Archive for the ‘debt’ Category



“Have you seen men handed refusals
Till they began to laugh
At the notion of ever landing a job
Muttering with the laugh,
‘It’s driving me nuts and the family too,’
Mumbling of hoodoos and jinx,
fear of defeat creeping in their vitals—
Have you never seen this?
or do you kid yourself
with the fond soothing syrup of four
“Some folks won’t work’??

Have you seen women and kids
step out and hustle for the family
some in night life on the streets
some fighting other women and kids
for the leavings of fruit and vegetable
or searching alleys and garbage dumps
for scraps?
Have you seen them with savings gone
furniture and keepsakes pawned
and the pawn tickets blown away
in cold winds?
by one letdown and another
in what you might call slums—

To be named perhaps in case reports
and tabulated and classified
among those who have crossed over
from the employables into the

Stocks are property, yes.
Bonds are property, yes.
Machines, land, buildings are property, yes.
A job is property,
no, nix, nah nah.
The rights of property are guarded
by ten thousand laws and fortresses.
The right of a man to live by his work—
what is this right?

Engineer of Knowledge Said:

Hello Laci. I thought I would pass this on.

Company Towns
By Carl Sandburg

You live in a company house
You go to a company school
You work for this company,
according to the company rules.

You all drink company water
and all use company lights,
The company preacher teaches us
What the company thinks is right.

This poem written decades ago still speaks true today.

Sir John Rose, the Chairman of Rolls Royce, on the economy

This is a quotation from Sir John Rose, the Chairman of Rolls Royce, which is something that should be considered in light of the US budget debates.

We must be realistic about the state of the UK economy. A rebalancing is necessary and there will be no quick fix to restoring public finances to some sort of sustainable balance.

To draw an analogy, if the UK was a business, the shareholders would be asking serious questions. The current model appears to be that we can grow our business by growing overhead, by applying better terms and conditions to support functions than to wealth creators, and by paying dividends out of borrowings not all of which are recognised on the balance sheet.

We are also asked to believe that service levels will inevitably suffer if the costs of delivery are reduced. This need not be the case. As any business will confirm, service levels will reflect prioritisation, proper definition of desired outcomes, concentration on reducing waste and investment in productivity.

In the UK, the debate needs to focus on how to make the pie bigger, rather than how it is sliced. We must concentrate on creating an environment where the enablers of wealth creation, which government can influence, are world class. In defining the right policies, there are many examples against which we can assess ourselves, but we must measure honestly and then take the necessary actions to be competitive. Importantly, there must be the will to apply policy consistently and over the long term.

If we get wealth creation right, distribution and consumption will follow. It cannot be done in the reverse order.

Media Malpractice on the Debt Debate

The convention in mainstream journalism is that the new stories give you the facts, and the columnists give you their opinions (hopefully backed by facts). But in the coverage over the debt ceiling and budget debates sometimes you’re better off heading straight to the columns. Today offers a good example. In the Washington Post (7/15/11), Ezra Klein lays out the political dynamic that is rarely explained. As Klein writes, the White House has decided to:

offer Republicans a deal that is not only much farther to the right than anyone had predicted, but also much farther to the right than most realize. In addition to the rise in the Medicare eligibility age and the cuts to Social Security and the minimal amount of revenue, it would cut discretionary spending by $1.2 trillion, which is an absolutely massive attack on that category of spending.

In the New York Times (7/15/11), Paul Krugman writes:

President Obama has made it clear that he’s willing to sign on to a deficit-reduction deal that consists overwhelmingly of spending cuts, and includes draconian cuts in key social programs, up to and including a rise in the age of Medicare eligibility. These are extraordinary concessions. As the Times’s Nate Silver points out, the president has offered deals that are far to the right of what the average American voter prefers — in fact, if anything, they’re a bit to the right of what the average Republican voter prefers!

The conventional coverage–which pits Obama’s offer against Republican intransigence–tends to gloss over these facts. The front-page article in the Times today by Jackie Calmes explains the debate as being between Obama’s desire to raise taxes on the wealthy and cut the deficit, while Republicans prefer “smaller government” and lower taxes. It quotes Sen. John McCain saying that the “president keeps talking about spending more money”–with no explanation that Obama is actually proposing to reduce non-security domestic federal spending as a percentage of GDP to its lowest level in 50 years.

These are the limits in the media debate. The fact that the public would seem to prefer an entirely different type of budget deal is a non-factor. The fact that such plans exist–the People’s Budget of the Congressional Progressive Caucus, for instance–is all but ignored by the corporate media. Senate Democrats have floated a similar plan. A competent press corps would cover these proposals, if only for the sake of telling citizens that such options are available–that reducing the long-term deficit is possible without slashing spending on programs that people support.

But the media would much prefer a budget debate that pits Obama’s Republican-leaning plan against the Republicans who oppose that plan. Unfortunately, there is another budget proposal coming from the left which get absolutely no play in the USMSM (includes “Public Broadcasting”). This People’s Budget is the exact antithesis of what is being mentioned in USMSM. The People’s Budget eliminates the deficit in 10 years, puts Americans back to work and restores our economic competitiveness. Additionally, this budget protects Social Security, Medicare and Medicaid and responsibly eliminates the deficit by targeting its main drivers: the Bush Tax Cuts, the wars overseas, and the causes and effects of the recent recession.

Our Budget Puts America Back to Work & Restores America’s Competitiveness
• Trains teachers and restores schools; rebuilds roads and bridges and ensures that users help pay for them
• Invests in job creation, clean energy and broadband infrastructure, housing and R&D programs

Our Budget Creates a Fairer Tax System
• Ends the recently passed upper-income tax cuts and lets Bush-era tax cuts expire at the end of 2012
• Extends tax credits for the middle class, families, and students
• Creates new tax brackets that range from 45% starting at $1 million to 49% for $1 billion or more
• Implements a progressive estate tax
• Eliminates corporate welfare for oil, gas, and coal companies; closes loopholes for multinational corporations
• Enacts a financial crisis responsibility fee and a financial speculation tax on derivatives and foreign exchange

Our Budget Protects Health
• Enacts a health care public option and negotiates prescription payments with pharmaceutical companies
• Prevents any cuts to Medicare physician payments for a decade

Our Budget Safeguards Social Security for the Next 75 Years
• Eliminates the individual Social Security payroll cap to make sure upper income earners pay their fair share
• Increases benefits based on higher contributions on the employee side

Our Budget Brings Our Troops Home
• Responsibly ends our wars in Iraq and Afghanistan to leave America more secure both home and abroad
• Cuts defense spending by reducing conventional forces, procurement, and costly R&D programs

Our Budget’s Bottom Line
• Deficit reduction of $5.6 trillion
• Spending cuts of $1.7 trillion
• Revenue increase of $3.9 trillion
• Public investment $1.7 trillion

But as the Economist pointed out: “Mr Ryan’s plan adds (by its own claims) $6 trillion to the national debt over the next decade, but promises to balance the budget by sometime in the 2030s by cutting programmes for the poor and the elderly. The Progressive Caucus’s plan would (by its own claims) balance the budget by 2021 by cutting defence spending and raising taxes, mainly on rich people.”

Naturally, the Koch Brothers and their ilk wouldn’t approve of such a budget, which is why it gets no air time. Obama is the perfect sell out who follows the line of his big donors.

But, the real problem is that the people who are screaming about the government will be screaming even louder when they see they have been sold out by their government.

see also:
Media Malpractice on the Debt Debate
Budget of the Congressional Progressive Caucus Fiscal Year 2012
The courageous Progressive Caucus budget

Living within your means

Thanks to Southern Beale for her 18th of May post, Americans Live Within Their Means & Other Wingnut Fantasies , which has had me thinking, but there has been an increased sense of urgency about this topic as the U.S. Economy grows closer to a possible default.  While the US is one of the largest economies in the world, it is the only one where this type of budget kerfuffle could happen.  Reduction of the Budget deficit will effect every American’s standard of living, yet people are being lulled into a bizarre sense of denial of where the current course of event will take them.

SoBeale is also annoyed by the Right Wing chant that goes along the lines of  “American families have to live within a budget, and so should the federal government”.   As SoBeale points out, this just ain’t true since the American consumer debt, which doesn’t include mortgages, is $2.43 trillion as of March 2011. Total U.S. revolving debt, which is almost entirely credit card debt, was $796.1 billion, as of March 2011. In fact, in March U.S. credit card debt increased for the second time since 2008, which the Wall Street Journal presented as a good thing:

U.S. consumers in March increased their credit-card debt for the second time since the financial crisis flared, giving a sign of hope that consumer spending could boost an economic recovery that has lost some steam.

In its monthly report Friday on borrowing, the Federal Reserve also said overall consumer credit outstanding rose, up $6.02 billion to $2.426 trillion. The increase, the sixth in a row, was bigger than expected. Economists surveyed by Dow Jones Newswires had forecast a $4.8-billion rise in consumer debt during March.

SoBeale mentions that  Jared Bernstein, who  was Chief Economist and Economic Adviser to Vice President Joe Biden and a member of President Obama’s economic team before leaving the White House to become a senior fellow at the Center on Budget and Policy Priorities writes that the  family budget analogy gets misused.

Graphic shows federal debt held by public as percentage of GDP

Anyway, the US is heading towards the Debt Ceiling showdown, which is a magnificent big of US political theatrics from a nation where political theatrics has become a nasty part of the social system.  Governments run debts when the revenues do not pay for the required governmental functions.  Economists debate the level of debt relative to GDP that signals a “red line” or dangerous level, or if any such level exists. In January 2010, Economists Kenneth Rogoff and Carmen Reinhart stated that 90% of GDP might be an indicative danger level.   Of course, the Budget “mess” is real more about spending priorities than any real crisis.  In particular, the spending on “entitlement programmes”.  The Pew Research Centre found that:

For the public, reducing the deficit is a much lower priority than preserving the benefits provided by Social Security and Medicare: In mid-June, 60% said it was more important to keep these benefits as they are, while just 32% said it was more important to reduce the deficit. Less affluent Republicans view preserving entitlements as more important, while Republicans with higher incomes prioritize deficit reduction. Democrats across income categories say it is more important to keep benefits as they are.

Of course, the usual right wing trick is to mention the word “Taxes” which causes a disgust in the average American’s mind.  This is despite the fact that the US system of taxation is one of the world’s most regressive systems.  The “Bush Tax Cuts” basically only helped the wealthy, yet they were not accompanied by budget cuts to offset the cuts in revenue, but that’s another issue altogether.

The problem is that the National Debt is not the problem as the graph showing how much of that debt is held by private entitites above points out.  There are certain words that cause people to have bad reactions, such as taxes and debt, especially if they are not aware what these really entail to the average person.  The real threat is a default on the National Debt, which is something that the founders didn’t allow.

The United States has had public debt since its inception. Debts incurred during the American Revolutionary War and under the Articles of Confederation led to the first yearly reported value of the National debt as $75,463,476.52 on January 1, 1791. The US had the option of honouring this debt or defaulting and chose the path of honouring it. The founders knew full well if they failed to honour the government’s debt obligations that it would impact the national economy. Unfortunately, those who wish to claim legitimacy by incorrectly following the founders’ “ideals” are more than willing to choose the opposite course of action.

Ultimately, is this all theatrics? Section 4 of the 14th Amendment to the US Constitution states:

The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.

Could that offer a way out of the current budget mess? Or is the US looking at creating one of the worst economic disasters through its ignorance?

Time will only tell if reason will prevail. I have to admit that I am not terribly optimistic about the situation. There are too many people to blame for this happening. I can sound off, but I do not have the power to influence policy, which makes me somewhat blameless. I have done what I can to sound the warning, but like the warnings of climate change, I think they will go unheard.


Center on Budget and Policy Priorities
Policy Basics: Deficits, Debt, and Interest
Economic Downturn and Bush Policies Continue to Drive Large Projected Deficits
Critics Still Wrong on What’s Driving Deficits in Coming Years
How the Right exploits single issues and manipulates religious faith to direct workers into voting for candidates who are a threat to their economic interests.

Deficit games

Nothing like a little voodoo economics to scare the crap out of the ignorant US public. Let’s talk about the budget deficit and how large the national debt happens to be.

Guess what? The US deficit is mostly the fault of the Bush tax cuts, the Bush wars, and the financial collapse that happened during the Bush presidency. At this point, though, this is more in the nature of a religious debate than a factual one, and conservatives are going to keep repeating the same tired disinformation about the deficit regardless of any evidence one way or the other.

Of course, there is a shift of wealth with the rich getting richer and the poor getting poorer, and everybody else seeing their standard of living drop.

Personally, I wish these ideas would go away, they are a bad idea for the US and a worse idea for the rest of the world.

Economic Downturn and Bush Policies Continue to Drive Large Projected Deficits
The Deficit Chart Republicans Hate

Eban Pagan and Self-Made wealth

OK, I put the last post I wrote about Eban into the Private category for a while since I don’t want to shill for someone who is selling get rich quick schemes. I decided to make it public again since I’ve been listening to the things Eban says on his blog:

Eban has been saying a lot of things I have about economics, which is why I am making the last post public and making this post.

Not to mention he commented here. He made his comment in the slavery post.

Only you can decide whether what Eban wants to teach you is something that meets your needs, but I think that what he says is worth giving a listen.

Especially since I say a lot of the same things when I talk about money. HIs latest post is really to the point:

Self-Made wealth

O.K., I’m a bit wary when people send me things telling me how to get money, but I received a link to Eben Pagan’s Self Made Wealth Blog.

The only reason I am passing this on is that he says some of the things I say here about fiat money and debt.

And he doesn’t ask for money up front.

I’ve always had this belief that if someone is onto something that will really make you rich, they aren’t going to need to ask you to pay for the secret. There’s no theory here, it’s just very practical, down-to-earth information that has been the cornerstone of why the rich get richer while the poor get poorer.

Maybe I’m a little too hopeful, but the video I watched has me very interested in what this person has to say.

Posted 07/01/2011 by lacithedog in debt, Eban Pagan, economics, economy, Fiat Money, money

World Collapse Explained in 3 Minutes

“How can broke economies lend money to other broke economies who haven’t got any money because they can’t pay back the money the broke economy lent the other broke economy and shouldn’t have lent it to them in the first place because the broke economy can’t pay them back?”

Posted 05/12/2010 by lacithedog in debt, economics, economy

Reserve Banking

OK, I am totally pissed off that the quantitative easing goes to the people who need it the least, the banks, while the rest of the population is broke.  The money needs to be spread amongst the people so they can pay off their debts–except that a cash economy is the worst thing that can happen.

Debt makes the economy go ’round.

But you need to make sure people have jobs so they can keep paying the company store.

But that is not exactly what I want to talk about.  I keep mentioning reserve banking and want to explain that term.

Reserve banking refers to the amount of cash reserves and assets that a bank has to hold to function.  A full reserve bank is one where 100% of the bank’s assets are in cash.  This is best described as a cheque since the amount of money needed to pay the obligation is held in full.

Fractional reserve banking is exactly that, the bank has only a fraction of its assets held as reserves against its obligations.  The amount of money which must be kept as reserve is determined by law.  It is also a surprisingly small number, which is a reason for bank failures.   If banks give out loans which go unpaid, then the “assets” aren’t worth anything.  In simple terms, if the customers make a run on the bank, then there is not enough money to pay out and the bank collapses.

The problem is that the cycle of debt is a necessity for the current world economy, but it is like a game of musical chairs or monopoly and someone ends up losing.

There needs to be a new, equitable distribution of cash to enable the economy to flow.  Money needs to be seen again as a tool for enabling commerce rather than a commodity in itself.

A dialogue on Quantitative Easing

In a facebook discussion:

Right wing, nitwit Brother in law says:

Do you realize that California is paying out $40,000,000 a day in unemployment benefits and since they are broke, that means you and I are paying this……oh wait, we (the feds) are broke too………..ok….print more money………wait…….won’t that lead to inflation?

Financial Services insider cousin says:

Nope. It won’t lead to inflation. Well not much anyway. Maybe a percentage point or two if we are lucky – because thats the point. When interest rates are at the zero bound, as economists say it is the equivalent of “pushing on a string”…. You try and pump the economy with fiscal policy but nothing happens because people save their money and banks wont lend so the money just sits there. Normally the fed would just cut interest rates now, but as they are at zero – they can’t. Thus Quantitative easing. Not a cure all – but it might help at the margins. That’s why there is an argument for temporary government spending, which would help. But there is zero appetite for more spending, so the Fed is the next best alternative.

Think of it this way – is our debt easier to pay off with inflation or deflation? Answer: inflation. And deflation is the Fed’s biggest fear right now. See 1930’s America and Japan today for reasons why.

While cutting spending and having the government tighten it’s belt and reduce debt sounds great – it really does – almost all evidence in economic history says that it would only make the economy worse when we are on the verge of deflation. Cutting debt and spending makes lots of sense when the economy is growing and we have slight inflation.

The ideal thing would be to get the economy recovered first. THEN cut government spending.

The real fear with QE2 is that it won’t do enough and the economy will stay in the doldrums. In fact, that’s what most economists think will happen.

So don’t worry about hyperinflation. It ain’t happening.

OK, the quantitative easing economics thing is something I’ve commented upon, which tempts me to want to respond on the facebook post, but I’d prefer not to deal with RWNBIL.  I will begin with where I am in agreement with FSI cousin which is  “The real fear with QE2 is that it won’t do enough and the economy will stay in the doldrums. In fact, that’s what most economists think will happen.”  I mentioned in the the quantitative easing post that “economists over at Goldman Sachs estimate that it would take a staggering $4 trillion in quantitative easing to get the economy rolling again”, which is a note that FSI insider is one of those economists. I also said that “quantitative easing can lead to serious hyperinflation and that the cycle of debt needs to come to an end”

Note that I said can not will.

That is an important distinction since unless we are talking about the $4 trillion in quantitative easing, we probably won’t see hyperinflation.  Still, the point is that quantitative easing is not the optimum solution: it is the ultimate last ditch.  It is screaming “uncle”.

World opinion to QE2 is negative and in some ways ironic: e.g., The Chinese chastised the US for QE2 at the G20.  The Irony being that the Chinese Yuan is the usual suspect in currency diddling for being undervalued. Now, the Chinese have turned the tables and are accusing the US of the same thing the Chinese are usually accused of doing.

The real beef with FSI cousin is that he is one of the beneficiaries of Quantitative Easing since the eased “money” goes to the financial services industry, not the people who are in debt.  My previous quantitative easing post was a bit simplistic in how it addressed this issue prefering to let the video describe the practise. Likewise, I will let this video explain fractional reserve banking:

The current economic system is based upon debt. If you consider that fractional reserve banking is based upon debt and that quantitative easing means that the banks will be able to increase their “reserves”. The problem is that the people who really need money are not the beneficiaries of the quantitative easing. That means the economy will stagnate and we will see our standard of living drop.

Quantitative easing

This is a term we may hear a lot more of in the coming days since it is a last ditch method of dealing with debt when a nation is skint.   It is where a nation puts more money into the economy.  The US Federal Reserve has done some quantitative easing by purchasing $600 billion of U.S. Treasury securities.   I’m not sure if quantitative easing is more like counterfeiting or cheque kiting: both of which are ways anyone other than the official national bank spends nonexistant money.   Another problem is that quantitative easing is an extremely short term fix which is as useful as counterfeiting or cheque kiting.

You too can be a billionaire in hyperinflated currency!

The problem is that the world economy is based upon debt, but everyone is pretty much in debt up to their eyeballs.  The Fed wants to revive the debt cycle which the world economic system is based upon. The Fed believes that if it can get more money into the banking system, the banks will turn around and make more loans. Unfortunately, this is a misinformed concept since everyone is pretty much in debt up to their eyeballs. The banks want to get solvent again and anyone else who can pay down their loans is trying to do that as well. The economy is tanking as Charles Hugh Smith recently explained:

Anyone who believes a meager one or two trillion dollars in pump-priming can overcome $15-$20 trillion in overpriced assets and $10 trillion in uncollectible debt may well be disappointed.

In fact, economists over at Goldman Sachs estimate that it would take a staggering $4 trillion in quantitative easing to get the economy rolling again. But one problem with quantitative easing is that it can lead to hyperinflation.   Seeking Alpha has a super post explaining this in detail called 9 Reasons Why Quantitative Easing Is Bad for the U.S. Economy. Although the short form is that quantitative easing can lead to serious hyperinflation and that the cycle of debt needs to come to an end.

Personally, there would be better ways to quantitatively ease the economy other than increase debt.  It seems that they could infuse the money via a lottery.  Given how lottery winners can go through the money, that would stimulate the economy.  There must be other ways to spend the money in a way that isn’t as obvious as giving it to the banks to shore up their assets.  After all, most counterfeiters don’t want to get caught.  But, I think this is a method of creating money, which while “legitimate”, ends up causing as much havoc as the illegal methods in the end.

Thinkin’ ’bout the economy.

I used to say that George W. Bush wasn’t going to be outdone by his father who saw the collapse of one of the world’s two superpowers, Dubya was going to make sure the other one collapsed.

Of course, people have been predicting the demise of the United States before the Declaration of Independence, let alone the Treaty of Paris.

What gets me off on this topic is that a few mornings back, I awoke to a story about China studying and preparing for the decline of US power. I would have preferred a more definite story on this, but I found the possibility quite intriguing.

I mean you have to remember that the question “How would you carry out a surprise attack on Pearl Harbor?” appeared on every final exam for each graduating class of Japan’s Naval Academy from 1931 until the actual attack. So, there is a precedent for not so sneak attacks catching the US unprepared.

I have to thank il principe for the term weapons of mass distraction media since as per usual, the yanks are too distracted by wedge issues and irrelevancies to see what is happening right in front of their noses. That is that the Chinese are the people propping up the US economy.

Sure, this seems a bit like the episode of Spooks I watched last night (S7e5) where the British economy is on the brink of collapse. On the other hand, that episode raised a lot of the issues, such as running an economy based upon debt, that I talk about here.

There is a seriously mixed rant here at the inability of the American people to see through the bullshit handed to them by the media and politicians. Worse, they are easily misled by special interest groups such as the NRA, Americans for Quality and Affordable Healthcare, pro-life, and so on that keep them in a panic about everything except what really is happening.

The funny thing is that the next invasion may happen by stealth. It will be undetected until the coup has happened. By that time, it will be too late for anything to be done.

Posted 17/11/2009 by lacithedog in debt, economics, finance

All that glitters…

I have to admit that I am musing on the topic of money and economics lately. Not just fiat money, you know, the folding stuff in your wallet that you spend. I am considering why gold has value.

There are two commonly held views as to why money has value:

1. Social convention–People are willing to accept it as payment.
2. Government decree–The government says so (Fiat money).

The first reason, that being that money has value because people are willing to accept it as payment is nothing more than a circular argument. It states that money has value because it is accepted. Why is it accepted? …because it has value!

The second belief is also false. As history reveals, there are many country currencies that have suffered through hyperinflation or complete collapse click here.

Right now we are witnessing the collapse of the world economic system which is causing great grief to governments. The problem is what is going to replace it. Not to mention there is fierce resistance from the “haves” who see their power waning as their wealth becomes worthless.

Money originally started out as a commodity. Originally, people exchanged goods according to their wants and needs with one another. Examples of commodities that have been used as mediums of exchange include gold, silver, copper, salt, peppercorns, large stones, decorated belts, shells, alcohol, cigarettes, cannabis, candy, barley etc. These items were sometimes used in a metric of perceived value in conjunction to one another, in various commodity valuation or price system economies. The problem is that it makes trade difficult, so along came a medium of exchange that eventually became money.

Money has to fulfill three things to be useful:

1. It is a medium of exchange.
2. It is a store of value.
3. It is a unit of account.

Now the real hitch is value. The title of this comes from the fact that I read that gold has no real value. I read somewhere that gold’s value is subjective. That is

1) The item is useful in satisfying human wants, therefore it is desirable
2) There is a limited supply to satisfy demand.
3) We are told it is valuable even though it can’t be eaten, worn, or very useful.

There are actually three types of value in economics, Objective, Subjective, and relative. Objective value is a value set by a marketplace such as a commodities exchange and is otherwise known as market value. It’s a bit like the social convention that says “gold is valuable because people find value in gold”. Relative value is the attractiveness measured in terms of utility for a given instrument of exchange.

Although value in general is relative. That is even if gold has a market value (Objective), it doesn’t matter whether you think it’s valuable or not (subjective), it does not affect its objective value. However, the situation in which the gold is supposed to be of value does matter, because value in general is relative to individual and circumstances. For instance to person X, who happens to be stranded on a desert island, gold is not valuable. Its value to him is still objective. That is it won’t all of a sudden change price because he decides so, that’s a market force. But relative to him the value of gold is, objectively, zero since it isn’t useful for exchange. That is there is no utilty to gold.

So, in a situation where the currency has colapsed and one needs food, which is more valuable to the person with food: gold or something they need?

I like to quote the TV show “Jute City”: Money in of itself isn’t evil, its when people take it from a medium of exchange and make it into a commodity that it becomes evil. Probably more of a paraphrase than a quote, but you get the idea. There is a cruder version of this which is “money is like shit, it’s useless unless it’s spread around.”

Part of the problem is that people have been wanting to accumulate far more money and things than they need. That means the rest of us are stuck in an economic form of musical chairs since the economy is really based upon debt. I know, I just did a literary no-no by introducing debt into this mix about money and value. But really the fiat money has been backed by debt and not by value for some time now. That is the reason for the seeming economic fluctuations. Although to be quite honest, the economy has been in recovery for quite some time now: at least since Reagan-Thatcher came into office.

Why are so many people having trouble making ends meet given the economic recoveries?

Actually, the economic situation is like a game of musical chairs and the recoveries have just been changes of songs.

But the real gist of this is that the gold out there is worthless if it can’t be spent. It’s nice to think something has value until you try to sell it.

Then you really see the market forces kick in.

Posted 06/08/2009 by lacithedog in debt, economics, economy, exchange, gold, money

frustrate their navish tricks.

I-95 has been closed for the past three days due to structural problems. Americans believe they are entitled to free highways and cheap petrol. Unfortunately, somebody has to pay to maintain the infrastructure.

As long as it’s the other person.

The revolt was due to the fact that the Crown finally sent the Colonists a bill for their defence. Not just an army, but a navy to protect trade on the seas. Nevermind the taxes weren’t as high as they were back in Blighty, it’s being told they had to pay taxes.

“Tax and spend” is used as a criticism of “liberals”, but we are finding the national debt is being increased since it is spend like a drunken sailor by “conservatives”. More is spent on the pointless invasion of Iraq than the United States. Damn any source of revenue.

But, debt makes the world go ’round, which is a criticism of most of the world’s governments since we are facing a crisis based upon massive lending without any consideration of who will eventually pay the bill.

OPM–Other People’s Money

On the other hand, most currency has the words “will pay on demand the sum of” the note’s denomination. So, really, we have debt. The War for Independence was based upon debt. Trash paper which was worthless, but was forced upon people to show their patriotism. The British paid in gold.

Of course, The citizens of the United States have gun control, abortion, prayer in school and other wedge issues trotted out so that nothing is done until a crisis arises. Even then, nothing gets done. Something might actually get done if the wedge issues were removed. On the other hand, why bother since it is easier to keep peoples’ minds on other things than really deal with serious problems.

Let’s have elections which take forever, but don’t result in proper representation of the people. George Bush didn’t win the last two popular elections, but he won in the electoral college. of course, a parliamentary system would result in new governments every two weeks. Either that, or people would be forced to work together.

The problem is that we have leaders who don’t lead, they follow. They follow polls. They follow the money of special interests which pay for their campaigns. Special interests which are at odds with the interest of the American people.