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A Mania Of Manias

Tyler Durden's picture




 

Submitted by Robert Gore via Straight Line Logic blog,

On December 5, 1996, Chairman of the Federal Reserve Board Alan Greenspan asked: “But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade?” Greenspan was worried about the stock market, particularly the booming tech sector, but for the next three years they just got more exuberant and more irrational.

The subsequent crash took 38 percent off the DJIA and 77 percent off the tech-heavy NASDAQ in a couple of years. Speculators who were short the tech stocks and indexes made buy-an-island profits, but most of them had already been carried out on stretchers. The NASDAQ had gone from 1492.4 in 1998 to 5048.62 at its 2000 high, a gain of 238 percent. Up to the crash, speculators justifiably said, “This is insanity,” bet accordingly, and lost their shirts. The NASDAQ bottomed in 2002 at 1139.9, below where it had begun its final lift-off in 1998. Greenspan had been derided for his “irrational exuberance” speech for three years, but by 2002 he was hailed as a seer.

Greenspan’s speech incorporated no extraordinary analytical insight, merely recognition that in a finite world, off-the-chart returns can’t last forever, or as the old traders’ adage puts it: trees don’t grow to the sky. The paradox of Greenspan is that he made such a public utterance about a financial condition that he bore responsibility for perpetuating. He has never acknowledged what became known as the “Greenspan put,” first instituted in response to the stock market crash of 1987. Every significant financial perturbation was met with more and cheaper money, and the Greenspan Fed even launched a preemptive strike against a threat that never materialized. (Anybody remember the Y2K disaster?) That pre-millennium largess sparked the equity indexes’ final spasmodic rapture before the tech wreck.

Greenspan’s flood of money after that wreck launched the great housing bubble, and again those who muttered, “This is insanity,” and bet accordingly lost their shirts—until they didn’t. The tech bubble had been fed by dreams of technologies most of the dreamers didn’t understand, a belief in magic and a “new economy”. There’s nothing magic about a house. It’s a wasting asset, and for most of U.S. history it has been regarded as a place to live, not as an ATM, investment, or retirement nest egg. And certainly not as a speculative asset, bought on leverage, held for a short time, and flipped for a profit.

So there was not even a belief in technological magic to “excuse” the housing bubble, just a lot of people on TV, in academia, on Wall Street, and in the government, proclaiming that house prices never go down (they did in the Great Depression), so buy one, or several, or many, before prices went up next month. But for the easy, cheap money spewed by the Greenspan and Bernanke Feds, the housing bubble would never have happened. When it burst the DJIA lost 54 percent from its 2007 peak to its 2009 low. Many of the derivatives created on the financial back end were worthless. Some of the shorts found themselves on the Forbes 400, but not before they had suffered substantial losses. It’s tough to time a bursting bubble.

Which brings us to the present day. If the tech mania was based on magic, and the housing mania was based on a supposed fact that was historically untrue, today’s mania is a mania of manias, interlinked and resting on premises that are patently illogical, contradicted by both the historical record and current experience. Those premises are: central planning works, government debt promotes prosperity, and economic growth stems from central banks buying that debt with money they create from thin air. On these premises rest manias in governments, their debts, and central banking.

If central planning worked, there would still be a USSR and China would not have tossed Mao’s brand of communism into the dustbin of history. These historical bastions of non-prosperity had to resort to “demand management.” When their economies were unable to provide the basic necessities of life, their enlightened rulers slaughtered millions. The US imported central planning with the Great Depression, but it worked no better here than it had for Stalin. Since then, government failures have been legion while the Information Revolution has transformed the economy, but the belief in central planning—and hostility towards markets and the profit motive—is unshakeable. Millions supported Obamacare, a big step towards centrally planned and provided medicine, probably after reading about it on their iphones.

The term “developed country” now refers to those countries whose governments have developed mountains of debt and future commitments they have no hope of repaying. The valleys are demographic; most of those nations have birth rates that aren’t replacing the current aging populations, and fall far short of providing a sufficient workforce to fund the old folks’ benefits. Japan has the dubious honor of having one of the highest mountains—its government’s debt is over 240 percent of its GDP, and one of the deepest valleys. Its birthrate is among the world’s lowest, and it stringently restricts immigration.

Most government debt doesn’t go towards projects that will produce an economic return; it funds consumption. The belief (hope?) persists that such consumption somehow leads to economic growth, although a weak “recovery” in the face of the greatest global governmental debt binge in history offers no support. Germany, which has incurred relatively little debt since the financial crisis, has had one of the world’s best-performing economies, while Japan, which has buried itself in IOUs, just reentered recession.

The debt binge hasn’t worked out as planned, but the quack economic central planners have more snake oil: central bank monetization of that debt to suppress interest rates. The Japanese central bank has monetized its government’s debt at low rates for years. It is currently buying 100 percent of the government’s issuance, and the yield on its ten-year bond dropped to .31 percent, but Japan has endured serial recessions. If central bank balance sheet expansion and low interest rates were the road to riches, why not monetize everything and create universal wealth? The absurdity of that proposition is self-evident, but equity markets the world over rally every time a central banker hints of more balance sheet expansion and continuing microscopic interest rates (see “Ms. Yellen Whispers Sweet Nothings in Mr. Market’s Ear,” SLL, 12/19/14)

Tulips, the South Sea Bubble, the new economy, the housing bubble—at some point the greatest fool has bought into an absurdity and a market that could only go one way goes the other way, precipitously. If the tech wreck was a jump off a thirty-meter platform and the 2008 financial crisis a plunge off the cliffs of Acapulco, the end of this multiple-absurdity mania of manias will be a swan dive from the top of the Empire State Building into a two-foot wading pool.

Seismic economic and financial upheaval will shake political foundations around the world. What will governments and central banks do? They are already buried in debt, and interest rates are at zero or below. Yet their constituents have bought into the absurdities of their supposed omniscience and omnipotence. They will, like spoiled children, demand immediate solutions to decades-in-the-making problems caused by central planning, and its attendant debt promotion and central bank machinations.

Of course, the same prediction could have been made at the end of 2013, 2012, 2011, 2010, and 2009 (and SLL made it at the end of some of those years), and it may be a just a prediction, not a reality, at the end of 2015. A good mechanic can listen to an engine’s rattle and correctly predict the car will break down, but not necessarily say whether it will be 50 or 500 miles down the road. Who knows when the jerry-rigged contraption known as the global economy will fall apart? It’s belching blue smoke. The oil market serves as a reminder that not all assets can be monetized and not all prices “administered” by the central planners. It may also be the dashboard red light that goes on just before the engine gives its death rattle and the car stops (see “Oil Ushers in the Depression,” SLL, 12/1/14, and “Oil Economics, Part 2,” SLL, 12/3/14).. This time, however, there will be no deficit-financing or central-bank-monetization AAA tow truck a cellphone call away to come rescue it.

 

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Thu, 01/01/2015 - 23:08 | 5613780 NoVa
NoVa's picture

Doom & Gloom, Doom & Gloom, Doom & Gloom    or

Boots & Pants, Boots & Pants, Boots & Pants and Boots & Pants

 

 

NoVa

 

Thu, 01/01/2015 - 23:32 | 5613826 Publicus
Publicus's picture

Let me introduce you to the computer that can erase all debt at the press of a button.

 

We now have the technology.

Thu, 01/01/2015 - 23:37 | 5613840 Truther
Truther's picture

Fuck the FED and ECB that goes with it. I am fucking tired of this bullshit.

Fri, 01/02/2015 - 03:03 | 5614052 Nemo DeNovo
Nemo DeNovo's picture

#YesWeCan #Moar #FSA #FTW #EBT

Fri, 01/02/2015 - 04:04 | 5614086 Pinto Currency
Pinto Currency's picture

 

 

"...As I testified before the Congress last month, accelerating productivity entails a matching acceleration in the potential output of goods and services and a corresponding rise in real incomes available to purchase the new output. The pickup in productivity however tends to create even greater increases in aggregate demand than in potential aggregate supply. This occurs principally because a rise in structural productivity growth, not surprisingly, fosters higher expectations for long-term corporate earnings. These higher expectations, in turn, not only spur business investment but also increase stock prices and the market value of assets held by households, creating additional purchasing power for which no additional goods or services have yet been produced..."

http://www.federalreserve.gov/boarddocs/speeches/2000/20000306.htm

Alan 'Bullshit' Greenspan

Fri, 01/02/2015 - 05:20 | 5614148 NidStyles
NidStyles's picture

I am still waiting for everyone to realize that there is one select group that benefits from all of this economic decline. It's the worldwide communist crowd that also happens to be the technocrats in charge at the Fed. None of this is happening by accident. It's obvious once you start looking into who is behind the UN, IMF, and World Bank.

Fri, 01/02/2015 - 05:33 | 5614156 Ghordius
Ghordius's picture

NidStyles, there is no one select group. there are several

the crowd behind the FED is easy: megabanks, with their lobbyists and even White House advisors, the Primary Dealer Nexus which involves even "foreign" megabanks and interestingly, even China

thinking they all pull at the same end of same rope is a terrible simplification

throwing in the "UN crowd" in the whole thing is even worse. throwing in the "IMF crowd" leaves me asking myself if you realize that China is setting up a rival to the IMF

you could as well say: there are the elites and there is "the little man", but this hides the historical fact that elites are engaged in constant struggle

Fri, 01/02/2015 - 10:57 | 5614521 Antifaschistische
Antifaschistische's picture

don't leave off corporate VIPs who benefit from large stock option packages - who benefit from jacking up the stock price - who benefit from the massive stock buyback programs - funded by the fed's easy money policy.

Thu, 01/01/2015 - 23:42 | 5613849 Oh regional Indian
Oh regional Indian's picture

This a a "top call" headliner for sure.

Like art for art's sake, a mania for manias. Excellent.

2015 will be a hard down year, no doubt. The fundamentals are screaming it and will not be denied.

It will either be a hugely expanded WAR or oil at $200 and either way, humpty dumpty all around.

This fall, we will see a fall

Nothing will be left

or Right

Standing tall....

 

Thu, 01/01/2015 - 23:43 | 5613853 Truther
Truther's picture

This is a Shmitah year.

Fri, 01/02/2015 - 00:30 | 5613912 Oh regional Indian
Oh regional Indian's picture

I thought that joisy gentlemen's message was pretty trippy too...

Thu, 01/01/2015 - 23:58 | 5613872 Chipped ham
Chipped ham's picture

The Bionic Yellen.

Fri, 01/02/2015 - 01:57 | 5614005 Renewable Life
Renewable Life's picture

This "push the button" bullshit always has fascinated and amused me at the same time!!

ALL debt is collateralized by something no matter how leveraged it may be or how uncollateralized it may seem!! If they ever did "push the button" you would see shit blow up all over this planet and in this Country that no one in their wildest dreams, would have thought were at risk or connected to each other!!

This button bullshit is part of the propaganda machine of CB's that is a cornerstone of the Kenyesian religion as to brainwash people into thinking that u CAN actually spend and borrow forever with consequence!

Which of course is utter bullshit!!

Fri, 01/02/2015 - 13:15 | 5615095 Publicus
Publicus's picture

You screw the super rich who holds pretty much all debt.

You can also print the other side too. We also have that technology.

 

Remember, it really is just a giant game of monopoly. We have control of all rules.

Fri, 01/02/2015 - 12:25 | 5614879 RaceToTheBottom
RaceToTheBottom's picture

So, that check engine light on the dashboard really means I should do something?

Thu, 01/01/2015 - 23:12 | 5613792 fascismlover
fascismlover's picture

"developed country" could also relate directly to the current "developed humanoid".  Idiocracy for the win...although that was tame.

Thu, 01/01/2015 - 23:18 | 5613802 stocktivity
stocktivity's picture

To put it another way....It's all Bullshit!!!

Thu, 01/01/2015 - 23:39 | 5613843 Truther
Truther's picture

yeah... and we live by it.

Thu, 01/01/2015 - 23:21 | 5613810 Yes We Can. But...
Yes We Can. But Lets Not.'s picture

In Gubmint We Trust.

That'll end well.

Thu, 01/01/2015 - 23:44 | 5613856 db51
db51's picture

lmao.....To the fucking moon on the open fuckers!   Dow 20K   S$P 2,500 by Valentine's Day.  

Fri, 01/02/2015 - 00:00 | 5613874 TuPhat
TuPhat's picture

"It may also be the dashboard red light that goes on just before the engine gives its death rattle and the car stops"  I don't think it will matter that much.  The car (economy) has not really been moving at any speed anyway.  It has all been fake for years.  When it stops and crumbles into dust we will realize that it stopped being useful a long time ago.  Those who still trusted it for reliable transport may be shocked and hurt but those of us who know better will shrug and walk on.

Fri, 01/02/2015 - 00:17 | 5613899 Yen Cross
Yen Cross's picture

The ïdiot switch.

 Sarcasmx10

Fri, 01/02/2015 - 00:32 | 5613916 MEFOBILLS
MEFOBILLS's picture

Tylers, maybe a little clarification is in order to not lead your readers astray.  Bubbles and all the other failures you rail about are a predictable output of current system design.

In our current money system, where private bank fiat (credit money) is what we use for our circulating medium, there must be government borrowing and spending.

In the private sector, people borrow from banks through hypothecation, and that bank money created as loans circulates in the money supply, to then return to ledger for destruction during its accounting cycle.  More is always required to return to said ledger because of interest/usury.

In other words, the usury on our private bank credit unbalances the equation to where more must always return.  Debt instruments and their hypothecated private bank fiat cannot get together to self-extinguish.  It is impossibility, a fraud really, built into our credit system and is central to an elaborate con and goal is rent taking and control.  Creditor is always over debtor, thus political control is actually subservient to money power.

In order to cancel private debt instruments, there must be depressions, so real assets can be transferred.  Usually land is attached to debts for security, as land has title and other legal means.  Land then becomes the fungible asset backing up private debts.  This is why the land and property in New York exceeds the value of all industry in the U.S.  So, American’s want jobs and things to be properly priced, how is that possible when land is distorted while industry is harvested to then become subservient to finance?

In order to keep people from being harvested in depressions, Government must spend its fiat.  Government gets its fiat by creating bonds (TBills) and then swapping said bonds with private banks.  Private banking corporations then create their bank money and give it to government.  Government then spends this now borrowed credit (Federal Reserve notes) into its sector, and ultimately this money ends up in the general money supply for everybody to use. 

  Government bonds are backed up by taxation, which really is the 16’th amendment, forced on a unwitting sheeple America in 1913.  It’s no accident the Federal Reserve, and 16’th and 17’th amendments were created as part of this “progressive era” banking machinery, as banking credit system needs backstop due to its inherent instabilities.  The 17’th is used to buy off and influence Senators and also disenfranchise States from political power, thus destroying Federalism.  I must add that this system machinery was foisted on America as a conspiracy plot funded primarily by Ashkenazi Jews of both England’s and Germany’s (private) banking sector.  This is the undeniable historical record for any honest researcher.

Government in its sector is the most efficient producer.  Government’s sector is inelastic markets and the commons.  This is also an undeniable truth.  We need government to do its job, and it is the only force that can stop rent taking and outright usury theft of the private economy which thus enable rent stealing as profits to bankers and finance e.g. wall street and international bonds.  Therefore, representative government is both parasitized and then demonized by this system. Hypnotic suggestion and outright lies, are whispered into our ear, usually by a paid off prostitute media.

In our current banker credit system, government deficit spends by going into debt to said bankers.  These are then public debts, which could be jubileed if we had proper law in place.  We owe public debts to ourselves supposedly, but must pay TBTF private bankers usury for their right to make keyboard entries (to create new bank credit).  Who owns the private banks at the top of pyramid –are they Americans? Are they loyal to American foundational principles?

Private debts will always mount and grow with usury and other financial engineering methods such as re-hypothecations, swaps, derivatives, etc.  The housing bubble was private debts pushing land as an asset class in a positive feedback loop.  Even NIPA accounting statements show this as “growth” thus accountants are also in on the con game.

 The population will be harvested when finance chooses. Finance simply calls in loans or slows down finance rate.  Government going into debt, to then create new money, forestalls this harvesting of the private economy, allowing producers some respite.

Make no mistake; Greenspan was a monetarist of the Chicago School.  So, he was a stooge and shill for private banking corporations, and he is direct ancestral lineage to the same Ashkenazi Jews who foisted the progressive era legal machinery on America in 1912, thus destroying our Federalism and the promise of our founding.

See Godley’s sector equations for how government must go into debt for us to have any savings.

http://en.wikipedia.org/wiki/Wynne_Godley

Fri, 01/02/2015 - 00:56 | 5613950 Greenskeeper_Carl
Greenskeeper_Carl's picture

"we need govt to do its job, prevent rent taking and outright theft"

So, what you are saying is, we need the govt to steal from us so that it can then prevent others from stealing from us? that might be one of the most insanely idiotic things I have ever heard

Fri, 01/02/2015 - 01:21 | 5613982 MEFOBILLS
MEFOBILLS's picture

A Federalist system has political control.  A parsitized Washington Consensus government, really an Oligarchy is not of the people.

A constant drumbeat of fiat bad, government bad, everything bad, makes people confused - this is hypnosis in action.

Think carefully on this.  Our supposedly representative government is subservient to several power groups:

1) Extraction industry - which includes oil and minerals  2) Farming sector  3) Military Industrial Complex  4) Banking and Finance.

Of these number 4 is the most powerful.  Israeli lobby and Zionism is embedded in Finance, and the money power can easily overcome and influence the rest of the interests.  These interests run America, not politics, and certainly we do not have political capitalism.   No Federalism and NO poltical capitalism.  These ideas about political capitalism and Federalism- the main thrust of America were usurped in 1912.

We now have financial capitalism, run by and for special interests.  Our vote is not important.  We have paid for political stooges, who use propaganda and the machinery now in place to buy our votes.  Also, power is not down low in the states and counties.  Power has centralized to Washington, a direct output of the machinery.

A proper Federalist structure puts the polity into balance. For example, States no longer recall their Senators due to the 17'th.  Example:  Obama care was pushed onto Massachusets despite Romney Care being superior.  When was the last time anybody has heard of a Senator being recalled to be remanded and do the states bidding?

As soon as the 17'th was passed, Washington had stratospheric growth, as States no longer were a restraining force. 

 

 

Fri, 01/02/2015 - 03:01 | 5614051 MrButtoMcFarty
MrButtoMcFarty's picture

HEAR HEAR!!

Fri, 01/02/2015 - 03:46 | 5614076 Oh regional Indian
Oh regional Indian's picture

MEFOBills, thanks for this series of very well strung together comments.

Very enlightening....

Fri, 01/02/2015 - 11:20 | 5614605 Greenskeeper_Carl
Greenskeeper_Carl's picture

I understand all that. The first two steps to 'fix' the constitution would be a repeal of the 16th and 17th amendments. But if history tells us anything, it is that govts tend to move towards totalitarianism, and I don't think we need it to do any of the things you describe. Govts ALWAYS overstep their bounds. The current near monopoly a handful of corporations have today could not exist without the govt, neither could out banking ststem( the fed is obviously part of that too). However, as well intended as out constitution may be, it's a deeply flawed document. Conservatives like to say 'if only we followed the constitution, everything would be better. What they fail to understand is that the constitution either outright authorizes this govt in its present form, or is completely powerless to stop it. Either way, it has been rendered nearly meaningless. Lysander spooner figured all this out over a century ago, when Lincoln really got out of hand around the civil war. It has only gotten worse since then. The idea that we can remake this govt into something small and friendly is farcical.

Fri, 01/02/2015 - 01:56 | 5614009 Joe A
Joe A's picture

"Government in its sector is the most efficient producer." Government in its sector has no competition for it has monopoly. So it cannot be compared to anything else so how can we determine efficiency? Is there an alternative?

"We need government to do its job". Government firmly in the hands of interest groups and the financial sector. And I guess efficient for them. "The population will be harvested when finance chooses." as you said. Question is, how to regain government to do its job which is to serve the people.

Anyway, keep up the good work. I like your postings. I am not sure about the Jewish component of them though. For me it is still quite difficult to imagine that such a small group can have so much influence. Although they seem to be disproportionately overrepresented in the financial system I would not deduce overall conclusions from that. Most Jews in Israel have a hard time to make ends meet.

Without sounding patronizing, your 'newbee's' contributions are refreshing compared to the influx lately of either pro Kiev or pro Moskou trolls.

 

 

Fri, 01/02/2015 - 02:36 | 5614034 MEFOBILLS
MEFOBILLS's picture

Inelastic markets are things like ports, sewer systems, power lines, the military.  Ports are geographic features, and hence two side by side ports are not available for elastic competition.  Rents could be taken on ports for example, where the owner would jack up prices to take tolls on the people.  What are you going to do, sail a far distance to avoid the extra fees?

It would not do to have competing nuclear power plants, or competing Air-Forces, etc. as this is duplication and waste. 

Therefore, inelastic markets and their regulation is a prime feature of government.  These markets and public commons are the province of government.  Without regulation of these markets and the commons, they will soon be turned over to monopoly forces who would take rents. 

Tolling formerly free roads, already paid by our ancestors, is a good example of the commons being usurped for oligarchy.  Britain recently selling off its postal holdings to private entities, and then getting kickbacks to politicians is another example of rent takings on the commons to fund oligarchs.

When money is created through hypothecations, it is really your credit.  You are being hypothecated.  You then spend this bank credit into the money supply, WHERE OTHER PEOPLE USE IT.  Therefore, money is of the commons, and is a government prerogative.  Private banking corporations do not want the sheeple to know that money properly is of the commons – they will lose their easy life of rental income and power control. 

All of this disinformation that is spewed by the media is designed to confuse the minds of the sheeple, and keep their eye off of the ball. 

A properly constituted government is a necessary evil to prevent rent takings and keep the commons free, and most importantly keep prices low.  Without efficiency in the market, your output cannot be priced properly, and you don’t get the fruit of your labor. 

Those that demean all government often are rent seekers who would love to toll the commons and keep labor in perpetual bondage.  They are already rent takers and want to keep their position.  Witness the now supercharged industrial revolution we have entered.  Production is up many times due to robotic production and high speed communications.  Yet, where is the leisure dividend?  I ask again, where is it? 

People are working harder than ever, to then have their output shifted away from them into oligarchy.  People know this to be true, even though they cannot articulate how it works. 

Here is a good video that describes financial empire, of which are now in:

https://www.youtube.com/watch?v=96c2wXcNA7A

Fri, 01/02/2015 - 02:56 | 5614047 TeethVillage88s
TeethVillage88s's picture

Clear and powerful post.

Fri, 01/02/2015 - 04:40 | 5614118 Joe A
Joe A's picture

I agree to all that. But ports and other inelastic markets are being privatized at an alarming rate. Government is clearly in bed with big business. Also the post the other day on the privatization of the US prison system. Anyway, good posts. Keep 'em coming.

Fri, 01/02/2015 - 07:08 | 5614189 Nockian
Nockian's picture

Elegant but faulty.

Real monopolies don't exist without States and governments to maintain them. Regulations are simply the mechanisms of monopoly. They appear to be chains on the rentier, but are really the levers by which they operate.

its this faulty thinking on supposed 'public goods' that has resulted in our present predicament. We need to free the markets and break the politically granted priviliges that are destroying competition and innovation.

Money is not a tool of the commons. It is a state granted monopoly which is entirely in the hands of private corporations known as banks. No other form of authority can grant that privilege other than the state. It has allowed carteling of the banks, lawful fraud, single issuer corruption which has resulted in privatised profits and socialised losses.

I was once told to 'build the pipeline'. However, the pipeline is expensive to build and difficult to profit by. The market decides how much profit can be made and not the pipeline builder. Another pipeline can always be built or an alternative type of pipeline created if the pipeline owner tries to raise prices too high. In order to protect the investment he must ensure that his is the only pipeline and for that he requires legislation and regulation. The only place he can obtain that is by government decree backed by state law and its guns.

Fri, 01/02/2015 - 08:13 | 5614228 GreatUncle
GreatUncle's picture

Like the post ... this point.

Yet, where is the leisure dividend?

You cannot have it why? Imagine you have a leisure dividend of 50%v time. The price should be governed by what people can afford, half the take on half hours and the price must fall accordingly otherwise even with leisure dividend you can't take it. DEFLATIONARY.

If anything the central bank directly opposes this through stimulus to preserve the sovereign debt and inflate values / prices. INFLATION.

At the moment this low growth world? Or is a cancellation of the natural deflation and the induced inflation. THINK SO.

Now no more golf for you, no leisure dividend because you must work 100% to hold up the values :-0.

Fri, 01/02/2015 - 10:21 | 5614409 tyrone sholaces
tyrone sholaces's picture

MEFOBILLS,

You make it sound as though the government protects the sheep and is not itself under the very same control.

Fri, 01/02/2015 - 12:30 | 5614887 MEFOBILLS
MEFOBILLS's picture

I notice nobody commented on link I provided above.  It will take about 1 hour of your time.

I'm sorry that people hate government.  But, anarchy doesn't work.  Also, the worst instincts of man need to be supressed. 

If a goverment bureaucrat issues sovereign money, by law, into the money supply - he gains no benefit.  It is not for his profit.

Somebody may try to give him a kickback, but then it wouldn't be within a legal framework, and he can go to jail.

Sovereign debt free money is recalled with taxes.  If they raise or lower taxes, then that is also supervised by the people and avaiable to be seen

When money is private, and when government is private, and when things are done behind closed doors - that is when sneaky rent takings begin to happen.  Psychopaths are attracted to these sort of powers.

Limit the psychos from those sort of positions, and keep it lawful.  Law done in advance has the ability for morality to be encoded.  We can also brain scan for psychopathy now.

Conservatives who think govt bad- govt bad- govt bad, better rethink their positions.  Rent taking bad- Rent taking bad- is a much better mantra.  

Man is a rent seeking animal, and the worst of us will even create religions and national movements to codify this behavior.

I just elucidated governments role, and nobody can deny that inelastic markets must have some legal framework.  If you do deny this, then your are an ideologue who cannot think logically. the commons also make us all more efficient.   

For example, having clean water makes all of labor stay healthy.

http://sovereignmoney.eu/

Fri, 01/02/2015 - 02:29 | 5614033 q99x2
q99x2's picture

If things go the way they have been financial warfare will cease to exist the same as nuclear war ceased to exist once it became known that it would destroy the planet.

Bitcoin: $315

Ethereum: ?

 

Fri, 01/02/2015 - 03:14 | 5614055 TeethVillage88s
TeethVillage88s's picture

Still reading the article.

"The US imported central planning with the Great Depression, but it worked no better here than it had for Stalin. "

But didn't the banks in 1880 start getting rid of Silver Certificates which farmers like to use since farmers could not afford gold certificates. Didn't Banks start tightening up the money supply & credit about this time ... and on up to 1928... then continued tight credit till the US President & Congress passed legislation????

How do you address tight credit in a Recession or Depression when Private banks don't lend and have no confidence in the US Economy??

Public Banking?? Or National Legislation??

Fri, 01/02/2015 - 04:07 | 5614088 MEFOBILLS
MEFOBILLS's picture

Actually it was recall of greenbacks with the resumption act.  Silver certificates were issued much later under President Kennedy, which in turn funded much of the Apollo program.  Actually, Kennedy allowed some reissue of Greenbacks as the law was still on the books.

Between Kennedy forgiving third world debt, and then issuing silver certificates (thus bypassing the FED) Kennedy was made an enemy of money powers.  As soon as Johnson came into power, the silver certificates were canceled as legal money, and also nuclear timers were allowed to be stolen by Israel.  Some think that Johnson was a crypto Jew on his mother’s side.  I must also add that all of the Kennedy family was killed in Kaballa (Jewish) numerology significance, and when constellations were in alignment.  This clearly indicates statistically, that money power agents were behind the assassination.  Kaballa is direct descendant of Zohar mystery religion, learned in the 1000 year sojourn in Babylon, and promulgated by the Sages.

 

Going back to Greenbacks.  Greenbacks were Civil War treasury instruments that circulated as money.  At first they had some debt association but were never redeemed.   Lincoln just wanted some money to pay the soldiers and pay for the war without usury and associated debts. Greenbacks then circulated debt free in the money supply.  Bankers could put them in their reserve loops and then have bank credit ride on top in a ten to 1 ratio.  Whenever Greenbacks would leave banker reserve loops, that would unbalance their towering credit as money.  Greenbacks would often leave local banks and go to Wall Street Banks, to then be played in the stock market.  Call in loans would retrieve greenbacks especially during harvest season.  This then caused credit bankers instability as greenbacks (now as base money) would disappear.  So, the bankers hated greenbacks because they didn’t have enough of them to stabilize their reserves, and they hated them if they circulated outside of their credit system as debt free money.

Fri, 01/02/2015 - 07:03 | 5614186 TeethVillage88s
TeethVillage88s's picture

Bland–Allison Act. You are better read than I. But I found some basis for my post:

- I'm curious about others response to public banking or national legislation to add money to the economy when bankers are risk averse to lending & credit.

Silver certificates are a type of representative money issued between 1878 and 1964 in the United States as part of its circulation of paper currency.[1] They were produced in response to silver agitation by citizens who were angered by the Fourth Coinage Act, which had effectively placed the United States on a gold standard.[2] The certificates were initially redeemable for their face value of silver dollar coins and later (for one year – 24 June 1967 to 24 June 1968) in raw silver bullion.[1] Since 1968 they have been redeemable only in Federal Reserve Notes and are thus obsolete, but still valid legal tender.[1]

Large-size silver certificates (1878 to 1923)[nb 1] were issued initially in denominations from $10 to $1,000 (in 1878 and 1880)[4][5] and in 1886 the $1, $2, and $5 were authorized.[5][6] In 1928, all United States bank notes were re-designed and the size reduced.[7] The small-size silver certificate (1928–1964) was only issued in denominations of $1, $5, and $10.[8] The complete type set below is part of the National Numismatic Collection at the Smithsonian's National Museum of American History.

The Coinage Act of 1873 intentionally[9][10] omitted language authorizing the coinage of “standard”[2] silver dollars[11] and ended the bimetallic standard[12] that had been created by Alexander Hamilton.[13][nb 2]

People began to refer to the passage of the Act as the Crime of '73. Prompted by a sharp decline in the value of silver in 1876, Congressional representatives from Nevada and Colorado, states responsible for over 40% of the world’s silver yield in the 1870s and 1880s,[16] began lobbying for change. Further public agitation for silver use was driven by fear that there was not enough money in the community.[17]

the Bland–Allison Act, as it came to be known, was passed by Congress (over a Presidential veto)[20] on 28 February 1878

Fri, 01/02/2015 - 03:26 | 5614061 Baby Eating Dingo22
Baby Eating Dingo22's picture

The BTFD mania losing no momo

Rampalooza 2015 is in gear after Wednesday's late day "bear market"

Fri, 01/02/2015 - 04:37 | 5614114 WTFRLY
Fri, 01/02/2015 - 04:45 | 5614122 Sanity Bear
Sanity Bear's picture

Just accept that that crazy is going to be the order of the day for the forseeable future, and place your bets appropriately. Much easier and more practical than trying to make things make sense.

Fri, 01/02/2015 - 05:41 | 5614159 huggy_in_london
huggy_in_london's picture

Only in America, where houses are made of crappy wood and knocked up in a matter of a few weeks, are they considered "wasting assets".  In most of the Western world they are made from brick and will stand, with minimal maintenance, for easily a hundred years.  I do agree thought that overcapitalisation in housing is often a poor investment.  

Fri, 01/02/2015 - 08:23 | 5614241 Winston Churchill
Winston Churchill's picture

Longer.

Do you know Fishpool St. in St. Albans ?

Solid mile of 15th century houses standing just fine.Some severe subsidence over the centuries,

but otherwise structurally sound.

Fri, 01/02/2015 - 07:17 | 5614196 Fix It Again Timmy
Fix It Again Timmy's picture

Positions of power are inimical to sane, rational decisions that benefit society at large for a number of well documented reasons; positions of power occupied by sociopaths/psychopaths jacked up with hubris add a nuclear chain reaction effect.  Who will put the "control rods" in place and is that even possible under current conditions?

Fri, 01/02/2015 - 07:31 | 5614205 tradewithdave
tradewithdave's picture

Altucher 20,000!

Fri, 01/02/2015 - 08:00 | 5614220 GreatUncle
GreatUncle's picture

There are insiduous hidden points to the central plannning and economic policy of debt by government.

******** SHOULD ONLY EVER PAY FOR THOSE SERVICES YOU USE

In a central planning system we are all forced to pay for others even if you have no use for it at all and this then has the disastrous consequences of leaving you short or without. In the west we have excessive taxation to fund all those government agencies but no choice on if you give that money or not.Best capital is raised "can you see it" in those services more people sign up for and want!!!

******** The Krugman Moment

Keynes can only service the interest on the debt, it does not create wealth AND NEVER WAS TO PAY FOR ALL THE FUCKING REST. This is how the Keynesian mechanism was abused and they are still doing it. Trying to crreate new wealth from artificially creating wealth whereby banks get 0% free money handed to them while the rest of us pay.

******** The 100% EConomic Pie Limit

Pie or not, what matters is it costs to grow this economic pie and we pay the interest YOY forever seeing as the debt is never paid. After a long enough timeline, we done a century so far when the growth maxes out and it has government can only borrow the interest on the total debt to pay the interest on the debt and not a penny more.

The whole world is using Keynsian economics so they are all the same economy and in a maxed out world of growth you are left stranded with borrowing enough to pay the interest on the debt alone.

THAT LAST POINT IS THE REAL KICKER IT IS STAGNATION ONCE AGAIN WITH AN ALMIGHTY KEYNESIAN DEBT THAT MUST BE PAID BEFORE SHELTER, FOOD AND WARMTH. Gets ugly don't you think.

 

 

Fri, 01/02/2015 - 09:01 | 5614278 Joe Wazzzz
Joe Wazzzz's picture

The failure of centrally managed economys (including MMT) is due to human nature not necessarily some inherent glitch of the system. No matter what kind of central system you come up with, there are evil, greedy, power hungry people that will start to game the system and work their way into positions of power. Just like arsonists like to join the fire department and crooks the police department, so it goes with government leaders, and finance and banking too. Just like Willy Sutton said when asked why he robbed banks. "Because that's where the money is".

Slowly over time, the evil forces take control and first bleed the system dry to enrich themselves and then they systematically eliminate those who object with ever increasing violence and then they crash the system to hide their activities, usually through war. Revolution and a new plan and then the whole thing starts over again.

Fri, 01/02/2015 - 09:13 | 5614295 Pee Wee
Pee Wee's picture

Where is the pic of that no talent ass clown, Paul Krugman, and his cat?!

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