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Dylan Grice On What Weimar Republic Popular Delusions Can Teach Us About Japan's Upcoming Hyperinflationary Bankruptcy

Tyler Durden's picture




 

Dylan Grice loves debunking popular delusions. Perhaps that is why he has picked precisely that phrase as the title of his periodic research piece at SocGen. In his latest piece Dylan asks a question so simple and profound that it should immediately force all Keynesians to provide a definitive answer, or else they should all be fired for being nothing else than card-carrying shamans of the world's most destructive religion (and if you thought the Catholic Inquisition was bad, you obviously have never been drawn and quartered by four of Bernanke's most vicious and bloodthirsty printers). Here it is: "For all I know, Keynesians might be even right in thinking policy makers can fiscally jolt economies back to life, allowing them to recover back to their ‘default mode.’ But their assumption is that ‘default mode’ is positive growth. But what if it isn’t? What if the ‘default mode’ is falling output because the population is declining? Japan might just have spent the best part of twenty years trying to fiscally stimulate its way out of a demographic compression. If this is correct, and population decline has blown the hole in Japan’s government balance sheet there’s still plenty of damage in store because the demographic compression isn’t over yet." Zero Hedge has long contended that Economists dwell so high up in their ivory towers of (flawed) theoretical construction, that they always ignore the simplest things that have the most profound systemic impact... such as demographics. Consider the creation of the Social Security Trust Fund, which would have been perfectly solvent in perpetuity... If only people died quietly as they were expected to do so in 1930s, some time in their mid- to late-60s. Now it is insolvent. Keynesianism, as an economic theory itself, is an anachronistic artifact of another time. As such, Dylan's question is arguably the most critical one that Krugman, Koo, and even the Kretins (sic) from the Fed should answer before they propose any additional and infinitely more destructive theories, and conduct any more failed experiments on a world population of roughly 7 billion people.

From Dylan, on how anecdotal evidence is always wrong, appropriately starting with that most misunderstood topic - the Weimar hyperinflation:

Anecdotal evidence can be a dangerous thing. In 1919 in the aftermath of the First World War, for example, the situation in Germany was about as dire as it’s possible to imagine. Humiliated by the Allies, embittered by the realisation that their leaders had betrayed them, and stunned by the toppling of their Kaiser during the November 1918 Revolution, the streets were seething with violence and anger.

There was no government to speak of as the political anarchy unleashed by the Revolution remained out of control and unchecked. The economy’s productive capacity was shattered too. Since it had been entirely mobilised for war by Hindenburg in 1916, the War’s abrupt end caused sudden and painful unemployment. And that was before the demobilisation of six million traumatised troops from the trenches. Having gambled decades of accumulated national wealth on war, and lost, there was simply no money to pay for the reconstruction of the economy and of peoples’ lives, other than from the printing presses ...

With the benefit of today’s hindsight we know that the Weimar Republic the Revolution bore was stillborn. The economic policies aimed at buying peace with increasingly intimidating political factions succeeded only in causing hyperinflation. The pact with a group of demobilized nationalist troops aimed at preventing communists from hijacking the Revolution (as the Bolsheviks had recently done in Russia) would inadvertently seed the military might which would one day propel Hitler to power and the world back to war.

But in February of 1919 such a bleak future was merely one scenario, and a distant one at that. The true condition of Revolutionary Germany was unknown so the British government sent two officers to Berlin find out. At the Adlon Hotel where they were staying they saw “no sign of want of anything” and noted the hotel’s restaurant was putting on meals “which would have done justice to the Ritz.” A plump lady feeding her dog expensive biscuits at the table made an impression on the two agents. But the explanation as to why there were so few cats and dogs in Berlin (they’d been eaten and their skins used for leather) did not. Indeed any claims by locals of shortages, hunger or starvation was treated as “hearsay” since “there was no evidence, whatsoever, of scarcity or want in the outward impressions we got.” On the contrary, the “mania for dancing” was observed as was the “huge crowd of middle class men and women” in the local bars “… waltzing and foxtrotting and drinking expensive wines.” (see “The Great Disorder” by Gerald Feldman, Ch 3)

The officers came to the calamitously incorrect conclusion that fears over the stability of Germany were exaggerated and partly due to this anecdotal ‘evidence’ Britain would soon back French demands for reparations which were so burdensome, historians now consider them the “continuation of war by other means.” (See Sally Marks “Central European History” page 338) Less than twenty years later the world would be at war again. So much for anecdotes …

So how does anecdotal evidence apply to today, especially run through the infinitely distorted prismatic farce that is the stock market?

Well for starters, it’s very dangerous to use what the market is saying as any sort of definitive truth. A few years ago the market was saying Greece sovereign credit was basically as sound as Germany’s, and that lending 125% of a home’s value to sub-prime borrowers was perfectly sensible.

Fast forward 80 years - would a preemptive visit to Tokyo indicate that, just like in Weimar Germany, things were at rock bottom? Not at all.

A visit to the glitzy districts of Tokyo won’t show that the so-called precariat – the “precarious proletariat” without job security or social security entitlement – has mushroomed to 20 million or 34% of the labour force; that suicide is now the leading cause of death among young men aged 20-44; or that 56% of 15-34 year olds need outside supplements to their salaries to cover mere living expenses. Neither will it show that young men aren’t the only ones who need help to pay for the basics: the Japanese government itself no longer manages to cover its bare necessities with revenues and must borrow just to cover debt service, social security and education (see chart below).

And when discussing the collapse in tax revenues, no piece on popular delusions would be complete without the customary smack down of the Keynesian priests who only know one response - spend, spend, spend: "The best way to revive growth is one of the favourite topics of economists everywhere: “almighty fiscal stimulus” says Richard Koo; “raise inflation expectations” says Paul Krugman; “who cares?” say the rest  of them, “just break this entrenched deflationary psychology which discourages private sector spending, and encourages excess saving.” Fix that macroeconomic malfunction and you’ll fix everything else, they say."

Here Dylen makes a startling observation: namely that even with a declining economy, GDP per worker has actually grown and outpaced that of the US:

The following chart (left panel) shows how sluggish Japanese GDP growth has been since the bubble burst … but how confident are we that our economists have diagnosed the cause of the malfunction correctly? The chart on the right shows that the growth in Japanese real GDP per worker has outpaced that of the US over the last five and ten years. If things are so bad in Japan, how come each worker has grown output more than his/her American counterpart?

Maybe Japan’s macroeconomic malfunction has actually been a demographic compression, and maybe no particular policy – fiscal or monetary, conventional or unconventional – will ‘normalise’ Japan because Japan is actually already behaving perfectly normally. Maybe Japan is what economies which demographically peak look like.

And here we get to the most critical argument that if validated, would refute all of Keynesianism clinically and efficiently.

For all I know, Keynesians might be even right in thinking policy makers can fiscally jolt economies back to life, allowing them to recover back to their ‘default mode.’ But their assumption is that ‘default mode’ is positive growth. But what if it isn’t? What if the ‘default mode’ is falling output because the population is declining? Japan might just have spent the best part of twenty years trying to fiscally stimulate its way out of a demographic compression. If this is correct, and population decline has blown the hole in Japan’s government balance sheet there’s still plenty of damage in store because the demographic compression isn’t over yet.

Continuing with the demographic shift, specifically an aspect of it which has been undressed extensively previously, is the impact of the aging population on the savings rate.

It isn’t just government revenues which are hit by demographic decline. The government’s ability to fund itself will also be effected since government deficits are funded by Japanese household savings and as households retire they spend their savings. The below chart (left panel) shows savings ratios (actually, “surplus” ratios) as a share of disposable income for various age cohorts and shows that old workers save a lower share of their disposable income than average, while retirees have negative savings ratios. As the population continues to age (right panel) the savings ratio will be increasingly pulled down, leaving less available capital to lend to the government.

Of course, the other impact is that as the bulk of JGB purchases are funded internally, there will be a time when there is simply not enough money to fund the government's spending. Which brings us back to the original point, and attempting to determine if the seeds of the Weimar bankruptcy case study can be seen (granted, deep below the surface), in the Japan of today. Dylan attempts to answer the key question for Japan - when will the country go "broke."

But when will that ‘some point’ be? When will the government no longer be able to fund itself at economic rates (even at 1% yields, debt service is expected to come in at around 43% of revenues by 2010!). I wish I knew, but I don’t see how you can. Most investors I speak to think that even if there is a problem it won’t blow up for some time …. but doesn’t that imply they know when (i.e. a while from now) and how does anyone know that?

We know the single biggest holder of JGBs, the GPIF is selling them. They’ve been very open about it, but you can see it in the Flow of Funds data too (top chart left panel). The reason they’re selling them is that they have to pay for the growing number retirees, a trend we know will continue from here. And we know from Reinhart and Rogoff that one of the early warning signals of government funding pressure is a narrowing of the debt maturity. The vehicle of choice for the Japanese government has been bills, not JGBs (top chart right panel).

There is also another signal to keep track of. One that has recently broken down in correlation with the deflationary trend gripping the country:

A bankrupt government implies default via inflation, which isn’t what people think when they think of Japan, but who expected such deflation 20 years ago? But the problems should first show up in the JGB market. A potential ‘grey swan’ with unforecastable timing argues for insurance, but there’s no point buying insurance unless it’s cheap. The chart below shows ATM swaptions on the 10y yield 10y forward. They’ve spiked recently because of Ozawa’s manoeuvres but at 60bps still seem reasonable to me.

Of course, those who wish to benefit from a Japanese bankruptcy in fiat terms may end up being disappointed - the second (or third, although China's endless lying about its economy probably means that Japan will be #2 for decades in unadjusted terms) economy going under would drag all of the developed world, not to mention all US banks, and financial instruments. And yes, the only recourse would be more money printing everywhere.

The bottom line is that in the supremest of ironies, perhaps Japan will be the first to teach the rest of the world what a developed country bankruptcy via hyperinflation would look like. Just like nobody anticipated the Weimar chain of events in 1919, it took just 2 years for the unthinkable to become accepted. 20 years of deflation has made the topic of Japanese hyperinflation the stuff of stand up comedy. Which is precisely why with so many people on the same side of the bandwagon, they will be wrong.

 

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Tue, 09/14/2010 - 13:38 | 581170 Sudden Debt
Sudden Debt's picture

WOW WOW WOW!

ONE HYPERINFLATION AT THE TIME PLEASE!

Tue, 09/14/2010 - 14:28 | 581280 B9K9
B9K9's picture

Zero Hedge has long contended that Economists dwell so high up in their ivory towers of (flawed) theoretical construction, that they always ignore the simplest things that have the most profound systemic impact... such as demographics.

And there you have it. As long as you view economists as anything other than con men, you will always be at an extreme disadvantage.

Here's a useful analogy: What would it take for you to don a flashy hat, put on some outrageous clothing and go pimp some cheap watches on a fold-out table to clueless tourists in Times Square? $100k? $250k? Ok, how about $1m, some air-time on a "respectable" MSM channel, perhaps a chair position at a prestigious university, and admission to a couple of limited country-clubs?

Here's my private theory: What do some men of conscience due to alleviate their suppressed guilt? Does anyone else ever come across certain (anonymous) writings that are so well crafted & articulated that they seem to have been written perhaps by none other than Ben S. Bernanke himself?

I mean, it takes a real psychopath to repress this level of deceit. It wouldn't be without reason to surmise that some truth is leaking out already. Boy, after this thing blows, the confessions are gonna run deep & long.

Tue, 09/14/2010 - 14:35 | 581318 BlackChicken
BlackChicken's picture

Excellent observation.

Tue, 09/14/2010 - 14:42 | 581337 mikla
mikla's picture

+1

The hubris, the elitism, the godlike central-planning attitudes ...

I've met genius.  And, I've met brilliant idiots (really smart people that can't even tie their own shoes).  Those aren't economists.  Rather, economists are "Idiot morons" with no sense nor redeeming mental capability nor discipline.

Wed, 09/15/2010 - 01:11 | 582608 StychoKiller
StychoKiller's picture

"It's hard to make predictions, especially about the future!"

-- Yogi Berra

Economists are the same ilk as fortune tellers, sans the crystal ball.

Wed, 09/29/2010 - 07:21 | 612168 snowball777
snowball777's picture

Psychic's convention cancelled due to unforeseen circumstances.

Tue, 09/14/2010 - 16:25 | 581609 MarketTruth
MarketTruth's picture

I mean, it takes a real psychopath to repress this level of deceit.

Or someone who once told the truth and now is pwned by the henchmen assassins of the Federal Reserve and Central Banking system. The below is from Greenspan from the 1960's. Of course he'd NEVER say such a thing today.

"In the absence of a gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good and thereafter decline to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as claims on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to be able to protect themselves.

This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard." -- Alan Greenspan, 'Gold and Economic Freedom' in 1966.

 

Tue, 09/14/2010 - 16:31 | 581630 ShankyS
ShankyS's picture

Short the duck - AFLAC (AFL) 70% of earnings from Japan.

Tue, 09/14/2010 - 16:54 | 581683 B9K9
B9K9's picture

Exactly my point. I sometimes wonder who the hell Another, Friend of Another and Friend of Friend of Another were/are.

Tribal members aren't Catholics; their economic sins can't be absolved through confession. They can't speak freely, but on cold, rainy nights all alone with their PC & the right encryption software, an expensive bottle of Scotch by their side, and a yearning for freeing the truth, they just might spill a few beans to those who can perceive the signs.

Tue, 09/14/2010 - 13:45 | 581181 michael.suede
michael.suede's picture

I think focusing on demographic shifts is wrong.

Rothbard and Mises showed us exactly why the business cycle occurs and exactly what government intervention does to markets.

There is no need to speculate on demographic shifts.

I suppose this article makes a good point that can be used to further undermine Keynesian fallacies, but rather than focusing on demographics, we should focus on the known causes of the business cycle.

If one thinks logically about this, they will come to the conclusion that falling demographics does not necessarily support the argument on its own because technological innovation allows for massively expanded rates of productivity per-worker.

We have to turn to Mises and Rothbard for the real answers.

Tue, 09/14/2010 - 14:26 | 581296 Raymond K Hassel
Raymond K Hassel's picture

I'd suggest a read of HS Dent, agree or disagree, his demographic approach to markets has some profound logic behind it.

Tue, 09/14/2010 - 14:35 | 581319 michael.suede
michael.suede's picture

Well I just pointed out one blatant reason why they are wrong.  The only way a demographics based approach can account for changes in productivity is by making assumptions which are not grounded in hard reality.

The Austrian school has provided all the answers by necessarily grounding itself in the actions of the individual.

Any theory that is not unified in its macro/micro views is wrong.

One must be able to explain the actions of individual actors all the way up to the actions of full markets under one theoretical roof.

 

Tue, 09/14/2010 - 14:48 | 581356 mikla
mikla's picture

You assert demographics will have no affect on social spending (e.g., Social Security expenditures, pension liabilities).

While a welfare state exists, demographics will ensure insolvency through cash-flow problems.  That is independent of any merits to Austrian theories regarding business cycles.

You would have better success making such an argument for China (not a welfare state), but similarly you have the problem of social unrest and overthrow of the government (and implicitly overflow of the the economic system).

Neither Western welfare states nor Eastern social unrest relate to any merits for Austrian theories regarding business cycle.

Tue, 09/14/2010 - 14:53 | 581371 michael.suede
michael.suede's picture

I never said demographics have no affect on social spending.

I said any economic theory that bases itself on demographics is wrong.

There is a big difference.

And, contrary to what you just said, the Austrian theory has very clear answers to those issues.

 

Tue, 09/14/2010 - 15:07 | 581410 mikla
mikla's picture

I never said demographics have no affect on social spending.

I said any economic theory that bases itself on demographics is wrong.

There is a big difference.

Ok, then we're talking past each other:  I'm asserting the business cycle is *irrelevant* because of social spending (e.g., sovereign debt service) and political and social upheaval.  (Your original comment referenced the business cycle, and I'm responding that the business cycle is *totally* irrelevant.)

Summary:  Japan won't even be a culture nor a nation in a couple decades because of demographics.  The business cycle in Japan is irrelevant.

And, contrary to what you just said, the Austrian theory has very clear answers to those issues.

Only if it is a socio-political theory, not an economic theory.

Tue, 09/14/2010 - 15:19 | 581430 michael.suede
michael.suede's picture

I would argue that its not irrelevant because one must look at why the social services were put in place to begin with.  One must also have a clear rational theory to explain all the economic damage caused by social welfare institutions.

I contend that Japan would have the same economic problems they have now even if they had a growing population base. As we all know, ponzi schemes require new entrants to keep the pyramid going.  The Austrian theory shows why the ponzi is bad in the first place.

 

 

Tue, 09/14/2010 - 18:01 | 581816 mikla
mikla's picture

I would argue that its not irrelevant because one must look at why the social services were put in place to begin with.

I don't think "why" is relevant at all.  The question is only whether or not Social Security and Pensions exist.  They do, and they can't pay, and they will default.  There's no fix, there's no resolution.  (Curiously, economists can't seem to figure that out.)

Economic theories aren't useful for everything.  For example, they have little value when your village of 85 meet two hundred people wielding machetes.  The domains of socio-political policy, behaviors, and culture (and perhaps chemistry and particle physics) seem to be more important in that type of scenario.

I contend that Japan would have the same economic problems they have now even if they had a growing population base.

Partly agree.  Japan's problems from the 80's never went away -- we merely time-shifted them to the present day.  However, demographics are the *sole* reason the pension and Social Security ponzi got to this level, so clearly they aren't *totally* irrelevant.  Further, demographics (and fraud) are the reason the ponzi ends now, taking the nation out with them, so they similarly aren't *totally* irrelevant.  For Japan, productivity and savings are in decline with the demographics, and they have *no hope* of re-establishing a society (i.e., the Japanese human capital doesn't exist, and will never exist).

For the US, demographics and simple math (not economics, not theories) are why the social contract will shortly be violated, and society will "reboot" after screwing a lot of Baby Boomers.

Wed, 09/15/2010 - 00:26 | 582558 bob resurrected
bob resurrected's picture

In a democracy, social welfare institutions will always be. Social welfare institutions depend on the Ponzi scheme. Therefore, demographics matter.

 

Tue, 09/14/2010 - 15:34 | 581460 enobittep
enobittep's picture

I am no economist, but this post has highlights an important variable in my mind that has / is not getting a lot of attention.   

In most developed economies, consumer consumption is a sizable contributor to GDP.  If there is steep decline in the consumer segment of such a country's population for any prolonged period of time, I can only see this having a negative effect on a countries GDP.  I believe Japan is a net exporter (?), so growth in worker productivity would surely help offset the impact of the population decline.

Tue, 09/14/2010 - 15:52 | 581503 michael.suede
michael.suede's picture

In a normal free market, natural gains in productivity would be able to manage any swings in demographics with ease.

Japan only has to worry about demographics shifts because of its ponzi welfare system.  If people were allowed to save the money they are currently forced to put into the ponzi, they would have plenty of resources left to deal with demographics shifts.

The problems all come from government allocating those saved resources into unproductive areas, there by wasting them, rather than allowing them to be used to grow the economy. 

A further comment on GDP spending - GDP spending also includes government expenditures.  This is totally ridiculous, since government expenditures are never spent productively.  Hiring a thousand more bureaucrats or building a dozen new aircraft carriers does not enrich the private sector of the economy one bit.  Since they can't export the carriers and the bureaucrats aren't making anything productive, it can be considered spending on resources that were totally wasted.

 

 

 

Wed, 09/15/2010 - 01:16 | 582616 StychoKiller
StychoKiller's picture

Bingo!  We have a winner!  ALL market distortions can be laid at the feet of the Govt!  I'm saving your post.

Tue, 09/14/2010 - 16:19 | 581597 midtowng
midtowng's picture

I think demographics are extremely important and not well understood. OTOH, I don't think the demographic shift will have as much impact on America as it has on Japan.

Tue, 09/14/2010 - 13:45 | 581188 Thorlyx
Thorlyx's picture

Soylent green might be an answer.

Tue, 09/14/2010 - 14:09 | 581250 Running on Empty
Running on Empty's picture

As long as it's made from Amanda I would eat that all day long.....

Tue, 09/14/2010 - 14:11 | 581258 hedgeless_horseman
hedgeless_horseman's picture

Amanda would be people, and Erin would be other?

http://gilagreen.files.wordpress.com/2010/06/funny-graphs-ingredients-of.gif

Tue, 09/14/2010 - 15:35 | 581463 centerline
centerline's picture

Do you serve white wine or red wine with that?

Tue, 09/14/2010 - 15:57 | 581524 BlackChicken
BlackChicken's picture

Since the underlying protein comes from red meat, I would say red wine would pair the best here...

Might I suggest a fantastic red Zin from Robert Biale?

Tue, 09/14/2010 - 14:14 | 581263 merehuman
merehuman's picture

Eat me with dignity. And dont blame me for the bellyache

Tue, 09/14/2010 - 14:40 | 581326 Dollar Bill Hiccup
Dollar Bill Hiccup's picture

Go long tobasco sauce.

Tue, 09/14/2010 - 13:52 | 581201 Ripped Chunk
Ripped Chunk's picture

"Japan might just have spent the best part of twenty years trying to fiscally stimulate its way out of a demographic compression"

Bingo! ALL trends are driven by demographics.  Boomers !!!! Epic Collapse !!!!

Tue, 09/14/2010 - 14:08 | 581242 1100-TACTICAL-12
1100-TACTICAL-12's picture

to many people in the cart, and not enough pulling it..

Tue, 09/14/2010 - 14:18 | 581276 PhotonJohn
PhotonJohn's picture

Speaking of trends, I know the US has not been strong for a while but looking at those top charts against Japan's...things do not look good!

Tue, 09/14/2010 - 13:50 | 581206 septicshock
septicshock's picture

let the games begin.

Tue, 09/14/2010 - 13:57 | 581224 duo
duo's picture

Exponentially growing debt-based money can survive is the population is growing exponentially (though with a smaller exponent).

"Economic growth" should be expunged from the lexicon of economics.  Per capita income (productivity) is what really matters.  Everything else is Ponzi.

Tue, 09/14/2010 - 16:48 | 581674 kridkrid
kridkrid's picture

Well said.  

Tue, 09/14/2010 - 14:08 | 581246 MrTrader
MrTrader's picture

"quartered by four of Bernanke's most vicious and bloodthirsty printers"....LOL ! Good laugh.

Tue, 09/14/2010 - 15:24 | 581438 Pseudo Anonym
Pseudo Anonym's picture

stand-up comedy mat'l. making funny things funnier; that's what I call talent.
But, are things really so fucked up these days that all we have left is satire? That's what I want to know.

Wed, 09/15/2010 - 01:20 | 582622 StychoKiller
StychoKiller's picture

I hear ya!  I'm waiting for the slapstick of seeing TPTB getting hit with baseball bats, numerous times!

Tue, 09/14/2010 - 14:09 | 581251 Azannoth
Azannoth's picture

The unfunded obligations and debt due is rising expotentialy where as population and economic growth is stagnating, guess where that leads <clif/>

Tue, 09/14/2010 - 14:10 | 581252 Eureka Springs
Eureka Springs's picture

I'm still wringing out my beach towel... trying to get all the anti Keynesian slobber and spittle off my monitor. And I still don't get what particular aspect of Keynesian policy so upsets the author?

Seems to me the free marketeer Chicago Schoolers have no regard for human issues which massive demographic shifts cause. How dare Keynesians even try seems to be their best transparent attack.

Tue, 09/14/2010 - 14:13 | 581261 michael.suede
michael.suede's picture

" Chicago Schoolers have no regard for human issues"

Which is code for:

I want free stuff by using the power of government to loot people because I'm a selfish hippie that likes to smoke pot and do nothing except make music and write poetry for a living.

Praise Mao.

Wealth redistribution is the ultimate in selfishness, it doesn't matter if its corporate subsidies or welfare handouts.


Tue, 09/14/2010 - 14:20 | 581281 Eureka Springs
Eureka Springs's picture

Malarkey, wealth redistribution of one kind or another is a given in any circumstance i have ever read about. Unfortunately the measure of wealth by so many seems to be far to willing to forget things like health or living standards of all.

 

I know very few people who want or expect something for nothing. As a percentage of grift clearly the top are the overwhelming champions of that angle.

 

Tue, 09/14/2010 - 14:24 | 581291 michael.suede
michael.suede's picture

That's probably because you learned economics from a public school teacher.

It stands to reason that anyone who earns a paycheck by holding a gun to another persons head is going to support wealth redistribution.

In a sane rational society, violent looting of the public by plutocrats is not necessary.

 

Tue, 09/14/2010 - 14:40 | 581329 Eureka Springs
Eureka Springs's picture

We have a lot of problems, but your boogie men remind me of stories about bad acid trips.

Just how scary are you willing to be to avoid substintive discussion?

Oh look, someone just bought a loaf of bread with food stamps! Boo!

Now if someone could answer my question, what particular aspect of Keynesian policy in light of major demographic shifts and Japans response to such problems is so flawed? And what pray-tell, might be a better way?

 

 

Tue, 09/14/2010 - 14:49 | 581354 michael.suede
michael.suede's picture

The better way is for government to stop looting the public through taxation and inflation.

I know it may be difficult to comprehend, but the wise overlords of government are piss poor at economic central planning.  Resources must be allocated by individual actors that are specialized in their respective fields.  Interest rates must be set by market forces in order for higher and lower order stages of production to be harmonized.  Welfare must be a function of charity rather than force.  Only through charity can the cream of the economy be given to the poor without taking from those who need the money themselves to create jobs and expand economic growth.

Japan will languish in agony forever, as will the US, because central planning does not work.  It only leads to economic disaster and total debt enslavement of the public.

 

Tue, 09/14/2010 - 15:27 | 581444 Eureka Springs
Eureka Springs's picture

 

So how many of the 42 million on food stamps today have you stopped from making such a terrible mistake  in front of the food stamp office and helped out with charity? Just what charity aside from government could ever do this size of task? Shouldn't people like yourself who don't believe in it - and often spend time trying to destroy it... and have no solution, admit it and simply step aside and leave it to others. You don't have to pay much in taxation at all. I know from living through several economic levels. No taxation level I've ever experienced was ever a major cause of problems for me. Though I do believe it should be simplified a great deal. It's the ponzi schemers and their lobbyists who cause that fiasco.

I don't pretend to have answers myself, but i sure can smell a "let them all die" rat when I read one. And that in a nutshell is our countries/marketeers biggest problem. Not keyenes or taxes.

 

Tue, 09/14/2010 - 15:42 | 581477 michael.suede
michael.suede's picture

Instead of "let them all die" - you should think of it as "let them all live"

The Soviets managed to kill some 7 million of their citizens through starvation by collectivizing their agriculture in order to control food production.

The rationale being they would be able to provide food for the poor without having to pay "profits" to the evil capitalist farmers.

In the end, the lack of a profit motive ended up destroying the Soviet agriculture industury, which cause them to starve to death.

Looting of the public can not solve complex social welfare issues.  It never has and it never will.  In a free society, jobs and wealth would be so abundant that the necessary charity could be managed entirely by the private sector.

It used to be this way in our past, and it can be that way in the future as well.

 

Tue, 09/14/2010 - 15:50 | 581478 pachanguero
pachanguero's picture

I don't pretend to have answers myself, but i sure can smell a "let them all die" rat when I read one."""

 

And I can smell a "I will put a gun to your head to take YOUR money (In the name of the Poor) and give it to my friends who throw a few crumbs to the sheeple and that will make me "feel" like I give a shit about the poor so I don't really have to do anything my self cause I'm really a fucking hypocrite" rat when I read one too!

Tue, 09/14/2010 - 15:53 | 581506 hamurobby
hamurobby's picture

You mean like maybe feed your neighbor and his kids after he cuts your grass or fixes your washing machine? not give them a card for food and a cell phone to look for work. There are jobs, just most people dont want them because they expect more than our service economy will pay. Soup lines were too degrading, and actually having family ties to fall back on was too much to ask of people. Its better to rely on the government instead of your family of neighbors. They have us right where they want us.

Wed, 09/15/2010 - 01:27 | 582627 StychoKiller
StychoKiller's picture

$50 Lesson I recently asked my friend's little girl what she wanted to be
when she grows up. She said she wanted to be President some day. Both of her
parents, liberal Democrats, were standing there, so I asked her, 'If you were
President what would be the first thing you would do?' She replied, 'I'd give
food and houses to all the homeless people.' Her parents beamed. 'Wow...what
a worthy goal.' I told her, 'But you don't have to wait until you're President
to do that. You can come over to my house and mow the lawn, pull weeds, and
rake my yard, and I'll pay you $50. Then I'll take you over to the grocery store
where a homeless guy hangs out, and you can give him the $50 to use toward food
and a new house.' She thought that over for a few seconds; then she looked me
straight in the eye and asked, 'Why doesn't the homeless guy come over and do
the work, and you just pay him the $50?' I said, 'Welcome to the Republican Party!'

So much for altruism!

Tue, 09/14/2010 - 16:55 | 581688 NotApplicable
NotApplicable's picture

Eureka, you are confusing "is" and "ought." Austrian Economics is the study of "is" from the perspective of the individual in regards to their choices and desires. It is amoral in that it studies the results of individual human actions without judging them, except for the axiom that people act to improve their individual state of being. (whether or not they succeed is their own subjective valuation)

Keynesian pseudo-economics is the study of "ought" in regards to non-existent actors known as aggregates. It is moral in the sense that it injects values ("oughts") into theories that the PTB can make the world a better place by manipulating things in order to make a better aggregate. Problem is, you and I are individuals, not aggregates, so any (and all) of us are fodder to feed the "greater good" of Keynesianism.

Given these two competing ideologies, and observing the results of constant Keynesian pump-priming, one can't help but notice the immorality of the moral Keynesianism, and the morality of amoral Austrian Economics.

It all comes down to one simple idea, no service should be provided at the barrel of a gun. Only a free society is truly free enough to solve its problems.

Wed, 09/15/2010 - 01:33 | 582630 StychoKiller
StychoKiller's picture

It all comes down to one simple idea, no service should be provided at the barrel of a gun. Only a free society is truly free enough to solve its problems.

Yet Progressive/Liberal Decepticrats "Believe/Care" that it's more moral to

get the Govt to redistribute what does NOT belong to them!

"Government is NOT reason, it is NOT eloquence -- it is FORCE!"  -- George Washington

[quote]

The Six Problems With Modern Liberalism

1) You really didn't learn everything you needed to know in kindergarten:
Liberals love to think of themselves as sophisticated, nuanced intellectuals,
but the truth is they have a kindergartner's view of the world. If it has been
defined as "nice" to people they like, they're for it. If it has been defined
as "mean" to people they like, they're against it -- and that is about as deep
as it gets. Unfortunately, that lack of adult perspective isn't so cute in
political leaders who are making life and death decisions that may still have
ramifications fifty years from now.

2) "Liberals hate religion because politics is a religion substitute for
liberals and they can't stand the competition." -- Ann Coulter: Somewhat
ironically, given the hostile relationship that has developed between the
Left and Christianity, liberal beliefs have more in common with religious
doctrine than a political agenda. There is no significant debate on the Left
about the aims of their agenda -- and the only "sins" believers can commit
against their religion are no longer being politically useful, deviating
from doctrine, or worst of all, cooperating with conservatives in some
fashion. No matter how much evidence piles up that big government doesn't
work, that welfare destroys families, and that socialism doesn't bring
prosperity, it makes no impact on liberals because their dogma is based
on faith, not logic.

3) "It is not human nature we should accuse but the despicable conventions
that pervert it." -- Denis Diderot: There is no dream more eternal in the
liberal heart than completely remaking human nature. If we could all just
care about the person across the world as much as we do our families, we
could live in a utopia! Unfortunately, in practice, human nature tends to
be quite a bit more difficult to subvert than in the liberal imagination.
That's why, despite more than 5,000 years of human civilization, very little
progress has been made in this area - but, oh, the Left is still trying.
One day, if they just spend enough money on the right government programs,
all the wars will end and everyone will be living in identical million dollar
mansions while we spend our days humming tunes from the latest Woodstock Tribute Album.

4) "Oh what a tangled web we weave, when at first we practice to deceive."
-- Sir Walter Scott: Like freaky religious cults, liberals have become adept
at hiding their more abhorrent views from the public until it's too late.
It's common to see liberals adamantly deny that they hold a position over
and over again only to completely switch sides the moment they have one
more vote than they need to pass legislation. Whether it's lying about
their opponents or what they believe, honesty is certainly not considered
to be the best policy on the Left.

5) "Why do you look at the speck of sawdust in your brother's eye and pay
no attention to the plank in your own eye." -- Matthew 7:3-5: Despite
the fact that liberals love few things better than to cry "hypocrisy,"
there is a rather bizarre disconnect between what modern liberals seem to
believe about themselves and how they behave. Liberals believe that they're
compassionate, but only with other people's money. They tie themselves in
knots trying to come up with valid reasons why terrorists hate the United
States, but they never give a moment's thought to whether the people who
dislike them might have a point. They pat themselves on the back for helping
minorities, but never stop to consider that liberal policies have done more
damage to black Americans in the last fifty years than the KKK could have
done in a millennium. Somehow, stunning hypocrisies of this sort, which are
too numerous to recount without doing a whole other column, never seem to be
bother anyone on the Left.

6) "Trust yourself. You know more than you think you do." -- Benjamin Spock:
It's great to have a healthy self-image, but there's not much to be said
for thinking you're smarter than the collective wisdom and traditions passed
down through human history just because you happen to read the Daily Kos.
Unbecoming arrogance of this sort permeates modern liberalism. The most grave
of decisions are undertaken by the modern Left without the slightest regard
for the potential consequences. Past disasters created by similar bouts of
whimsical thinking, of which there are many, are treated as acts of God
untethered from mere human decision making and prompt no self reflection
whatsoever. That's because to the modern liberal, the real world results of
their policies are secondary in importance to the amount of positive
self-esteem generated by supporting that policy.

[/quote]

Wed, 09/15/2010 - 01:24 | 582625 StychoKiller
StychoKiller's picture

Egad!  He really tagged that one out of the park!  Batting 1000 today is Michael Suede!

Tue, 09/14/2010 - 15:15 | 581424 Oquities
Oquities's picture

"i know very few people who want or expect something for nothing."   try some other anecdotal evidence, blind man.  even p krugman, the loon, in a recent economics book acknowledged that extended unemployment benefits can be a disincentive.  and just to counter your example, i know plenty of those people - i live near detroit.

"As a percentage of grift clearly the top are the ovwrwhelming champions.."  2 wrongs make 1 right, eh?

as to your question about the aspect of keynesianism relative to demographics vis Japan?  it's the part that supports failing institutions and companies through excess money creation disallowing creative destruction and the re-setting of the clock to a balanced economy throughrestructure.

Tue, 09/14/2010 - 15:42 | 581479 Eureka Springs
Eureka Springs's picture

The unemployed I know... would LOVE a job right now. Every single one of them.

 And no, two wrongs don't make a right. but the big wrong is the very reason blogs like this are needed/popular. we've watched the free marketeers club the middle and little man without shame since Reagan (I'm in my mid forties). Now so many look around and wonder what went wrong... You can't have a civil or healthy society for long when you've bleed so many dry. When production and self respect or human dignity just get in the way of profits.

 

The Japanese are on an island... they have to deal with it or die... and they know it. it has nothing to do with keynes. Without Keynesian policy they would have never made it so far so fast. Probably not even up to the bottom they now face.

There are a whole lot of top americans who could help out most by falling on their sword right about now.

Tue, 09/14/2010 - 15:53 | 581507 pachanguero
pachanguero's picture

When you start laying the blame for all the wars and fleecing of the poor and middle class at the feet of the Federal reserve and the

New World Order assholes then you will begin to have credibility.  Until then you sound like a community organizer or shrub from Texas

Tue, 09/14/2010 - 16:10 | 581566 Eureka Springs
Eureka Springs's picture

Perhaps you misunderstand my definition / use of the term "free marketeers" includes those elements too.

Tue, 09/14/2010 - 16:04 | 581551 Oquities
Oquities's picture

you seem to have little understanding of human nature.  when you say that the unemployed you know would love to have a job, you miss the point.  of course they would, but at what price?  they won't leave unemployment comp of $250-$350 a week, perhaps also food stamps, for a starter job.  they want a good job but don't know how to create one and want someone else to do that.  but someone else is not likely to because of the burden of govt mandates, taxes and disincentives. are you a govt worker?

also, how dare you ask another poster about his charitable contributions as refutation of a discussion about private charity vs. forced govt social programs!  even if that person is non-charitable, it's not relevant to his point.  and any answer to your cheap question question would seem defensive.

and i answered your inane question about keynesianism but you didn't acknowledge it, just kept rambling.

Tue, 09/14/2010 - 16:13 | 581576 Eureka Springs
Eureka Springs's picture

it's entirely relevant when individual charity the only suggestion he has as an alternative to government.

Tue, 09/14/2010 - 16:17 | 581590 Oquities
Oquities's picture

no, it is once again, only anecdotal.

Tue, 09/14/2010 - 16:27 | 581618 Eureka Springs
Eureka Springs's picture

So we can't have a discussion of whether or not individual charity could or would possibly provide food assistance to 42 million people across the land with such efficiency... while we know government is doing it without a scientific study? I'll take my overwhelming anecdotal evidence for 500, Alex.

Tue, 09/14/2010 - 17:05 | 581713 NotApplicable
NotApplicable's picture

Guess what? Your Keynesian/socialist food assistance to 42 million people is going to send food prices skyrocketing, causing further untold millions of working class poor to be forced onto food assistance. (which is exactly how most of the original 42 million made it onto the rolls)

You call this a solution? I call it eating the seed corn.

So once all of the seed corn is gone, then what? Do we start culling the herd then, all for the greater good?

Tue, 09/14/2010 - 22:23 | 582291 Eureka Springs
Eureka Springs's picture

PPeople ate before they needed food stamps. I doubt consumption of corn increased significantly because of food stamps. If anything expenditures on foods probably dropped as a paycheck dropped away. Without major drought, disease or oil spikes no one in this country should be facing a corn/food or seed shortage. However I am convinced more than ever after reading replies to me this afternoon that food stamps are far better than relying on individual free marketeers idea of charity as a means to avoid mass soup lines or starvation.  Clearly as a solution it sucks and can't work forever.. which is why people must be put back to work. But it is your solution which would certainly lead to a culling effect just to prove a point. To hell with that.

Wed, 09/29/2010 - 10:22 | 612447 Common_Cents22
Common_Cents22's picture

Free marketeers cause trouble?    Oh, You mean those that collude with our corrupt government for bailouts, preferential policy in exchange for campaign contributions and friends of mozillo cheap mortgages?   yeah those marketeers.

Turn off MSNBS and wake up to the fact that corrupt government causes huge mis-allocations of capital and huge dislocations to the free market.

All the lame stream media outlets have brainwashed much of the public into thinking business and profits are bad.  They have thrown the real free market heroes out with the bath water and under the bus while cozying up to the two corrupt parties, their government idiot hero elected elites in DC and the incestual big business element that has much political persuasion.

I suggest adding a little more Friedman Filet to your diet of Government Gruel.

Wed, 09/29/2010 - 10:24 | 612452 Common_Cents22
Common_Cents22's picture

Free marketeers cause trouble?    Oh, You mean those that collude with our corrupt government for bailouts, preferential policy in exchange for campaign contributions and friends of mozillo cheap mortgages?   yeah those marketeers.

Turn off MSNBS and wake up to the fact that corrupt government causes huge mis-allocations of capital and huge dislocations to the free market.

All the lame stream media outlets have brainwashed much of the public into thinking business and profits are bad.  They have thrown the real free market heroes out with the bath water and under the bus while cozying up to the two corrupt parties, their government idiot hero elected elites in DC and the incestual big business element that has much political persuasion.

I suggest adding a little more Friedman Filet to your diet of Government Gruel.

Wed, 09/15/2010 - 01:40 | 582640 StychoKiller
StychoKiller's picture

What makes you "think" that there would even be anywhere near 42Million in poverty if the Govt would simply STOP INTERFERING in the Economy??

Sorry, but "Big Brother" eats a lot BEFORE even trying to do what you "think" is just!

Tue, 09/14/2010 - 14:11 | 581257 saturno_v
saturno_v's picture

 

A bun of idiocy from Krugman fresh from the Pinceton bakery this morning:

 

"As for China not buying our debt, well... they're already paring back their holdings, but between our Fed, and the global savings boom, it just hasn't been much of an issue. Yields are very close to their all time lows despite China clearly losing its appetite for USTs. And to the extent that Chinese selling of bonds would hurt the dollar then, well, obviously to Krugman that'd be a good thing."

"Our Fed.......our great Fed"....

 

http://finance.yahoo.com/tech-ticker/krugman-slap-tariffs-on-china-and-let-them-stop-buying-our-debt-535419.html?tickers=fxi,tlt,tbt,%5Edji,%5Egspc,nyt

 

 

 

 

Tue, 09/14/2010 - 14:15 | 581268 RicktheDick
RicktheDick's picture

What baffles me about Keynesians, and many financial historians in general, is that they refuse to put their presumptions into context. Even if you were willing to concede that certain policies worked in the 1930's and 40's, you're dealing with a completely different set of variables in the current economy. Our problem isn't rooted in the deflation of assets, it's in larger structural issues (demographics being one of them) that over time are only going to be exacerbated by the Fed's actions.   

Tue, 09/14/2010 - 15:09 | 581413 traderjoe
traderjoe's picture

I think it is a function of desperation and pandering. The neo-Keynesians want to spend forever because they don't want to be responsible for a recession/depression and also because ppl will pay them to suggest spending/largess. There is no constituency for austerity...

Tue, 09/14/2010 - 14:17 | 581272 williambanzai7
williambanzai7's picture

I don't understand how one can assert that demographic shifts are of overstated importance, particularly in a place like Japan.

Tue, 09/14/2010 - 14:24 | 581293 PhotonJohn
PhotonJohn's picture

Good models (ones that prove your point) only work when you get to choose the variables. Besides multivariate calculus is hard with too many variables.

Tue, 09/14/2010 - 14:26 | 581295 Bam_Man
Bam_Man's picture

Hyperinflation is a terminal symptom of socio-political, economic and monetary collapse.

We (the US), Japan and Europe are all certainly headed in that direction, but are nowhere near that final destination.

IMHO, the US and Europe could easily get there before Japan does.

 

Tue, 09/14/2010 - 15:06 | 581366 citationneeded
citationneeded's picture

"I am going to disprove the usefuleness of anecdotes with an anecdote"

 

Edit: I should add though that it's a good article.

Tue, 09/14/2010 - 15:05 | 581404 web bot
web bot's picture

If I were to #uckin start and spew what I really think about Krugman and his conclave cohorts, there would just be #uckin profanity smeared across this post. Pure #uckin unadulterated venom.

When this #uckin thing blows... and it will, I am very concerned about what comes next.

Don't these #uckin idiots realize that we are at the boundary?

 

Wed, 09/15/2010 - 01:43 | 582643 StychoKiller
StychoKiller's picture

Why can't someone invent a board game to keep Krugman et.al. busy and away from the "real" world?

Tue, 09/14/2010 - 15:13 | 581419 Sokhmate
Sokhmate's picture

wtf is going on with gold spot?

P.S. those math questions with minuses all over are beyond my level of education.

Tue, 09/14/2010 - 15:25 | 581439 web bot
web bot's picture

You understand that the gold and silver markets are manipulated? Right?

Well, what you are now seeing is the result of people taking physical possession of these PMs. As a result, we are seeing shorts being taken out, pushing up the value. We are now just starting to see the demand impact on the market.

Check out Harvey Organ's blog and GATA for some fireworks discussions this evening.

 

Tue, 09/14/2010 - 15:35 | 581464 Sokhmate
Sokhmate's picture

I like fireworks.

Tue, 09/14/2010 - 15:38 | 581472 centerline
centerline's picture

Someone is wrong... either equities or gold or both.  Or maybe is a result of timing... gold leading, equities lagging.  I wager that gold is calling the equity bluff here.

Tue, 09/14/2010 - 16:00 | 581534 Oracle of Kypseli
Oracle of Kypseli's picture

So far, I don't know anything else as valuable, other than gold, that is not taxed, it's portable, anyone can use as a wealth preservation and can be exchanged easily at anytime.

My grandfather told me stories about going downtown shopping (European city). He would take a British Sovereign gold coin (1/2 oz. 23k) with him and exchange it in coin/jewelry stores based on the day's newspaper value for currency in vogue and buy what he needed.

 

 

Tue, 09/14/2010 - 16:23 | 581608 RockyRacoon
RockyRacoon's picture

On Thursday, Sept. 9, the Treasury’s auction of 30-year bonds failed.

...a buyer of a COMEX gold contract for delivery in September 2009 just received confirmation that the physical gold has finally been posted to his account. It is now stored in a bonded COMEX warehouse as “eligible” inventory, meaning that it could be easily transferred to a broker to become registered inventory to be available for delivery of a COMEX contract. The buyer noted that the broker’s rules for owning this particular bar have changed from past practice. The only options open to the owner are to take delivery, to leave it in storage, or to sell the bar to a broker. In the past, owners of eligible COMEX inventories could leverage it, put it out on lease, or engage in other activities which might generate a bit of income. The new limitations on how the bar may be treated I interpret as a further sign of growing physical shortage in the COMEX gold and silver inventories.

If you don’t mind having to wait a year for delivery of your COMEX inventory, then you can consider owning a COMEX contract. If you want to make sure that you have the physical metal, though, get it in your own custody immediately.

http://www.numismaster.com/ta/numis/Article.jsp?ad=article&ArticleId=13958

Tue, 09/14/2010 - 15:26 | 581441 Jim in MN
Jim in MN's picture

And when these goldbugs fight their battles on the blogsites with their prattle

This is what we call

An upright goldbug prattle blogsite battle

 

(had to get that out of my system--whew)

Tue, 09/14/2010 - 15:31 | 581446 Poofter Priest
Poofter Priest's picture

About the default 'declining output' rather than default 'positive growth'

Aside from 'declining population' (which could be influenced one way or another by immigration on a 'regional' basis.)

 How about adding to the the uptick in costs of materials due to declining resources. Not just oil but the rare earth elements.

As such stuff gets rarer and more expensive, this will certainly put the brakes on the falicy of 'growth'

Tue, 09/14/2010 - 15:55 | 581504 surfsup
surfsup's picture

"How about adding to the the uptick in costs of materials due to declining resources..."

 

The uptick in costs has far more to do with the terminal phase of usury than it does with actual lack.  Lack is a slick way to pump propaganda out into the world when one "knows" their debt based usury game is hitting the skids due to the lack of simple adequate circulation.   Just like a cap and trade tax is spewed out as an "environmentally friendly gesture" when its far more of a means of forming a global government knowing that usury is on the way to blowing out many national governments.  The whole thing is rigged via brainwashing to make us "think" things are rare or more expensive because as the terminal phase kicks in the QUICK ATTEMPTED SOLUTIONS will always lead to a further diminishing of the value of the unit of exchange.

Such can only be, for only as long as OZ is truly hidden from mass view.  Today and yesterday should show us that its the unit of exchange -- wrapped up in its usury -- less and less in circulation for common exchange due to the exponential growth of debt, which is tugging at the hull of the ship.   It takes more and more fine tuned propaganda to keep people from looking at the very basic center of this game -- but when that cracks -- oh my -- perhaps people will truly end the dark age currently upon them?   Very slick game ongoing for more than a few centuries -- the big con -- and now the math itself -- the very simple science of it is now rearing its head for those who can see -- and the cheerleaders for a broken tractor system look ever more nubile and misinformed.   Human effort never faded and neither have real resources.  What's faded is grandpa's old tractor as they try to put high octane gas into it as its sputtering toward a stall...   Planes just don't act like planes when they hit stall speed -- and people all around grasp for "some reason" its all doing this and that -- when the very simple fact alludes them in all its diabolical simplicity like a lady bug on the tip of their nose. 

 

[Its the interest stupid ~ why do you think they are trying all they can to lower it now?  Cause this is what interst (usury) does over time -- it boils the frog]

Tue, 09/14/2010 - 15:30 | 581450 Segestan
Segestan's picture

Demographics are over rated. Just look at the third world. Human numbers are at an all time high, but it requires Modern society to sustain, usury is more deadly than then sheer numbers.

Flawed ideas of utopia .. aka.. Marxist Socialism is far more dangerous than demographics.

Tue, 09/14/2010 - 15:32 | 581454 surfsup
surfsup's picture

The reason the demographic population issue ties in is that it takes ever more people to come on line to the work force to keep the EXPONENTIAL INCREASE OF DEBT game going. Again, the simplest aspects delude the complex minded; these times are the fruits of the INTEREST game at its TERMINAL PHASE.    

...

(quote)

 

In the interest of disinforming you of the cause and consequences of irreversible multiplication of debt, we are not just lied to regularly. We are deceived without exception, for a purpose; and the purpose not only of all the pervasive, concerted disinformation, but the vast usurpation which must come with it, is preservation of an imposed currency for the sake of unearned accumulation of vast, undeserved wealth, by inherent, irreversible multiplication of debt by usury.

Because the known improprieties of the currency are the very intended tools to do this, modern "economists" and the pretended representatives before us will never rectify purported economics of its obvious faults. In turn, true economic solution can and will only be established by a knowledgeable people, demanding together not only the one monetary paradigm that can serve them, but thus unseating the vast usurpation presently working to secure usury forever.

We absolutely can solve the few simple issues imposed upon us by "modern economies." We can readily perfect economy by mathematic processes, in fact of the most elementary kind. Ancient scripture even tells us we will do so.

Moreover, the responsible and vigilant citizen who breathes can only smell the sulphur of purported modern economics. They thus turn to discover at least the smoking history everywhere by which, without mandate, and converse to representation, today's central banking systems were imposed upon the world. But the smell and dark, corrupt history of the thing are not enough, even if they lead us to the beginnings of the crime.

Contemplating that dark history or perceiving any of the many adverse consequences everywhere about us only incline the responsible citizen to find and eradicate them. Yet there is no way to eradication but solution; and so, given resistance to a proof of singular solution, a struggle must ensue, and history must indeed boil up the vital paradigm.

(Unquote)

www.perfecteconomy.com

 

Wed, 09/15/2010 - 01:56 | 582652 StychoKiller
StychoKiller's picture

In short, too many people in the wagon, not enough pulling it!

Tue, 09/14/2010 - 15:33 | 581458 cocoablini
cocoablini's picture

Keynesianism is popular because it is based on Free Lunch Theory. It is a political economic tool- and it only works with a monetary and demographic inflation pyramid. Your average dimwit elected official loves Free Lunch Theory- it's easy to sell and easy to sell.

Tue, 09/14/2010 - 15:43 | 581475 Oracle of Kypseli
Oracle of Kypseli's picture

Japan stubornly resists legal immigration reform and therefore the illegal immigrants from China are not in the books contributing to Social Security.

Even the legally immigrated Chinese are off the books. There are more Chinese cooks who have immigrated to Japan than all the cooks in Japan combined regardless of ethnicity. Similar with ethnic dancers, performers etc. (working in karaoke bars) All off the radar of the taxing authorities.

There are thousands English teachers, engineers, translators etc., who fly to Seoul and back the same day every 90 days.

They have lost control just like we have. Next!      

Wed, 09/15/2010 - 01:59 | 582654 StychoKiller
StychoKiller's picture

Xenophobia rulez! 

Tue, 09/14/2010 - 15:51 | 581501 Nathan Muir
Nathan Muir's picture

+1, nicely worded

Tue, 09/14/2010 - 16:01 | 581543 Poofter Priest
Poofter Priest's picture

"The uptick in costs has far more to do with the terminal phase of usury than it does with actual lack."

 

Dude,

Yes, usury can affect price. But the phrase 'rare earth' is just that. Rare. According to the USGS current silver extraction can last approximately 16 more years. And at this time, isn't it Russia that is sitting on the majority of palladium? You could claim that China's restriction of exporting of rare earth elements is a form of usury. But if they are the only ones holding it and it is finite, it's price by simple demand will outstrip the usury affliction.

We live on a finite planet. As related to this article, the assumption of the default setting being 'positive growth' if possible would be mitigated by a reduction of resources.

Tue, 09/14/2010 - 16:17 | 581589 Shrimp Head
Shrimp Head's picture

Rare Earths, bitchez!

Tue, 09/14/2010 - 16:36 | 581648 bugs_
bugs_'s picture

How many of us will step up to the plate and offer to help Japan with their demographic problem?

It is our Keynesian Duty.

Wed, 09/15/2010 - 02:03 | 582656 StychoKiller
StychoKiller's picture

I'd be fine with "adopting" some cute Japanese women, but my wife would divorce me!

Tue, 09/14/2010 - 16:37 | 581649 romanko
romanko's picture

in north america:

declining birth rate + aging population + compounding interest on compounding debt = need for immigration

would or could we ever consider a gradual down-scaling, save the environment as well?

Tue, 09/14/2010 - 16:48 | 581672 linrom
linrom's picture

The biggest farcical comedy around is that of financial workers words of wisdom. Having stolen the wealth of middle classes during the past 30 years, they now seek to dig themselves out of the hole they dug. Alas the economy is going to implode as the 90% of consumers and spenders with no money can't keep the economy going by themselves. But, you didn't figure it out? Did you?

The loot that the elites hold needs to be either spend or taxed or it will implode and blow up; but, I doubt that they'll figure it out. Barking up at Keynesianism is another bit of farcical comedy; the barkers can't even agree to token higher taxes to reduce deficits. After all Keynesianism is the result of low taxation of the rich during the past 30 years. I doubt that financial types will understand this simple truism.

Tue, 09/14/2010 - 17:11 | 581719 DosZap
DosZap's picture

 "Consider the creation of the Social Security Trust Fund, which would have been perfectly solvent in perpetuity... If only people died quietly as they were expected to do so in 1930s, some time in their mid- to late-60s. Now it is insolvent."

I disagree, the reason for insolvency here is greed,pork, and socialist programs.

13%(including emp contributions) of all employee's working for a company, (not contract labor),have been put into what WAS a Trust Fund.

If those funds had not been allowed to be removed and put into the General Fund by LBJ, and had been invested just in Treasuries, with NO way for some Pol C*nt to get their mitts on it, we would have a surplus, that would last likely another 50yrs, w/out another dime put in.

The Fund was never meant to be used for welfare, it was meant for use by the people who paid into it....

Nothing further from the truth can be said.

Welfare pmts to illegals, people who never worked,etc,etc killed that goose.

Politicians are to blame for this Funds demise..........period.

If someone had the figures for the amount put into the fund, since inception, and averaged the rate of return from Treasuries, /Bonds/MM Accts,on those funds........there would be likely a Trillion dollar surplus.(If it had been left alone).We all know the miracle of compound interest.

Just stop and think how many dollars Boomers put into that fund(just them, that Demograhic.............mind boggling,add interest,we're GTG.

As for Aging Demographics, what if we had not murdered 50 million plus babies since 1973?,how many generations would be alive because of them, and all paying into the sytems?.

Why do we think illegal immigration is such a NO TOUCH topic?,votes?,yeah that's part of it.

But the larger cause is it brings in population growth, and new taxpayers,you have to do something since you killed off so many American workers.

Tue, 09/14/2010 - 17:29 | 581755 NotApplicable
NotApplicable's picture

All of your monetary assumptions are based on "investing" in someone else's debt. Not only does debt not create any wealth, it adds the burden of interest to the debtor, which ends up being everybody when you are talking sovereign debt.

There is simply no way for a government to create a viable long-term retirement system, since the government does not create wealth, but instead, consumes it. At best it would be a zero-sum game of wealth transfer, but given the overhead of government, it can be nothing but a negative-sum in the end.

The only answer to this problem is genuine savings. The only genuine savings are real assets, not someone's liabilities.

Tue, 09/14/2010 - 23:09 | 582402 jippie
jippie's picture

get your fact straight. Illegal immigrants can only receive money from SSTF if they paid in. the SSSTF doesn't really care whether you are legal or not, as long as you pay in you have a right to get paid out, even if you move back to your own country.

Bruce kasting has had a huge debate around this just google it.

Wed, 09/15/2010 - 01:53 | 582648 Moonrajah
Moonrajah's picture

 


For all I know, Keynesians might be even right in thinking policy makers can fiscally jolt economies back to life, allowing them to recover back to their ‘default mode.’ But their assumption is that ‘default mode’ is positive growth. But what if it isn’t? What if the ‘default mode’ is falling output because the population is declining? Japan might just have spent the best part of twenty years trying to fiscally stimulate its way out of a demographic compression. If this is correct, and population decline has blown the hole in Japan’s government balance sheet there’s still plenty of damage in store because the demographic compression isn’t over yet.

New message to marketplayas' - Go long geriatrics.

Wed, 09/15/2010 - 02:07 | 582658 StychoKiller
StychoKiller's picture

I "thought" I was positioned for the retirement of the baby boomers (in health care stocks, pharma, etc), but then the housing bubble blew up and took all my plans with it!

Thu, 10/07/2010 - 06:19 | 631669 Herry12
Herry12's picture

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