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Today’s Contemplation: Collapse Cometh XCVIII–‘Inevitable’ Growth: Helping To Keep the Profiteer Gravy Train Pumping

April 13, 2024

Today’s Contemplation: Collapse Cometh XCVIII

February 7, 2023 (original posting date)

Monte Alban, Mexico. (1988) Photo by author.

‘Inevitable’ Growth: Helping To Keep the Profiteer Gravy Train Pumping

The following are two brief comments (followed by a couple of shorter responses to others) I put out on one of my town’s FB pages regarding the ongoing conversation/debate around a proposed 18-story apartment complex along our main street. This is a very controversial plan given the fact that buildings have been limited to 6 floors for decades and brings to the surface the insane speed with which development has been occurring in our once small town with the moniker ‘Country close to the city’ — which most laugh at now given the ongoing loss of ‘ruralness’ once felt/observed. This community on the edge of the Greater Toronto Area has grown from around 13,000 in 1995 (when my wife, newborn, and I moved to a spot overlooking a kettle lake 10 minutes north of the built-up centre) to close to 50,000 presently with plans to continue expanding at a 5–10% per annum clip for as long as possible. For anyone who has ever seen the television series Schitt’s Creek, several of the buildings seen in the show exist along our main street (e.g., the veterinary clinic) and the main buildings are located in the town of Goodwood ten minutes east of us.

Everybody keeps going on and on about how we need to increase significantly the supply of housing to keep prices affordable but this is not at the root of this issue. That rather facile explanation is the one being leveraged and marketed by the profiteers (especially developers and banks, and facilitated by politicians eager to look like they’re doing something ‘positive’) to expand their cash cow of ever-expanding ‘development’ — regardless of environmental impacts and finiteness of resources.

These unaffordable prices are primarily the result of gargantuan money creation (i.e., credit/debt) by financial institutions (banking and shadow banking) to support (at least for a bit longer) the Ponzi nature of our monetary/financial/economic systems.

Much of this newly created ‘money’ is sloshing around in the system looking for assets with the best returns and what better avenue than parking it in housing — much of which is being bought up by the rentier class (especially the ‘investment’ industry who suck up most of the supply).

Take a look some time at the enormous exponential increase in debt/credit instruments over the past few decades — all of which are potential claims on future resources (particularly energy) that have encountered significant diminishing returns.

This will not end well…

The ‘growth is inevitable’ narrative that some are repeating here must be challenged. Pursuing growth is a conscious choice and one being made and repeatedly propagated by those who stand to profit the most from it: the ruling caste of society who market it as purely beneficial and ignore or rationalise away the negative aspects. This creates an Overton Window that limits our thinking and thereby beliefs.

Limits to growth and the significant negative consequences of such growth (e.g., ecological overshoot) are real. While such repercussions can be ignored/denied/bargained with, the very real biophysical impacts continue on and compound regardless of our beliefs or wishes.

The speed with which growth overwhelms systems is not something to wave away via denial or bargaining through magical thinking (i.e., some as-yet-to-be-hatched technology will ‘solve’ our resource woes and toxic legacies). While growth can be perceived to have some good intentions, as the saying goes “The road to hell is paved with good intentions.”

We are putting at risk not just the overburdened planetary sinks that help to absorb and cleanse the pollutants created by our expanding industrial processes, but also the finite resource stocks — especially energy — that we depend upon for everything. Perhaps more importantly to sustaining a livable environment is the destruction of ecological systems in the wake of our growth. Biodiversity loss (mostly due to land system changes) over the past century or more has been off the charts and puts all species, including homo sapiens, in jeopardy.

And ‘building up’ to densify areas and prevent expansion onto farmland or environmentally-sensitive lands does absolutely nothing to eliminate the above issues. The sinks and stocks continue to be affected at almost the exact same rate. It is the continued growth that is the problem, not how we accommodate such growth.

For any that continue to believe growth in inevitable and can go on indefinitely (or, at least, for a lot longer before we must confront it), you need to watch the following presentation by the late Dr. Albert Bartlett, a physics professor from Colorado University, on the reality of exponential growth: https://www.youtube.com/watch?v=sI1C9DyIi_8.

You have fallen prey to the mythical narrative the governments, banks, and developers have created around supply and demand impacting house prices. This is not the primary reason. The fundamental reason is all the credit/debt ‘money’ created by the financial institutions and government (mostly financial institutions). This newly created money seeks return and gets funnelled into popular assets, sometimes good ones but oftentimes not (think Non-fungible Tokens, cryptocurrency, or many stocks). Housing is one of the very popular targets for all this ‘money’, most of it in the hands of the ruling elite/caste that buy up the housing stock and then rent it out. When well-off individuals/families and/or investment firms (what some have referred to as the rentier class) have millions/billions of dollars at hand to soak up assets, they sink much in real estate and land thereby driving up the price of these assets. The developers, banks, and other profiteers, however, leverage the rising prices to argue for more of their cash cow: development. They need more land, hence opening up the Greenbelt. They need to build more houses, thus the push to build ‘millions’ of residences. Despite the building binge that has been going on for decades around Toronto, prices have shot through the roof. It’s not about supply and demand.

Disagree completely. Growth is happening to keep our Ponzi economic system going for as long as possible…a bit of a misguided strategy on a planet with finite resources, especially energy. We need to be pushing degrowth, not growth.

Shaving it off at zero would be best. The idea that ‘growth’ is inevitable is another of those notions that needs to be challenged. ‘Growth’ is a choice and one being made by our ‘leaders’ (mostly because the ruling caste profits immensely from it). It is neither inevitable nor beneficial past a particular tipping point when it begins to encounter diminishing returns — to say little about the negative impact any and all growth has on ecological systems.

While ‘printing’ money is a tad inaccurate (the vast majority of new money is loaned into existence by banks and shadow-banking institutions), the primary reason housing costs have ballooned is certainty related to this as you suggest: newly created money is flowing into certain hard assets such as housing. If one includes the derivatives nightmare and other debt-liabilities, the world is drowning in quadrillions of dollars of interesting-bearing obligations. The issue around housing costs is multifaceted and supply/demand is but a very small aspect…but one leveraged as THE one by those who stand to profit from ever-expanding development; mostly the banks and developers. I am reminded of what industrialist Henry Ford stated (paraphrasing US Congressman Charles Binderup):”It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”

What Happens When There’s Nobody Left to Save Us?

March 25, 2024

What Happens When There’s Nobody Left to Save Us?

Passively waiting for centralized powers to “save us” from their own excesses is not a solution.

It’s no exaggeration to say that our way of life depends on somebody somewhere saving us from the excesses that are the bedrock of our way of life. What excesses, you ask? There are none. This is true in one sense: all the excesses have been normalized by previous “saves”: whenever the bedrock excesses threaten to collapse under their own weight, the Federal Reserve or the Federal government rush in to save us from the excesses they’ve created.

Stripped of artifice, the bedrock excess that has been completely normalized is to goose consumption by borrowing from future earnings and resources. As long as growth is eternal, this works great: we can always pay more interest on ever-expanding debt with future earnings because those will be inevitably be even larger than the interest due.

Creating money out of thin air is another mechanism that achieves the same goal: goosing consumption via boosting the value of assets to generate a “wealth effect” that lifts all boats. This is also predicated on the eternal expansion of earnings, so wage earners can afford to consume as new money ceaselessly devalues the purchasing power of existing money (what we call inflation).

The problem is these “saves” only work if the interest rate is eternally near-zero and the costs of production are eternally declining: as long as it costs almost nothing to borrow more money into existence and production costs continue to drop, enabling consumers to afford more goodies even as the purchasing power of their wages declines, then all is well.
…click on the above link to read the rest…

Record Global Debt: A Ticking Time Bomb for the World Economy

February 29, 2024

Record Global Debt: A Ticking Time Bomb for the World Economy

The relentless increase in global debt is an enormous problem for the economy. Public deficits are neither reserves for the private sector nor a tool for growth. Bloated public debt is a burden on the economy, making productivity stall, raising taxes, and crowding out financing for the private sector. With each passing year, the global debt figure climbs higher, the burdens grow heavier, and the risks loom larger. The world’s financial markets ignored the record-breaking increase in global debt levels to a staggering $313 trillion in 2023, which marked yet another worrying milestone.

In the Congressional Budget Office (CBO) projections, the United States deficit will fluctuate over the next four years, averaging an insane 5.8 percent of GDP without even considering a recession. By 2033, they still expect a 6.9 percent GDP budget hole. Unsurprisingly, the economy, even using optimistic scenarios, stalls and will show a level of real GDP growth of 1.8% between 2028 and 2033, 33% less than the 2026–2027 period, which is already 25% lower than the historical average.

Some analysts say that this whole mess can be solved by raising taxes, but reality shows that there is no revenue measure that will fill an annual financial hole of $2 trillion with additional yearly receipts. This, of course, comes with an optimistic scenario of no recession or economic impact from a higher tax burden. Deficits are always a spending problem.

Citizens are led to believe that lower growth, declining real wages, and persistent inflation are external factors that have nothing to do with governments, but this is incorrect. Deficit spending is printing money, and it erodes the purchasing power of the currency while destroying the opportunities for the private sector to invest. The entire burden of higher taxes and inflation falls on the middle class and small businesses.

…click on the above link to read the rest…

The Era of Easy Money Ruined Us

February 2, 2024

The Era of Easy Money Ruined Us

The rot caused by easy money will only become fully visible when the hollowed out institutions start collapsing under the weight of incompetence, debt and hubris.

We have yet to reach a full reckoning of the consequences of the era of easy money, but it’s abundantly clear that it ruined us. The damage was incremental at first, but the perverse incentives and distortions of easy money–zero-interest rate policy (ZIRP), credit available without limits to those who are more equal than others–accelerated the institutionalization of these toxic dynamics throughout the economy and society.

Fifteen long years later, the damage cannot be undone because the entire status quo is now dependent on the easy-money bubble for its survival. Should the bubbles inflated by easy money pop, the financial system and the economy will collapse into a putrid heap, undone by the perversions and distortions of endless easy money.

Easy money created destructive, mutually reinforcing distortions on multiple fronts. Let’s examine the primary ways easy money led to ruin.

1. The near-zero rate credit was distributed asymmetrically; only the wealthiest few had access to the open spigot of “free money.” The rest of us saw mortgage rates decline, but we were still paying much higher rates of interest than corporations, banks and financiers.

If we’d all been given the opportunity to borrow a couple million dollars at 1% and put the easy money into bonds yielding 2.5%, skimming a low-risk 1.5% for producing nothing, we’d have jumped on it. But that opportunity was only available to banks, the super-wealthy, corporations and financiers.

The charts below show the perverse consequences of offering the wealthiest few limitless money at near-zero rates while the rest of us paid much higher interest. The wealthiest few could buy income-producing assets on the cheap at carrying costs no ordinary investor could match…

…click on the above link to read the rest…

The schizophrenic understanding of money in economics

April 3, 2023

The schizophrenic understanding of money in economics

One of the great ironies of economics is that, while the public regards economists as experts on money, the issue of how money is created is still not settled within economics.

In 2014, the Bank of England published a landmark paper explicitly rejecting the textbook model of money creation, stating that:

Money creation in practice differs from some popular misconceptions—banks do not act simply as intermediaries, lending out deposits that savers place with them, and nor do they ‘multiply up’ central bank money to create new loans and deposits…

The reality of how money is created today differs from the description found in some economics textbooks: Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits. In normal times, the central bank does not fix the amount of money in circulation, nor is central bank ‘multiplied up’ into more loans and deposits. (McLeay, Radia, and Thomas 2014, p. 14)

Several other Central Banks published related papers, notably the Bundesbank in 2017, which stated that:

It suffices to look at the creation of (book) money as a set of straightforward accounting entries to grasp that money and credit are created as the result of complex interactions between banks, non- banks and the central bank. And a bank’s ability to grant loans and create money has nothing to do with whether it already has excess reserves or deposits at its disposal (Deutsche Bundesbank 2017, p. 17)

And yet, just five years later, the Nobel Prize in Economics was awarded to Bernanke, Diamond and Dybvig for work which, as the “Scientific Background” to the Prize noted, claimed that banks function as “financial intermediaries” which “channel funds from savers to investors, receiving funds from some customers and using the funds to finance others”….

…click on the above link to read the rest…

Inflation Lowered By Investment In “Intangible Goods”

February 16, 2022

Inflation Lowered By Investment In “Intangible Goods”

Inflation ahead will be contained in certain sectors of the economy. How much inflation we see is still up in the air. From a Main Street perspective, people and businesses are saying that inflation is here to stay and is not a short-lived or transient issue. Still, it is also important to remember that as supply and demand have taught us, what goes up can and often does come down. I contend and envision most of the inflation that takes place will be in hard assets and it will be the result of people losing faith in fiat currencies.When money is created or printed it has to go somewhere, and it has been fueling the “everything bubble.” While feeding the “wealth effect” and inequality, a bubble is not necessarily inflationary. All this can be a difficult concept to grasp. The important point to remember is that everything is relevant and values and prices change. Up until now, much of the newly created money has not resulted in massive inflation. This is because it has been diverted from goods everyone needs to live and into intangible assets not included in the consumer price index.

The way people view fiat currencies way be about to change in a big way, they are generally a poor place to store wealth. To be clear, I view the dollar as the best of the four fiat currencies, however, I expect all of them to come under more pressure in the near future with the yen and euro being the biggest losers. The amount of interest in cryptocurrencies and other inflation hedges is an indication many investors are losing faith in the central banks and fiat currencies. The result may be a monetary crisis and chaos that shifts people into tangibles and a self-feeding inflation loop.

…click on the above link to read the rest of the article…

Welcome to the age of cuts

February 8, 2022

Welcome to the age of cuts

The UK government faced a barrage of criticism over its National Insurance hike this week. The tax – which theoretically pays for public services, pensions, and benefits – was in creased last autumn, before the political class became aware of the massive increase in gas and electricity prices coming later this year. However, with cost-push inflation rising across the economy, and with rises in local taxes due to be announced, millions of British households are facing a massive squeeze on their standard of living. This has given more weight to the idea that government should extend its pandemic borrowing until the economy has recovered, rather than raising new taxes at this point.

It goes without saying that nobody welcomes tax increases. Nevertheless, as a consequence of the way this currency-creation system works, the government is rapidly running out of room to manoeuvre. In the UK, around £500bn worth of government bonds are index-linked, so that as the inflation rate rises, so the cost of servicing the debt increases. As James Sillars at Sky News reported this week:

“Interest payments on government debt hit a record £8.1bn for the month of December because of surging inflation… The Office for National Statistics (ONS) said the cost of servicing the country’s £2trn+ debt pile was almost 200% or £5.4bn up on December 2020.

“It is because half a trillion pounds worth of government bonds are linked to the Retail Prices Index (RPI) measure of inflation which stood at 8.4% in December – its highest level since 1991.”

The problem will worsen in the spring as the new energy price cap comes into force, and as prices continue to rise across the economy. This sets up one of contemporary democracy’s greatest flaws. It is precisely during inflationary periods that the people begin to demand more government spending and less taxation…

…click on the above link to read the rest of the article…

Do Not Trust Governments With the Control of Money

November 19, 2020

DO NOT TRUST GOVERNMENTS WITH THE CONTROL OF MONEY

If there one thing that is fairly certain in this life – besides the seeming inescapability of death and taxes – is that once someone is appointed to almost any position in the political and bureaucratic structures of a government they soon discover how important and essential is the organization of which they are a part for the well-being of the nation. The country could not exist without it, along with its increasing budget and expanded authority. This applies to the Federal Reserve, America’s central bank, no less than other parts of government.

The news media has reported that the apparently unlikely appointment of Dr. Judy Shelton to the Federal Reserve Board of Governors probably will be successfully maneuvered through the full Senate confirmation process. Shelton would then sit on the Federal Reserve Board for a 14-year term. Hers has been one of the more controversial nominations to the Fed in recent years, with critics fervently expressing their negative views of her.

For instance, Tony Fratto, a former Treasury official and deputy press secretary under George W. Bush, was recently quoted as saying that Shelton’s appointment would be “a discredit to the Senate and the Fed. It screams. Nothing at all is serious. Not us. Not you. Not them.”

Mainstream Economists Against Anyone for Gold

Back in August of this year, over one hundred academic and business economists issued an open letter to members of the U.S. Senate calling for rejection of her nomination to the Fed. Among those who signed were some economics Nobel Laureates, including Robert Lucas and Joseph Stiglitz. They insisted on her unfitness for such an appointment. Why? They said: “She has advocated a return to the gold standard; she has questioned the need for federal deposit insurance; she has even questioned the need for a central bank at all.”

…click on the above link to read the rest of the article…

ECB v Fed

June 27, 2020

ECB v Fed

QUESTION: Martin,

You mentioned in a recent blog post that the ECB, unlike the FED, can go bankrupt.

Can you explain further?

Not sure where you get the time, energy and resources to research and write all that you do buy it is truly amazing.

Regards,

ANSWER: The Federal Reserve does not need permission to create elastic money. It has the authority to expand or contract its balance sheet. However, it cannot simply print money out of thin air. The ECB is the only institution that can authorize the printing of euro banknotes. The Federal Reserve must back the banknotes by purchasing US government bonds. The Fed buys and sells US government bonds to influence the money supply whereas the ECB influences the supply of euros in the market by directly controlling the number of euros available to eligible member banks. This structure was created because of Germany’s obsession with its own hyperinflation of the 1920s.

Each member state retained its central bank and those central banks issue the banknotes — not the ECB. Therefore, the ECB works with the central banks in each EU state to formulate monetary policy to help maintain stable prices and strengthen the euro. The ECB was created by the national central banks of the EU member states transferring their monetary policy function to the ECB, which in effect operates on a supervisory role.

There are four decision-making bodies of the ECB that are mandated to undertake the objectives of the institution. These bodies include the Governing Council, Executive Board, the General Council, and the Supervisory Board.

…click on the above link to read the rest of the article…

Do Banks Require Savings to Accommodate Demand for Lending?

October 2, 2019

DO BANKS REQUIRE SAVINGS TO ACCOMMODATE DEMAND FOR LENDING?

There is an emerging view held by many commentators that it is banks and not the central bank that are key for the expansion of money. This way of thinking is promoted these days by the followers of the post Keynesian school of economics (PK).^[1] In a research paper by the Bank of England’s Zoltan Jakab and Michael Kurnhof, they suggest that

In the intermediation of loanable funds model of banking, banks accept deposits of pre-existing real resources from savers and then lend them to borrowers. In the real world, banks provide financing through money creation. That is they create deposits of new money through lending, and in doing so are mainly constrained by profitability and solvency considerations.^[2]

It seems that for the researchers at the Bank of England and PK followers the key for money creation is demand for loans, which is accommodated by banks increasing lending. In this framework, banks do not have to be concerned with the means of lending, all that is necessary here that there is a demand for loans, which banks are going to accommodate i.e. demand creates supply.

According to the Bank of England researchers,

In the real world, the key function of banks is the provision of financing, or the creation of new monetary purchasing power through loans, for a single agent that is both borrower and depositor. The bank therefore creates its own funding, deposits, in the act of lending, in a transaction that involves no intermediation whatsoever. Third parties are only involved in that the borrower/depositor needs to be sure that others will accept his new deposit in payment for goods, services or assets. This is never in question, because bank deposits are any modern economy’s dominant medium of exchange.^[3]

…click on the above link to read the rest of the article…

The Silver Series: The Start of A New Gold-Silver Cycle (Part 1 of 3)

September 13, 2019

The Silver Series: The Start of A New Gold-Silver Cycle (Part 1 of 3)

The world has experienced a decade of growth fueled by record-low interest rates, a burgeoning money supply, and historic debt levels – but the good times only last so long.

As the global economy slows and eventually begins to retract, can precious metals offer a useful store of value to investors?

Part 1: The Start of a New Cycle

Today’s infographic comes to us from Endeavour Silver, and it outlines some key indicators that precede a coming gold-silver cycle in which exposure to hard assets may help to protect wealth.

Bankers Blowing Bubbles

Since 2008, central bankers around the world launched a historic market intervention by printing money and bailing out major banks. With cheap and abundant money, this strategy worked so well that it created a bull market in every sector — except for precious metals.

Stock markets, consumer lending, and property values surged. Meanwhile, the U.S. Federal Reserve’s assets ballooned, and so did corporate, government, and household debt. By 2018, total debt reached almost $250 trillion worldwide.

Currency vs. Precious Metals

The world awash in unprecedented amounts of currency, and these dollars chase a limited supply of goods. Historically speaking, it’s only a matter of time before the price of goods increases or inflates – eroding the purchasing power of every dollar.

Gold and silver are some of the only assets unaffected by inflation, retaining their value.

Gold and silver are money… everything else is credit.

– J.P. Morgan

The Perfect Story for a Gold-Silver Cycle?

Investors can use several indicators to gauge the beginning of the gold-silver cycle:

Gold/Silver Futures

Most traders do not trade physical gold and silver, but paper contracts with the promise to buy at a future price. Every week, U.S. commodity exchanges publish the Commitment of Traders “COT” report. This report summarizes the positions (long/short) of traders for a particular commodity.

…click on the above link to read the rest of the article…

Is The Fed Trying To Sabotage Trump’s Re-Election?

August 30, 2019

Is The Fed Trying To Sabotage Trump’s Re-Election?

William Dudley is encouraging the Fed to prevent Trump’s re-election.

Imagine an organization that can grow an economy as fast it can destroy it. This institution can make presidents kings and then transform them into court jesters. The smartest men in a room situated on 2051 Constitution Ave can choose to increase the value of money in your wallet or make it worth less than single-ply generic brand toilet paper.

Well, this is not a fictitious body found in a dystopian novel. It is right here in the real world. It is the Federal Reserve System. Cue The Twilight Zonetheme song.

William Dudley

Burning Down Trump White House

Former New York Fed Bank President William Dudley recently penned a scathing op-ed on Bloomberg News titled “The Fed Shouldn’t Enable Donald Trump.” Dudley wrote that the central bank should refrain from bailing out Trump on the economy. He believes that the Eccles Building must cease enabling the administration by accommodating policy to Trump’s whims, otherwise, he warns, the country risks re-electing the president next year.

Dudley, who served as NYFRB head from 2009 to 2018, stated that his former employer needs to avoid coming to the president’s aid in his trade war with China. The tit-for-tat dispute has escalated over the last month, though both sides are ostensibly returning to the negotiating table. He explained that the Fed needs to send a clear message that it is Trump, not the Fed, bearing the risks and responsibility of the prolonged trade spat.

But the biggest revelation in Dudley’s piece is how far some people would go to stop Trump earning a second term.

…click on the above link to read the rest of the article…

MMT Is a Recipe for Revolution

April 2, 2019

MMT Is a Recipe for Revolution

Historian Stephen Mihm recently argued that based on his reading of the monetary system of colonial Massachusetts, modern monetary theory (MMT), which he cheekily referred to as PMT (Puritan monetary theory), “worked — up to a point.”

One can forgive him for misunderstanding America’s colonial monetary system, which was so much more complex than our current arrangements that scholars are still fighting over some basic details.

Clearly, though, America’s colonial monetary experience exposes the fallacy at the heart of MMT (which might be better called postmodern monetary theory): the best monetary policy for the government is not necessarily the best monetary policy for the economy. As Samuel Sewall noted in his diary, “I was at the making of the first Bills of Credit in the year 1690: they were not Made for want of Money, but for want of Money in the Treasury.”

While true that colonial governments controlled the money supply by directly issuing (or lendin) and then retiring pieces of paper, their macroeconomic track record was abysmal, except when they carefully obeyed the market signals created by sterling exchange rates and the price of gold and silver in terms of paper money.

MMT in the colonial period often led to periods of ruinous inflation and, less well-understood, revolution-inducing deflation.

South Carolina and New England were the poster colonies for inflation, in part because they bore the brunt of colonial wars against their rival Spanish and French empires. Relative peace and following market signals eventually stabilized prices in South Carolina.

In New England, however, Rhode Island for decades was able to act as a “money pump” that forced inflation on other New England colonies until they abandoned MMT entirely in the early 1750s.

…click on the above link to read the rest of the article…

Chapter 6: American, Won and Lost

March 25, 2019

CHAPTER 6: AMERICA, WON AND LOST.

After the United States gained its independence from Britain, it became powerful in the world in two very different ways: as an idea, and as a reality.

‘America the idea’ is a land of freedom and democracy, equality and opportunity, promoting these aspirations and values across the world.

‘America the reality’ is an international power. It was built on genocide and slavery. Today, a carefully managed monetary system allots wealth to those who do no productive work. In the wider world, America destabilizes popular governments, promotes tyrannies, creates dollars to purchase foreign resources for corporate exploitation and sponsors foreign wars to establish new bases of military and financial power.

For a long time ‘American the idea’ successfully camouflaged the activities of ‘America the reality’. Today the camouflage is wearing very thin indeed.

‘America the reality’ became stronger than ‘America the idea’ as the powers of money and corporate industry won out over the idealism and the good intentions of many of its ‘founding fathers’^[1] and of countless others. Central to this development was the adoption of British banking as a way of creating money.

The adoption of British banking by America has an interesting history. After Independence, the American elite opted for the method favoured by their old colonial masters and rejected homegrown approaches to money-creation, some of which had been both just and efficient (see below).

The new elite liked British banking for the same reason it was loved by the British parliament – because it favoured government power and private wealth. The collusion of finance and government power, via circulating credit, is a very resilient form of concentrated power, because although everyone can see the bad effects, few people understand how it works. Governments across the world have since adopted the method for the same reasons: to augment their own power, and to make it easy for their supporters to increase their own wealth.

…click on the above link to read the rest of the article…

Politics Has Failed, Now Central Banks Are Failing

March 22, 2019

Politics Has Failed, Now Central Banks Are Failing

With each passing day, we get closer to the shift in the tide that will sweep away this self-serving delusion of the ruling elites like a crumbling sand castle.

Those living in revolutionary times are rarely aware of the tumult ahead: in 1766, a mere decade before the Declaration of Independence, virtually no one was calling for American independence. Indeed, in 1771, a mere 5 years before the rebellion was declared, the voices promoting independence were few and far between.

The shift from a pre-revolutionary era to a revolutionary era took less than a year. Perhaps no one exemplified the rapidity and totality of radicalization more than Benjamin Franklin, who went from an avowed Loyalist bent on reform to a dedicated, zealous revolutionary at the tender age of 70. (Old dogs can learn new tricks, at least in revolutionary eras.)

Recall that news could only travel as fast as a ship between seaports or a horse on the colonies’ minimalist roads, and it took days to travel between Boston, Philadelphia and New York, and much longer to reach Williamsburg and Charleston and points west. Communications were slow and limited, and this makes the rapid change of the political tide even more extraordinary.

Are we in a pre-revolutionary era? Here’s clue #1: politics has failed. When the political process can no longer fix what’s broken, politics has failed. When entire classes of citizenry no longer feel represented, politics has failed. When the system delivers a steadily declining standard of living to the bottom 80% of households, politics has failed.

Clue #2: having failed, the political machinery passed the baton to the central bank, which attempted to fix what’s broken by creating money out of thin air.

…click on the above link to read the rest of the article…

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