What is the biggest source of power in the world? Lesson 1 discussed the issue of financial power, but for those who haven’t lived in the world of balance sheet power it may still seem like a vague theoretical notion.
After a short intro about the need to restore the authentic real world vs. the fake corporate PR world, this lesson digs into financial power in more detail, explains how you might think of it in terms of the power parents have over children, and then evaluates some of the popular solutions being discussed in the political realm:
- ending the fed
- cutting back on government in the interest of a “free market”
- putting the banks through bankruptcy.
Intro:
Main lesson:
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I’m all for casual Friday! Unfortunately, people focus on the wrong information; dress, white board… Glad you don’t have any ads or sponsors to distract viewers. Keep up the great work–thanks for all you’re doing.
G
Pingback: Debunking Money #3: Corporate PR, Financial Power, and Evaluating Some Popular “Solutions” | The Matrix Sentry
Wow. Very nicely done. Very clear.
I think the reason adolescents are more observant is that they don’t really own anything yet. They have nothing to lose by observing and speaking the truth. According to Prospect Theory, human beings place more weight on avoiding losses than on seeking gains. The power of the financiers increases as people grow older and develop things they can lose, bet it wealth, power or even something as simple as reputation. That’s when the cognitive biases kick in: not only does it become harder to speak the truth, it becomes impossible to see the truth because to do so would cause a great deal of discomfort (or even an existential crisis) for most people. It’s easier to lie to yourself than it is to accept the truth, and this is what the financiers count on and prey upon with all of the memes they’ve developed to consolidate their power.
Interestingly, the developers of Prospect Theory (who were cognitive scientists, not economists; their work led to behavioral economics, which will always be used by the financiers but never the orthodox school) received the Nobel Prize in economics. I’ve become convinced that this prize is awarded to anybody who significantly advances the financiers’ power, whether purposefully or not. Another unwitting accomplice was Gunar Myrdal, an institutional economist who provided stunning insights into the nature of classical liberalism that allowed the financial power to develop a new form of liberalism (aka neoliberalism) minus the “communistic fiction.” Myrdal was the co-recipient of the prize in 1974 along with Hayek, the founder of neoliberalism (which has held sway in the U.S. and UK since at least 1980). As a result of Hayek receiving the prize, he called for its abolishment.
Furthering the concept of getting past the various false dichotomies, whether or not you agree that a particular recipient is deserving of the Nobel Prize, you need to ask yourself what did that person do that might have helped financial power. With Friedman, it’s obvious. With Hayek and others, it may not be.
Agreed on the statement that public companies are not operated to maximize profits. They are operated to manage a balance sheet that provides the illusion of profits that grow exponentially forever. Accounting rules drive decisions more than anything else. Corporations that are not publicly traded do not have to operate in this way, but many of them do because their goal is to go public or sell out to a company who is.
Speaking of “free markets,” the sad fact is that I know at least two entrepeneurs who were put out of business (one who was smart enough to take the offer-that-couldn’t-be-refused, the other who wasn’t) by large public companies. Money is power, and once money feels threatened, you get one chance to be reasonable and accept a low ball offer.
You seem to be critical about money that is a debt instrument but isn’t that the only thing it could be? Is money not the right to demand receipt of some value in exchange for it? I seems to me that the problem is in the regulation of money rather than the nature of money. Would you please comment on this viewpoint? Thank you for engaging people in thought!
if people want to keep a debt-based form of money, the key is who gets to own/control/monetize the value of the debt? currently it’s a small group of global financiers/banks. not a good idea if people think neighborhoods, towns, counties, states, countries are useful things to have.
Why would people want to keep a debt-based form of money?
I look forward to Damon’s response.
In the meantime, here’s Michael Hudson’s take on the history of money (and the history of its nature), which you might find interesting:
http://michael-hudson.com/2003/03/the-creditarymonetarist-debate-in-historical-perspective/
His twelve “major points” are kind of the Cliff’s Notes version . . .
Thanks for the link Tao! It was epic.
http://commongoodbank.com/2010/10/general/create-money-as-debt
This is a good article to understanding how and why money can be ethically created as debt.
What? Why would you ever want debt based money when you can have ‘free’ money, with no strings attached? Unless of course, you’re in charge of the debt based money…….
Oh yeah, that’s the problem NOW!!!
I have to wonder about a question of this sort….?…….
Another marvelous presentation! This suspense is unbearable. What is the solution? I have been holding back from so many (probably all) solutions because they seem to be partial and perhaps could even make our situation worse. We need a plan that will support self-sufficiency for ALL countries – not just ours. We have all been colonized. Show us how to gain our independence – become self-sufficient and autonomous.
What about Stephen Zalenga’s American Monetary Act? (www.monetary.org) His proposal is to absorb the Fed into the US Treasury, to end fractional reserve “money” creation (debt instruments) and have the US government create its own sovereign currency and issue (public) credit. The US government would then spend this money into circulation – on infrastructure, education, health care etc – “to promote the general welfare.” Private banks would still be able to make a profit but they would have to use depositor’s savings or investor’s money from 100% reserves rather than creating digital accounts out of thin air based on 10% reserves.
Do you think this plan is sound? Dennis Kucinich is willing to introduce the bill but if there is anything about this strategy that will not work, now is the time to correct it.
If you have a winning strategy PLEASE tell us!
@Nikki,
” I have been holding back from so many (probably all) solutions because they seem to be partial and perhaps could even make our situation worse. We need a plan that will support self-sufficiency for ALL countries – not just ours.”
That’s a pretty tall order in view of the fact that 30+ years of neoliberal globalization has forced interdependency as a means for destroying national sovereignty and making governments like ours beholden to the financial power. We can’t undo decades of destructive change overnight. We’re going to need decades of positive change just to become self-sufficient.
hi Nikki, that’s sage advice from Tao. one of the reasons I’m taking people through these videos is to bring us to the sober truth and eliminate all the cheap hope out there people are putting in politicians, economic theories, and seemingly simple actions like “end the Fed.” cheap hope is deadly. it’s why we’re in this situation in the first place.
regarding AMI, a big step in the right direction, but I’m suspicious of 1) proposals for 100% reserve banking if they don’t have a long-term transition plan, 2) putting ALL control at the federal level. given 1 and 2 if the wrong people get in office or takeover the govt, there’s no better way to lock us into feudalism, which Michael Hudson correctly says we’re in danger of moving into. people don’t realize the impact of eliminating fractional credit. so I prefer economist Nathan Martin’s Freedom Vision which you can find at swarmusa.com.
http://www.CommonGoodBank.com
This is the solution I give all my time to. It is a transition model to be sure, but the amazing possibilities afforded by harnessing fractional reserve banking for the common man is an immediate step in the right direction. We don’t need to topple the system we just need to be responsible in as many facets of our economy as possible.
Democratic Economics for a Sustainable World!
I suggest that we have through ignorance and bliss enslaved ourselves by agreeing to beholden to the system that provides us such gifts. Past generations have not learned and communicated the dangers of the moneyed interests and history is set to repeat itself unless we can break the cycle.
Look around your household, look at all the products you buy and where they come from. Take a step back and look at your community, do you know your neighbours 2 doors down? The only way we can defeat the moneyed interests is by refusing to play their game. We cannot have it both ways – we must sacrifice certain luxuries in order to gain our freedom and independence.
I believe the path to freedom starts with simple small acts in our own lives towards securing our independence and freedom from government and economic control. To band together and create strong local communities.
For example.
1. Start buying your produce locally – find local farmers and cooperatives
2. Start a local silver buyers club to invest in physical silver for savings and a future barter currency
3. Grow a family vegetable garden or raise some chickens for food source
4. Create a home-based business to barter within your community and create financial independence.
If every single freedom loving individual around the world performed small steps like these and communicated with their friends and family members we can create the change we want to see in the world.
Damon, you talk about where the power lies and how power is siphoned from us by the banking system and by governments, etc… I think we need to start acting in our own lives to build up our own soft power and independence – it can’t realistically be taken away from the interests by force. By refusing to be a party to the system in effect their power and control fades into the night.
I am working on creating a social networking platform that will enable people to sign up and find people within a 50mile radius to connect and work together to complete small acts of freedom / challenges.
We currently have a blog available at freedomtown.net while we are working on completing the social network. I would like to offer a shout-out to your blog visitors to visit our blog at freedomtown.net. We could really use your help refining the tools and creating the foundations for worldwide action towards creating local self sustainable freedom-loving communities independent of the moneyed interests system of control!
Nice video, Damon.
Although I’m not sure what your specific solutions might be, I’m also not sure that I have any solutions so am keeping an open mind. I am, however, suspicious of
governments, as you have ably pointed out how corruptible they are and how control over the monetary system in anyone’s hands can amount to a serious usurpation of the people’s rights and property.
Could you please expand upon the 75 trillion dollars in derivatives you mentioned in connection with JP Morgan Chase?
Hi Damon!
Can’t imagine who would give you grief about your “appearance”, but I guess there’s folks out there who still don’t get it… they’re still asleep I guess.
Just want to say thank you for lessons 1, 2 & now 3. I think you’re spot-on…
I get you (lol)
I agree that there needs to be a transition period and plan. I think a very important point that needs to made is that a sovereign nation, like the U.S., never needs to go bankrupt. Technically it can’t go bankrupt unless it chooses to.
For example, at any time, a nation may directly issue debt free money based on its sovereign credit. Private entities, like banks and corporations, don’t have this option and must be allowed to go bankrupt under the appropriate statutes.
We are told that many banks are too big to fail as they will bring down the nation and cause massive defaults. No doubt, there would be a major impact on our economy but that may be mitigated through planning and maybe that is what Damon is alluding to.
For example, the current “foreclosuregate” fraud could be a major hit to our already putrid economy. We will be told that if emergency measure are not taken immediately (bail-out) then potentially 62 million mortgage holders could be out on the streets.
The reality is that “We the People” guarantee all of these mortgages through Fannie and Freddie already so why don’t we simply buy them? I think (this is a guess) there are around $9 trillion (principal) in questionable mortgages – the government could issue $9 trillion (debt free money) and buy them all rather than to borrow more money to bail them out.
The mortgage repayments would be become revenue for the government (tax reduction) rather than debt. After all we are guaranteeing them, in fact banks are moving them off their balance sheets under the justification that if they are guaranteed, they aren’t liabilities.
As far as the Federal Reserve is concerned, I agree with Damon that you can’t simply pull the plug – but they must be ended IMHO. Again, I think that the sequence of actions is the key.
It is great that we are having this discussion – thank you Damon.
Larry
Hi Damon and the rest:
Whether it is warranted or not, I tend to think of people in suits as criminals! +1 for the casual garb.
No the corporate empire is not the free market as you point out! Those who seek truly “free markets” and understand the concept of just ownership of property and full restitution for past crimes and the huge amount of criminality that has taken place in the last century do focus their gaze upon the super enemy of freedom, the predatory master class you rightly illustrate up on the board. There are two different big issues to be settled though:
1. First a system has to come into being that once again allows accumulation of wealth and well being into the hands of those who are creating it, NOT the predators! When this has happened and you have a NON-captured way of seeking adjudication and restitution, only then can you move onto the HUGE issue of –
2. RESTITUTION, from past crimes and the recapture of the incredible amounts of stolen booty. This step, if you can get to it, will obviously be viewed by the predatory money power as a deadly threat.
If restitution is attempted, this is where the future of our planet gets very interesting because I think these type of people would not hesitate to kill 90% of Earth’s population in order to maintain their control and I am thinking they have well considered plans in place for such an eventuality. I could go on and on about this class of seeming sub-humans, but maybe that should happen at another time, other than to briefly state that I genuinely wonder if these “people” actually are human at all or some kind of alien life form that appears in human skin, but it totally incapable of empathy, and lacks anything like a “conscience”. They seem to be non-Mammalian, almost reptile like in their coldness and lack of regard for human life and the suffering they cause. It is almost suffocating to even begin to grasp the magnitude of darkness they exhibit. Having said that, you could say this place we live in is a rather dynamic environment if you want to use labels like “good” and “evil”. It is quite a time to be alive.
I don’t know if there is any validity of the so called prophetic vision Of George Washington of the future of America, but for those who are unfamiliar with it, the final great test of America he was shown, was the entire world united against America in a great global war. According to the story America prevails against all comers and leads the world into a final golden age. Well perhaps one can see how are our present circumstances could work to fulfill such a vision?
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I also have a few things to say about the IMF/World Bank:
Have you noticed how the IMF/World Bank likes to describe their highly predatory actions in double-speak Orwellian terms that end up
associating their ultimately destructive actions with wording commonly
associated with libertarian or “Austrian school” economics terms?
Examples from their 4 part “program”:
1. “Privatization”:
(“What ex World Banker economist Joe Stiglitz described as
“briberization” wherein despots with power are bribed into selling off
key state industries at great discount to World Bank insiders )
2. “Capital Market Liberalization”
(meaning allowing insiders with easy access to huge fiat money
resources to alternately bid up local market prices and currency
exchanges and then crash values at an opportune moment for insider
gains and additional control of key industries: The “Hot Money” cycle)
3. “Market-Based Pricing” (once they have “privatized”- gotten monopoly
controls, they drive up food, fuel, water, electric, etc. prices that cause social
dislocation, misery and chaos: The well known “IMF riots”.)
-In the ensuing panic sell-offs large insider multinational
corporations scoop up any remaining resources and industries for
pennies on the dollar and IMF “rescue” loans with “strings attached” (averaging about 111 conditions per country),
guarantee near total economic control and debt servitude of the
captured nation into the future.
4. “Free Trade” (WTO style), similar to the British opium wars muscling open markets for mega-corporate domination of the “market place” and the destruction of domestic business and agriculture, regardless of the misery and deaths they cause.
The above is based on Greg Palast interview with Joe Stiglitz,
“The Globalizer Who Came In From the Cold “, see:
http://www.gregpalast.com/the-globalizer-who-came-in-from-the-cold/
So I would ask you all, doesn’t the deliberate miss-use of this wording mean that the
World/Bank IMF is knowingly not only seeking to create hundreds of
millions of economic slaves, but in classic Orwellian fashion, by
corrupting the proper using of the language, also seeking to pervert
key economic understanding so as to cripple any future tendency
towards genuine libertarian or “free market” policies?
Were you aware that Timmy Geithner and a few other key people,
who are currently and were recently directing US economic policy, were
instrumental in the above cycles of destruction of a long list of
nations while at the IMF/ World Bank? When you combine that with the
recent history of looting of America’s future generations to shunt
trillions to the banks and insiders at Wall Street, what does that say
for their vision for the future for America and its people?
Have you noticed that the main stream media, including even Greg Palast as well, are quite content to quote this deliberate IMF/World Bank wording verbatim, again, to assist in the Orwellian double-speak twisting of free market terminology for the same destructive ends?
Damon:
“Austrians being focused down over here”, is at least in my case, entirely inaccurate, to the point of being highly offensive!! I am acutely aware of the problem that you have so well described up on your board. I have been becoming increasingly more aware of it each year since about 1985.
You seek to characterize the inappropriateness of trying to establish a “free market” now without acknowledging the key necessary ingredients people like me insist are necessary for a “free market” and that you seem incapable of understanding are needed to even build a stable just system:
Non-monopoly adjudication, non-monopoly enforcement, non-initiation of crimes against others (force/fraud/taxation), and indeed you then go on to seem to advocate these very criminal powers to attempt to progress with a system you think can be utilized to challenge the very masters of crime, tyranny, and hierarchical thinking! Good luck with that! Do you not see at least a hint of moral contradiction in your strategy? I suggest you not play according to the beast’s own rules!
Sun, I simply ask how you propose dismantling the accumulation of power, resources, assets, land, wealth in the corporate empire system given their own private armies and security teams now that neoliberalism has run for decades to consolidate most of it in their hands (i.e. it’s basically equivalent to a monarchy)? not to mention how to deal with their alignment with China, Japan, Russia, OPEC and how to defend against them if you decide to “go free.” call it a contradiction if you’d like, but as you point out in the other comment, power never voluntarily lets people go free (they aren’t reptiles…just standard psych categories of sociopath and narcisssist).
arguing about morals deduced from purist assumptions, while useful in a philosophical setting, doesn’t help solve the grim real world situation we’re facing. I struggle with Austrians on this sometimes…when they convert technical economic theory into ideology (students of other economic schools don’t seem to get upset when their theories are critiqued, which is an indicator they’re technicians).
Hi Damon and everyone:
Not critiqued, miss-characterized. But to be frank, I am not your regular “Austrian”, I am a hybrid, and what is a miss-characterizing for me, may, even though you are failing to grasp all the factors involved in the scenario, be a somewhat-valid critique for others (given your misapprehensions themselves working as a limit to the overall power of your “critique”).
I have spent some time trying to integrate the quantum physics holistic view (and the fact of non-locality) with what must therefore be in some ways, the illusion of separateness and the apparent materialistic nature of our reality.
As shocking as it may sound to the people who only think in terms of linear-rational, there is such a thing as unified field awareness. I have personally experienced it and have personally known people who could, to cite one small example, look at my picture from 45 years ago, having had no prior contact with my family and outside sources of information, and tell me intimate little known historical facts about me that are simply “impossible” for them to have known based on any rational criteria. And there are many other experiences. I and others try to collect them and trying to understand them from a scientific perspective.
Why do I mention these highly controversial data points? What most people consider “metaphysics” has for some time been merging with what one can call “physics”. There are people in this world that KNOW that this statement is true and there are those who refuse to consider even the possibility that such a statement could be true. I mention it as a way to introduce the point that there is a huge “unified field” aspect to the present circumstances on this planet. There are actually pattens of “unified field effects” in this universe that can, with much work, be correlated to individual and group sentient being choices.
If you have not had the appropriate experiences, and have not done the “work” yourself, then the words I mention above may seem irrational and and at once dismissible as some kind kooky superstitious self delusion. I understand that point of view and I even suggest that no one agree with what I am about to say unless they can verify it for themselves through their own experiences. If such is the case then the best my following words can serve as is some kind of warning, and then useful input once you have chosen your path, and reaped the consequences of your actions.
Ok, now to the main point. There are people and groups in this world that, to use very poor linguistic tools I might describe as being in certain “moral” trajectories based on their prior actions and states of mind. To try to explain: There is a very great likelihood, bordering on certainty that, given an individual’s prior actions and state of mind they will continue to cycle in patterns of behavior that one could describe as highly regular cyclical patterns. It is possible to break out of these patterns but it involves understanding the circumstances due to past choices one is constrained by and consciously choosing to move in a new direction . They have to “see” things as they are. Their “freedom of action” is constrained by the barriers they construct for themselves when they make certain prior choices.
Ok, now its time for you to get out your rotten fruit and start throwing it at me when I give you the next piece. I expect this, and can only say, if you cannot receive it, you have not made your own “ears” to hear what I am saying.
Now let me describe to you some of these “barrier” conditions but I will use culturally old terminology that in fact, encompasses many millennia of experience and wisdom from a “unified field” perspective:
Do not steal.
Do not bear false witness.
Do not murder.
Do not covet your neighbors things.
What am I trying to say? If you steal, you can expect to suffer the consequences of others stealing from you in ever repeating cycles, and you can expect to again be faced with similar circumstances where you again choose to “steal” until you understand and choose to move “beyond” your self imposed barrier of choosing to steal from others.
You may not like this, you may think this is all bunk, but I will state right now, it is so certain to constrain your actions and “freedoms” that I could describe it to you as a “law”. Go ahead and reject what I said and then, later, remember this so that you can try to make your “ears” so that you can hear.
Ok so why am I telling you all this? Taxation, (involuntary appropriation), is theft. If you do not agree with this then I would say you have not thought things out clearly. “Yes, but…. Yes, but….”. This won’t matter, go find out for yourself if you can not accept it.
Having said that, what do I KNOW, based on experience I can predict if you as a group choose to utilized theft in your group actions, you as groups and as individuals will be “victims” of theft, and you will in ever repeating cycles, lack the ability to help people in this world including yourself, to be less subject to the crime of theft.
If you as a group choose to create or sustain a monopoly of “legal” force that can and will be used against the will of a “just” person, you will continue to experience a repeating cycle of force being used against you and being unable to stop this from happening in your world.
I think you get the idea at this point what I am trying to say here. At this point, naturally those of you who are certain “you” only live once, that there is only the physical, can see that what I am saying is utter nonsense. From a certain perspective you are absolutely correct. From another perspective you could not be more mistaken.
If you continue where you seem to be heading then it is approaching the point where I must say:
You must choose your path and I must choose mine. I am looking to see what you choose, to see if I will be walking with you or choosing another path. Best wishes to you.
sunshines
Hi again Damon and COR:
Having again given you what I am thinking you would consider a “philosophical” answer above, I will try and respond in “practical terms” as you put it, to maybe help focus some thoughts on the issues.
What an individual and a “group” can do would of course depend on the all the individuals and what they are willing to do in organized action(s) under the banner of some group or idea.
People such as myself, although we have had much to loose in the past, are finding that we have less and less to lose as time goes on. If a significantly sized and dedicated group can be formed, then what is possible, “practically speaking” will of course be much greater than what is possible to the individual.
This group and many others in and out of America, are still going through the education and consolidation stage of forming groups. I would say, practically speaking, that if many of us are dedicated to genuine change then we are quickly approaching the point of needing to show some kinds of meaningful actions that can be recognized and emulated by large groups of people, or at some point soon suffer some of the effects of social disintegration that it is reasonable to expect lie ahead, and can be expected to hinder our present methods of consolidation and growth. We have a window of time and opportunity.
This group, “Council on Renewal”, is still deciding what it stands for and what it is willing to do.
So to continue this “practical” exercise I must now make a few assumptions about this process.
Assuming that this group determines certain key things it will NOT do:
Will not advocate the initiation of force or fraud.
Will not advocate political action that utilizes the initiation of force or fraud, or participate in a system that maintains a monopoly of adjudication, or enforcement, or claims taxation “power”.
If you can come to an agreement about something basic like this, then you can openly declare that this as part of the position and basis of your organization.
At that point you can continue for a short while to continue to education and consolidate numbers to allow the fundamental ideas to attain some “traction” and asses the growth prospects over the short term. Also during this time you can reach out to other organizations that are highly congruent in similar principles.
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Soon then might come the next step, to ascertain what you will do based on what you stand for. Going forward with the above model, one can deduce certain possible actions based on available strength and resources considering the power to educate people in general and preferably to catalyze an escalation and acceleration of the growth process. If this “world” is going to change in a big way, an “ahaaaa” moment has to occur in the minds of hundreds of millions of people, similar to the moment in Romania when the people and “enforcers” just coalesced in intent, and said, no more, it is finished. If your actions are sufficiently liberating and motivating to the thinking of your world neighbors, and very widely disseminated ,you can try to reach a critical mass that can sweep the planet and try to deactivate large numbers of criminal “enforcers” in rolling waves of change similar to the the Romania event.
So back to the theoretical position model above. Some people will be willing to do more and be willing to risk more loss (based on what you stand for). We must as individuals answer some hard question within ourselves as to how much we “love” what we stand for, our fellow humans who are suffering, and how much we are willing to sacrifice to help our neighbors learn how to change and possibly motivate them to join the the movement, and how likely we are to create progress by our collective proposed actions. There are family factors and and many variables involved. Based on magnitude of commitment and personal preferences, multiple voluntary sub-groups can focus on individual sub-group actions. And there may be low risk but high publicity activities that can be practiced by a large majority that can benefit from sheer weight of numbers.
When you move beyond planning to action I would advise a “banner” grouping title that has power to capture the imagination of mass individuals and give them hope for a better future such as
“The Free People of Planet Earth”, or “Free at Last!”, or some such wording
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Some thoughts about actions, again assuming a “free market” model:
Individually speaking, since you are starting from a position of strong moral superiority that theoretically has the power to transform the minds of masses of suffering individuals, and since the approach will basically be strictly non-violent and at the same time confrontational, and keyed to inspiring non-cooperation, and since there are many “organized criminal” targets of opportunity, the low and medium risk actions should be widely publicized in advance to build suspense and general popular attention, combined with the most effective media recording tools available in real time to disseminate the events when they happen. The general theme being similar to the approach of Gandhi, of non-violent but provocative action that will focus peoples awareness to the ideas that we are trying to educate them as being criminal and involved in keeping people in slavery. Possible obvious criminal activity to challenge: taxation, central bank transport, monopoly adjudication, monopoly enforcement, and the list can be greatly expanded depending on how much suffering or loss individuals are willing to tolerate.
Positions statements with action announcements can both function as pre-event recruiting, some mitigation against possible disinformation actions and violent “false flag” event seeding by the criminals, media preparation, a general raising of the stakes of those criminal entities subject to action, and the building of suspense to attract a larger real time or subsequent audience of these events.
Also again, given the theoretical position, pejorative words that have opposition disinformation value such as “anarchy” should not be used, and always terms descriptive of intended service methodologies seem to me preferable such as “free market” justice, or “free market security”, etc. Honestly what people associate with the word “anarchy” is not at all what the above theoretical group would stand for. Such a group would advocate self-rule and self-sovereignty in the strictest sense. While it is true that such a system is “without” “archy” in the hierarchical sense, a network of free market adjudication providers and security/insurance/enforcement providers is far from what people conceive of with the word “anarchy”.
So this is some of the obvious that comes to mind at first thought.
@Sun Shines,
“Taxation, (involuntary appropriation), is theft.”
What do you mean by “taxation,” exactly? Let’s take an example. Do you consider city-owned parking meters a form of taxation? My guess is that you do. Okay, what if the city sells those parking meters to a corporation, thus privatizing them. Would you consider parking meter fees paid to the private corporation as a form of taxation? My guess is probably not. Now, what happens when that private corporation doubles the parking meter rates with plans to quadruple them within two years, as is the case in Chicago? Would you prefer to pay four times more for the same service (parking) just so you won’t be taxed?
Much of the privatization of natural monopolies has done is allowed private companies to extract rents–i.e., premia above the natural value of the commodity–which I view is a privatization of the taxing power and a multiplication of the tax burden. But none dare call it that. It’s just good ole fashioned private enterprise providing greater efficiency and getting that incompetent government out of the way.
Certainly, taxation can amount to theft, but that depends largely on what is taxed, how the tax proceeds are used, and what legal avenues are provided for shielding the money from taxation. Right now, the tax system and the rent system (the FIRE sector) are set up to extract money from the middle and working classes and funnel it first upwards then out of the country to capitalize other economies. I know there are lots of arguments about how the top 5% pay an overwhelming percentage in federal income taxes, but that’s only a part of the story, as they extract an even more overwhelming set of earning advantages that their hoarded wealth provides them. A lot of their money is “made” from money, i.e., they don’t really earn it from doing anything productive but entirely from speculation, which can be quite destructive of the real economy when the bets go bad.
@ Tao:
“Do you consider city-owned parking meters a form of taxation? ”
No, it is not an involuntary tax. It is a usage fee. An owner can request such a compensation for this kind of use of their property and a potential customer is free to choose to decline such a service. Practically speaking in a “free market” society there would be no “city-owned” property, only individual or subgroups of owners. It is important to avoid the problems of “public” ownership. Given that someone or something owns that street, one is “free” to use or not use the street or the parking if they satisfy the terms of the agreement, in this case the “parking fee”.
“Okay, what if the city sells those parking meters to a corporation, thus privatizing them.”
Again, a usage fee, not an involuntary tax.
” Now, what happens when that private corporation doubles the parking meter rates with plans to quadruple them within two years, as is the case in Chicago? Would you prefer to pay four times more for the same service (parking) just so you won’t be taxed?”
If an owner attempts to extract such a large fee for such a service, they will reap the consequences of this. If such a fee is outside of the preference range of a large enough range of people, such a decision may if fact lead to a loss of income for the owner. See my comments below and the pitfalls of permitting a monopoly entity to sell outright.
About “privatization”, the steps of divesting “public” ownership towards “private” ownership can be very problematic, as all the disadvantages of a monopoly entity engaged in a “transaction” can be far from an open and “free market” event, meaning bribery and fraud as part of the deal, as the IMF/World Bank are so good at bribing for so called “privatization”. A possibly better way to “privatize” is to distribute transferable ownership shares to those who have adjacent land ownership to the mobility corridor in question (these were probably the same plots of land where the easement originally came from anyway), school ownership shares within the designated area of a school’s district, and so on. It is preferable to eliminate a monopoly holder from the process of the transaction if possible.
“Certainly, taxation can amount to theft, but that depends largely on what is taxed, how the tax proceeds are used, and what legal avenues are provided for shielding the money from taxation.”
I would say, the key is whether the transaction is involuntary from the perspective of the “just” owner of property. A just owner my not be compelled by anyone to enter in any involuntary exchange involving what is “rightfully” there’s without it being a crime. The word “just” here has a precise and well defined meaning. A person’s labor is entirely there’s to dispose of as they please or agree to, because they own their own body. When the origins of first ownership (such as first use homesteading) are clearly understood, the very idea of “public” ownership can be viewed as a false statement. Such a condition is a contradiction of the very idea of “ownership”. Something can be “unowned”, but an abstract concept called “public”, is incapable of exercising effective stewardship over something. Under this condition, who ever has “control” at any time will behave quite differently from an actual owner.
a couple points in response to the vlog:
right – it’s not a “free market” if a boardroom full of bankster thugs determine the price of money (interest rates), which is at least one half of every transaction.
parties by definition and nature are not sophisticated. but the libertarians and anarchists at least appreciate the basic fundamentals of don’t steal, don’t lie, what’s mine is mine what’s yours is yours, stop the madness, we’re mad as hell, free to agree to disagree, rule of law, etc. the basic reality gets lost when people try to “get sophisticated”. true sophistication comes with honesty, not necessarily intelligence or education or complexity.
keep up the great work!
- if you mean the Fed sets interest rates, this is one example of where some Austrian followers misread things. the Fed follows the market. it’s dwarfed by the collective non-state institutions. now it would be nice if they didn’t have the quasi-government Fed facilitating their moves, but the fact is that private capital sets the rates. so by sophistication I don’t mean elitist erudition, but just an accurate read on things as complex as today’s money system (Austrians nailed it back in the day, monetarists nailed it after that in the world of savings/checkings, but both are now out of date regarding an accurate understanding of our current system…accurate diagnosis is a prereq for accurate prognosis).
- I agree with your fundamentals, but it frustrates me that some Austrian followers don’t realize how private banking can be used to invade private property (seems like the laser focus on “the state” causes blind spots in other areas). banking can be used as a hidden attack through the balance sheet, collecting claims on assets, and driving monetary dynamics, as I explained in lesson 1 how banks drove farmers off their land pre-Fed.
I suggest one not focus on the “state”, I suggest one focus on themselves and learn to not step beyond the the very real boundaries of their own self-sovereignty. The consequences of doing so are quite predictable. If we as a group cannot agree to this then we as a group are not going to get very far, no matter how “noble” our intentions.
Before there was the Fed, a boardroom full of bankster thugs determined the price of money (interest rates). There was never a free market in the private money trade because competition is bad for business.
If you go back and review the report of the Pujo Committee in 1911, which ultimately led to the Fed, you’ll see that there was a lot of testimony about banks agreeing to not compete. Something that was confirmed again by the Pecora Commission. Something that was confirmed again by Matt Taibbi in an article earlier this year, I believe.
The Fed was created to provide political cover for the banksters. The neoliberal double truth doctrine created by Hayek and found at places like mises.org obviates the need for political cover. Just ring their “liberty” bell, and the masses who follow Hayek’s vision will hold out their arms to be fitted with freedom manacles. Boom busts are natural, they say. You can’t stop them, they say. It’s “malinvestment,” they say. No, actually, boom/busts are caused by predation, speculation and manipulation of the scarcity of capital to steal property legally. Attempting to remedy fraud after it has occurred means fraud will be rampant and will mostly never be remedied (see the current foreclosure fraud mess).
The “liquidity” Damon talked about in the video used to be called “scarcity of capital,” and pretty much everybody who spoke loudly about how bankers manipulated the scarcity of capital to “legally” steal have been disappeared or are being disappeared from history. Henry George – Disappeared. Karl Marx – Disappeared (ostensibly for other reasons, but this is the real one). John Maynard Keynes – In Process (they’re falsely labeling Chicago School monetarism a la Milton Friedman, Hayek’s neoliberal colleague, as “Keynesian”).
As a natural monopoly, money has to be publicly owned.
Tao,
“Boom busts are natural, they say. You can’t stop them, they say. It’s “malinvestment,” they say. ”
Come on with this. You know better especially since you claim to have read the Austrians (and everything else;-). If anything, you have to give credence to the Austrian Theory of the Business Cycle, which explicitly states that the MANIPULATION of interest rates/credit creates economic booms and busts in society. These predatory conditions and boom/bust results occurred at more local/regional levels before the Fed as these bankers have continually sought power. This is one of the MAIN contributions from the Austrians, who recognize the banking cartels power plays.
Also, please stop lumping all the “Neoliberals” and Austrians together especially Rothbard. Just as all the free marketers on here are opening our minds to transitory stages of govt/communal trusts. Thanks.
@Ranallo
There’s plenty of things that I haven’t read. In fact, I think I admitted to you early that I had not read much Rothbard.
Anyway, my problem with the Austrians is pretty much my problem with all of the major schools of economic thought: they intentionally misdescribe how economies really work.
For example, business cycles are not caused by the manipulation of interest rates but by debt-financed financial speculation. While it’s true that, as the financial bets start to go bad, the banks will jack up interest rates and tighten liquidity, that’s a symptom not a cause. Also, while there may be more demand for credit while interest rates are low, that doesn’t mean that supply must meet demand, especially in the case of extending credit to financial speculators.
Speculation is NOT investment (mal- or otherwise), but the fact that the Austrians equate the two tells me that they’re not serious. A further indicator of non-seriousness is the idea that reserve requirements and gold-backed money (i.e., banking regulations) will somehow fix everything. As long as debt-financed financial speculation is not criminalized, the banks will have no trouble finding ways around the inflexible banking regulations of the Austrians. Yet another indicator of non-seriousness is the Austrians’ insistence that when there’s a central bank, all money is exogenous, that banks don’t actually create money by extending credit, if there is a central bank. That simply isn’t true.
Then you throw in the neoliberal tactic of putting the word “free” in front of a bad idea to make is seem like a good idea, and, well . . .
Tao,
Not necessarily disagreeing with you on what causes the business cycle but could you provide an example of how debt-financed financial speculation is the cause of the business cycle? I would just like to understand it on a more fundamental level then just taking someone’s word for it.
@John,
I need to focus on something else for the next few days, but I’ll do my best to get back to you with some examples. I can tell you that there are four major economists/thinkers who have observed the phenomenon in the last 150 years or so: Karl Marx; Henry Geroge; John Maynard Keynes; and Hyman Minsky. Modern economists who get it include Michael Hudson and Steve Keen.
The general concept can be understood by the most recent financial crisis, in which defaults in sub-prime led to failures in derivatives that measured an order of magnitude or two more than the underlying defaults. The reason it was not 1:1 is because of leverage provided through fractional reserve lending. Derivatives are bets, i.e., financial speculation. I’m going to get the example wrong, but basically, when you lever up 10:1, if you lose 10% on your bet, you’re wiped out, the bank requires you to pay up, and you have to start selling off assets, which can cause the stock market to crash, depending on how much you have to sell (think Long Term Capital Management). It’s the leverage that creates the systemic risk . . .
@Tao and John
“For example, business cycles are not caused by the manipulation of interest rates but by debt-financed financial speculation.”
Interest rate manipulation and debt financing are related.
Interest rates are manipulated by the Fed purchasing bonds up and down the yield curve pushing cash into banks for them to speculate. This one of the ways speculators are debt-financed as well as through the fractional reserve multiplier. This causes speculators to amp up bets to extreme levels, which inevitably bust due to black swan events.
However, you’re missing one key factor about centralized control of interest rates.
Why is it that ALL entrepreneurs from ALL sectors make the same mistake by having over-capacity/under-utilized resources AT THE SAME TIME? It’s because interest rates SHOULD provide entrepreneurs with a signal as to the willingness of consumers to buy in the present or “interest rates coordinates production across time”.
Assume an un-cartelized banking and monetary system that’s based on supply and demand of currency in the below example.
People are saving more, thus increasing the supply of lending capital and lowering interest rates. From an entrepreneur’s perspective, low interest rates provide an opportunity to engage in long-term projects that would not pay off under higher interest rates. From a consumer’s perspective, saving more indicates a relatively lower desire to consume now. Another reason for businesses to invest in the long-term.
When the Fed or any central bank manipulates interest rates through bond purchases along the yield curve, it distorts what is actually happening in the economy causing mis-allocation of budgets across the country, e.g. booms/busts. This is the Austrian Theory of the Business Cycle.
Ranallo,
I agree with what you take on the business cycle. Interest rates help drive speculation as well as misallocation of resources.
“I agree with what you take on the business cycle. Interest rates help drive speculation as well as misallocation of resources.”
So what you’re saying is that debt-financed speculation causes the business cycle, not interest rates. Why not go after the speculators directly and in a targeted way as opposed to modulating the access to credit for the entire economy based on what speculators do? It’s like punishing the whole class because one kid acted up.
For some reason I can’t respond directly to William F.’s posts but:
You’re wrong on the issue that tptb or Rulers don’t know that they’re the “rulers”. I worked for them on many levels, and on many projects over the years. To the point that I was having tea and lunch with the Queen Mother at times before her death. They know exactly who, and what they are, and what they desire to do in the future. At least that’s what I gained from my experiences.
I honestly don’t think we can win without a violent struggle at this point. I’m hoping that Damon’s continued reaching out to his military brethren, will help in the struggle, as I think if we can get them on our side, we have a chance to bring peace instead of chaos and pain. At least LESS chaos and pain.
tj
Once again I see that nobody here wants to address the issue of corporations’ illegitimate claim to personhood, unanimously preferring to spin off into radical changes in every other aspect of the nation’s governance. Perhaps because the drafting of effective corporate charters on an individual basis would require a great deal of economic and philosophical thought (?)
Yes, charters would have to be carefully crafted and might be as difficult to write as the original Constitution itself. There’s a lot to think about and there would be much debate involved. But think what a breakthrough in economic security it would yield! I think it’s worth the effort to turn our strongest financial institutions into ALLIES in the pursuit of national prosperity instead of the public enemies they have become. Violence on anybody’s part will not fix a systemic problem, it would only change the names of the actors. Corporate tunnel vision is a SYSTEMIC problem in that it supports corporate GREED which is far more pervasive than individual greed. It’s immortal greed and it feeds on those who control it as well as it feeds on those who are victimized by it.
Maybe the main reason nobody wants to talk about revoking corporate personhood is that it’s never been tried and only a hair-brained inventor can visualize such a novel alternative to “free-markets” . The Letters of Marque upon which corporate charters are modeled were carefully laid out by kings to serve the realm; so what I’m proposing isn’t exactly new. Thomas Jefferson was aware of the problem corporations presented and warned us against their creation; so he, too, visualized the complexity involved in state-sponsored incorporation.
Is there anybody on this forum that can explain to me why our Constitutionally mandated sovereignty should be subjugated to “fictitious persons” because they have more money? It can’t be that unimaginable that a free-thinking attorney couldn’t make an iron-clad legal argument for reducing corporations (and banks) to the status of State-supervised legal abstractions who serve at the pleasure of The People.
The repercussions would be felt world-wide and I believe the end would be a free, fair, and peaceful international trade environment in which all could prosper according to their ability.
Hi William:
Tend to agree with your statement: “Violence on anybody’s part will not fix a systemic problem, it would only change the names of the actors.”
Regarding:
“Maybe the main reason nobody wants to talk about revoking corporate personhood is that it’s never been tried and only a hair-brained inventor can visualize such a novel alternative to “free-markets” . ”
— William are you are thinking “top down” here from the perspective of centralized authority, adjudication, and enforcement with your use of the word “revoking” in this context?
Someone like me might say: when you have an actual FREE MARKET, not a “free-market”, there will be no institutional barriers to seeking “just restitution”, and those entities that attempt to thrive in the current ways that make much of mega-corporate conduct so objectionable will find it near impossible to continue to engage in such destructive conduct without facing continuous, non-evadable tort challenges and restitution claims that will lead to their extinction unless they change their conduct.
As you rightly point out we face a “systemic problem”. I am asking you to seek a solution that steps outside the constraints of such a system that you can plainly see. To defeat systems that rely on monopolies of adjudication, monopolies of force, and the imposition of involuntary exchanges, I argue you must enact systems that rely on non-monopoly adjudication, non-monopoly enforcement, and are based strictly on Voluntary Exchange.
For this to happen it must be a choice of enough individuals who know and understand this and act upon this knowledge so that enough others will start to learn from their examples and reach some sort of critical mass. Otherwise you will just end up with more and more tyrannical non-voluntary systems that people on this planet are so good at coming up with.
Once again I find myself on the wrong side of a chicken/egg dilemma. My statements regarding the imposition of federal power and governmental force presupposes that government is a reflection of the will of the People, not a banking aristocracy. If the People were truly sovereign, such coercion would not be considered tyrannical, but just and proper governance in accordance to Constitutional principles. To return sovereignty to the People we must first revoke the personhood of those all-powerful corporations that have usurped it. Hence, it’s the age-old chicken/egg argument and your fear is justified. Attacking the Beast with a thousand cuts, starting now, could break this dilemma.
In the context of a global top-down banking conspiracy our only recourse would be violent revolution but I disagree with the majority here in that I don’t believe the Aristocracy wields any more financial control over the global banks than our President wields over the US government. The System itself is running out of control on its own momentum at this point with the usual suspects profiting immensely from its waste; and, yes, it’s going to be very difficult to put the brakes on it, but he brakes are there for the citizen-patriots who can find them. The System is not sentient and won’t even feel the prick or pain of incremental braking action in the courts. Media giants like Judge Napolitano, working under the radar of CFR and Bilderberg, could turn Personhood into an election issue by 2012 if Murdock doesn’t pull his plug. A Constitutional challenge to Personhood could be fought and won by a few enlightened lawyers on the basis of its moral, Constitutional, and logical merits. An enlightened few, using the same patient “ratcheting” tactics as corporate lawyers use, could gradually tip the balance in favor of Treasury Dept. control over monetary policy and abolition of the Federal Reserve Banks and the broker/dealers they rode in on. It all comes down to: “Who has the *authority* to write corporate charters?” Us or Them. The Constitution was quite clear on that. The media, with the notable exception of Napolitano, has been silent until now but with his arguments in favor of Wikileaks’ First Amendment rights and against the constitutionality of the FED, the cat is out of the bag. His mainstream broadcasting career should be of interest to everybody here: think canary in the mine.
Our Constitutionally guaranteed right to coin sovereign money gives us the legal authority to control its supply. With the perfect clarity of hindsight we can certainly see the dangers of Reptilian Economics, over-centralization, and a privately held central bank; all of which are immoral or unconstitutional. Taking incremental legal steps, a relative few could backtrack through numerous cases of unconstitutional precedence toward state-controlled corporate charters with Common Good as a guiding principle. Can we agree that the restoration of the Middle Class and putting an end to the Reptilian School of Economics is a common goal among us enlightened proles? I can’t understand why we’re so afraid of one-eyed myopic reptiles.
BTW: I agree with Damon’s assessment that Aristocracy rules the top tiers of financial power but question whether the System (or it’s corporate components) is sentient and I don’t know that we need to enlighten the masses – just our representatives. If Utopia depends on an enlightened populace it might be better to restrict voting rights to those who understand the the political and economic principles our Republic was founded on. Perhaps the numerical value of each vote could be based on the fractional value of that voter’s test score on the standard citizenship qualification exam. The agrarian economy of 1776 equated land ownership to education and I think the information economy of 2010 should equate education to education and grant voting rights only to the educated, or in proportion to their level of same, regardless of ANY other consideration, as the Founders intended. But that’s another story…………to be continued at an Article Five Constitutional Convention of the enlightened future.
@William,
I view corporations as the original moral hazard because of the principal-agent problem. I’m also well aware of the dubious history of corporate personhood, which sprang into being under false pretenses as a result of the Suprem Court’s Santa Clara County case in 1886.
I’ve written elsewhere that I’d make a number of changes to the corporate form, prohibit banks from taking the corporate form, and prohibit private corporations in certain critical sectors from being publicly traded on the secondary equity markets. While I think the corporate form can provide a social benefit, the way that it has been financialized through the secondary markets has magnified the moral harm inherent in its form.
Henry Simons, who I call the “Excommunicated Neoliberal” had his own detailed proposal for reforming corporations back in the 1940s. (Simons helped bring Hayek to the University of Chicago and get Volker Fund funding for establishing neoliberalism, now known as modern libertarianism, but he proved too “socialist” for the Volker Fund, most likely in part because of his views on corporations, so he has been disappeared from the movement’s history).
http://taojonesing.blogspot.com/2010/09/excommunicated-neoliberal-henry-simons_20.html
Debunking Money #3: OK, could you give us a name for the predator/ruling oligarchy? It has to boil down to certain individuals and certain groups. The CFR? The Bilderberg group? The Trilateral Commission? The IMF? The UN, the largest organized crime organization in the world? David Rockefeller? The Fed issues paper banknotes which only have a value because this is fiat money. Really, it’s just sophisticated (worthless) paper. Why can’t the government issue it’s own money, interest free, after re-monetizing the present system. The debts in the present system will never be paid back. We all know this. I don’t see why the US can’t break free of the New World Order collectivists.
nobody knows the true rulers, and it doesn’t matter. it’s “capital interests” as the monetary system aligns MOST people (all of us chugging along in a job for credit are aligned with the system) with a strong interest to keep the system as is. the key is changing the system. whether that’s doable or not however given the resistance most people have to change and the alignment of China, Japan, Russia, OPEC with the banking system, I don’t know. Germany thought it could change its system, only to learn the creditors had some powerful allies called Britain and the US.
I doubt the majority of “true rulers” see themselves as “true rulers”. Not to deny the probability of some evil “at the top of the pyramid”; I suspect most of them are just “doing their job” – keeping the wheels of finance churning.
If that means “corporate self-interest”; it explains the lack of concern (for neither good nor evil) our various global economies have for nationalistic or popular welfares.
And the key to changing the system is to change the basic character of the Charters under which Governments sanction corporations (and banks) If the People wrote corporate charters, and not the corporations, their character would reflect entirely different goals – directed towards serving the Common Good rather than their own selfish Corporate Good.
Under the banner of American nationalism, I think so. The idea of rich, powerful *nationalistic* corporations under Government (The People) supervision would preserve a privileged class, for sure; but they’d be OUR barons and we’d know who they are and where they live. They’d be our heroes and the models we used to look up to as examples for our youth to aspire to emulate through hard work and education. Amorphous corporate entities with the rights and privileges of personhood but only *limited liability* offer no hope that the American People’s (not to be confused with stockholders, voters, managers, debtors, creditors, or any of the other *roles* we play in the over-all economy) interests will ever achieve top priority. Corporations, as presently structured and defined, have no morals, ethics, nationality, or public benefit. Why do we tolerate them? Because they’re people, too: right? Think about that real hard.
Germany DID change its system, and with the level of FEAR being foisted on the public by corporate-owned media these days it could happen again. Given our divisiveness I don’t think we’d ever agree on a single dictator like Hitler, but who knows. The big question is whether we retain the industrial infrastructure to defend ourselves against the World. Maybe if we didn’t try to conquer it………………?
In regard to history: Hitler didn’t have an Internet, camera-phones, a Constitutional tradition, and an armed citizenry to contend with. Americans really like our Constitution – I think we should tweak it a little in Jefferson’s favor (Art. 5 CC) to correct our errors regarding the formation of corporations; but for the most part it’s served us well and deserves our support. Let’s admit it: the “Divine Right of Corporations” was a bad idea.
For some reason the carrots I used to quote Damon’s words got deleted in the magical posting process so I’m re-posting with quotation marks instead. Can you delete the previous post? Can we self-edit these entries? Answers without questions just don’t work as well.
“nobody knows the true rulers”
I doubt the majority of “true rulers” see themselves as “true rulers”. Not to deny the probability of some evil “at the top of the pyramid”; I suspect most of them are just “doing their job” – keeping the wheels of finance churning.
“it’s “capital interests”
If that means “corporate self-interest”; it explains the lack of concern (for neither good nor evil) our various global economies have for nationalistic or popular welfares.
“the key is changing the system”
And the key to changing the system is to change the basic character of the Charters under which Governments sanction corporations (and banks) If the People wrote corporate charters, and not the corporations, their character would reflect entirely different goals – directed towards serving the Common Good rather than their own selfish Corporate Good.
“whether that’s doable or not”
Under the banner of American nationalism, I think so. The idea of rich, powerful *nationalistic* corporations under Government (The People) supervision would preserve a privileged class, for sure; but they’d be OUR barons and we’d know who they are and where they live. They’d be our heroes and the models we used to look up to as examples for our youth to aspire to emulate through hard work and education. Amorphous corporate entities with the rights and privileges of personhood but only *limited liability* offer no hope that the American People’s (not to be confused with stockholders, voters, managers, debtors, creditors, or any of the other *roles* we play in the over-all economy) interests will ever achieve top priority. Corporations, as presently structured and defined, have no morals, ethics, nationality, or public benefit. Why do we tolerate them? Because they’re people, too: right? Think about that real hard.
“Germany thought it could change its system”
Germany DID change its system, and with the level of FEAR being foisted on the public by corporate-owned media these days it could happen again. Given our divisiveness I don’t think we’d ever agree on a single dictator like Hitler, but who knows. The big question is whether we retain the industrial infrastructure to defend ourselves against the World. Maybe if we didn’t try to conquer it………………?
In regard to history: Hitler didn’t have an Internet, camera-phones, a Constitutional tradition, and an armed citizenry to contend with. Americans really like our Constitution – I think we should tweak it a little in Jefferson’s favor (Art. 5 CC) to correct our errors regarding the formation of corporations; but for the most part it’s served us well and deserves our support. Let’s admit it: the “Divine Right of Corporations” was a bad idea.
Could you develop that last sentence about Germany further ? Or give a link or something that shows us this explanation to that conflict ?
I also thinking about possible elite plans to use the FED as a fall guy. When you got media like Time Magazine putting out things like “Will the Federal Reserve Cause a Civil War?” (http://curiouscapitalist.blogs.time.com/2010/10/19/will-the-federal-reserves-next-meeting-lead-to-civil-war/)
then I must consider the possibility that the crime bosses are setting up the FED as a “Bag holder”. When ever things get to hot these scum bags are masters at the “limited hangout” “investigations” and having scape goats for everything that ails you. If they do take follow this tactic then they must be confident that they have so devastated America that they conclude that its people are incapable of recovering enough to be any kind of a threat of threat to them?
Sorry for typos, rather tired
A quote from the times article: “with the Tea Party gaining followers, the idea of civil war over economic issues doesn’t seem that far-fetched these days.”
A quote from Karl Denninger (http://market-ticker.org/akcs-www?singlepost=2222649) “look at what’s over at TeaParty.Org: you’ll find the usual pablum. Guns, gays, God.”
Let’s say for the sake of argument that no fall guy is necessary.
In the context of THE BIG PICTURE do the “ruling oligarchy” want QE2?
Milton Friedman’s 1962 “A Monetary History of the United States” makes the claim that the Fed caused the Great Depression, and by the early 1970s he had convinced Congress, setting up the Chicago School Ponzinomics phase of neoliberalism. When Ponzinomics has proven to be the utter failure it was designed to be for the masses (while being a smashing success for the top 1%; look at the gains they’ve made!), the Fed can be dissolved and it will be the Austrian School’s turn to manage the economy to the benefit of the top capital holders. Brilliant strategy.
I watched the video.
There could be a million reasons QE2 is not in the interests of the “ruling oligarchy”, I have no idea.
What are some more reasons they want it?
@ Jim gomoka
Re. “You seem to be critical about money that is a debt instrument but isn’t that the only thing it could be? Is money not the right to demand receipt of some value in exchange for it?”
Money itself should be a receipt, not the right to demand receipt.
Money should be a receipt for the production of a good or service, which in turn is used in the marketplace to purchase other goods and services.
Regarding the loaning of money for start up businesses, I like Ellen Brown’s idea of the government issuing loans and using the interest payments in place of taxes.
Interest payments do not belong in the pockets of banks who have money for which they have done no work to earn it.
Just to recapitulate, putting banks into bankruptcy will just suck all of the assets of the people into the banks so that they can pay off their liabilities to each other, leaving us broke and them still chugging along. Ending the Fed will dry up our government of liquidity while doing nothing to end the feudal control banks have over nations. It’s a bad time to suddenly deregulate to free, non-government interventionist markets precisely because a small group of people already have so much power- it’d be like walking up to a poker table where one player already has 1,000,000x the number of chips you do.
Isn’t the logical conclusion of this that what’s necessary is to declare an open war against the international banking system? We’ll never overcome the financial power of these institutions with political or economic solutions- imposing physical power against them seems like the only solution with a reasonable chance of success.
Do you think oil scarcity following peak oil will be the deus ex machina which presents an opening for the people to take back power from the international banking cartel? Once war is openly declared in any one place, wouldn’t there be quite a bit of temptation from other countries to court the banks’ favor in exchange for the power and influence of being a favored nation of the cartel? I can’t imagine a scenario which doesn’t eventually lead to WWIII, even if the US continues complicity with the banks all the way to its bitter end.
I do not seek war in the physically destructive sense, I seek adjudication, some kind of meeting of minds through negotiation, and then as full and “just” a restitution that such a process is capable of producing.
Practically speaking, given the highly destructive nature of “war”, what ever one may be able to recover, assuming you win such a conflict, may be quite a bit less than trying to achieve some level of cooperation and accommodation. What ever satisfaction people might derive from “bloody vengeance”, how ever “just”, they might come to seriously regret what has been done to get there and what kind of social arrangements that have come about to achieve it. Once you start “pounding” with a hammer, things can go in very unexpected and unsatisfactory ways. Another thing to consider, there is so much accumulated wealth in those few hands, that even a moderate level of “restitution” could greatly improve the situation of a large part of the human race.
The only way this planetary system it going to long-term improve is if we can chart a new course that is a qualitatively superior way of resolving conflict. The history of resolution through combat is not, to my thinking, conducive to such a global change. And “winner take all” outcomes seem to be rather suboptimal overall.
Another thing to consider is key technology that has been suppressed to the detriment of humanity’s future to maintain domination. Given a peaceful resolution through negotiation and restitution, we stand a much better chance of getting these things into circulation. We could be talking about the difference between night and day for the quality of life of the average individual. In war, one can be “right” and “win”, but wish you were dead! But in peaceful resolution, even the “losers” can come out with a very satisfactory future (provided all can respect individual sovereignty). Some things ought to be non-negotiable. And returning to the idea of technology, what the “money/capital criminal faction” has access to may be quite a bit more advanced beyond what we might be willing or able to use. If we give them no reason to negotiate, then what might we expect if they are driven to desperation?
Another point. I, and many other highly credible people in this world have strong reasons to conclude that we aren’t the only sentient beings in this universe, and I think an ultimately peaceful resolution to what seems to be the most vexing problems for humanity may bode well for our future in a greater “community” than we can currently anticipate.
I would like to also point out that the forte of non-monopoly adjudication is precisely this kind of “win” “win” resolution I have described above. I am not ignorant of the huge level of misery, death, and darkness that has been derived from this side of “humanities” ledger. It may well be that at some point those who seem to be “human” but are incapable of empathy need to take a separate independant path that results in the total separation of these different types of “humans” towards different destinies, but this also seems preferable to me then claiming the vengeful right (and responsibility) of annihilating something that we may not understand but still may have a very important purpose in this universe. Just another thing to think about.
Two points quickly: 1) your new system of conflict resolution is nice in theory but it ignores 3 million years of “winner-take most” natural selection which appears to be the system by which nature most efficiently operates. 2) The banksters will defend their positions of power, and they will use force if they think it’s necessary. They’ve certainly lied, cheated, stolen and killed in the past. Certain narratives of history suggest that a powerful clique might even maneuver a country or countries into war if they thought it would serve their own selfish, shallow interests.
That’s what we’re up against: the worst thieves, killers, drug dealers, and manipulators ever. They have TV, all the political power, and have plenty of practice at what they do. There’s no win-win with them, when you play with the banksters they always win, and if you’re lucky that let you feel like you won a little too but ultimately you’re still their slave.
Your work is superb. I am honored to link your sites to my humble offerings in order to spread the knowledge…and to help prepare for the great changes ahead. All the best to you.
Well, what a string this has come to be. And it has to be healthy that these issues are being examined.
It seems that the conversation has broken down into roughly two camps. One camp talks about various institutions that people have created such as banks, corporations, and governments, as if these creations were the heart of the matter. The other group speaks about we, the creators of these diverse institutions. One might ask, where is the primacy here and where should the primary focus be? Does it make sense to talk about the culpability of the puppet or must one realize that the puppet is just an extension or tool of the puppeteer?
If it is recognized that it is the creator and controller of the puppet (institution) that is at issue, then it seems to me that the question of personal morality is the central issue. It also seems quite clear to me that there are some who advocate for this position, and some who don’t. Those who don’t would rather put the focus on the created entities as the core reality.
Now to recognize the created over the creator is the very definition of idolatry and blinds us to the role of ourselves as creators. But what really troubles me about this sort of thinking is the tendency to ignore the immoral actions of the individual while focusing on the amoral nature of the created institutions. This results in all sides of the battle between the various institutions ignoring the subject of personal morality in favor of expedience, as in two wrongs make a right, and in fact employing the same immoralities in the pursuit of their various positions. (Is it really possible to achieve moral ends while employing immoral means, and can I delegate to a government I have created actions which I cannot morally perform myself?) They are then presumably surprised when the results are always predictably and unsatisfactorily the same. “Instant karma gonna getcha!”
I actually think that everything boils down to human nature, which I don’t think is inherently evil but can nonetheless lead to quite a bit of it.
For lack of a better word, morality is at the heart of this issue. I’d prefer to speak of it in Freudian terms as the superego, the societal angel on our shoulder that argues against the selfish devil when making a tough decision. The neoliberal doctrine created by the likes of Friedman and Hayek is aimed at killing the societal angel. “There is no society.” And all of our social institutions have been infiltrated with this message to some degree. The result is a society of sociopathic individuals who are much more easily divided and conquered.
Now, why would anybody want to control somebody else? Human nature as described by the Prospect Theory I mentioned earlier. (FYI – I don’t believe in Prospect Theory as a complete statement of the human condition, but I do think it provides one of the most important insights into how human beings actually make decisions). Hoarding is merely an extreme version of loss aversion, and one that can be immensely lucrative when money is privately controlled. By modulating the scarcity of capital, financiers can multiply their wealth on the way up (with the boom they create through speculation funded by easy money) and on the way down (with the bust they create by withdrawing liquidity).
I still have a lot of thinking to do about the right solution, but in broad outlines I think we need to (1) have sovereign money, (2) provide strong disincentives for engaging in financial speculation (including criminalizing financial speculation levereaged with fractional reserve borrown), (3) provide strong incentives for investing in the domestic economy over hoarding (this can be done largerly through tax policy).
@Tao
“……. I think we need to (1) have sovereign money, (2) provide strong disincentives for engaging in financial speculation (including criminalizing financial speculation…….), (3) provide strong incentives for investing in the domestic economy over hoarding….”
Once again you’ve hit the head on the nail! I would add that all three of the points above could be accomplished by re-defining corporate status and re-writing corporate charters to limit their functions. All the philosophical thought that’s gone into this thread should be institutionalized in the form of broad outlines of incorporation with additional and specific, explicit, and well-considered wording applied to individual charters. Different rules should be applied to individual corporations based on their proposed benefit to the American economy. Sole proprietors and partnerships would not be thus burdened, relying instead on their adherence to civil and criminal law – pretty much as it is now; thus creating a level playing field that promotes innovation and personal wealth creation. Kind of like what Jefferson envisioned. The American Dream.
One who hoards money isn’t hoarding capital since they are two different things. Capital consists of the resources used in the productive processes. Money is simply a medium of exchange that can be used to acquire capital. When one takes one’s money out of circulation by hoarding it, the value of all of the other money in circulation increases, so that there is no net decrease in aggregate purchacing power or available capital. In fact the purchasing power of the non-hoarders actually increases giving them increased access to capital. If one invests or loans one’s money, then it still becomes available for the purchase of capital by others. It is not those who decrease the available money supply who are the problem but those who increase it and thereby redistribute capital to themselves and their comrades. Of course bankers and other advocates of fiat money would rather you not appreciate this simple functioning of supply and demand.
@Tim,
Isn’t money also a store of value?
And while I appreciate your distinction between money and capital, the terms are often used interchangeably. For example, when Keynes referred to euthanizing the rentier to prevent them from obtaining rents through the scarcity of capital, I’m pretty sure he was talking about money, not the means of production.
With respect to hoarding one’s money, yes, doing that can cause deflation (that’s what you describe) and if you couple that with a contraction of available credit, you’ll also see businesses fail and wages driven down, i.e., you will see asset price deflation. That’s when the hoarders bring out their money and start buying stuff again.
Yes there is a lot of conflation of terminology which results in a lot of confusion. For instance inflation is often referred to as a general rise in prices which leads to such idiotic concepts as ‘cost push inflation’ and ‘demand pull inflation’ which imply that inflation is caused by rising prices due to one or another of these or other causes. This is like saying that wet sidewalks cause rain, yet we hear many people parroting this nonsense proffered by our leading economists eager to ingratiate themselves with the money masters for obvious reasons. My dictionary gives only one definition of infation as it relates to economics and that is, “An increase in the volume of money and credit…” Rising prices are the result or effect of this inflation of money and credit…full stop!
Now because there is a difference between money and credit and capital goods and wealth, and what is actually being traded in the market is the goods and services which make up the wealth which constitutes the real supply and demand, money acting only as the medium of exchange, much mischief and confusion is introduced into the market when fiat money and credit are injected which represents no actual increase in wealth.
A false sense of prosperity is engendered by the seeming new demand produced by new money before the rising prices expose this new demand (wealth) as illusory. When the new money comes into circulation, before the inevitable rise of prices, people are fooled into thinking they are wealthier than they really are and make purchases and increase their debt on the basis of this mirage. This then stimulates businesses to expand to meet this apparent new demand. But when the inevitable rise of prices occurs, people and businesses discover that they can no longer afford the commitments and investments they have made on the basis of the false signals conveyed by inflationary expansion of money and credit. The result, of course, is a recession accompanied by various liquidations and bankruptcies.
So what are we to conclude from all of this? That hoarders are the cause of all of this misery? Hardly, as the rate of hoarding remains pretty constant through time. They may see a profit opportunity from the bust, but they are hardly responsible for the bust. That responsibility lies squarely at the feet of those who flooded the market with funny money. At present those people are the bankers, but it makes no difference who inflates the money supply the result will always be the same.
You cannot create wealth by printing money, but you sure as hell can destroy a lot of wealth by doing so. All inflationary booms are followed by and in fact are the cause of the inevitable busts. But people keep on chirping about the wonders of ‘elastic’ fiat currencies, from Keynes on down to almost all of the economic luminaries of our present. Will the people ever wake up or was W. C. Fields right when he said, “Never give a sucker an even break”.
@Tim,
The hoarders are the capital(money) holders who are the people who flood the system with funny money (i.e., they provide the credit). They get you on the way up, and on the way down. In the first instance, all money IS credit, and, when the capital holders have complete control over the creation of money, they can make sure that all money winds up back in their own coffers during the busts.
Tao,
Again we see how confusion of terminology can lead to real misunderstanding. What sense does it make to say that those who can create money at the stroke of a key are hoarding money? The banksters aren’t after money. They can create infinite amounts of money and they know that it’s just an abstraction with no tangible reality or value. What these guys are after is real wealth, yours, mine, and everyone elses.
While many others may confuse money with wealth or capital, I can assure you that the banksters suffer no illusions as to the distinction between the two. Money is simply a tool used by them to expropriate the wealth of others and get it for nothing, which is what fiat money, digit money, or whatever you may wish to call it is. It is nothing but an abtract idea.
To repeat myself, those who create the money and thereby cause the booms and busts are able to use their phoney money instrument to confiscate the wealth of society both on the way up and at the bottom of the so-called business cycle that they themselves manufacture…this same business cycle that their lackey economists would have us believe is just some mysterious epiphenomenon of the market.
Once again, what the ‘senior capital pools’ are hoarding is wealth, i.e. , land, resources, the manufacturing and commercial assets, etc. It is important to know these fundamental distinctions. Money is the means, wealth is the end.
Excellent lesson Damon – once again.
I will be linking your lessons.
Right now in Ireland we are being told what to do by the EU and of course they are being told what to tell us to do by the senior bond holders. There is nothing our politicians can do. Their hands are tied. We are at their mercy. Difficult to see any outcome other than what the bond holders want.
I think they want to completely change the global system. I think they know that competitive consumption driven capitalism is no longer a viable system for many reasons such as resource depletion and the environmental impact. The global warming issue is just part of the environmental problem; the real problem is the poisoning of the biosphere on which we all depend for life.
Like it or not humanity has to change how it lives on Earth. And it has to be done in this century. We have to change or re-structure completely how we live – our civilisation. There is no debate about this – the only real debate now is what form will the new structures initially take; how will the transition be managed; and who will manage it and determine the outcomes; and who will be in control of the new global system?
I think we all know the answers to those questions.
Very few humans alive today will understand what I have written, or what you say in your lessons. Not enough in my opinion to bring about a truly rational and humanely managed transition. So it is likely to be difficult for many as the cyclopean (or is it psychotean) capital machine grinds us into whatever shape it wants.
The United States and other nations must take back their sovereign authority to issue and control their own money. In our case (U.S.) this means the Federal Reserve MUST go – but I suggest a sequence of actions that will go a long ways towards mitigating problems during the transition:
1) The United States owes the privately owned Fed around $5 trillion. This must be handled first and it should only take 10 minutes.
The treasury should simply have an employee call the Fed and ask them to please watch our clearing account on their computer monitor…then, $5 trillion (if that’s the correct amount for principal owed the Fed) should be sent via an electronic transfer. The debt would be repaid and the money would cease to exist at the Fed as it was created by debt and destroyed by debt repayment.
2) The United States should then send a message to all private banks alerting them to the fact that the Fed won’t be around anymore, so the banks can no longer create money. Instead, the banks (only the solvent ones) will be supplied with 0% money from the treasury to operate under a new model. In lieu of interest, the U.S. will charge an issuance fee (seigniorage) so that we can end income taxes.
3) Next, a pink slip should be sent to the Fed, with a note:
Larry
@ DrKrbyLuv aka Larry
Why don’t you have a blog?
Hi Mary Rose,
Thanks for the suggestion, how hard was it for you to set up your blog?
Larry
@ Larry
It’s easy and it gives me a platform to try to make a difference.
Damon,
You have been slowly educating me on what the modern economic problems are and how the Austrians, which I used to believe had it all figured out, are really off simply because they don’t understand the how all money originates from debt issued by banks. I believe you are familiar with Murray Rothbard and it appears some other who post on this blog. Well, I found a video on you tube in which a guy brings up the issue of the fact that banks create inflation by issuing credit to Rothbard after one of his talks. I though you and all the other posters might be interested. Go to about the 59 min mark and watch until the end in which they don’t allow the guy to press issue any further: http://www.youtube.com/watch?v=Ta7q1amDAN4&feature=related
Rothbard just doesn’t understand what the guys is saying.
The questionnaire also explains that there is a limit to how far credit can be expanded in our system. Is this where we currently are and the reason there is a need for the international banking cartel to restructure the world financial system, as you have stated they are in need of doing so in order to retain power.
@John,
“Rothbard just doesn’t understand what the guy is saying.”
I will have to watch the video. All I can say is that Rothbard knew exactly what the guy was saying but refused to acknowledge that fact. It is extremely important for neoliberals, generally, and the Austrians (sorry, Ranallo), in particular, to maintain the fiction that we have a fiat money system where reserves are deposited before credit is extended, that our money is exogenous. Politically, this absolves the banks of any responsibility for booms and busts because, hey, it wasn’t the banks’ fault, they were just doing what the Fed told them to do. Oh, the tyranny!
But we know from a 1990 Fed paper that credit is extended 9-12 months before reserves are deposited to “enable” that lending, i.e., that banks create money endogenously through the extension of credit, which Rothbard’s teacher Ludwig von Mises said was impossible when there’s a central bank. There’s every indication that Mises was a genius and knew better, that he was really making a political argument to advance the position of his sponsors and allies.
For Ranallo, I’ll give Rothbard the benefit of the doubt and assume he was a crank (a favorite insult of Mises) instead of an outright liar, but Rothbard is another guy who was so smart it is hard for me to imagine that he was ignorant of reality, especially when he was one of the architects of the neoliberal (aka libertarian) propaganda machine.
Tao,
How do you know that he knew exactly what the guy was saying but wouldn’t acknowledge it. You did say you didn’t watch the video. It just appears to me that Rothbard is confused by the last statement the guy makes. Can you provide me with evidence that Rothbard was not ignorant to this but just tried to avoid it?
I don’t “know” what Rothbard knew at the time. I can’t read minds, nor can I travel back through time.
I’m speculating based on deduction from a variety of facts, many of which I’ve laid out above. Rothbard was the opposite of an idiot. He learned at the feet of Mises, who understood endogenous money creation but asserted, without basis, that such was impossible in the presence of the central bank. The only way that Rothbard didn’t know that banks CAN create money is that he never read what his teacher wrote. That’s a ludicrous proposition. Now, one could argue that Rothbard did not realize his mentor was lying when he asserted without basis that banks don’t create money endogenously in the presence of a central bank, but the fact is that not only was Rothbard a genius, but he was cool, calculating propagandist who urged employing Leninist tactics to create and propagate the “libertarian” movement. Just google Rothbard Confidential Volker Fund and see for yourself. Rothbard existed to shape public opinion to conform to his vision of a world safe for banksters (the banksters part is my addition), proving that his economics are politics, and that he was a politician like all Chicago School and Austrian School economists.
When I started reading stuff by Friedman, Mises and Hayek, I noted a lot of REALLY stupid statements that were completely wrong based on my own experience. “Bureaucracy can never arise in private enterprise,” said Mises. Really? My initial reaction was “wow, this guy is STUPID.” But then I dug into things and realized how smart he was, and I realized “wow, this guy is a major LIAR.”
When all of these people assert that everybody is a selfish jerk just looking to screw everybody over (which does not describe me in the least), and that is what liberty and freedom are all about (which does not comport with my vision), I realize they are telling me who they are and what they are trying to accomplish, which tells me why I should question everything they say because they are most likely lying to me. This is one of the things that fascinates me about a lot of the libertarian (aka neoliberal) followers out there: they’ve been told by their leaders that everybody is out for themselves, yet they still choose to follow.
Crazy.
just listened to those few minutes in the clip. yeah it sounds like he didn’t know what the questioner was talking about…or he’s a good actor feigning ignorance.
the top related video was a Rockwell speech “how abolishing the fed would change everything” so I listened out of curiosity. the most striking thing to notice is how it sounds like a church service…started out by welcoming all those committed to the tradition and the benevolence of it as if they are the chosen few…mentioned their “great predecessors”…implied Austrian is the only school following the “drive for truth”…ended with the same tone. you NEVER hear such dynamics from any other economic school…they’re quite boring and technical. this is my primary problem with Austrian…the technical theoreticians are fine, but it has a marketing arm in these thinktanks designed to attract retail customers, or disciples, almost converting it into a religion that glorifies the free market as the place to find salvation and puts all blame on the state.
he uses the old language about the Fed being a govt institution and promoting fiat money. BS. it facilitates private sector electronic digit money.
he uses the same old thinking the solution now is cutting back on social support, cutting minimum wages, etc. hilarious. the richest clique in the world has just completed the biggest heist from the lower classes in history and Lew now says the lower classes need to sacrifice more to save the economy. sure, high school kids making $8/hr rather than $4/hr will save us from galactic debt deflation…twilight zone.
he says the solution to money and banking is to keep the govt out. well, certainly is a good solution for the bankers. another flaw of Austrian…not being able to separate the parasitic portion of the economy from the real portion (freedom for one requires constraining the other). also not being able to adjust one’s theory to current reality rather than keeping it in the fundamentalist past is, well, fundamentalism…another aspect of religion.
he says money is a commodity like anything else. wrong. yellow rocks will not save us. what the banks have shown is that a great medium of exchange is simple electronic debits/credits. the problem is that they’re all privately controlled by a few big usury institutions.
Tao,
I think you should watch the video. In it Rothbard does say banks and the FED make new money, thereby causing inflation. The questioner then responds by stating that banks and the FED create credit, which is different from money and has interest attached. Its also fraudulent in nature because people think there getting money and they don’t understand they are just receiving bank credit. Rothbard couldn’t understand that banks create credit, which is different from money.
As far as I understand the Austrians they don’t say all people selfish jerks but that people will work in favor of ones self interest and to protect ones private property. Do you have kids? If so it should help you understand this. Most parents would do anything for their children and although their children are not them, they are almost an extension of them. The child is the future of the parents, the continuation of their lineage so it has been ingrained in every mammal at least to put in tons of work to make sure they survive and in our case enjoy life. If one has no incentive to work hard then one won’t and therefore one productive capacity will not increase.
It appeared to me that if the Austrians theories was put into practice back in the 1950 prior to the accumulation of assets by this elite banking structure and the corporation then it would’ve worked. But my issue is their inability to see the problem right now, which Damon has very clearly laid out in his series of videos.
@John,
I’ve watched the video. (And, yes, I have two kids.)
“In it Rothbard does say banks and the FED make new money, thereby causing inflation.”
Yes, Rothbard was saying that money is exogneous, that the Fed creates it. Like Mises, he was insisting that we have a fiat money system where the money is printed first by the Fed before it is lent out by the banks. Mises recognized that, in the absence of a central bank, the money supply is endogenous, that banks create it money through lending. Apparently for ideological reasons, Mises concluded without basis that when there is a central bank acting as a socialist “central planner,” the rest of the banks are just serfs doing what they’re told, and all money is exogenous.
I’ve become such a cynic when it comes to the Chicago Boys and the Austrians that I viewed what Rothbard was doing not as displaying confusion but as engaging in obsfucation. When he got flustered, the moderator stepped in and deftly handled things, shutting down the conversation. Rothbard may well have been a true believer in what he was peddling, and I hope he was. But I doubt it. Still, I view Rothbard as a secondary player in the whole neoliberal/libertarian political movement. My real beef is with Friedman, Hayek and Mises.
I’ll admit that I engaged in a little hyperbole by reducing Hayek’s and Friedman’s approach to lionizing the self-interested individual as believing that all people are selfish jerks. Neoliberalism is founded on a false individualism v. collectivism dialectic, in which they argue that the individual is the source of everything good, and the collective is the source of everything bad. Of course, on the backend, neoliberals are all for collectives of shareholders (called corporations) running the world, but they pretend that each corporation is an individual, so it’s all good. From my perspective, each human being is a blending of the individual and the collective, that being a social animal and having a common set of morality and sensibilities is what allows us to cooperate and grow, individually and together. I view neoliberalism as nothing less than an assault on our basic humanity.
“It appeared to me that if the Austrians theories was put into practice back in the 1950 prior to the accumulation of assets by this elite banking structure and the corporation then it would’ve worked.”
Worked how? The fact is that the accumulation of these assetss by the banks and the monopolies and trusts they fostered into existence started in the U.S. shortly after the end of the Civil War.
As I state below, as long as private banks control the quantity of money, they will have the motive and opportunity to create confiscatory boom-bust cycles. And they will. I agree, however, that Chicago Ponzinomics has been used to accelerate the accumulation of wealth by the oligarchy, clawing back what they lost due to the New Deal and other socialist policies.
Tao,
How is a human both an individual and a collective group? A human is a distinict single entity. I do not view my self as both an individual and a group. I do not have to grow with anyone else or any group. If I choose to remain ingornant to whatever, or go my seperate way its my choice. No one has any right to force anything upon me because they believe I need to advance in some way with a collective group. If I choose to live with out morals, so long as that choice does not infringe on the rights of others, I can do so. I agree corporations are groups not individuals and shoudl be treated as such. Individuals have right, real individuals, not groups. There is no such thing as goups rights. When you start giving rights to groups yo always end up with a certian group have a certian set of rights and another group having another set of rights (i.e. Slaves and slave masters, serfs and fedual lords, and the groups forming today with certain rights that other groups don’t have – Elite bankers, government leaders, workers/tax payers)
After the civil war just as before the civil war, individuals by way of certian groups, were attempting to increase their own wealth. Those with intelligence understood that real assets and productive capacity is where real wealth resides. After the civil war the power was not all that concentrated just as it was all that concentrated shortly after WWII especially when compared to today. The vast majority of food production was not controlled by a few corporations and neither was manfacturing, mining, land etc…. If the playing field is somewhat level with regard to the distriubtion of real asstes then a truly free market does work, something that has never existed in the USA. A truly free market does consist of free money, where I can choose as a producer what to and not to accept as payment and you as a consumer would be albe to choose what to use as payment. In the past 50 years or so the federal government has been used as a tool by the elite bankers to gain control of the market and consolidate real assets (i.e. food production/distribution, land, manfacturing, which is now outside of the USA, etc…) into their hands. Without the governments help none of this would’ve been possible. Additionally, a fractional lending system would never last long in a truly free market with free money.
“How is a human both an individual and a collective group? A human is a distinict single entity. I do not view my self as both an individual and a group. I do not have to grow with anyone else or any group.”
Psychologically, you are very much a blending of individual and collective. Contrary to what Milton Friedman said, we are not simply “free to choose.” Our choices are narrowed in the first instance by what is socially acceptable. In Freudian terms, the superego, aka our conscience, acts as a little cop in our head to tell us when we might do something that the rest of society might deem as bad. All of the choices that we make are influenced by what we think the collective will think of us, which we learn by being socialized by the institutions we grow up in. Each of us as members of the collective likewise influences the collective. As social creatures, this dynamic cannot be avoided. In this sense, the Taijitu (the symbol for yin and yang) of Taosim accurately represents how the individual and the collective interact. That’s why I don’t view individual and collective as truly separable.
Institutional ecnomists (a largely defunct group) concentrate on the role of social institutions in economic choices. Gunnar Myrdal was a co-recipient of the Nobel Prize in economics with Friedrich Hayek in 1974. Given the neoliberal assertion that there is no society but merely a collection of individuals, it is odd to think of two more contrary views of economics being awarded at the same time (Institutioanl and Austrian). My personal theory is that the neoliberal movement and the Austrians in particular actually represents a fusion of their stated individualistic theory of economics with institutionalism because they have created social institutions to condition individuals to have no superego, to have no conscience, to not worry about society and to focus only on pursuing their own self-interest, which is a precondition to their economic theories being accepted. The fact that the neoliberals created these social institutions to make their economic theories socially palatable belies their rhetoric regarding individualism.
Unfortunately, a person who has no superego, who has no conscience, is clinically defined as a sociopath (at least whent they’re adults; when they’re small children, and I think you can call it normal). That’s what neoliberalism wants the masses of people to be: either children or sociopaths, both of whom are much more easily controlled by the elite.
At least that’s my personal theory.
This is something that all
Tao,
It’s one thing to have your own psychological theories about the nature of man and his relation to society. It’s entirely another thing to deny that we exist as separate volitional individuals, which is testified to by the very fact that we can and do and are disagreeing about various issues on this very blog.
Where the trouble begins is when one or more individuals decide that it is their prerogative to force their ideas and arrangements upon other individuals in the name of some holy collective the nature of which has been given to them by some revelation that trumps the opinions and desires of other individuals. This amounts to the tyranny of the group, and whether the group is a majority or a minority is of no consequence. The writings of George Orwell and others and the history of our own time, with its numerous collective tyrannies, testify to the perils of this kind of thinking.
This is what bothers me about some of the ideas promoting collective fiat money I read about on this blog. I have no problem with people getting together on a voluntary basis and agreeing to create and exchange their own form of money among themselves. This is how most forms of asset money came about such as gold and silver coins, but also tobacco, certains kinds of shells, precious stones and the like. But it seems that those who want an abstract fiat money, issued as debt or otherwise, intuitively know that it will not fare well in competition with money which has value in itself without a fiat being necessary for its acceptance.
People who want real asset money are labeled as selfish and anti-social for thinking that fiat money, which can be created at will, might be used by some members of the collective to confiscate the earnings and wealth of others. This of course is what has always happened with fiat money arrangements. The result is usually that producers of wealth are plundered and non-producers are rewarded. This results in the general impoverishment of all. Whether the government enforcing the fiat money system is a democracy or any other form of arrangement, you can bet that special interests will vie for the creation of more money to serve their desires and monetary and economic chaos will follow.
And finally, just let me observe, if humans were like ants it would not be necessary to force them to join the ant hill.
Tim, you must move on from the old false choice between individualism and totalitarianism. Community does not equal Stalin, despite Ayn Rand, Austrians, and selfish sociopaths wanting us to believe that precisely so we’d allow the breakdown of our own communities for their profit. And I’m not sure you know what Orwell was writing about. He described a tyrannical system where there was TOTAL breakdown of community into isolated individuals with no connection, no love, no affection, no community…only oligarchical tyranny which owned each individual as a widget. YOU GET TYRANNY WHEN YOU BREAKDOWN COMMUNITY, which is why we’re moving into tyranny now.
We also need to move beyond the old indoctrination about fiat money…if people even know what that means. Talk through the math and accounting that you think allows some people to confiscate the wealth of others in a fiat system. You’ll find no such math…only talking points learned from old theory. The issue is privately held debt-based money issued by banks. Then the math and accounting are very clear. THAT IS WHAT ALLOWS CONFISCATION OF PROPERTY. We’re seeing it before our eyes, yet people still want to blame the fantasy of government printing.
@Tim,
“It’s one thing to have your own psychological theories about the nature of man and his relation to society. It’s entirely another thing to deny that we exist as separate volitional individuals, which is testified to by the very fact that we can and do and are disagreeing about various issues on this very blog.”
Are you claiming that I’ve denied that each of us is an individual? If so, I think you’ve mischaracterized what I’ve said in a significant way.
What I’m saying is that the line between individualism and collectivism is not nearly so bright as neoliberal rhetoric would have us believe. Yes, we each make our own choices as individuals, but those choices are constrained by our understanding of what is acceptable to the collective of which we are part. Indeed, we often cannot even see alternative choices because we have been conditioned by our group not to see them. This is called cognitive bias, and it is something that is learned.
If you do believe that I’ve said that we do not exist as separate volitional individuals, that is most likely due to your own cognitive bias prompted by your chosen social belief system, which seems distinctly Hayekian in flavor, although I am growing to understand that there are belief systems that are similar to but not the same as neoliberalism. If I wanted, I could restate my theory of the intertwining of individual and collective in the classical liberal terms which the neoliberals co-opted and corrupted to their own purpose: the reason an individual pursuing his own selfish interests benefits society is because the individual’s interest includes pursuing the interests of society. If you actually read Smith’s “Wealth of Nations” in conjunction with his “Theory of Moral Sentiments,” I think this is a fairer statement of his “invisible hand” aphorism than the “everybody be selfish, and everybody will benefit” silliness of Milton Friedman.
A massive blindspot in neoliberal rhetoric, one that I believe was deliberately cultivated by neoliberalism’s founders, is the tyranny of the market, which is not free and never will be free because it has been and always will be directed by a small group of capital holders by modulating the quanity of money to their benefit and everybody else’s determinent.
FYI – I’d like to hear more about your theory of real asset money. I actually don’t view the idea or its promoters as selfish or anti-social. My issue is that I don’t believe there is such thing as “real asset money.” Other than the food and water that sustains us, there is nothing on this planet that has intrinsic value. Anything that we would label as “real asset money” is, in fact, fiat money, because we as human beings agree that it has value.
Maybe my view springs from my electrical engineering education at MIT, where we were taught that, when it comes to implementing an algorithm, there is no meaningful difference between hardware and software. Either way will work because the algorithm is a “meta” that can be expressed equivalently in a variety of different ways. That’s how I view money, as well: money is an algorithm that only “works” because we humans agree that it works.
“The result is usually that producers of wealth are plundered and non-producers are rewarded.”
Who, in your opinion, produces wealth? You’ve said previously that money is not capital, which to me means that money is not wealth, as it is capital–the means of production– when worked by labor, that produces wealth. Currently, we find ourselves in society where the people who make money from money (Marx’s M-M’), not money from capital (Marx’s M-C-M’), have all the power. But are they the producers of wealth, or just fraudsters? And should somebody who has collected wealth by means of fraud be allowed to keep it? (NOTE: I view myself as an ardent capitalist, but I think Marx has a very useful paradigm for explaining the various ways in which money is created.)
Anyway, thank you for helping me understand your point of view better. As I’ve said previously, our conversation has already helped me to normalize terms so as to communicate better (hopefully).
Tao,
I did not mean to ascribe particular beliefs to you but merely wanted to speak to an issue that your posting was tangential to, as so much discussion on this blog has touched on the issue. I wanted to especially delineate what I see as the distinction between psychological and spiritual community and the attempt to enforce political collectivity. I seized upon your posting as an opportunity to work out some of my concerns.
Tao,
P.S. You touched on many other things in your last reply to me. I’ll try to reply to them later as it’s late and I’m tired.
Tao,
I don’t think we were on the same page regarding collectivism vs individualism. To me, individualism is a political model in which the rights of individuals are put first. I do not think of individualism as a ideology in which people completely ignore others and the community and only think of themselves. Further, collectivism is a political model in which the rights of the individual (i.e. right to privacy, property life etc…) are sacrificed for the greater good of the greater number. An example would be the war on terror in which the government forces people to submit their right of privacy to the TSA. If you fly you have to go through humiliating searches to make sure everyone on the flight is safe, so the individuals rights are scarified for the greater good of the greater number. I would conclude that we are currently in a collectivist political model as was the USSR and there are many other examples.
I completely understand that individuals are influenced by society. My thinking regarding individualism vs collectivism is with regard to political models and rights. Not the psyche. We are all influence by each other in one way or another, and some individuals have more influence on us than other individuals.
Tao,
Please excuse me for being so tardy with my promised response to your post to me of October 30.
The point I was trying to make in my post to you is that I find it very doubtful that the community that all of us on this blog seem to desire can be achieved by government mandate or legislation.
You say that markets are not free but are controlled by certain financial interests. You are right. But then so is government. The fact is that without goverment cooperation the sort of monopoly practices that we see with regard to banking and other corporate interests just could not be established and maintained. I seem to hear people putting our problems in terms of either government or markets. But the fact is that the tail and the rest of the dog are all one body, regardless of which you think is doing the wagging.
I have on several occasions brought up the fact that gold and silver were the original monies decreed by the Constitution of the U.S. I have done this not because I am such a ‘gold bug’ but to illustrate how the framers tried to circumvent exactly the situation we find ourselves in today. They wrote at the very beginning of the Constitution at Section 8 of Article 1 that only gold and silver should be legal tender in any of these United States. And that Constitutional mandate has never been amended, so it is still the supreme law of the land. And yet we see no gold or silver money being used in any of the states today, but only bank debt money. So if this bankster money is already illegal, what’s all this talk I’m hearing of fixing our problems by law all about? I think it’s obvious that pretty much all of the governments of the world have been co-opted by the international financial powers. Money is not just the tail wagging the dog, it IS the dog and IT is wagging the tail (government). Is this not what Keen’s article implied?
Part of the problem is that the banksters’ scheme operates with the complicity of large numbers of people who feel they are benefitting. Of course there are the many prostitutes serving in all three branches of government and the hoards of lawyers and economists who are handsomely rewarded for their complicity. But more that that, there are millions of people who feel they are benefitting from stolen purchasing power offered to them in the form of credit. Those who benefit the most are the large corporate interests who receive the pilfered purchasing power first at very low interest rates, i.e., the prime rate. They, in effect, receive it for practically no effective interest as they get the new money first before it bids up prices, are able to purchase at that day’s prices, and then are able to pay back the loans with cheaper money. But smaller businessmen also clamor for inflationary credit expansion as they too are able to pass the cost of borrowed money on to consumers, many of whom are working people, whose wages are the last thing to rise in response to the inflatinary credit expansion. So what we have here is a reverse Robin Hood situation where the rich are stealing from the poor. And I don’t think I have to tell you that it’s the rich who have the juice when it comes to government. It seems to me that as long as so many people are willing to profit by the banksters’ plunder, that talk of government solution rings a bit hollow.
Even many in the working classes think they are benefitting by buying on credit in an inflationary environment they themselves are participating in and by paying off the debt down the line with depreciated money, all of this at the expense of the honest saver. W. C. Fields was right when he said, “You can’t cheat an honest man”. Every fraudster depends upon larceny in the soul of the ‘mark’.
So my question to you and others, Tao, is how are we going to get a moral government out of a nation inhabited by people who want to get something for nothing? Can you make a silk purse out of a sow’s ear? Or to quote that already overused quotation from Pogo, “We have seen the enemy and it is us”.
Tao,
Being a person with an empirical turn of mind, I am driven back to the stubborn fact that for all but a very few years in the history of humankind the overwhelming majority of people have lived lives subservient to ruling elites, no matter what the systems were called. Just judging from the testimony of history one is inclined to adduce that this must be the natural order of things. There have been many different rationalizations for this situation, i.e. divine right, social Darwinism, etc., but the stubborn fact remains that the ruthless and the cunning have always ruled the roost.
In an earlier post of yours you brought up the issues of human nature and morality. Might not such considerations be apropos in consideration of the historical record? Marx spoke of social institutions as being at the heart of class inequities. You see how well all of the experiments based upon his ideas turned out. As always, a tiny clique rose to the top of the new communist institutions. It would appear that something more than a changing of social institutions is required. Rearranging of the furniture has been tried and found wanting.
Hey everybody, I’ve lost my ability to stay up to speed with these blog comments. I’m thinking of launching a forum so we can better manage the conversations.
But just a quick note based on some emails I’ve seen: the Fed MUST be ended (or absorbed by Treasury). The point I tried to make in this video was just that it needs to be done as part of a larger strategic restructuring that includes the banks and Treasury. We can’t only end the Fed without doing anything else because we’d be thrown into chaos.
My mistake for making it sound like I want to keep the Fed around.
Damon,
From watching your videos, it appears that your solutions would require those who understand the source of the problem to infiltrate the federal government with the opposition of those in control of the vast majority of capital, money and the media. Then go about restructuring the financial system so it is a benefit to the people as opposed to a parasite. Which, basically means we have to turn the government on its true constituents the large banks/bond holders/senior capital pools. The part I don’t really understand is how we actually infiltrate the government against all the odds and then turn it on its true constituents. I use the word infiltrate because anyone who plans to break up the powers that be almost needs to do it under the cover of night. I think you know why. This just seems like an almost impossible task. Would it be easier to initiate this change at a more local level?
very good observation and it’s why I’m slowly taking people through these videos illustrating the sober truth so when I offer some thoughts on solutions people aren’t disappointed. people who are expecting a new monetary proposal to solve everything will be disappointed. there are plenty of people offering those types of proposals, but as long as more people don’t wakeup, they have zero practical chance of happening given the power the oligarchs have over politicians and their alignment for powerful foreign countries.
local is great. it’s a big part of what I advocate because I think it’s where true life exists. but it does nothing about the global imperial system. it would return us to the world of an all-powerful ruling class with a bunch of local peasants in farm communities. sorta like feudal serfdom like we see in Braveheart where the local people are just trying to love each other and enjoy life while the oligarchs keep messing with them. local currency would facilitate local commerce for the necessities of life but it would provide no access to the elite corporate system…the definition of a 2-tiered feudal society.
on the other hand, states have far more power than localities, so movements at that level would have a tiny chance of promoting change at a higher level to deal with the imperial system.
Damon,
So it seems that the only way to solve any of these problems is to first educate enough people as to the true nature of money and who really controls its. It seems without educating the masses all is lost. I’ve been thinking about solutions but I anxious for the next video. Don’t keep us waiting too long.
@John
After weighing all these videos and researching on the side, I’ve come to that exact same conclusion.
As Damon has stated, this is a multi-generational journey that starts with this understanding. To make these types of changes even over generations would require a huge and very dangerous uprising involving both govt and us plebes against the oligarchs. Even a complete banking collapse leaves the oligarchs in charge, and they’ll have no hesitation killing thousands/millions to maintain power. It’s a little disheartening.
But as H.L. Mencken said:
It’s better to know than to be ignorant. To tell the truth than to lie. To be free than a slave.
@Ranallo,
But Hayek, Friedman and Mises were able to manage a revolution without (official) bloodshed within a couple of generations.
Why can’t we follow their example, in reverse?
All I hope is that whatever comes next kills a lot fewer people than the true vision of Friedman, Hayek and Mises has. (Think Iraq, and you’ll understand what I mean.)
Damon,
I keep talking about force and coercion and you keep talking about community. I am certainly not against community. But it seems abundantly clear that when people use force as the basis of community, they contradict their purpose. What has love and affection got to do with force and compulsion? I have seen many relationships where force and compulsion were practiced and in all cases love was the casualty.
I think I understand Orwell very well. It is force, coercion, and regimentation that are at the heart of his nightmare scenarios. These things always result in the alienation you describe. It seems to me that it is those controlling types who use threats and force to achieve their ends who are the true sociopaths.
You may think that your ideas about how others should arrange their lives are wonderful and righteous, but that doesn’t give you the right to force them on others by government fiat. What gives you or anyone else the right to force your ideas on anybody. All governments up to this point have been based upon force, and it seems to me that this has been the problem. When you create a government and give it a monopoly on anything, you automatically introduce the element of force as all monopolies are maintained by the threat of violence (force). And when you give this government a monopoly on force, how is it that you are able to delegate a right to the government that you yourself don’t have? If you don’t have a right to coerce your neighbor how is it that you can delegate that right you don’t have to an agent (government).
You cannot rid the world of tyranny by using the tools of tyranny. It is truly amazing to me how the lessons of Gandhi have been ingnored. Gandhi abjured the use of all violence and coercion and yet defeated the mighty British Empire, using the simple tactics of non-violence and non-cooperation. He simply refused to cooperate with tyranny. It worked then and it can work now. In fact it’s the only practical solution I can see.
Does anyone really think we’re going to achieve the life we want by either the ballot box or violently confronting the tyrants? But what if we could convince enough people to just stop cooperating with the beast. The Internet is a powerful and revolutionary tool. If enough people can be made to see that it would be in their and everybody else’s interest to stop the insanity, we may be able to realize a better world. But just look around you and check out the news. Isn’t it obvious that we must give up our old politics of force and violence. Passing laws that threaten others with violence unless they do it our way is not going to achieve the love, affection, and community that we all desire.
As to the math of fiat money, I am not aware of any historical instance of the use of fiat money that was not accompanied by inflation. Inflation is by its very nature theft.
“I keep talking about force and coercion and you keep talking about community.”
Because I keep talking about community and you morph it into tyranny.
I reject the anarchist notion that all government is tyranny (by the way, I’m all for anarchism, but as Chomsky says in the face of a corporate empire that wants to install fascism, it seems the individual’s only hope is some sort of community declaration “no!”). Free people merge themselves into community…do you know any indigenous people who have/had no tribal identity, which then had some form of “government?” I think the Mandan tribe was a wonderful example of a system “governed” on the commonwealth (bottom-up) side of the spectrum vs. empire (top-down).
Speaking of tribes, I have a hard time listening to the anti-statists and anarchists who continue cheering for a purist sense of freedom from inside the comfort of our imperial system that’s created capital markets and rule of law that we benefit enormously from while the 3rd world suffers from it. I’d be willing to listen if they truly gave up on tyranny and moved in with the Aguaruna people in Peru to experience life without the massive tyranny we’re in. I don’t think most people know what they’re advocating. I love it…I spend as much time as I can in wilderness, but it’s “wilderness” precisely because most people prefer the comfort of a top-down controlled system.
The anarchist notion that government has a monopoly on violence is ridiculous. One could only honestly claim that if they’d never been in the corporate world, the security industry, Wall Street, or hung out with VIPs or been on the receiving end of a gun. But yes, I couldn’t agree more that corruption comes with a license to commit violence. Having led government violence organizations, I know how dangerous the power is and I know how to manage it. Unfortunately we see a lame leadership being put in the military and police to convert them into fascist units, as they have been at times in the past as well.
Sorry but Gandhi did not win. Didn’t take long for outside tyrants to takeover. They keep comin…they never stop…sick narcissist freaks. Indira tried to stop their 2nd attempt by nationalizing the banks (was the only way to stop the financial invasion). It worked for a while, but again, they never stop…now India is a satellite of the multi-national corporate system.
Regarding fiat money and inflation, yes, but what this means is that they were attacked by foreign capital, which always flees and attacks a sovereign currency because global aristocrats prefer one that they own. And I’ve never known a commodity money system to not have inflation either…the gold standard was a phenomenal method of allowing banks to inflate and steal the people’s assets.
Damon,
As I have said before, I am not an anarchist, but would say that I feel kinship with Jefferson’s and Mill’s idea that the purpose of government ought to be the securing liberty. Although anarchy has its intellectual attractions, I can not see that it could be practically realized. But I do tend to always come down on the side of liberty.
As for the hypocricy of purism and a compromised life, I cry mea culpa, but then who of us fully lives up to his ideals. The only thing I can say in my defense is that none of my positions entail the encroaching upon the liberty of others.
You are certainly right that the old demons came back after Gandhi, and the nation fell back to its sectarian squabbling. I think this demontrates the insufficiency of a leader. If the people themselves are not wise and motivated, there can be no lasting change. But that still doesn’t detract from the fact that at one time this little man and his followers stood down the British Empire. Einstein said that in the future people will scarcely believe that such a man as this once existed. Why aren’t there more like him? Think what a million Gandhis could accomplish. I think that it is a lack of imagination that is holding us back. We keep falling back on the old traditional methods that have proven their inadequacy.
Another hero of mine was Martin Luther King Jr., who ,of course, was a disciple of Gandhi’s methods. I can’t think of any politician who accomplished anything near to what King did. And he did it without political power or the threat of violence. It was precisely because of these things that King had such moral authority.
It is interesting how the military has misappropriated the Bible quote that there is no greater love than that a man should lay down his life for another, when, as we all know, a soldier isn’t about laying down his own life but is about “making some other poor bastard lay down his life”, as Patton so elegantly expressed it. It is clear, when watching the speech that King gave in that church the night before he was killed, that he knew he was going to be sacrificed. Now there was a man who walked the walk. I feel very small when I think on him, but nonetheless I try in my own way to walk in his footsteps. I desire power over no man but would speak truth to those who would wield power over others.
Tim, you and I are on precisely the same page then. I thought you were advocating the caustic, narcissistic, atomistic model of someone like Ayn Rand. That’s diametrically opposed to the love embedded in Gandhi and MLK’s methods, so that’s why I was fighting back. Now that I understand what you’re saying, I couldn’t agree more.
Thanks for sticking with me long enough to get through my thick head. By the way one of my inspirations for doing what I’m doing is this video put to MLK’s words: youtube.com/watch?v=KlM87dwYPjg. The little girl at the end had me in tears everytime I watched it for the first few months until it really sunk in how evil our system is. As a result of that process, I now have a calmer peace about what I’m doing.
Damon,
This is not the first time nor will it be the last that I have found myself engaging in what I thought was one conversation, but was in fact two separate monologues. I have shared the guilt in many of these instances. We all tend to pigeon-hole certain ideas into certain camps. Often we see things as either/or, when really there are many other approaches that don’t fit into either of our presumed categories. This is what I was referring to earlier when I mentioned the danger of labels.
I don’t belong to any group, party, or ‘school of thought’. I find this often confuses people. I don’t do religion anymore, Damon. It’s antithetical to truth. I think Nietzsche said it very well: “Convictions are greater enemies of truth than lies”.
@ dvrabel
“he uses the old language about the Fed being a govt institution and promoting fiat money. BS. it facilitates private sector electronic digit money.”
I’m impressed with the term “private sector electronic digit money.”
I think it would be good if that term were used often so the public begins to recognize it and understand the difference between it and “fiat money,” which people associate with out of control government spending and inflation. People think that fiat money is what we have and that we’ve got to get rid of it and bring in the gold standard to save ourselves.
If we could change the terminology to private sector electronic digit money I think it might help clarify where we are.
Mary Rose,
Wasn’t it the young Juliet standing on her balcony that moonlit night in Verona, musing on the young Romeo who’s family was an enemy of her family, and thinking on his family name, who asked, “Would not a rose by any other name smell just as sweet?” Even at fifteen she knew the importance of distinguishing between the name and the thing. And so, does it matter whether you call an intangible monopoly money abstraction, which is created by and under the monopoly control of some particular group, ‘fiat money’ or ‘private sector electronic digit money’? After all, the electronic digits are simply the means of creating the money. The authority to oversee the creation of this money was given to the Fed by congress by fiat, thus it is money by fiat, or fiat money.
The government (congress) was given the exclusive right to “coin money” in the Constitution. The phrase “coin money” was used because the Constitution explicitly states that nothing but silver or gold should be used for money.
You see, the founders were very familiar with paper money, bookkeeping (manual digit) money, and fractional banking. They had seen how these inventions had been used by both governments and banks to the ruination of the people’s wealth, and they didn’t want any group of people to be able to wield these instruments which they called “more dangerous than standing armies”.
The founders’ skepticism of both banks and governments was born out in 1913 when a handful of corrupt congressmen passed the Federal Reserve Act, during Christmas break when most of congress was at home, and by congressional fiat gave the Fed complete control over the monetary matters of the nation. Turned out pretty good, right? The founders trusted neither the government nor the banks and that is why they specified that the nation’s money should consist of gold and silver which could not be counterfeited or increased ad infinitum by ANYBODY.
Do you really think that our monetary or other problems can be solved by transferring this monopoly power to create money ex nihilo to government or to any group whatever? Moreover, since people have demonstrated that they can and will subvert and usurp any constraints, including the Constitution, and that the masses will go along with it, doesn’t it suggest that something more than just a new mechanism or arrangement is required?
If people themselves are corrupt, wouldn’t young Juliet ask, “Would not a human system by any other name smell just as corrupt?” Or as Shakespeare tells us in “julius Caesar”, “The fault, dear Brutus, is not in our stars (an arrangement of things out there) but in ourselves…”
@Tim,
I’m just going to reply down here.
Yeah, I realized when I was half-way through the comment to which you responded that I was muddling a couple of things together, hence, the disclaimer.
“To repeat myself, those who create the money and thereby cause the booms and busts are able to use their phoney money instrument to confiscate the wealth of society both on the way up and at the bottom of the so-called business cycle that they themselves manufacture…this same business cycle that their lackey economists would have us believe is just some mysterious epiphenomenon of the market.”
I agree with you that this is the game. However, having a private credit-money based scheme is not required. There’s every reason to believe that banks can and will cause the same confiscatory boom-bust cycles under alternative private money schemes, only the mechanism used to do so will be different. Where my wires crossed last night, and which led to my confusing mess of a comment, is that I was thinking in terms of “sound money,” i.e., how the banks would accomplish creating these “natural” boom-bust cycles (and they must be natural in the absence of a government interfering) under that kind of system, which would essentially make the quantity theory of money operative. First, they’d avoid the reserve requirements, as financial “innovators” always do, to engage in leveraged speculation, driving up asset prices. Then, when the bubble bursts, they will create a deflationary, confiscatory spiral by hoarding money and denying access to credit (i.e., what Keynes called “the scarcity of capital”).
As long as private banks are allowed to control the quantity of money, whether through loaning money into existence or modulating the amount of money in circulation, they will have the motive and the opportunity to artificially create and profit from speculative boom-bust cycles. As you say, these cycles are not natural, they’re man-made.
Tao,
I agree, except I would not say that money is hoarded, but withdrawn from circulation when referring to banks. After all, there’s really nothing to hoard as money is just bookkeeping to a banker. Bankers hoard real assets as do most professional investors, who are only liquid, if they are astute, in anticipation of the bust, which is when they accumulate assets which can be used as collateral for leverage on the way up with the next bubble. Of course timing is crucial and that can be aided if you have your hands on certain levers or know those who do. It helps to be in the club. And, as George Carlin said, “You and I ain’t in the club”.
“Be fearful when other people are greedy and be greedy when others are fearful.”– Warren Buffet. Or as an old boss of mine used to say, “Buy low, sell high”.
@Tim,
Thanks for your clarification of terminology. Yours works better than mine.
Thanks to everyone participating. Damon’s work and the various critiques of Austrian/libertarian/anarchic paradigms have really helped me think about the social problem more clearly. There are two threads intertwined here. One is deconstructive: “How did we get here?” The other is constructive: “How can we successfully re-engineer the global economy”?
Human society is a collection of individuals, and on a basic level reality is re-engineered one mind at a time. However, at present most minds are collectively linked and move as networks of social consciousness. I call this the good neighbor or late adopter syndrome. Most people will change their ways if enough of the neighborhood has agreed that it’s OK/better. Some people like to call it the 100th monkey syndrome. Social attitudes are viral.
It’s not enough to get people to agree that they’ve been fundamentally misled and exploited their entire lives. That we’ve all been duped. We’ve got to have an incentive for going through the painful process of change. In many cases we only change when circumstances force us to. To create momentum for preemptive change, we have to believe strongly that sacrifices will pay off, if not for us, then for our progeny. It can’t be done strictly via a moral argument. We need to get the marginally attached mid-level professionals and lawyers to turn their backs on the system that has sheltered them and their families for generations. We have to offer the likelihood of better outcomes and a structure stable enough to preserve them.
The other issue that comes to mind is the predatory/prey dynamic. What is required is a full-scale repudiation of predatory economics by imperialist nations. The prisoner’s dilemma and the free rider issue apply on a global level. Unless everyone agrees to play by the same rules, those who cheat or engage in exploitative strategies negatively externalize costs to the other players. In other words, even if the current cartel of predatory capital holders is broken up, how to prevent the attempted formation of other such cartels globally? This problem won’t go away as long as there is a predatory imperative in the human genome. There will have to be massive structural penalties for exploitive behaviors enforced collectively through all major power centers. Whether this means stripping malefactors of global rights or banishment to the no safety zone, I don’t know. But I don’t see any way to avoid a police apparatus in the presence of predators. And the police itself is inherently prone to its own predation, and so on. Constant vigilance is required.
It may be the case that humans are genetically designed to be predatory tribal creatures, and the best we can hope for is to diligently harmonize our globally shared interests for longer-term habitation, without ever expecting or hoping for all tribes to completely integrate. Society may be an inherently flawed experiment incapable of fully succeeding.
I hate to play Devils Advocate but I don’t buy into ‘Financial Power’ being bondholders
1. Draw a vertical line down the globe between west and east. Which side has more legitimate cheap oil reserves and less complicated logistics to secure it? That may explain why power is shifting to the east.
2. “Senior bondholders are anonymous and their identity doesnt matter anyways”…there is nothing anonymous about them at all because their power ultimately is made possible by disrupting oil shipments to America. That requires state based military power besides the USA. Where do you suppose that is?
3. “True life is through community”
Well, I know my community and I suspect its very similiar to yours. Its value system is very simple:
Gas Stations –> Convenience
Thats it. People value oil and the convenience/products derived from it. If that cloud with the word ‘People’ in it is actually a useful resource, then perhaps you can explain what it is. Power is the highest Energy Return on Investment Ratio. That makes oil the king.
To destroy the Harvard (and obviously a few others like Princeton, etc) Economics Department you first have to destroy the Harvard Theoretical Physics Department. They are quite smug in their belief String Theory is the only game in town, so there is a point of attack. I did not say its easy, or even possible in principle but that and studies in Nuclear Engineering is really the only effective means of survival. Either discredit the existing university hierarchy through some remarkable achievement in theoretical physics or dust off the engineering texts and start learning nuclear theory.
Germany proved advanced conventional weapons are of no use.
Charlie,
Your reference to physics intrigues me. Would you care to amplify your thoughts on that subject for me? I’d appreciate it.
Damon mentions the setup benefitting Bank of America in the 2008 Great Heist. I still think its small potatoes compared to the notion that the west should deindustrialize to benefit the earth. That has to be the ultimate scam.
Read more carefully Charlie. I never said benefit BofA. I said benefit the capital holders. BofA is going down.
@ Tim Healy
It matters what you call money if people associate a term with what we have now, which, obviously, isn’t working. What we have now isn’t working not because the currency is not backed by a commodity, thus it is currency by fiat, but because it is issued by the private sector, which has the power to create money digitally based on public debt, then multiplies it ten times over, all of which enables them to collect interest, for essentially doing nothing in return.
Actually, Article 1 Section 8 of the Constitution, which gives to Congress the power to coin money, says nothing about gold or silver. Gold or silver is mentioned only in Section 10, in reference to the states, which are specifically forbidden to coin money. The gold or silver is mentioned only in reference to not allowing any other legal tender. Since it is only the Congress that can coin money, and gold and silver is not specified in Section 8, I think the Constitution is rather ambiguous on the topic.
For a successful fiat money system issued by the government to be possible, we’ll have to first have a new government. Monetary reform will not happen until the election process is reformed so that the people in Congress are not puppets of private interests, like we have today. I think this will require getting the money out of politics.
Mary Rose,
Do you really think that a government monopoly on fiat money will bring a different result than what we have today. A monopoly is a monopoly and compulsion is compulsion no matter who is pulling the levers. The dynamic is the same and the freedom and property of people will be at the mercy of those controlling the money creation.
Does it really matter who is given this money power? Won’t they, be they bankers or government officials, be inclined to enhance their own power and wealth at the expense of the people and subvert and control the ‘democratic process’ to perpetuate their own power? Do like causes (monopoly and force) produce different effects? A rose is a rose is a rose.
Human nature is what it is no matter what monetary system is in place.
Government for the welfare of the people is a necessity. We have to have a means of exchange sanctioned and protected by the government, which is out of our control at present. The root cause of our problem is not fiat money; it’s our out of control government.
@Mary Rose
Check out Damon’s videos about the velocity of money/power vortex and how it affects our daily lives. Ever wonder why both parents HAVE to work now? Monetary policy dictates power. If you control the issuance of it, you have the power no matter who’s in the government as they can easily be bought or over-thrown.
Fiat money allows govt and banksters to run out of control as there’s no accountability while the inflation tax is passed down to us in less purchasing power. Check out the history of fiat money going all the way back to Rome and Kubla Khan.
Ranallo, fiat money is not what creates the vortex/velocity problems. It’s debt-based money held on private balance sheets where the private capital holders demand perpetual ROC that drives increasing velocity.
Mary Rose,
Our out of control government got out of control largly because of fiat money. You cannot control the purse strings of government as long as a government can create fiat money. With fiat money we have the ultimate taxation without representation as the government can confiscate your wealth by the simple mechanism of diluting the value of every one of your dollars by simply creating and spending more fiat dollars. It matters not whether the government creates the fiat money itself or turns to the Fed which the government itself created.
If you had put some money in a jar and put it away for safe-keeping in 1970, every dollar of that money would have a purchasing power of one dime today as compared to when you put the money away. Fully 90% of your purchasing power would have been stolen. I was around in 1970 and so know that this is true. This is what always happens with fiat money “sanctioned and protected by the government”.
By the way, had you purchased gold for about $50 an ounce back then it would be worth about $1300 dollars an ounce today. But of course you wouldn’t have wanted to do that, because gold is not “sanctioned and protected by the government”.
Tim said “It matters not whether the government creates the fiat money itself or turns to the Fed.”
The difference between the 2 couldn’t be bigger.
Tim: You should listen to sister Mary Rose. She knows best. You say there’s no difference between private and Gov’t fiat. You’re only correct in that our government itself has been usurped by private bankers and can’t run itself, much less the nation. Amend your statement to reference a *sovereign* government and I’d be more inclined to agree.
If you’re saying there’s no difference between the fiat money of a free, democratically elected sovereign government and the fiat money of an elite crime oligarchy (like we have now) and you reveal yourself as one who’s lost that lovin’ feeling.
George Washington didn’t give up, nor should we. The American dream can work but we might have to slap the zombie around a little to keep it awake.
@ Ranallo
I’m not sure what you mean.
What do you advocate?
I’m not sure what I advocate in the NEAR term as these videos/lessons are reshaping my thoughts about how to tame the current system, which will probably never happen in my or my children’s lifetimes. It seems govt and the people will need to come together to transition out of this predator/prey relationship with the large capital holders. Iceland may be a model. We’ll see.
In the long-term, I’m for decentralization of power as close to the individual as possible where sound money, voluntary exchange, rule of law and peace drive our daily lives. Each “city-state” would be allowed try whatever it pleases be it communal-ism or a stateless society as long as people are free to move. I’m against the monopoly of force and believe we need to move past the God of Abraham to truly find self-transcendence on a mass scale.
Check out Damon’s Renaissance videos to learn more about the “velocity of money” and “money as debt” – http://www.csper.org/renaissance-20.html. If you’ve seen those and understand how money/economics shapes our day-to-day behaviors, then you’re all over it:-)
“. . . how to tame the current system, which will probably never happen in my or my children’s lifetimes.”
Wow.
I’ve been thinking about that lately. It seems to take centuries to get things done.
I hold this truth to be self-evident: state-chartered corporations was a bad idea.
It took our Founding Fathers about ten years to wrest sovereignty from England and set up a banking system. We’ve tried several versions of central banking now wherein the control of money was left to private interests, thinking they’d act in the nation’s best interest. They haven’t.
It should therefore be self-evident that banking is a necessary function of Congress. If we can’t trust Congress to keep their grimy hands out of the till, we need to change the way we elect our Representatives. If our elections are corrupted by corporate interests, we need to cut the grimy hands off of the greedy corporations. That can be done by fiat.
Fiat is a GOOD thing when the sovereigns doing the fiating are the People. Corporate charters should only be granted by fiat of the People.
If, as many here are stating, the Constitution of the Republic of United States is incapable of creating and administrating a sound economy, the Constitution needs Amendment.
A good place to start amending the Constitution would be to clarify what “citizen” means and limit its protections and duties to that class of being. Groups of citizens should have no inherent rights beyond those granted to its individuals, individually. Contrarily; groups of citizens should be closely watched to insure they don’t pose a threat to national security (that means banks and multi-national corporations especially).
Let’s drop the theories and labels and just look at the mess we’re in, in terms of common sense. It ain’t working; and we all know why. Big shots in control of vast supplies of Other People’s Money have usurped the US Government; and by the leverage of US military might, the majority of foreign governments, too. Foreigners can’t fix this problem; it’s ours, and ours alone, to deal with.
Damon is already implying that the status quo is untenable. I think so too. Privately managed banking has brought us to the brink of global insolvency because the corporate culture has no love for the humanity it is supposed to serve. The *Corporation* knows only to “profit and grow”. Corporate managers know only to serve the *Corporation*. Congress must therefore be suspended long enough to institute an Amendment declaring corporate charters illegal, their funds confiscated, and the Treasury placed in control of monetary policy. This can be done by military coup, violent popular uprising, or a groundswell of voter outrage. Let’s choose one of the above and get on with the campaign.
Jefferson warned us. Every twenty years.
You make some good points William and I agree, “Let’s choose one of the above and get on with the campaign.” I suspect that our greatest hope of invoking the needed changes may be at the state level with publicly owned state banks. Washington and Wall street are very difficult to change as they do not represent the interests of the people and are unaccountable.
Our voices are louder at the state level and a priority should be for states to financially decouple as much as possible and end their full dependence on the national government. The private banking cartel’s monopoly to create money can be broken at the state level. Once one state takes the plunge (in addition to North Dakota), I think you will see many other states follow in a true grass roots effort.
The Federal Reserve system can only exist as long as people remain ignorant; once the cat is let out of the bag via state banks, the usury and tyranny of the Fed will end.
Larry
“The Federal Reserve system can only exist as long as people remain ignorant; once the cat is let out of the bag via state banks, the usury and tyranny of the Fed will end.”
Speaking of people remaining ignorant; my crystal ball received a pop-up image of disgruntled Tea Party activists of the near future, having failed to change anything in Washington, turning their focus to matters of banking and big business. I’ve been poking and prodding them at the local level to change their focus, with little success, but aside from labeling me as a “progressive” they’re not totally pissed at me either. They don’t understand the financial dynamic because they don’t want to be distracted from their current mission of restoring the Constitution (and religion). When they find out that Congress doesn’t control anything they’ll use their mandate to attack the FED and the UN. I think now is the time and this is the nucleus of a movement to educate and direct that attack. I think constant reminders of pre-war German economic conditions would serve to avoid our making the same mistakes in our own response. I think economic education should include constant references to Jefferson and his role in the drafting of the Constitution, along with concrete examples showing where he was right and what happened when we ignored his warnings. You probably already know what else I think.
William,
Although I applaud your recognition of the individual, I question your assertion that individuals are “granted” rights. Who is it that grants these rights? And where did this person or persons get their authority to grant anyone rights? It seems to me that Jefferson and the others believed that “All men (humans) are created equal” and are endowed at birth with “certain inalienable rights”. According to the men who wrote the Constitution, the individual human is sovereign, not any government.
The government serves at the pleasure of and is the agent of the people and is not itself a sovereign and has no right to abridge the rights of any sovereign individual. And no human is sovereign over any other human. So tell me, in light of these thoughts, how you can so blithely assert that “Fiat money is a GOOD thing” What right can any group of citizens or the government have to tell me what I have to accept as money or payment? After all, you yourself have said that ‘groups’ shouldn’t have any rights. They certainly shouldn’t have any more rights than the individuals who comprise them and, therefore, no other individual has the right to dictate to any sovereign individual any fiat that infringes upon his liberty.
You seem to fear corporations but want to invest the same powers wielded by corporations in the ultimate monopoly corporation….the government.
“So tell me, in light of these thoughts, how you can so blithely assert that “Fiat money is a GOOD thing” ”
I’ll re-state that for you blither form: Fiat money could work quite nicely if honestly administrated by a functional democracy.
In the light of your thought process I can’t see how anything would make sense. Your thoughts seem to go on into infinite circles of word-driven contradictions. Try taking simple statements at face value without parsing everything and you’ll probably find something of substance to learn from these discussions. Our Founders didn’t go off on intellectual theorizing and word-parsing in the Federalist Papers but connected with the real world of common people by common sense reasoning. Some things are just “self evident” and if you don’t get that, then there’s no point in going further. Adults just “get it” without re-defining “is”. The available choices usually boil down to Shinola and that which is not Shinola. Pick one.
William,
Very blithe indeed.
“Who is it that grants these rights? And where did this person or persons get their authority to grant anyone rights?”
Under constitutional democracy, citizens grant sovereignty to the government and the government grants rights to the citizens. That’s why they call it “of, by, and for”. Simple really; perhaps you forgot in all the confusion of your intellectualizing.
“What right can any group of citizens or the government have to tell me what I have to accept as money or payment?”
Sovereign power was invested in the US Government by our forefathers when they ratified the Constitution. If you don’t agree, as an individual, you have the right to go elsewhere in the world.
“you… said… that ‘groups’ shouldn’t have any rights.”
I never said any such thing. Pulling words out of context is an old, lame, and transparent game to provoke an argument where there is none. Pseudo-intellectual BS won’t fly in the skies of public opinion so give it up; it serves no purpose to our mission here.
“You seem to fear corporations but want to invest the same powers wielded by corporations in the ultimate monopoly corporation….the government.”
How can you possibly confuse the function and structure of corporations with the structure and function of a government? I can’t believe you said that.
William,
Let us begin at the beginning. Your first words to me are, “Under a constitutional democracy…” The United States of America is not a “constitutional democracy” and never has been. The framers of the Constitution formed a ‘constitutional republic’ and certainly knew the difference between the two.
This is no small quibble. The framers of the Constitution wanted, above all else, to prevent tyranny in any form and knew full well that democracy was simply the tyranny of the majority or rule of the mob, and they certainly knew and wrote about it. The word ‘republic’ comes from the Latin words res (thing) and publica (people’s). The people’s thing here refers to the law. The framers wanted a government based on the rule of law, not the rule of men, as in a democracy. They were fully aware of the tyrannies of the past issuing from democracies.
In a democracy, if I could convince enough people that someone named Falberg ought to be deprived of his liberty or property, it would be done. The same applies to any unpopular group, like the Jews in pre-war Germany, or the blacks in the U.S., or groups with unpopular views.
I can remember when those who opposed the Vietnam War were told, as you have told me, “If you don’t agree as an individual you have the right to go elsewhere.” This, of course, was the view of the ‘silent MAJORITY’. They felt that they, as a majority, had the right to tell those who disagreed with them, “Love it or leave it.” And by “Love it” they meant their majoritarian dictates. Or how about, “Go back to Africa”, after all, we’re the white majority. This is the tyranny of the majority and the framers of the constitution had watched it in action through the pages of history.
As a result of these considerations, they formed a republic and delegated certain powers to that government and ONLY those powers. They wanted a government that secured the liberties of each individual against the encroachments of any would-be tyrants, but most especially the goverment itself. That’s why they wrote the Constitution to “bind the hands” of the government by a public document that circumscribed governmental powers by law (the Constitution). That’s why it’s referred to as ‘limited government’. And that’s why the ‘old order’ were so threatened. Never before, since the fall of the Roman Republic, had there been a notion other than that sovereignty resided with the government and that it was the government (usually kings and princes) who granted rights and privileges.
Now as to this matter, let me simply quote the second paragraph of the “Declaration of Independence”.
“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their creator with certain unalienable rights, that among these are life, liberty, and the pursuit of happiness–That to secure these rights, goverments are instituted among men, deriving their just powers from the consent of the governed…”
Even if you don’t believe in a god, it is abundantly clear from the above words that the founders of the nation did not believe that rights were granted by government. People had sovereign rights by virtue of their very humanity. They had them at birth. It is also clear that the government was formed to protect the individual’s soverign rights, not to infringe upon them. It is the people who grant certain powers to the government and not the other way around.
The founders knew perfectly well that if they as individuals had no right to restrict one another’s liberties, they also had no right to form a government that could. You cannot assign to an agent a power you yourself do not possess. The U.S. Constitution was simply the most radical formulation of government ever designed. It turned the power structure on its head, and this is why the old order has been trying to undo this revolutionary idea since its very inception. And I can assure you, they’re still at it. They want us back under their control and they’ve come a long way toward achieving their goal. As a step in that direction, they’d like us to believe that we are a democracy so that the pesky notion of individual sovereignty can be dispensed with.
Of course those who would have us believe that our goverment is a democracy realize that they can infringe upon the rights of the individual by simply manipulating public opinion…not hard to do if you can control education and the media. That’s why so many people today believe they live in a democracy even though they have been pledging allegiance “to the flag and the REPUBLIC for which it stands” since childhood. Tyranny cannot live in a constitutional republic nearly as easy as it can in a democracy where public opinion is sovereign and can be manipulated, as Goebbels knew so well. Remember, everything Hitler did was considered legal because he had majority opinion behind him. He was elected by a majority and there was no constitution such as ours to stop him.
Now a corporation is a group of people who organize around a governing structure and act as a single body in order to achieve some goal. This goal is usually to enhance the power and wealth of it’s members. It’s members are also shielded from personal liability. If it could be achieved, most corporations would like to become monopolies. Surely you can see here certain parallels with a government which is in fact a corporate entity.
I would have the power of all corporate entities restricted to the extent that they cannot interfere with the people’s sovereign rights to pursue life, liberty, and the pursuit of happiness. If I am radically out of touch here, so was Thomas Jefferson who wrote these sentiments in the above quoted Declaration.
@Tim I agree.
Ah – HA ! You caught me! Boy am I stupid!
Here’s another tit for your tat:
“they cannot interfere with the people’s sovereign rights to pursue life………”
People don’t have sovereign rights – they have Constitutional rights. Our Government (used to) have sovereign power. Should I launch into a full-page high school civics lesson to explain the correct use of those words ?
No, I wouldn’t insult your intelligence. I feel childish even replying to this provocation but your endless pontification is becoming annoying; at least to me. I could say something about your lack of respect, but I won’t do that either; you’d only write another page of pedantic drivel.
You could do yourself and the rest of us a big favor by restricting your remarks to the subject at hand: runaway banks.Try to think of something that has real substance before you type. Do you have any suggestions relating to a solution?
@William He’s correct though. A rebuttal, point-for-point would be interesting.
Well William,
How you can read the words of the “Declaration of Independence” where it clearly states that people are endowed with unalienable rights by their creator, and that goverments are formed to secure these rights, and say that these rights are granted by the Constitution is certainly surprising to me.
The Constitution was written by a man. Does that mean that a man granted me my rights? Surely this is so, as I doubt that the paper and ink which comprise the Constitution decided to grant me rights. If so, a man can take away my rights. This is the very problem with your position. Which gets back to my original question in my first posting to you that started this dialogue: Who grants me my rights and who has the right to abridge my rights? According to you, it’s men, just like you. Apparently, all you have to do is write it down on a piece of paper. Parchment might make it look a bit more official.
I hope that someone reading these exchanges takes something away from them. Apparantly you have not. ‘Tis a pity.
There is a candidate for governor in Florida, Farid Khavari, who has on his platform a state-owned bank. He calls it The Citizen’s United Financial Institution. I hope he wins!
http://www.khavariforgovernor.com/state-bank/
Update from My Community: The election results are in, and 25% of the voting public bothered to cast a vote. The only reason to bother showing up was to oust the incumbents who where giving themselves significant pay increases because they are VIP’s afterall! All the elected officials are spreadsheet warriors with utter contempt for the productive citizen. Nonsense projects to fuel tax hikes. This is community. I can’t wait for the fascists to take over.
@ Charlie
Wow! So sarcastic!
Ellen Brown has posted a new article entitled “Time for a New Theory of Money.”
http://www.webofdebt.com/articles/new_theory.php
Ellen Brown: “The Bank of North Dakota, currently the nation’s only state-owned bank, is rated AA and recently returned a 26 percent profit to the state.”
Thats all I need to read. Who is highly valued in Ellen Brown’s Great Public Central Bank? Why of course, the same bunch of cretins who have led us to this sorry state of affairs. Surely, the public bank will hire a Chief Investment Officer to make sure those profits are wisely invested, correct? And no doubt hordes of accountants, lawyers, real estate wizards, insurance, rating agencies, and so on.
Its funny, now that austerity is looming, a bunch of these crooks want to reinvent themselves in Public Banking.
Try auditing the Bank of North Dakota. Thats just it, you the citizen can’t. So Ellen Brown basically says: “Hey, we’re honest, not like those private banker dudes”. Pablum for the great unwashed.
Charlie, while ignoring the facts and substantive dialogue, you’ve consistently shown the narcissism and divisive contempt typical of the stooges serving the system. Hmm…
The vortex of state public banking is the state’s monopoly over gambling and regulated drug dispensing. The notion that the profits are distributed to the people is nonsense because it simply gets cycled back and then some right back into the state central public bank. However the vast majority of profits are skimmed off the top with the public never knowing what accounting is real. See how anything is possible with the accountants? Then they get one of their crony accountant firms to “audit” the official central public bank and naturally come to the conclusion: “No hanky panky here sheeple, go back to gambling and toking up on dope”.
I think it’s hard to distinguish the operatives from the cynics.
Charlie,
What would you propose?
What’s going on with comments?
When I post a comment now, it populates in the wrong place – out of sequence.
I apologize to Damon Vrabel and Ellen Brown for my recent conduct. My comments didn’t make any sense and it was borne out of frustration. I will stop posting and simply watch the videos and articles.
Yeah, how dare you?
Anyways, Tim asked you about your reference to physics and I too am interested where you were going with that, care to explain?
This is a test to see where this comment populates.
Is the following an accurate description?
The Fed takes the government’s promise to pay and uses it as collateral to loan ten times that collateral. The interest earned in this system are profits made in return for doing no work and performing no service. The loans issued in this system are where our money comes from; thus, the volume of money is created by the Fed. When the volume of money exceeds the productivity of the people, we get inflation. So, inflation is unavoidable in a system that allows earning money for doing nothing, which of course results in an excess of supply of money over demand for the exchange of goods and services.
The Fed is a cartel mechanism just like OPEC. It is the governing entity set up by the members, i.e., the banks, who wish to control monetary matters to the benefit of themselves..
The Fed is not limited in the amount of money it itself can create. In the last couple of years it has doubled the money supply, some of the new money going to foreign institutions. You can go to Youtube and find video of Congressman Grayson of Florida unsuccessfully trying to find out to what foreign parties this newly created money went. The Fed simply refuses to disclose where the money went. So much for Congressional oversight.
When the Fed buys treasury debt from the Federal Government, it receives the bonds, putting the taxpayer in bebt at interest, and simply creates the new money by computer entry into the account of the U.S. Treasury. The Federal Government then spends the money into circulation by writng checks and making direct deposits to various banks. Either way, the new money ends up in banks.
It is in the banks that the fractional reserve expansion of the money supply takes place. Most people believe that banks loan out the money of their depositors just like George Bailey did in “It’s a Wonderful Life”. But this is not the case. The bank puts any new money received in a reserve account with the Fed and then is able to create loans at a multiple of the amount of the reserve deposit, depending upon what the current reserve requirement is. But it doesn’t just end there. As the new loans circulate, they themselves become deposits in other banks and other banks’ new loans become deposits in the original bank and as all of these new loans are deposited into the various banks they become the reserves for new loans and the process can continue, as long as there are borrowers, until many times the original amount of the new money created by the Fed is introduced into the economy as debt money. This process can continue until the small amounts of money put away as reserves in each new round of loan creation finally attenuates the process.
The banks didn’t get all of their wealth and power and those great shiny bank towers by simply borrowing from depositors and lending out that money at a modest spread like good ol’ George Bailey. They got it by stealing the purchasing power of the citizenry and loaning it back to them, after they loaned it at prime rates to their “special customers and associates”, of course. To put it in plain English, banks steal our money from us and loan it back to us at interest, putting us in their bondage. Nice racket, no?
I would just like to add, my dictionary defines inflation as “an increase in the volume of money and credit”. Inflation is not a rise in the price level as the bought and paid for economists and talking heads would have us believe. The rise in prices is the result of inflation. In an economy using honest money prices would naturally tend to fall, as productivity rises, putting more purchasing power in the hands of we who create the wealth. But the banks, in their infinite wisdom, have decided that the increased purchasing power, and then some, should be stolen from us and lent back to our now impoverished selves at up to 30% interest. Night after night we see folks like Ben Bernanke on the media telling us how inflation is natural and good for the economy. It was Joseph Goebbels, Information Minister to the Third Reich of Germany, who told us that a lie told aften enough will be accepted by the public as common wisdom. History certainly bears him out.
@Tim
Did you see the link Tao provided about how the Fed process of money creation and fractional reserve credit/lending is being circumvented by banksters? (Link below.)
It’s definitely a smoking gun IMHO and lends more credibility to Damon’s take on “ending the Fed” and “bankrupting banks” not doing any good as the senior capital pools don’t need the Fed and will be protected by commercial laws. A rebuttal could be that we need to eliminate corporate “personhood” and any laws being used to entrench their interests. Then again, it just shows how deeply rooted these folks are. Only time, the truth and transparency can wrestle power away from them and back into our hands. I’m leaning towards shorter term goals like sound money and less government control even if that means the senior capital pools still rule.
http://www.debtdeflation.com/blogs/2009/01/31/therovingcavaliersofcredit/
From the piece:
“Their empirical conclusion was just the opposite: rather than fiat money being created first and credit money following with a lag, the sequence was reversed: credit money was created first, and fiat money was then created about a year later:
“There is no evidence that either the monetary base or M1 leads the cycle, although some economists still believe this monetary myth. Both the monetary base and M1 series are generally procyclical and, if anything, the monetary base lags the cycle slightly. (p. 11)
The difference in the behavior of M1 and M2 suggests that the difference of these aggregates (M2 minus M1) should be considered… The difference of M2 – M1 leads the cycle by even more than M2, with the lead being about three quarters.” (p. 12)”
Ranallo,
Thank you very much for the link. It’s one of the more interesting articles I have read of late. I especially appreciate Mr. Keen’s empirical approach. Having a scientific background, I like to see arguments backed up by actual data.
Although I have known for some time that the banks were the tail wagging the dog, I wasn’t aware of the aspect of it forming the thesis of this article. I knew that the banks owned and controlled the Fed which was an agency providing legal window-dressing for the banks’ operations, and I have for years watched the changing volume of money and credit aggregates and their relationship to economic activity, but I had somehow never noticed that the expanding volume of credit money was preceding the increase in Fed created money acting as reserves.
In what may seem like a quibble, I would just like to mention that the U.S. government does not itself create any money as this article seems to imply at places. All money in the U.S. is created by the Fed , which is a private central bank, and its member banks. I realize when he uses the term ‘fiat money’ he is referring to money created by the Fed, and when he speaks of ‘credit money’ he is speaking of the credit or debt money created by the commercial banks, but we must not lose sight of the fact that all money in our current system is created in the form of loans, whether by the Fed or by the member banks. And the legality of this money is subsumed under the authority Congress gave the Fed and its members to create this debt-as-money. As this bank money is made legal by a grant from Congress to the Fed, and from the Fed to the banks, it seems to me that it’s all fiat money in the sense that it derives its legality from a government fiat or decree.
But, again, the fact that the banks create money at will and then the Fed backs it up with new money reserves just illustrates that it is the banks themselves that are really running our monetary system. And it is made even more clearly evident by the failure of the Fed’s stimulus efforts as illustrated graphically by the author. It is not the Fed that is controlling the credit markets but the banks who are sitting on their reserves. Do you think Bernanke really believes he’s in charge of the monetary system or is he just putting on a dog and pony show?
The author goes on to explain how a credit money banking system could be created, using what he refers to as “essentially useless money”, that would solve all of the problems of our current inflationary system, with its inherent booms and busts. He also asks how this sort of system can operate without being abused by its operators. Well that does seem to be the question when one observes that all of the banking systems of the world and their governments have been hijacked by pirates.
Damon,
You might find this thread about your video relevant: http://freedomainradio.com/BOARD/forums/t/27931.aspx
Rigour, unfortunately the thread isn’t relevant. Austrian disciples don’t understand money (I’m not saying technical Austrian theoreticians, but some Austrian followers who just repeat talking points from 100 years ago when money was an entirely different construct).
@Ranallo,
Here’s a link to a 2009 piece by Post Keynesian economist Steve Keen. In it he describes how we really have a credit-money system and not a fiat money system, and he links to the 1990 Fed paper that empirically establishes that fact.
http://www.debtdeflation.com/blogs/2009/01/31/therovingcavaliersofcredit/
From the piece:
“Their empirical conclusion was just the opposite: rather than fiat money being created first and credit money following with a lag, the sequence was reversed: credit money was created first, and fiat money was then created about a year later:
“There is no evidence that either the monetary base or M1 leads the cycle, although some economists still believe this monetary myth. Both the monetary base and M1 series are generally procyclical and, if anything, the monetary base lags the cycle slightly. (p. 11)
The difference in the behavior of M1 and M2 suggests that the difference of these aggregates (M2 minus M1) should be considered… The difference of M2 – M1 leads the cycle by even more than M2, with the lead being about three quarters.” (p. 12)”
FYI – the author of the Fed paper won the Nobel Prize in Economics in 2004. Here’s a link directly to the paper:
http://www.minneapolisfed.org/publications_papers/pub_display.cfm?id=225
@Tao
That article is like a smoking gun! Thanks for the link.
I think some of the Austrians get it wrong in their “End the Fed” solution as they think bankers/capital holders are actually following ANY rules at all. Just extend credit…forget those pesky Federal Reserve notes being issued or any reserve/lending standards.
Some Austrians propose that once the Fed cartel dies and is replaced by gold-backed currency that OVER TIME the capital holders power will erode as we’ll slowly eliminate the commercial laws protecting them. Wishful thinking? It is as long as no one understands who’s pulling the strings. These videos sure help.
What does Wendell Berry have to say that Ron Paul and Aaron Russo and Andrew Napolitano are not saying or have not said? If the United States can’t maintain its
national sovereignty and Constitutional underpinnings, then the greatness of this country will disintegrate. President Kennedy had the Treasury issue silver certificates as a way to get around the Fed. Was this one of the reasons he was assassinated? I believe Lincoln tried something similar. The Bank of England sent hit men to the United States to assassinate Andrew Jackson for his opposition to the Second Bank of the US. Central bank monopolistic control of economic planning is a discredited idea. Lucrative for the backers; an embezzlement system for we poor sucker taxpayers. Thanks very much for your website and videos!! You clearly see the dangers. What are the solutions out of this enormous web of deceit?
@Tim,
“Please excuse me for being so tardy with my promised response to your post to me of October 30.”
No worries. And no hurry. These problems are HUGE and started long ago. Solving them will take generations.
“The point I was trying to make in my post to you is that I find it very doubtful that the community that all of us on this blog seem to desire can be achieved by government mandate or legislation.”
“You say that markets are not free but are controlled by certain financial interests. You are right. But then so is government. The fact is that without goverment cooperation the sort of monopoly practices that we see with regard to banking and other corporate interests just could not be established and maintained. I seem to hear people putting our problems in terms of either government or markets. But the fact is that the tail and the rest of the dog are all one body, regardless of which you think is doing the wagging.”
I understand that point, and you’re right in terms of how the “government” is currently constituted, but conceptually, WE ARE THE GOVERNMENT. Each of us is part of the collective, which cannot exist without our consent. Neoliberal rhetoric invites us to pretend otherwise, but each of us is responsible for ceding our power to a system that does not serve us.
That being said, I agree with you that the system that we have today is corrupt and unreformable. We need to get back to the initial principles that informed the republic, but anarchy ain’t one of them. To me, this means taking power away from the Federal government and redistributing it to individual market participants and ordinary citizens alike. There are lots of ways to do this, but the point is to prevent creating a centralized “flag” that can be captured and controlled by those who would subjugate instead of serve.
“I have on several occasions brought up the fact that gold and silver were the original monies decreed by the Constitution of the U.S. I have done this not because I am such a ‘gold bug’ but to illustrate how the framers tried to circumvent exactly the situation we find ourselves in today.”
The framers were pragmatists, but they were far from prescient. The Constitution as it finally wound up was full of so many untenable compromises (e.g., those regarding slavery) that it is surprising the country lasted as long as it did without a civil war. I should go back and review the debates about the money provisions, but I am pretty sure that the provisions regarding money were informed by what was experienced during the Revolutionary War (e.g., British counterfeiting) and the debt overhang to veterans that resulted.
“Money is not just the tail wagging the dog, it IS the dog and IT is wagging the tail (government). Is this not what Keen’s article implied?”
Only if money is created through extending credit. The problem is that people confuse debt-money with fiat-money. But we don’t have fiat-money, which can work just fine.
“Part of the problem is that the banksters’ scheme operates with the complicity of large numbers of people who feel they are benefitting. Of course there are the many prostitutes serving in all three branches of government and the hoards of lawyers and economists who are handsomely rewarded for their complicity. ”
You’re preaching to the choir. What I’m focused on right now in real life is trying to turn the tide against a Supreme Court decision from four years ago that I view as endangering property rights owned by anybody other than corporations. To accomplish this, I’m going to have to interact with lawyers and economists (several of whom I already know) that, from what I can tell, have actively worked to achieve this kind of result (although they may not understand all of the potential consequences). It ain’t easy trying to figure out how to get through to these people from within the system, but that’s what I’m trying to do.
“So what we have here is a reverse Robin Hood situation where the rich are stealing from the poor. And I don’t think I have to tell you that it’s the rich who have the juice when it comes to government. It seems to me that as long as so many people are willing to profit by the banksters’ plunder, that talk of government solution rings a bit hollow.”
Agreed on all points. The last point, though, can be fixed, provided that we redistribute a lot of the power that the federal government has accrued back to the individual. Of course, this will require reaching a point where the federal government sees no alternative but to cede a lot of its power. We’re getting there, but the dominant memes (e.g., Austrian) want to merely transfer that power directly to private banking cartels instead of down to the individual citizens.
“So my question to you and others, Tao, is how are we going to get a moral government out of a nation inhabited by people who want to get something for nothing? Can you make a silk purse out of a sow’s ear?”
First, as an aside, why do we accept amoral/immoral corporations while demanding a moral government? Shouldn’t every market participant behave morally as the price for being allowed to participate in the market? Neoliberalism seems to expect morality only from people who contractually owe debt . . .
The goal has to be to take discretion away from the federal government so that their morality is irrelevant. This means creating a new legal system dominated by market-based “strict liability” offenses that government merely confirms/denies. The legal and regulatory system that we have today simply won’t work, but we have to understand that the system we have today is hugely different than what existed in 1789. The system evolved to deal with shortcomings of prior instantiations, and it needs to evolve again.
Anyway, I very much appreciate your thoughtful response, and I hope I’ve responded well enough to engender a new round of thoughts and challenges from you. I’m learning a lot from this conversation, and I like being pushed to clarify my thinking.
I look forward to your response.
Tao,
When one peruses the pages of history, one cannot escape the fact that all civilizations at all times have tended to centralized tyrannies, regardless of initial conditions. Whether it be a democracy (Athens), a republic (Rome, America), or a socialist state (Russia, China) tyranny and/or empire has always resulted in short order. It seems that a central question to be answered before any solution to our current problems be proposed is: why have civilizations for the past 6000 years of recorded history been overwhelmingly tyrannies of an elite? 6000 years of history is a lot of empirical testimony. Why this constancy? There can be no viable solutions to perceived problems unless the causes are properly understood.
“……..one cannot escape the fact that all civilizations at all times have tended to centralized tyrannies,……………………….There can be no viable solutions to perceived problems unless the causes are properly understood.”
I’ve been thinking about the same thing and coming to wonder if we’re still evolving – from pack hunters to herd grazers – and these disparities in human nature are all evidence that the transition is still in progress with both “species” trying to co-exist. (?) It helps (at least for me) to rationalize the existence of good and evil. It’s all really too hard to figure out but if I come up with a better theory I’ll post it here.
BTW: Reading our last exchange from the end of October I had to laugh. I can be a real jerk sometimes. Sorry. It was nothing you said, it was what I heard. Hying off the flandle in rits of jage is just me resisting change. I’ll try harder to be better in the future. This whole discussion is a lot to digest in one gulp.
To all: I DO appreciate the intellectual babysitting. Thank you.
@William Respectable.
Your presentation and explanation work well with me, though I have a pretty good understanding of the doomed financial system. The fact is some kind of redistribution is never going to happen, quite the opposite in fact. The system is going to collapse, because we have insufficient planets to exploit. So you might as well explain the banking / financial system along these lines, it’s so much easier:
Good enough for a 5 year old to understand. An adolescent may get extra benefit from a few of your flow charts.
Your presentations are just mental masturbation, unless you can suggest an answer. But we all know the franchise holders are not going to let go of their control grid. We are near the end!
Damon,
Could we put the banks through bankruptcy if we brought back Glass-Steagall first? In other words, seperate the gambling debts off into speculative banks and keep people’s savings safe in commercial banks, as we used before 1999?
Thanks
Judge Napolitano on the Fed and banking:
Some guy Farid Khavari is going to help Mary Rose. Just because he says so. There should be a competition for who can come up with the most silly public bank name to fool the clueless. Here’s my entry: The “I Love Ya Public Bank for Good Honest Working People”.
“…ignoring the facts and substantive dialogue”
Thats because accountants never deal with facts or anything of substance. I can think of 101 ways of creating an accounting vortex to gain financial power. All you have to offer is “We’re honest accountants”.
No such thing.
P.S. Too bad about free speech. Oh well, another casualty of “public” banking.
another helpful comment.
everyone, I’ll try to keep operatives off my forum if I launch one.
Damon,
“Ranallo, fiat money is not what creates the vortex/velocity problems. It’s debt-based money held on private balance sheets where the private capital holders demand perpetual ROC that drives increasing velocity.”
I think I’m getting close to fully understanding here.
So, you’re saying it’s the power to demand ever increasing ROC that creates velocity and not the currency manipulation itself. I can see this when I meet people proudly giving up family and community to consult around the world for major coin.
However, I’m seriously hung up on inflationary environments that debase currency making people need more of it to maintain their current standard of living. Inflation makes people work harder for less. That’s a fact. However, I think you’re saying that’s just a symptom. Over-riding that phenomenon are the infinite demands for more ROC that drive grandiose debt-driven speculation, which result in crises as “black swans” happen. These “crises” are covered up by inflationary practices. Inflation wouldn’t be necessary if the drive for perpetually increasing ROC were gone.
I’m also hearing from this thread (Tao in particular) that banks don’t wait for the Fed to create money deposited into their accounts to enact fractional reserve lending multipliers. They do it regardless of money being created or not.
Am I close?