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Debt Slavery – Why It Destroyed Rome, Why It Will Destroy Us Unless It’s Stopped
Here's some interesting weekend reading about Debt Slavery and our place in its long history. ~ Ilene
Debt Slavery – Why It Destroyed Rome, Why It Will Destroy Us Unless It’s StoppedCourtesy of MICHAEL HUDSON
Published at CounterPunch
Aristotle, The Louvre - Wikicommons Eric Gaba (Sting)
Book V of Aristotle’s Politics describes the eternal transition of oligarchies making themselves into hereditary aristocracies – which end up being overthrown by tyrants or develop internal rivalries as some families decide to “take the multitude into their camp” and usher in democracy, within which an oligarchy emerges once again, followed by aristocracy, democracy, and so on throughout history.
Debt has been the main dynamic driving these shifts – always with new twists and turns. It polarizes wealth to create a creditor class, whose oligarchic rule is ended as new leaders (“tyrants” to Aristotle) win popular support by cancelling the debts and redistributing property or taking its usufruct for the state.
Since the Renaissance, however, bankers have shifted their political support to democracies. This did not reflect egalitarian or liberal political convictions as such, but rather a desire for better security for their loans. As James Steuart explained in 1767, royal borrowings remained private affairs rather than truly public debts. For a sovereign’s debts to become binding upon the entire nation, elected representatives had to enact the taxes to pay their interest charges.
By giving taxpayers this voice in government, the Dutch and British democracies provided creditors with much safer claims for payment than did kings and princes whose debts died with them. But the recent debt protests from Iceland to Greece and Spain suggest that creditors are shifting their support away from democracies. They are demanding fiscal austerity and even privatization sell-offs.
This is turning international finance into a new mode of warfare. Its objective is the same as military conquest in times past: to appropriate land and mineral resources, also communal infrastructure and extract tribute. In response, democracies are demanding referendums over whether to pay creditors by selling off the public domain and raising taxes to impose unemployment, falling wages and economic depression. The alternative is to write down debts or even annul them, and to re-assert regulatory control over the financial sector.
Near Eastern rulers proclaimed clean slates for debtors to preserve economic balance
Charging interest on advances of goods or money was not originally intended to polarize economies. First administered early in the third millennium BC as a contractual arrangement by Sumer’s temples and palaces with merchants and entrepreneurs who typically worked in the royal bureaucracy, interest at 20 per cent (doubling the principal in five years) was supposed to approximate a fair share of the returns from long-distance trade or leasing land and other public assets such as workshops, boats and ale houses.
As the practice was privatized by royal collectors of user fees and rents, “divine kingship” protected agrarian debtors. Hammurabi’s laws (c. 1750 BC) cancelled their debts in times of flood or drought. All the rulers of his Babylonian dynasty began their first full year on the throne by cancelling agrarian debts so as to clear out payment arrears by proclaiming a clean slate. Bondservants, land or crop rights and other pledges were returned to the debtors to “restore order” in an idealized “original” condition of balance. This practice survived in the Jubilee Year of Mosaic Law in Leviticus 25.
The logic was clear enough. Ancient societies needed to field armies to defend their land, and this required liberating indebted citizens from bondage. Hammurabi’s laws protected charioteers and other fighters from being reduced to debt bondage, and blocked creditors from taking the crops of tenants on royal and other public lands and on communal land that owed manpower and military service to the palace.
In Egypt, the pharaoh Bakenranef (c. 720-715 BC, “Bocchoris” in Greek) proclaimed a debt amnesty and abolished debt-servitude when faced with a military threat from Ethiopia. According to Diodorus of Sicily (I, 79, writing in 40-30 BC), he ruled that if a debtor contested the claim, the debt was nullified if the creditor could not back up his claim by producing a written contract. (It seems that creditors always have been prone to exaggerate the balances due.) The pharaoh reasoned that “the bodies of citizens should belong to the state, to the end that it might avail itself of the services which its citizens owed it, in times of both war and peace. For he felt that it would be absurd for a soldier … to be haled to prison by his creditor for an unpaid loan, and that the greed of private citizens should in this way endanger the safety of all.”
The fact that the main Near Eastern creditors were the palace, temples and their collectors made it politically easy to cancel the debts. It always is easy to annul debts owed to oneself. Even Roman emperors burned the tax records to prevent a crisis. But it was much harder to cancel debts owed to private creditors as the practice of charging interest spread westward to Mediterranean chiefdoms after about 750 BC. Instead of enabling families to bridge gaps between income and outgo, debt became the major lever of land expropriation, polarizing communities between creditor oligarchies and indebted clients. In Judah, the prophet Isaiah (5:8-9) decried foreclosing creditors who “add house to house and join field to field till no space is left and you live alone in the land.”
Creditor power and stable growth rarely have gone together. Most personal debts in this classical period were the product of small amounts of money lent to individuals living on the edge of subsistence and who could not make ends meet. Forfeiture of land and assets – and personal liberty – forced debtors into bondage that became irreversible. By the 7th century BC, “tyrants” (popular leaders) emerged to overthrow the aristocracies in Corinth and other wealthy Greek cities, gaining support by cancelling the debts. In a less tyrannical manner, Solon founded the Athenian democracy in 594 BC by banning debt bondage.
But oligarchies re-emerged and called in Rome when Sparta’s kings Agis, Cleomenes and their successor Nabis sought to cancel debts late in the third century BC. They were killed and their supporters driven out. It has been a political constant of history since antiquity that creditor interests opposed both popular democracy and royal power able to limit the financial conquest of society – a conquest aimed at attaching interest-bearing debt claims for payment on as much of the economic surplus as possible.
When the Gracchi brothers and their followers tried to reform the credit laws in 133 BC, the dominant Senatorial class acted with violence, killing them and inaugurating a century of Social War, resolved by the ascension of Augustus as emperor in 29 BC.
Rome’s creditor oligarchy wins the Social War, enslaves the population and brings on a Dark Age
Matters were more bloody abroad. Aristotle did not mention empire building as part of his political schema, but foreign conquest always has been a major factor in imposing debts, and war debts have been the major cause of public debt in modern times. Antiquity’s harshest debt levy was by Rome, whose creditors spread out to plague Asia Minor, its most prosperous province. The rule of law all but disappeared when publican creditor “knights” arrived. Mithridates of Pontus led three popular revolts, and local populations in Ephesus and other cities rose up and killed a reported 80,000 Romans in 88 BC. The Roman army retaliated, and Sulla imposed war tribute of 20,000 talents in 84 BC. Charges for back interest multiplied this sum six-fold by 70 BC.
Among Rome’s leading historians, Livy, Plutarch and Diodorus blamed the fall of the Republic on creditor intransigence in waging the century-long Social War marked by political murder from 133 to 29 BC. Populist leaders sought to gain a following by advocating debt cancellations (e.g., the Catiline conspiracy in 63-62 BC). They were killed. By the second century AD about a quarter of the population was reduced to bondage. By the fifth century Rome’s economy collapsed, stripped of money. Subsistence life reverted to the countryside.
Creditors find a legalistic reason to support parliamentary democracy
When banking recovered after the Crusades looted Byzantium and infused silver and gold to review Western European commerce, Christian opposition to charging interest was overcome by the combination of prestigious lenders (the Knights Templars and Hospitallers providing credit during the Crusades) and their major clients – kings, at first to pay the Church and increasingly to wage war. But royal debts went bad when kings died. The Bardi and Peruzzi went bankrupt in 1345 when Edward III repudiated his war debts. Banking families lost more on loans to the Habsburg and Bourbon despots on the thrones of Spain, Austria and France.
Matters changed with the Dutch democracy, seeking to win and secure its liberty from Habsburg Spain. The fact that their parliament was to contract permanent public debts on behalf of the state enabled the Low Countries to raise loans to employ mercenaries in an epoch when money and credit were the sinews of war. Access to credit “was accordingly their most powerful weapon in the struggle for their freedom,” Richard Ehrenberg wrote in his Capital and Finance in the Age of the Renaissance (1928): “Anyone who gave credit to a prince knew that the repayment of the debt depended only on his debtor’s capacity and will to pay. The case was very different for the cities, which had power as overlords, but were also corporations, associations of individuals held in common bond. According to the generally accepted law each individual burgher was liable for the debts of the city both with his person and his property.”
The financial achievement of parliamentary government was thus to establish debts that were not merely the personal obligations of princes, but were truly public and binding regardless of who occupied the throne. This is why the first two democratic nations, the Netherlands and Britain after its 1688 revolution, developed the most active capital markets and proceeded to become leading military powers. What is ironic is that it was the need for war financing that promoted democracy, forming a symbiotic trinity between war making, credit and parliamentary democracy which has lasted to this day.
At this time “the legal position of the King qua borrower was obscure, and it was still doubtful whether his creditors had any remedy against him in case of default.” (Charles Wilson, England’s Apprenticeship: 1603-1763: 1965.) The more despotic Spain, Austria and France became, the greater the difficulty they found in financing their military adventures. By the end of the eighteenth century Austria was left “without credit, and consequently without much debt,” the least credit-worthy and worst armed country in Europe, fully dependent on British subsidies and loan guarantees by the time of the Napoleonic Wars.
Finance accommodates itself to democracy, but then pushes for oligarchy
While the nineteenth century’s democratic reforms reduced the power of landed aristocracies to control parliaments, bankers moved flexibly to achieve a symbiotic relationship with nearly every form of government. In France, followers of Saint-Simon promoted the idea of banks acting like mutual funds, extending credit against equity shares in profit. The German state made an alliance with large banking and heavy industry. Marx wrote optimistically about how socialism would make finance productive rather than parasitic. In the United States, regulation of public utilities went hand in hand with guaranteed returns. In China, Sun-Yat-Sen wrote in 1922: “I intend to make all the national industries of China into a Great Trust owned by the Chinese people, and financed with international capital for mutual benefit.”
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World War I saw the United States replace Britain as the major creditor nation, and by the end of World War II it had cornered some 80 per cent of the world’s monetary gold. Its diplomats shaped the IMF and World Bank along creditor-oriented lines that financed trade dependency, mainly on the United States. Loans to finance trade and payments deficits were subject to “conditionalities” that shifted economic planning to client oligarchies and military dictatorships. The democratic response to resulting austerity plans squeezing out debt service was unable to go much beyond “IMF riots,” until Argentina rejected its foreign debt.
A similar creditor-oriented austerity is now being imposed on Europe by the European Central Bank (ECB) and EU bureaucracy. Ostensibly social democratic governments have been directed to save the banks rather than reviving economic growth and employment. Losses on bad bank loans and speculations are taken onto the public balance sheet while scaling back public spending and even selling off infrastructure. The response of taxpayers stuck with the resulting debt has been to mount popular protests starting in Iceland and Latvia in January 2009, and more widespread demonstrations in Greece and Spain this autumn to protest their governments’ refusal to hold referendums on these fateful bailouts of foreign bondholders.
Shifting planning away from elected public representatives to bankers
Every economy is planned. This traditionally has been the function of government. Relinquishing this role under the slogan of “free markets” leaves it in the hands of banks. Yet the planning privilege of credit creation and allocation turns out to be even more centralized than that of elected public officials. And to make matters worse, the financial time frame is short-term hit-and-run, ending up as asset stripping. By seeking their own gains, the banks tend to destroy the economy. The surplus ends up being consumed by interest and other financial charges, leaving no revenue for new capital investment or basic social spending.
This is why relinquishing policy control to a creditor class rarely has gone together with economic growth and rising living standards. The tendency for debts to grow faster than the population’s ability to pay has been a basic constant throughout all recorded history. Debts mount up exponentially, absorbing the surplus and reducing much of the population to the equivalent of debt peonage. To restore economic balance, antiquity’s cry for debt cancellation sought what the Bronze Age Near East achieved by royal fiat: to cancel the overgrowth of debts.
In more modern times, democracies have urged a strong state to tax rentier income and wealth, and when called for, to write down debts. This is done most readily when the state itself creates money and credit. It is done least easily when banks translate their gains into political power. When banks are permitted to be self-regulating and given veto power over government regulators, the economy is distorted to permit creditors to indulge in the speculative gambles and outright fraud that have marked the past decade. The fall of the Roman Empire demonstrates what happens when creditor demands are unchecked. Under these conditions the alternative to government planning and regulation of the financial sector becomes a road to debt peonage.
Finance vs. government; oligarchy vs. democracy
Democracy involves subordinating financial dynamics to serve economic balance and growth – and taxing rentier income or keeping basic monopolies in the public domain. Untaxing or privatizing property income “frees” it to be pledged to the banks, to be capitalized into larger loans. Financed by debt leveraging, asset-price inflation increases rentier wealth while indebting the economy at large. The economy shrinks, falling into negative equity.
The financial sector has gained sufficient influence to use such emergencies as an opportunity to convince governments that the economy will collapse they it do not “save the banks.” In practice this means consolidating their control over policy, which they use in ways that further polarize economies. The basic model is what occurred in ancient Rome, moving from democracy to oligarchy. In fact, giving priority to bankers and leaving economic planning to be dictated by the EU, ECB and IMF threatens to strip the nation-state of the power to coin or print money and levy taxes.
The resulting conflict is pitting financial interests against national self-determination. The idea of an independent central bank being “the hallmark of democracy” is a euphemism for relinquishing the most important policy decision – the ability to create money and credit – to the financial sector. Rather than leaving the policy choice to popular referendums, the rescue of banks organized by the EU and ECB now represents the largest category of rising national debt. The private bank debts taken onto government balance sheets in Ireland and Greece have been turned into taxpayer obligations. The same is true for America’s $13 trillion added since September 2008 (including $5.3 trillion in Fannie Mae and Freddie Mac bad mortgages taken onto the government’s balance sheet, and $2 trillion of Federal Reserve “cash-for-trash” swaps).
This is being dictated by financial proxies euphemized as technocrats. Designated by creditor lobbyists, their role is to calculate just how much unemployment and depression is needed to squeeze out a surplus to pay creditors for debts now on the books. What makes this calculation self-defeating is the fact that economic shrinkage – debt deflation – makes the debt burden even more unpayable.
Neither banks nor public authorities (or mainstream academics, for that matter) calculated the economy’s realistic ability to pay – that is, to pay without shrinking the economy. Through their media and think tanks, they have convinced populations that the way to get rich most rapidly is to borrow money to buy real estate, stocks and bonds rising in price – being inflated by bank credit – and to reverse the past century’s progressive taxation of wealth.
To put matters bluntly, the result has been junk economics. Its aim is to disable public checks and balances, shifting planning power into the hands of high finance on the claim that this is more efficient than public regulation. Government planning and taxation is accused of being “the road to serfdom,” as if “free markets” controlled by bankers given leeway to act recklessly is not planned by special interests in ways that are oligarchic, not democratic. Governments are told to pay bailout debts taken on not to defend countries in military warfare as in times past, but to benefit the wealthiest layer of the population by shifting its losses onto taxpayers.
The failure to take the wishes of voters into consideration leaves the resulting national debts on shaky ground politically and even legally. Debts imposed by fiat, by governments or foreign financial agencies in the face of strong popular opposition may be as tenuous as those of the Habsburgs and other despots in past epochs. Lacking popular validation, they may die with the regime that contracted them. New governments may act democratically to subordinate the banking and financial sector to serve the economy, not the other way around.
At the very least, they may seek to pay by re-introducing progressive taxation of wealth and income, shifting the fiscal burden onto rentier wealth and property. Re-regulation of banking and providing a public option for credit and banking services would renew the social democratic program that seemed well underway a century ago.
Iceland and Argentina are most recent examples, but one may look back to the moratorium on Inter-Ally arms debts and German reparations in 1931.A basic mathematical as well as political principle is at work: Debts that can’t be paid, won’t be.
This article appears in the Frankfurter Algemeine Zeitung on December 5, 2011.
MICHAEL HUDSON is a former Wall Street economist. A Distinguished Research Professor at University of Missouri, Kansas City (UMKC), he is the author of many books, including Super Imperialism: The Economic Strategy of American Empire (new ed., Pluto Press, 2002) and Trade, Development and Foreign Debt: A History of Theories of Polarization v. Convergence in the World Economy. He can be reached via his website, michael-hudson.com
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Good read, thx.
Year of Jubilee biatches!
A very nice article I must say, I enjoyed reading it.
Timeless.
Bravo Michael Hudson !
An excellent essay.
I think the political philosophy of John Locke which effectively enshrined the inviolability of property in democracies since 1688 has a place in the story.
Just as the debts of past monarchs died with them, so we need a new paradigm that the debts of governments should die with them!
Once an elected government falls from power, any debts they incurred should be written off. This would make the bankstas a LOT more careful when lending to elected governments!!
Whats next???? are they going t address us as earthlings or foolish mortals????
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Fuck you skeletor, lighten up. Time to listen to "shes lost control" by joy division and get a jack and coke. zzzzzzz later zh
What's next? Well, the banks own planet earth times 100, so next up they'll ask everybody to move away from their property. That's why they talk about Mars. Everybody should leave earth and move to Mars....
Just don't breath to much because oxigen is a issue and you better wear a warm coat and you also might want to bring your own water but that's not yet a sure thing because they think there's water down there.
Overall, this is the best historical perspective on current issues I've ever read.
Some important takeaways: Modern economists write of today's situation as if society is going to collapse by the end of the week, or at most in a month or two. Note in this article it took Rome F-I-V-E H-U-N-D-R-E-D Y-E-A-R-S to collapse, and during that period the first folks who advocated debt forgiveness were killed by the creditors.
"it took Rome F-I-V-E H-U-N-D-R-E-D Y-E-A-R-S to collapse"
Sheeeit, Ben can do it in a few mouse clicks
How long did it take Argentina? Or Egypt? My understanding of history tells me that the conditions for collapse take years to sow and to manifest themselves, however, when the final collapse does come, events accelerate and policymakers no longer have the ability or means to keep up with them.
Most peoples' view of human nature is vastly inflated.
This is a very good article. Two important points are that government must remain soveign and democratically elected governments tend to yield sovereignty to the interests of creditors. Aristotle, in the Politics, classifies democracy as a deviant form of government with good reason.
As we see, part of the problem with the West lies with democracy; the people vote themselves ever more leisure on credit. At least in a monarchy or aristocracy, the state is a seriers of personal estates, and tends to be managed with much more care.
While historically fantastic, I feel Hudson creates a false dichotomy in his solution: state versus private. Could a cooperative system of beefy credit unions accomplish the ends he desires without the Public Choice issues that come from the statist fix?
Beefy wha?
Jefferson said somewhere that an enlightened anarchy is the best form of .gov...where the people are sufficiently advanced they don't NEED a government...
My self, I think democracy is FINE. It just doesn't "scale" worth a shit...
Re-monetize gold. In doing so, you can have a simple way to re-capitalise the globe and solve the financial crisis. It's a proposal which goldbugs will enjoy. Listen to mp3 at this Dominic Frisby page http://commoditywatch.podbean.com/2011/10/23/genius-chartist-nick-laird/
gold is already monetized. It can freely be traded for paper or other real things. It just doesn't trade as day-to-day currency
Re-monetize gold. In doing so, you can have a simple way to re-capitalise the globe and solve the financial crisis. It's a proposal which goldbugs will enjoy. Listen to mp3 at this Dominic Frisby page http://commoditywatch.podbean.com/2011/10/23/genius-chartist-nick-laird/
Excellent posting, though I doubt that many will give it due attention; especially those with little prior knowledge of history.
I count myself fortunate for having been exposed to the broad sweep of history that the article covers, so I suppose that I find it easier to read than a lot of other people, e.g. I know a lot about "Greek Democracy", if mainly via Plato and not Aristotle. And I know enough about the Roman Empire to know that the Washington Empire is "history repeating" (but with FAR more destructive military means to "go down fighting" than the Romans had).
I also know a fair bit about more modern attempts to escape the grips of banksters, who end up controlling governments ... via the myth that only banks can create money, issue credit/debt, charge interest (a private form of taxation, in fact) and generally dictate what happens in the world, e.g. the Fed, IMF, World Bank and the BIS.
But this mob does not HAVE to have this power.
N Dakota has its own state bank.
See: http://webofdebt.wordpress.com/ for more information about how states can side-step the "Web of Debt", even without doing the ultimate ... which would be for all governments to print and coin their own means of exchange for goods and services.
People love to give Peter Schiff and his fellow Austrians nearly total credit for calling the housing bubble, but go to Counterpunch.org, search for Mike Whitney, and discover that the counterpunchers whose economic knowledge would "fit in a thimble" also had it dead on. As does Mr. Hudson. Do you really want to further deregulate banks? Was the 70-year success of Glass-Steagall just a coincidence? Too much gov't regulation is written to benefit the "elite", but that doesn't mean regulation can't work if properly written. Google "FDR" for starters.
Spot on.
Even as just a pleb, I could see that disaster loomed from the early 80s, when the Ayn Rand lover Friedman got popular and sought ever-more deregulation of the bankster system, via Ronnie Ray Gun, in the US, Maggot Thatcher, in the UK, and sundry others around the world.
My own economic knowledge, per se, is tiny; but I have known - for around thirty years - that we would end up as we are today (though I could not predict fine details of course).
Interesting that you mention Mike Whitney. For about ten years I have found him expressing ideas and analyses I would have dearly liked to have put in writing myself; but I lack the talent and so have just made comments in various blogs.
A chart you need to study:
http://3.bp.blogspot.com/-VM5CjufN-vs/Ttw5SRPr4VI/AAAAAAAATb8/0kYMdLiom0...
Once the FED & the Central banks resume printing, the $ of Au will let you know!
All bank created debt is a fraud. If people actually redeemed Federal Reserve Notes I would say different. The fact is they don't. So the banks promise to pay is never going to be called. Their collateral is never going to be at risk. Everyone's faith that someone else will accept the Federal Reerve Note as valuable is all that supports it. Common delusion is not a consideration the law recognizes.
Please explain how one goes about "redeeming" an FRN...
Debt slavery is voluntary; it's not really slavery if you volunteer, is it bitches?
Tax slavery on the other hand is imposed on me without my consent, by force of law. To avoid it, I must expatriate, which is looking better and better. See ya, parasites.
The guiding principle of free markets is the efficient allocation of societal resources. Efficient markets are hyped by free marketers as superior to government control, which plans for the greater good. Free market theory is pure bunk, put forth by corrupt politicians, neoliberal and neoconservative academic economists and lobbyists who are shills for the financial elite, who are currently ruining the US economy for their own benefit.
Free market dogma is the foundation of mainstream academic economics, which calls for smaller government, deregulation and privatization. The massive worldwide real estate bubble is the result of free market ideology. Since 2008, corrupt politicians force US taxpayers to pay $13 trillion dollars for added debt to Wall Street creditors, who get to make all the decisions, taxpayers are only there to pay the Wall Street’s debts when their bets go bad. Wall Street elite get to keep all their winnings and never go to prison for fraud. New scientific evidence proves that markets are not efficient. The financial elite are entirely wrong.
"Goverment plans for the greater good?"
How many people do governments need to eliminate via war, pogroms, and secret police disapperances before you come to your senses?
The Federal Reserve was one of the key enablers of the 2008 financial crisis. The Federal Reserve was created by government to better regulate the economy. In what way does the Federal Reserve resemble a free market?
Modern government is just a more sophisticated version of ancient monarchies and divine right. An excuse to collectivize and concentrate power so that a small group of people can take advantage of a large group of people.
The problem, Eric, is that we only deregulated one side and not the other. We removed regulations that protected individuatl citizens from the forces of competition and responsibility but we retained the regulations and laws that give advantage to large financial institutions.
Our deregulation did not create a free market - it created an imbalanced market that was dominated by larger organizations.
Capitalism without failure is like religion without sin.
We needed to let the financial system fail but we pussied out.
The author forgot an early example: Egypt. This was the original stable of the stablest societies. Between the pyramid builders like Cheops and Cleopatra was a couple of thousand years. During that gap, however, there was a 500-yr period where things went dark. Historians of the time said "the money got currupted and trade ceased". That's the one that keeps me up at night.
Otherwise, the point stands. Credit is a very useful thing; but a society must limit its availability. Every time they don't it means disaster and war. And no, bankers did not "just happen to be at the scene of the crime". Read about the finacing of Wellington's defeat of Napoleon or WWI for good examples of how wrong that statement is. And please don't tell me the Iraq war was about al-Qaeda...it was (is) about money, pure and simple.
Historians of the time said "the money got currupted and trade ceased".
Hmm, wonder if this period corresponds to the Exodus. Jews infiltrate the government, destroy the money, cause a collapse, get chased out, and then rewrite history? Wouldn't be the first time for any of these things. And how did slaves end up with enough gold to make a golden calf?
Consider tonight's "60 Minutes" broadcast.
Some 60% to 80% of the mortgages run through Countrywide under Godfather Angelo Mozilo were fraudulent. Defective through forgery, missing source documents, and another dozen forms of criminal action. Yet CITI willfully ignored their own internal auditors.
Then the Federal Government bailed them out, while the fraudulent mortgages are still being used for purposes of debt slavery.
They are thieves.
Same thing is up with State of Massachusetts filing on the Big Four TBTFs.
http://www.mass.gov/ago/docs/press/ag-complaint-national-banks.pdf
and this one
http://graphics8.nytimes.com/2010/07/10/business/complaint.pdf
Read every word of them.
In total they stole $7.3-trillion. Between the mortgage frauds and the pension-and-investment frauds.
And how's about Martha Coakley as a reincarnation of Abigail Adams ?
An excellent review, just enough to prove the point; ignore history at your peril. 5000 years of history, all ignored. And the root cause of our problems is our preference to wallow in ignorance and to elect the most incompetent and most eagerly corruptable as our "leaders".
Revolution, and the Big Banks be damned - along with Central Bankers, their agents.
Isn't it about time that we construct a system of credit distribution that is controlable and is not in the hands of a few and does not permanentl;y entrap human beings?
Show me a Nation that permits the borrowing of funds in International waters and I will show you a Nation with an illegitimate, irrespponsible, incompetant and redundant Government whose a priori allegance is not with those peoples that elected it.
They say there is not 'certainty'. I say that it is certain that a Dark Age, if not already here, is iminent.
http://verbewarp.blogspot.com/2011/08/delusional-economics.html
Post-hoc ergo propter hoc .... Just because the creditors were at the scene of the crime does not make them solely culpable for the crime. Rome was brought down by a number of faults that had all roads leading to a decadent and avaricious ruling class preying on the middle, lower, and slave classes, often using the creditors as a means to source capital from those other players.
In fact, Rome is a poster child for why effective border control and restraint to avoid insourcing cheap foreign-source labor is in a nation's vital interest.
Not for nothing that the US and Europe, heirs to the legacy of Rome, seem genetically predisposed to political, social and economic suicide like their Roman forebearers. But don't think that it will end so quickly ... Rome continued on for another 9 centuries after the fall of Rome itself under the death-grip of the Byzantine bureaucracy, several times flexing its considerable muscle and asserting considerable power although well past it's prime.
Central planning, touted here as an essential part of the cure, is but a sick joke when one realizes it is a professional bureaucracy that is now running the show.
I agree. Roman citizens had become too weak and fat to fight or work. Rome opened its borders to its most dangerous enemies, the Germans. The Roman army became an employment agency for Germans. In time the army officer corps was mostly German. And then Alaric appeared at the borders of Italy and the gates of Rome. So there was a German army on both sides. And Rome fell to the Germans. What a surprise.
"The problem, according to J.B. Bury, is that almost all of the males of the Roman Empire were unfit for hand-to-hand fighting against the barbarian enemies."
"As Germans were admitted into the army in the western Empire and became the backbone of the fighting force the officers commanding them soon were Germans as well."
http://www.sjsu.edu/faculty/watkins/barbarians.htm
It is not wise to open the borders to those who hate you and are stronger than you.
"Every economy is planned. This traditionally has been the function of government. Relinquishing this role under the slogan of “free markets” leaves it in the hands of banks."
WTF?!! Fail. This isn't even remotely true, and only the most dishonest or historically ignorant person could say so. For an example of ultimate economic planning, look at the Soviet Union. The further away you get from that, you get closer to free markets. The Soviet Union also had a central bank, and I doubt anyone would say that the Fed's management of the currency has been worse than the Soviet government. You can also look at the timeframe in which politicians' control of the money supply has destroyed or seriously devalued (far worse than our 95% over a century) the currency. (Hint: you can't find a single example of public control over the money supply that's not worse than our admittedly awful record with the Fed). What you're describing is fucking socialism, and it always ends the same way.
It wasn't even until the 20th century (the century of modern authoritarianism) that governments controlling the primitive function of currency was even taken as a given. How could governments "always" have been in charge of the printing press?
Governments dispensing "justice" or upholding property rights is in no way tantamount to "planning." If a person believes this, then they should say that the internet is a government "planned" system because the government recognizes the top level address blocks and the DNS system--the "property" of the system. But outside of certain rare and misguided exceptions, I don't see the government determining what sites and content should be developed by whom and what they can do with it. That would be planning, and that's what you're advocating. It's like you say that it's bad that a few large corporations have undue influence on the internet and so you should go all the way and just let the government take it over.
Yours is the thinking that led to institutions like the Fed in the first place. People like you blamed people like J.P. Morgan for his influence in financial markets, and then you wanted to make that function public, naively believing that it wouldn't be manipulated by them inside the institution of government with force of law.
Replacing fascism with democratic socialism isn't a noble solution given how horrible the results have been. This should be obvious to anybody with a pulse today. The failed European currency union was an attempt to stabilize their nations' currencies precisely because public political control of the money supply was even worse. The Euro will fail and these nations will print like mad because the politicians will do what the people want. The results will be completely predictable and everyone will see horrible inflation. They'll oscillate between fascism and socialism until they've complely ruined themselves. The European Union has done all of the things that you suggest (they are parliamentary democracies and we aren't) and they're even worse off than the United States.
Get rid of the fascism and the socialism and have free private markets.
Did you actually read the article ... I mean with diligence?
Seems you did not. Seems that you probably skimmed it and skipped anything your mind was not already closed to.
FYI there has NEVER been a "free market" and never can be ... it is an ideological pipe dream, except that we do indeed have "free private markets", commonly known as BANKS which have had all regulations removed, especially the Glass-Steagull Act which used to prevent commercial banks (and other entities) from using deposits to finance speculation ... the MF debacle is just the latest in a series of disasters enabled by the "free market" mantra of deregulation.
And how do you like the results, eh!?
And how do you like the fact that nothing about banking is in any sense 'free'?
I agree that if a state tries to micro-manage/plan, such as with the defunct USSR, the results are bad; but do you seriously suppose that turning everything over to "the private sector" produces better results?
Yeltsins Russia tells that you are wrong.
In the absence of any state regulation, private (really corporate) interests will plot and plan to take over everything ... and fool people like you into defending the likes of J P Morgan, who never believed in anything other than his ability to gain control and obliterate competition.
MF Global only existed because of political power and nepotism.
Nothing is turned over to the private sector, it is there to begin with and stolen by government, this is called taxation.
Without Fannie&Freddie no MBS no housing bubble.
Yes, more gov planning is clearly needed.
I did actually read the article.
The implied subtext is that people with belief in 'democracy' should insist on public control of the money supply. Hence all of the fascination with parliamentary democracy, a governmental philosophy embraced by almost every single nation in Europe and the reason that their failing social democratic systems ceded power to a fascist entity known as the ECB. The problem is that the democratic 'public' is a non-sensical entity. It doesn't exist. A government of people will be in control of the money supply and pure democracy is a centralizing entity for power.
All the arguments of leftist haters of the Fed boil down to "a fascist collusion of the private and public sector is screwing everyone over... let's give more power to the government!" It's no less insane than the Keynesian belief that you can fix a debt problem with more debt.
It is each and every one of these misguided arguments that has centralized more power to the government and given powerful interests more control over our daily lives.
I bring up the J.P. Morgan example to show how government involvement made a bad situation infinitely worse. As for the "deregulation" trope, it wouldn't matter at all. Trying to contain Fed money printing with government (which will always be incompetent because of its incentives) is like trying to hold jello with rubber bands. Real regulation is not allowing central money printing in the first place--either by public politicians or centralized cartels--and allowing interest rates to mediate the supply of money.
* Also, you have a funny argument here with the free markets. We did in fact have free markets through most of the 19th century. Look up the tax burden in 1900 and the percentage of government spending vs. private sector spending. It is bad enough that we have a fascist control of the money supply that will fail, but a socialist control of the money supply will fail even faster. It is precisely the regulatory apparatus which allows fascism to form because it creates the illusion of free markets, whereas socialism involves no such pretense. In socialism they'll just print and print and print because the welfare state demands it (see Dennis Kucinich, madman extroardinaire, and every single public printing press in human history).
All hail the awake and aware Mr. Sandman!
Banking is only made possible by government privilege. Fractional reserve banking is enacted by statute. Fiat currency is enacted by statute. Central banking is enacted by statute. Legal tender laws preventing anything besides the fiat in question to be used to settle debts is enacted by statute. Inflation is enacted by de facto central banking operations. Modern day "tricks" like derivatives leverage and checking account sweeps are enacted by statute. The list or white-collar crimes goes on and on.
I suppose any of these things (FRB, fiat, etc) could arise organically in a free market, but the difference is that the lack of government-enforced privilege probably makes these things short-lived, as honest people can utilize more honest means of exchange, and shun the intrinsically worthless, backed-by-nothing, conjured-out-of-thin-air paper that bankers attempt to sling around.
Now, you could argue that bankers gain government privilege by bribing the government, i.e., systemic regulatory capture. The classic response to this generally seems to be, "Well, you need a stronger, more corruption-resistant regulator." Which is really just a roundabout way of saying "We need more powerful government to do [X] or [Y]." This is the solution that Hudson seems to be advocating, in this and other of his works. He sure seems to place an awful lot of trust in "the government" to "do its job," "stand for the people," "ensure national self-determination," etc.
This doesn't even get to the point that modern empires absolutely depend upon crooked banking to enable their actions. Modern fiat-based deficit spending allows empires to run up huge trade imbalances (one of the downfalls of the British Empire). Modern fiat-based deficit spending allows empires to field enormous, technologically-advanced armies to all corners of the globe. Modern fiat-based deficit spending allows politicians to promise unlimited amounts of bread, circuses, health care, and education to the people, creating the permanent establishment of the cradle-to-grave central savior state. Modern fiat-based deficit spending allows empires to import goods and services of actual value, while paying nothing but useless paper/electronic currency in return. Why would any bureaucracy purposefully reduce its own power by eliminating the banking cartel?
The truth is, governments need bankers, and bankers need government. They create and enable and sustain each other. It's an unholy alliance lost on the naive and foolish like Hudson whose knee-jerk reaction to banker misdeeds is a larger, more pervasive, endlessly powerful Central State.
Personally, I always think of this quote:
"Experience has shown that even under the best forms of government those entrusted with power have, in time, and by slow operations, perverted it into tyranny."
-Thomas Jefferson, 1779
Banking emerges in a free market even in the absence of government action. Banking on a small scale is called "loan sharking" and has been in business since Biblical times (usury being one problem that was outlawed in the OT). And, even in more sophisticated financial markets, the lack of a central bank wouldn't be a problem. Banks and investment companies offset their risks of inflationary and deflationary cycles in various ways: savings, derrivatives, insurance contracts, etc. To think that either the federal reserve or a government monopoly on chartering banks is the only way things need to be for a stable and honest system of financial intermediation is a bit shortsighted IMHO. Certainly having some regulation in place (financial disclosure laws, reserve requirements) are necessary for sound financial intermediation, but trade organizations would emerge in a true free market to try to edge out the shady people...who do you think writes the legislation anyway?
Excellent discussion.
The traditional Chinese view of history was (is?) that it is cyclical, same drama playing out again and again. Mandate of Heaven indicating who gets to be the oligarch this time around.
Anything different today? I don't really know, but a few things come to mind:
-There is much more awareness among the plebs of what's going on, and why. Although countering that is the extremely advanced global integration of political and financial control being consolidated every day now. Mordor's eye is everywhere, but we can see it too...
-The impending breakdown of civilisation's life support systems evidenced by peak everything, oil of course but also capital, water, topsoil, also the thousands of toxins we are bathed in (hundreds in mother's milk alone), who knows how much radiation, destruction of fish stocks, damage to the ozone and ocean currents... all these factors that affect bankers and oligarchs and the 99% too.
So this would seem to add up to a situation in which humanity as a whole not only can but must change, or else it just won't be much fun even to be an oligarch if all you have is lockdown, bomb shelters and auto-immune disease.
There is a precipice and we might get to see it, at least.... if there is a chance for change it is probably right at the precipice, still a few minutes until we see the Crack of Doom, although I can smell it for sure...
The same old thing just happens over and over again - doesn't it?
Read:
http://www.amazon.com/Simple-Wealth-Mr-Andrew-Costello/dp/1463523017/ref
Sorry, but the government is no better at "planning" the economy than they are at anything else.
Oh, and free markets aren't planned by banks. They're planned by the participants, each seeing to his own interest.
Read some Austrian economics and you won't be ignorant any more.
By the way, Counterpunch is good when they point out the evil acts of the warfare state. Otherwise they're a bunch of communists, whose understanding of economics could be put in a thimble with plenty of room left over.
Go to counterpunch.org, search "Mike Whitney 2006", and report back to how dead-on and early-on counterpunch was in calling the housing bubble.
Hudson is seriously confused about the role of government, which is not to "plan" the economy, always unsuccessful, but to enforce rule of law, and specifically rule of law regarding banks and other creditor-debtor relations. The problem in the West is that bankers, through their powerful lobbies, have completely subverted rule of law with respect to large banks and other crony capitalists. The first stage occurred when the Fed was created on Christmas Eve 1913, and it has gotten exponentially worse.
But the answer to subversion of rule of law is reaffirmation of law, not dictators and populist mayhem, which just leads to different kinds of lawlessness.
Yes, thank you. This point ruined an otherwise good post for me: government is to planning as banks are to free market?!? WTF? The central bank IS the government plan!!!
REPUDIATE YOUR DEBT.
The momentum grows: DEBTORS REVOLT – intentional *default-en-masse* to hasten the collapse of the predatory lending system and the plutocracy into which our country has morphed.
Join us. Simply refuse to play their game, and repudiate your debts – just walk away. The system, as it has transformed over the past 15 years, is simply rigged against you and offers you no mercy. So show no mercy in return; just default. Watch what happens – their power depends upon OUR cooperation, and our continued fear. Reset and rebuild from there.
DEBTORS’ REVOLT — DEFAULT EN MASSE. The Founding Fathers revolted against England over far, far less.
I don't recommend debt repudiation as a form of protest or as sabotage.
But if you do have debt trouble, my book "Debt Hope: Down and Dirty Survival Strategies" is a concise guide to making your way through. You can order it on Amazon or Barnes and Noble.
RUN UP YOUR CREDIT CARDS AND DEFAULT! DESTROY THE BEAST!
What is presented is valuable, and it is well condensed. Brooks Adams valuable on all this as well.
A lot was left out, unfortunately. Even a brief outline such as this needs to include the "Jewish financier" dimension in order to avoid tendentious ellipsis. Read Sombart.
Hudson does not mention that the Jews expelled from England under Edward were re-admitted by Cromwell in exchange for his undertaking to get rid of the king and make better security for their handsome loans (without which he would not likely have prevailed). The fact that the Restoration did not involve the re-expulsion of the Jews from England was fateful. Their advice and their underwriting were fundamental to the chartering of the first great national bank, the Bank of England, in 1694 (after getting rid of Stuarts once again, in 1688). They had already helped the Dutch (don't forget, William of "William and Mary" was Dutch!) against the Hapsburgs in a similar way, and helped creat the Dutch central banking system. Our present misadventures with the City of London have a long back story.
So it is not merely "a symbiotic trinity between war making, credit and parliamentary democracy which has lasted to this day." as the author correctly states, but there is also the inconvenient added factor of Jewish financial backing and influence. Before the AIPAC shills start screeching, no "anti-semitism" is needed to notice this, just a decent respect for facts. If Jews can be politically organized, then they can express interests. This interests must be understood and analyzed in their relations to the other interests involved. The factor of these interests as they relate to the extension and refusal of credit is all-important. Wake up, folks.
No mention of the Rothschilds, Sassoons, Belmont, Chase, Morgan. Tsk. Such cowardice. Read Disraeli's "Coningsby" for a diverting and informative "insider's view" of this factor.
Cheerio.