
Despite all that, the crowd insists that a carbon dioxide tipping point is imminent, but a debt tipping point can be avoided indefinitely.
Monday, February 1, 2010
Taxes And Deficits Can ( And Will ) Rise Simultaneously
http://www.huffingtonpost.com/james-kwak/budget-sense-and-nonsense_b_445197.html
Kwak: "but complaining about "more taxes" and "more deficits" in the same sentence? Does Paul Ryan not know how a deficit is measured, or does he not know where government revenues come from? Logically speaking, it must be one or the other."
Not exactly. Taxes are finite and spending borrowed money can be infinite ( as long as the Fed exists and can find buyers for our debt )- so it is very possible for taxes and deficits to increase simultaneously. Even if the government taxed 100% of everyone's earnings, the government could still create deficits by adding new borrowing to expand the budget.
Kwak: "The 2001 and 2003 Bush tax cuts and the unfunded Medicare prescription drug benefit created the large deficits of the Bush era."
Not really. The tax cuts had much less of an impact on the deficits than did the war spending and the spending on the post 9/11 police state. In fact, tax revenues as a share of GDP hardly changed at all from 2001-2008, even with the tax rate changes. The money poured into Afghanistan and Iraq swelled the deficits, not reduced tax revenues.
Kwak: "but complaining about "more taxes" and "more deficits" in the same sentence? Does Paul Ryan not know how a deficit is measured, or does he not know where government revenues come from? Logically speaking, it must be one or the other."
Not exactly. Taxes are finite and spending borrowed money can be infinite ( as long as the Fed exists and can find buyers for our debt )- so it is very possible for taxes and deficits to increase simultaneously. Even if the government taxed 100% of everyone's earnings, the government could still create deficits by adding new borrowing to expand the budget.
Kwak: "The 2001 and 2003 Bush tax cuts and the unfunded Medicare prescription drug benefit created the large deficits of the Bush era."
Not really. The tax cuts had much less of an impact on the deficits than did the war spending and the spending on the post 9/11 police state. In fact, tax revenues as a share of GDP hardly changed at all from 2001-2008, even with the tax rate changes. The money poured into Afghanistan and Iraq swelled the deficits, not reduced tax revenues.
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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.