This page has been archived and commenting is disabled.
Central Banking Refuted In One Blog - Thanks Ben!
Submitted by David Stockman via Contra Corner blog,
Blogger Ben’s work is already done. In his very first substantive post as a civilian he gave away all the secrets of the monetary temple. The Bernank actually refuted the case for modern central banking in one blog.
In fact, he did it in one paragraph. This one.
A similarly confused criticism often heard is that the Fed is somehow distorting financial markets and investment decisions by keeping interest rates “artificially low.” Contrary to what sometimes seems to be alleged, the Fed cannot somehow withdraw and leave interest rates to be determined by “the markets.” The Fed’s actions determine the money supply and thus short-term interest rates; it has no choice but to set the short-term interest rate somewhere.
Not true, Ben. Why not ask the author of the 1913 Federal Reserve Act and legendary financial statesman of the first third of the 20th century—–Carter Glass.
The then Chairman of the House Banking and Currency Committee did not refer to the new reserve system as a “banker’s bank” because he was old-fashioned or unschooled in finance. The term evoked the essence of the Fed’s original mission. Namely, to passively rediscount good commercial collateral (receivables and inventory loans) brought to its window by member banks—priced at a penalty spread floating above the market rate of interest.
Notwithstanding Bernanke’s spurious claim that the Fed has to “set the short-term rate somewhere”, the reserve system designed by Congressman Glass was authorized to do no such thing. It had no target for the Federal funds rate; no remit to engage in open market buying and selling of securities; and, indeed, no authority to own or discount government bonds and bills at all.
Instead, its job was to passively respond to the ebb and flow of trade and industry on main street as mediated through the commercial banking system. If business conditions were robust, interest rates would rise on the free market in order to balance the demand for working capital loans and long-term debt financing with the available supply of private savings.
In that environment, commercial banks wishing to expand their loan books beyond what could be supported by their deposits and reserves ( the latter generally amounted to between 9% and 15% of deposits), could “rediscount” their loans for cash at a penalty rate. Likewise, solvent banks holding good commercial collateral which faced unexpected or untimely deposit redemptions could borrow cash in the same manner in lieu of liquidating their loan books. The entire purpose of the original Fed’s rediscounting tool was to augment liquidity in the banking system at market determined rates of interest.
This modus operandi was the opposite of today’s monetary central planning model. Back then, the rediscount window at each of the twelve Reserve Banks had no remit except the humble business of examining collateral.
The green eyeshades who toiled in the Richmond, St. Louis and Dallas reserve banks thus did not know from the macros. That is, they were on the look-out for “slow” paper, not slow GDP growth or slow progress in lifting housing starts, retail sales and business inventories—–or even “slowflation” on the CPI less food and energy index. And that’s not only because most of such “incoming data” measures did yet exist—- or even because the Fed had no proactive tools to guide the macro-economy in any event.
In fact, the Fed was created on the earlier side of the Keynesian divide. When Woodrow Wilson signed the act on Christmas eve of 1913, the notion that the state must manage the business cycle and turbocharge capitalist prosperity did not exist.
And well it didn’t. During the prior 40 years, the US economy had grown at a 4% compound rate—the highest four-decade long growth rate before or since—- without any net change in the price level; and despite the lack of a central bank and the presence of periodic but short-lived financial panics largely caused by the civil war-era national banking act.
So in 1913 there was no conceit that a relative handful of policy makers at the White House, or serving on Congressional fiscal committees or at a central bank could improve upon the work of millions of producers, consumers, workers, savers, investors, entrepreneurs and even speculators. Society’s economic output, living standards and permanent wealth were a function of what the efforts of its people added up to after the fact—-not what the state exogenously and proactively targeted and pretended to deliver.
And most importantly, the cosmic economic error of the 20th century had not yet settled in. That is, the false belief that market capitalism has a suicidal impulse and chronically veers towards underperformance, breakdown and depressionary spirals absent the deft interventions and ministrations of the state and its central banking branch. Indeed, that is the utterly false lesson of the Great Depression——a Big Lie regarding which Bernanke himself is a principal propagandist (see below).
In short and contrary to Bernanke, the Fed’s actions under its original charter did not “determine the money supply and thus short-term interest rates”. It was exactly the opposite. Short-term interest rates (and the whole yield curve, too) were determined by supply and demand on the free market.
Likewise, the “money supply” was a product of the banking system, not the writ of the Federal Reserve. That is, the supply of checkable demand deposits and the “elastic” Federal Reserve notes enabled by the 1913 Act were essentially determined by private savers and augmented by lenders when their advances generated new checkable deposits. Indeed, even the rediscount loans issued by the “banker’s bank” did not represent new money; they only liquefied working capital savings or collateral which had already been created in the process of production and commerce.
It is therefore more than a bit rich that the Bernank even talks about the Fed’s supposedly indispensable role in creating the “money supply”. That’s because during his entire tenure at the Fed he paid no heed to it whatsoever.
He virtually never even uttered the word! His entire focus was on pegging interest rates low for long in order to promote incessant and monumental credit expansion. And the more the better on the theory that debt is the elixir of economic growth and prosperity.
But here’s the thing. There is absolutely no need for a central bank to create honest credit. The latter comes from savers who are willing to forgo current consumption (or reinvestment of business profits) at a price that rewards them for their thrift and deferral of the current use of their incomes.
What the Bernanke-style Fed does is foster the creation of dishonest credit. That is, mortgage loans, credit card loans, auto loans, and government bonds that bear subsidized below-market interest rates.
This form of dishonest credit arises when the central bank buys government bonds and bills with credits made out of thin air rather than funded from savings out of current income that must earn a market clearing price or rate of interest. Bad credit also arises when banks make auto loans funded by deposits that earn the Fed’s pegged money market rate of interest rather than the market clearing price. And dishonest credit is generated when brokers hypothecate collateral for repo or margin loans at short-term rates fixed by the writ of the central bank, not the law of supply and demand.
So rather than performing the necessary function of money creation, the modern Keynesian era central bank performs the unnecessary and harmful function of generating mis-priced credit—–or, for the want of a better term, fraudulent excess finance.
The latter, in turn, fosters a plethora of ills including penalties for savings and the crushing of thrift; cheap funds for speculation and carry trades in the financial markets which eventually transforms them into dangerous houses of leveraged gambling; and false, low prices on government debt which turn democratic politicians into agents of chronic fiscal profligacy and destructive free lunches for organized and financially advantaged lobby groups.
To be sure, all of these adverse consequences of cheap dishonest credit might be at least vaguely plausible if it could be shown the economic benefits and gains outweigh the disadvantages. But no such showing is possible, nor is it really even attempted any more by our Keynesian economic rulers.
They just postulate it. And after decades upon decades of repetition—ritual incantation, almost—-the attentive public does not question it; the Wall Street casino finds in convenient; and the politicians are tickled pink.
Aside from the special case of capitalism’s alleged depression- seeking tendency, just exactly how does dishonest credit cause more growth, prosperity and societal wealth and welfare than does honest credit reflecting market-priced bargains between savers and borrowers?
Surely, it can’t be that under a free market regime there would be too little savings to fund the growth of working capital and the long-term debt needed to finance the fixed production assets of growing businesses. Indeed, scratch a Keynesian during almost any phase of the last eighty years of economic history and you will hear the opposite. Namely, that economic output and growth is always being impaired by too much savings and too little demand—-by which they mean consumer spending.
Likewise, there is no empirical argument whatsoever that the massively higher leverage ratios to income that have prevailed since the early 1970’s have led to a step-wise and sustainable improvement in economic growth or in real median household incomes(as a proxy for gains in living standards). As a matter of fact, both measures have been heading south since the nation’s credit market debt to national income ratio came off its historical average of 150% in the late 1970’s—- and then kept climbing until it reached the 350% zone during the Greenspan-Bernanke-Yellen era of Keynesian central banking.
Needless to say, when it comes to a $17.8 trillion GDP two extra turns of debt against national income amount to a lot more than chump change. Total credit market debt outstanding today is $58 trillion and nearly 3.5X GDP; it would be $33 trillion lower or about $25 trillion under the ratio that prevailed during the 1950-1975 era shown in the graph.

Those forgotten times before the Greenspan ascent do not need to be gussied-up as a “golden era” to make the point. The numbers speak for themselves. Between 1954 and 1972 real GDP growth averaged about 4% per year. Since the turn of the century when the US economy became fully loaded with central bank enabled dishonest credit, the GDP trend growth rate has fallen to 1.7%; and it has averaged only 1.1% since the housing bubble peak in 2007.
The even more relevant numbers for real median family income also speak for themselves. Just as the national debt-to-income ratio was beginning its heady climb in the late 1980s, main street living standards peaked. And they remain below that peak 1989 level even today. That is, real living standards have fallen materially even as the balance sheet of the Federal reserve soared from $200 billion (1987) to $4.5 trillion today.
In short, the massive accretion of dishonest debt enabled by the Fed’s monumental balance sheet expansion and crushing financial repression in the last three decades has not improved the nation’s financial performance or well being. Not be a long-shot.

So there is no affirmative case that control of interest rates spurs a magic elixir called more debt and higher leverage ratios which, in turn, generate improved economic performance and greater societal welfare and wealth. Accordingly, the Keynesian central banking remit, perforce, rests on the default case of prevention of business cycle instability and warding off the alleged suicidal tendency of capitalism toward depressionary swoons.
Well, thanks to Bernanke himself we don’t have to deal with economic underperformance and business cycle instability. The blinding empirical reality is that since the arrival of Keynesian central banking under Greenspan and his successors we have had the Great Immoderation, not the nirvana of stable, endless growth and a recession-free world. Indeed, as could be readily demonstrated on another occasion, the notion that central banking can prevent business cycle instability has been refuted by the entire US experience since 1950.
All of the earlier recession cycles were caused either by the wind-down of over-heated wartime economies as in 1953-1954 and 1969-1970; or occurred owing to excessive monetary stimulus by the Fed, which had to be corrected by an abrupt resort to the brakes. Clearly that was the case in 1974-1975. It is even more evidently the reason why the Volcker’s triumph over double digit commodity and consumer inflation during the early 1980s required a deep slump to cleanse the inflationary excesses of the 1970s; and it is also the reason why the Greenspan money printing panic after the 1987 stock market meltdown was followed by the recession of 1990-1991.
We can leave the myths of the 1930s Great Depression for another day, but the short of it is summarized in the attached excerpt from the Great Deformation. The Great Depression was a left-over consequence of the massive debts and currency inflation created during the Great War and the failed efforts to restore a sound money gold standard and liberal international trade and financial order during the 1920s.
But it was not due to a suicidal depression wish in the bosom of capitalism or Hoover’s failure to embrace fiscal deficits after 1929. And most especially, it was not due to the Fed’s failure to go on a bond-buying QE style campaign in 1930-1932 as Milton Friedman and his academic subaltern, Ben Bernanke, argued first in the backwaters of academia; and than memorialized through a sweeping real world experiment after 2008.
So the sum of it is this: The Fed does not need to manage interest rates, and therefore does not need to embrace Bernanke’s spurious answer to the question of “what rate”:
The Fed’s actions determine the money supply and thus short-term interest rates; it has no choice but to set the short-term interest rate somewhere. So where should that be? The best strategy for the Fed I can think of is to set rates at a level consistent with the healthy operation of the economy over the medium term, that is, at the (today, low) equilibrium rate.
And what might that “equilibrium” rate be? Why its the Wicksellian solution—–more than 100 years old and counting. Here are Bernanke’s comments on the “equilibrium real interest rate”. They amount to pure gibberish—–academic jargon for unbounded, plenary power to manage the entire pricing machinery of the world’s $300 trillion financial system.
Indeed, lurking in the intellectual mush below is the true rationale for the greatest exercise in mission creep during the entire history of the modern state.
….it helps to introduce the concept of the equilibrium real interest rate (sometimes called the Wicksellian interest rate, after the late-nineteenth- and early twentieth-century Swedish economist Knut Wicksell). The equilibrium interest rate is the real interest rate consistent with full employment of labor and capital resources, perhaps after some period of adjustment. Many factors affect the equilibrium rate, which can and does change over time. In a rapidly growing, dynamic economy, we would expect the equilibrium interest rate to be high, all else equal, reflecting the high prospective return on capital investments. In a slowly growing or recessionary economy, the equilibrium real rate is likely to be low, since investment opportunities are limited and relatively unprofitable.
There is nothing in that paragraph that can be objectively measured or tangibly pegged at any given point in time. It is evident that even the Fed no longer knows what the “full employment” unemployment rate is. Bernanke himself postulated a few years ago that it was in the range of 6.0-6.5%. Now Yellen says its in the range of 5.0-5-2%.
Besides that, the potential labor pool as measured currently by the BLS omits upwards of 50 million adults who are not employed or on OASI retirement; and it ignores entirely the real labor pool, which is the world market. The fact is in a open world market, “full employment” of labor resources is a function of the price of labor, not arbitrary utilization rates within an imaginary US economy that resembles a bathtub.
As to full utilization of “capital resources”, does that include Sears stores and Borders big boxes that have been obsoleted by Amazon and UPS? Or just the one-twelfth of the footage used for pop-up stores in these empty facilities around Halloween? And does it include furniture factories and cold rolled sheet mills that have moved to China or fracking sand mines and crude oil tank cars idled by the Saudi decision to maintain 10 mb/d of production even at $45 per barrel? The monetary politburo sitting in the Eccles Building cannot possibly know.
Likewise, how can you measure the real interest rate when there is no obvious basis for utilizing one over another of the multitude of inflation indices now available. As is shown in the graph below, over the period of Keynesian central banking since Greenspan’s arrival in 1987, there has been a persistent 60 basis points annual difference between the CPI and the PCE deflator less food and energy. That difference amounts to fully one-third of the raging 2% argument between Janet Yellen and her right-wing kissing Keynesian cousin, Professor John Taylor, as to the appropriate real equilibrium interest rate under present conditions.
The truth is the real world of capitalism is far, far too complex and dynamic to be measured and assessed with the exactitude implied by Bernanke’s gobbledygook.
In fact, what his purported necessity for choosing a rate “somewhere” actually involves is the age old problem of socialist calculation. It can’t be done—–and most especially not in the most fluid, complex and fastest moving markets known to man. That is, the global financial markets for debt, equity, loans, commodities and all their derivatives.
So thanks for the blog, Ben. Now we know the real answer. Its called the free market.
* * *
Why The Lack Of QE Did Not Cause The Great Depression During 1930-1933.
FRIEDMAN’S ERRONEOUS CRITIQUE OF THE DEPRESSION-ERA FED OPENED THE DOOR TO MONETARY CENTRAL PLANNING
The historical truth is that the Fed’s core mission of that era, to rediscount bank loan paper, had been carried out consistently, effectively, and fully by the twelve Federal Reserve banks during the crucial forty-five months between the October 1929 stock market crash and FDR’s inauguration in March 1933. And the documented lack of member bank demand for discount window borrowings was not because the Fed had charged a punishingly high interest rate. In fact, the Fed’s discount rate had been progressively lowered from 6 percent before the crash to 2.5 percent by early 1933.
More crucially, the “excess reserves” in the banking system grew dramatically during this forty-five-month period, implying just the opposite of monetary stringency. Prior to the stock market crash in September 1929, excess reserves in the banking system stood at $35 million, but then rose to $100 million by January 1931 and ultimately to $525 million by January 1933.
In short, the tenfold expansion of excess (i.e., idle) reserves in the banking system was dramatic proof that the banking system had not been parched for liquidity but was actually awash in it. The only mission the Fed failed to perform is one that Professor Friedman assigned to it thirty years after the fact; that is, to maintain an arbitrary level of M1 by forcing reserves into the banking system by means of open market purchases of Uncle Sam’s debt.
As it happened, the money supply (M1) did drop by about 23 percent during the same forty-five-month period in which excess reserves soared tenfold. As a technical matter, this meant that the money multiplier had crashed. As has been seen, however, the big drop in checking account deposits (the bulk of M1) did not represent a squeeze on money. It was merely the arithmetic result of the nearly 50 percent shrinkage of the commercial loan book during that period.
As previously detailed, this extensive liquidation of bad debt was an unavoidable and healthy correction of the previous debt bubble. Bank loans outstanding, in fact, had grown at manic rates during the previous fifteen years, nearly tripling from $14 billion to $42 billion. As in most credit fueled booms, the vast expansion of lending during the Great War and the Roaring Twenties left banks stuffed with bad loans that could no longer be rolled over when the music stopped in October 1929.
Consequently, during the aftermath of the crash upward of $20 billion of bank loans were liquidated, including billions of write-offs due to business failures and foreclosures. As previously explained, nearly half of the loan contraction was attributable to the $9 billion of stock market margin loans which were called in when the stock market bubble collapsed in 1929.
Likewise, loan balances for working capital borrowings also fell sharply in the face of falling production. Again, this was the passive consequence of the bursting industrial and export sector bubble, not something caused by the Fed’s failure to supply sufficient bank reserves. In short, the liquidation of bank loans was almost exclusively the result of bubbles being punctured
in the real economy, not stinginess at the central bank.
In fact, there has never been any wide-scale evidence that bank loans outstanding declined during 1930–1933 on account of banks calling performing loans or denying credit to solvent potential borrowers. Yet unless those things happened, there is simply no case that monetary stringency caused the Great Depression.
Friedman and his followers, including Bernanke, came up with an academic canard to explain away these obvious facts. Since the wholesale price level had fallen sharply during the forty-five months after the crash, they claimed that “real” interest rates were inordinately high after adjusting for deflation.
Yet this is academic pettifoggery. Real-world businessmen confronted with plummeting order books would have eschewed new borrowing for the obvious reason that they had no need for funds, not because they deemed the “deflation-adjusted” interest rate too high.
At the end of the day, Friedman’s monetary treatise offers no evidence whatsoever and simply asserts false causation; namely, that the passive decline of the money supply was the active cause of the drop in output and spending. The true causation went the other way: the nation’s stock of money fell sharply during the post-crash period because bank loans are the mother’s milk of bank deposits. So, as bloated loan books were cut down to sustainable size, the stock of deposit money (M1) fell on a parallel basis.
Given this credit collapse and the associated crash of the money multiplier, there was only one way for the Fed to even attempt to reflate the money supply. It would have been required to purchase and monetize nearly every single dime of the $16 billion of US Treasury debt then outstanding.
Today’s incorrigible money printers undoubtedly would say, “No problem.” Yet there is no doubt whatsoever that, given the universal antipathy to monetary inflation at the time, such a move would have triggered sheer panic and bedlam in what remained of the financial markets. Needless to say, Friedman never explained how the Fed was supposed to reignite the drooping money multiplier or, failing that, explain to the financial markets why it was buying up all of the public debt.
Beyond that, Friedman could not prove at the time of his writing A Monetary History of the United States in 1965 that the creation out of thin air of a huge new quantity of bank reserves would have caused the banking system to convert such reserves into an upwelling of new loans and deposits. Indeed, Friedman did not attempt to prove that proposition, either. According to the quantity theory of money, it was an a priori truth.
In actual fact, by the bottom of the depression in 1932, interest rates proved the opposite. Rates on T-bills and commercial paper were one-half percent and 1 percent, respectively, meaning that there was virtually no unsatisfied loan demand from credit-worthy borrowers. The dwindling business at the discount windows of the twelve Federal Reserve banks further proved the point. In September 1929 member banks borrowed nearly $1 billion at the discount windows, but by January 1933 this declined to only $280 million. In sum, banks were not lending because they were short of reserves; they weren’t lending because they were short of solvent borrowers and real credit demand.
In any event, Friedman’s entire theory of the Great Depression was thoroughly demolished by Ben S. Bernanke, his most famous disciple, in a real world experiment after September 2008. The Bernanke Fed undertook massive open market operations in response to the financial crisis, purchasing and monetizing more than $2 trillion of treasury and agency debt.
As is by now transparently evident, the result was a monumental wheelspinning exercise. The fact that there is now $1.7 trillion of“excess reserves” parked at the Fed (compared to a mere $40 billion before the crisis) meant that nearly all of the new bank reserves resulting from the Fed’s bond-buying sprees have been stillborn.
By staying on deposit at the central bank, they have fueled no growth any different.
- 19805 reads
- Printer-friendly version
- Send to friend
- advertisements -



Errrrr....could you repeat that please?
You disrespect Stockman's great work and effort (he's much more correct than not - and he eviscerates the fallacies of Bernanke & the Fed Reserve) with such glib, snarky comments.
If it's TL;DR for your brain, move along.
TL;DR version.
Bernank: "We had to do something!!!"
Stockman: "Liar."
+1, TIS. This is an excellent article from the Classic/Austrian School perspective on how Neo-Keynesian the FED became, slowly and piecemeal
central banking does not equal central banking. the FED of 1913 bears little resemblance in it's operations to the FED of 100 years later
Our daily dose of wishful thinking from Ghordius:
"Central banking doesn't have to be nefarious!"
Oh, right, but how come it seems to be evil everywhere today?
I'd go further and say it has a built-in tendency to become that way, in a typical "race to the bottom" manner.
The first paragraph of Bernanke's says it all; the FED does not believe that markets can do anything, and that people need central authority to make decisions for them.
Bernanke is either knowingly lying through his teeth to support his bankster masters - or he is an utterly deluded academician from an Ivory Tower that reaches the clouds.
Ben Dover: People are bad, therefore we need a government, made up of....PEOPLE!!!!
He would be dangerous if he had two brain cells to rub together.
He was a "professor" at Princeton. That says it all. He's an ivory tower academian who knowingly lies through his teeth.
Episcopalian Luciferians!
bernake is the Head Parasite.......
PEDROsite Luciferian!
"Luciferian(s)". Having fun with a new word or label?
;-)
It's all fun & games until the tip of your dick gets bitten off...
In Ben's own vernacular...I'm just a lowly putz.
Please...someone...anyone...give David Stockman a job!
Is this site about to be criminalized?
http://www.mondialisation.ca/censure-loffensive-politico-mediatique-contre-les-sites-de-re-information/5436792
Socialism for the rich is fascism. Let's call it by its real name. The world has had no socialism since 2001. It's had all fascism.
Fascism is simply national socialism. It's all socialist.
Wouldn't it be something if Blogger Ben were to grace us with a response.
Ben Shalom gets paid $250,000 to open his pie hole in front of an audience, so I'd say the odds of a response are rather slim.
$250,000 to lie about his heading up of the looting of the American country and people for 8 years.
Pretty sick.
I'd do it for free. Here goes: "We looted some Goy."
The banksters need to repay us.
Guillotine the Fed. Audit the heads.
Control V doesn't work on Bennie's blog. wonder why?
The alchemists became central bankers.
John Maynard Keynes bought all of Isaac Newtons notes on alchemy and the occult.
go figure.
[google keynes newton alchemy for details]
Ben is having a "Throw a Senior Under the Bus" party this weekend ... all current and former FED directors invited, BYOB.
The Self-Driving, Fly by Empire Wire, Economy
Essentially, by implementing the dc economy globally, to increase the efficiency of feudalism, breeding compliance with RE control at the expense of economic mobility, the critters have entered a positive feedback loop with climate variability, kind of like grabbing 480 3-phase and being surprised that it won’t let you go until you are fried. Clinton and Bush are not getting all the money by accident. They can’t help themselves, any more than the herd they represent.
The central bank is a hero, for throwing savers under the bus. Just ask Warren Buffet, as he doubles and triples rents in the Bay Area, to throw people on the street, and build another empty building for Chinese and Russian money launderers. It’s always a war in the empire, over who gets to employ its economic slaves, to build a memorial to themselves. Of course government rewards compliance and makes an example of dissent, to breed automatons. The Millennials aren’t any different from the Boomers.
Maglev, controlled by dc, can only fail, but it creates a lot of make-work, RE inflation and relative income deflation. Pissing away opportunity ends badly, for both the herd and its predators. Not selling to homosexuals is a stupid business practice, but so is not discounting it to a couple raising children out of poverty, as is giving Buffet a free pass all together. Self-driving cars is the ultimate irony of the lie that is the American Dream. Like every majority, this one is volunteering for slavery, to the past.
Equally yoked in marriage is one thing; equally yoked in a herd is another. A little common sense goes a long way. Basic physics tells you not to place all that weight in one place, a shining city on a hill, especially on the coast. The whole point of HR is to reward compliance with credit and penalize dissent with debt, the only difference in which is the disposable toys, and the price of RE up the slope from the landfill.
The Dust Bowl/Roaring 20s/Great Depression/WWII was no accident. From the perspective of the planet, it wasn’t even separate events. Whether this planet is 5000 years old or 5 trillion is a matter of perspective. From the perspective of the universe, it is a blip in a vortex. Some values are timeless; the equals sign is only a limit switch if you make it so, in your mind.
Only the physical universe you see, in a telescope and a microscope, calculates itself, with gravity. If a dc computer is one point and an ac computer is another, what is the third point?
That sin wave is a circle with a switch, a multiplexer. Time is a derivative, which is why it travels in one direction, and why the critters are always looking in the rear-view mirror, increasing efficiency. The empire is noise; learn to recycle. You shouldn’t be surprised that the reward for responsibility is more responsibility, and being hunted with technology. If you want bridges between the social event horizons, you have to build them, in real time, because only you are at your location in time, despite everything and everyone around you, telling you otherwise, what they see in the mirror.
Funny, where you can go, if your mind can leap, and who you find when you get there. The critters, always travelling expediently downhill, into the hands of predators building the path before them, cannot tolerate reality, so don’t waste your time.
"Cheap Money a Costly Panacea"
NY Times, April 13, 1930
SYRACUSE, N.Y., April 12, "Cheap Money is a stimulant, also an intoxicant," warned Dr. Benjamin M. Anderson Jr., economist of the Chase National Bank of New York City, in an address here tonight. "If the dose is large enough, " he said,"a very substantial temporary effect can be brought about, but headaches will follow. It is not the sound way to do it."
After saying that cheap money was a costly and temporary panacea for business depression, Dr. Anderson said, "It is definitely undesirable that we should employ this costly method of buying temporary prosperity again. The world's business is not a moribund invalid that needs continuous galvanizing by an artificial stimulant."
The Federal Reserve System and the central banks of Europe are under heavy pressure from advocates of the cheap money panacea Dr. Anderson said. The matter is exceedingly simple in the minds of its advocates, he added.
Cheap money will not induce manufacturers and merchants to increase their borrowings in an unsatisfactory business situation, Dr.Anderson declared. He cited the figures for commercial loans as reported by member banks of the Federal Reserve System in support of this contention.
But if merchants and manufacturers will not use cheap money, he said, speculators will. They will use cheap money in buying stocks, for the prospect of capital appreciation....
"In the second place, such methods are extremely costly in their effect upon the quality of bank credit. The ideal employment of bank credit is in financing the movements of goods, in financing short, self- liquidating commercial transactions. <B>We have gone much too far in the substitution of bank investments in bonds, collateral loans against securities, bank holdings of real estate mortgages, and bank holdings of installment finance paper</B> for the normal bank credit that represents goods in movement and that adjusts itself automatically to the volume of trade."
http://select.nytimes.com/gst/abstract.html?res=F00812FA345D157A93C1A817...
It's all about horses led to water not wanting to drink. Really simple.
Negative interest rates will sure salt the oats though.
Currency destruction subsidizes shitty products.
Somebody call the police. Arrest him. Don't let him get away.
"As to full utilization of “capital resources”, does that include Sears stores and Borders big boxes that have been obsoleted by Amazon and UPS? Or just the one-twelfth of the footage used for pop-up stores in these empty facilities around Halloween?"
Of course such facilities will never be UTILIZED (they are worse than worthless - property taxes are owed, after all), but their titular owners (the banks) will be PROTECTED from any loss on same by the Fed policy of reducing the funding costs of those "Assets" to zero for AS LONG AS IT TAKES, DAMMIT!
As I’ve said before, there is no such thing as a Free market: Markets are human creations. Markets especially cannot work well if money does not work.
Markets consist of three types: Elastic, Inelastic and Mixed. Elastic is free competition, were consumers can make choices, and thus keep producers honest. Inelastic is markets like Ports, Bridges, Military, Infrastructure. Inelastic has no ready competition. For example, a port is a natural geographic feature and hence a nearby competing port is not available. Inelastic markets must be regulated or government owned.
Real classical economists understood that inelastic markets had to be regulated to keep monopoly forces at bay, and thus deliver the economy from rents, and further to prevent oligarchy. In other words, government is the lowest cost producer in inelastic markets. But, they don’t belong in elastic markets. I notice few economists seem to understand this distinction.
Mixed markets are something like Medical. Predators and rentiers who lie about the nature of medical market have boosted America’s costs to 70% over that of Japans and 50% more relative to Germany.
Even the slightest cursory examination of money shows it to be of the commons. When somebody gets hypothecated for a credit loan, it is upon their signature authority. This credit is actually theirs and then they spend it into the money supply WHERE OTHERS USE IT. This means money is part of the commons, and no amount of navel gazing about credit markets will change these facts. Anybody who ignores this truth or hand waves it away, should be dismissed as not serious.
Credit can be useful if done right, which is what the author is arguing. However, the profit motive and ability to do things privately and sneakily means that this type of credit does not have morality encoded. The poison is part of the parcel.
Here is an article by PCR describing how Capitalists are destroying the earth. Private Credit as money needs to go away. We need a new money system; otherwise humanity will cycle back and forth between financial predatory capitalism or communism.
Capitalism does not price externalities, and usury on money causes prices to be about 40% too high. Monopoly rents are probably another 30%, so most people are toiling their lives away and vectoring their output to Oligarchy. Private credit emitted for corporate profit, is not the path to an enlightened civilization.
http://www.paulcraigroberts.org/2015/03/27/social-costs-capitalism-destroying-earths-ability-support-life-paul-craig-roberts/
Glass Stegall was overturned by the Insurance industry and banker agents who were looking for a way to make some quick “profits:” Wall Street, Insurance, and Banker’s greased Graham, Leach, and Blily in order to change the law to their “groups” benefit. The money trusts have always used their gains from private capital and usury to maneuver government and gain monopoly privilege; witness the railroad barons; witness unnecessary wars; witness the overturning of America’s Federalism.
Money power is significant – humans respond to prices and “money as demand” much like fish swimming in water.
www.sovereignmoney.eu
Thanks for the education, MEFOBILLS. After reading what you have written I am now wondering if Travelers(tm) was the real instigator that pushed for repeal of Glass-Steagall? In brief, what proportion of bag men from the insurance industry outnumbered the bag men in Investment Banks, or are they equal partners in crime? Lastly, I fully agree that credit belongs to the 'commons' as you state. Frankly, all the logic you use is bang on IMO.
From Master of Univers:
or are they equal partners in crime?
When you take out a new house loan, said house is dotted line connected to double entry ledger. Debt instrument and credit creation are then backed up by an asset.
This particular (housing) asset has lines of law and especially Federal Insurance backing, thus making bank's capital position look better.
If one goes back in time and looks at the housing bubble, it was turbocharged by insurance co-signing.
Insurance co-signs on double entry ledger, making the "asset" appear to be high grade. But, insurance is an actuarial numbers game, and they really didn't have the money to back up their gamble.
AIG in particular was making money on both sides of the deal.
So, by eliminating Glass Steagall, firewalls came down, and Insurance was allowed to dabble in Investment Banking. This then made the Credit "look good" something like lipstick on a pig.
Housing then had a credit fire-hose aimed at it. This caused a positive feedback, where house prices rose, and people took out new loans - even liar loans. The new loans aimed at the housing sector, making it rise yet again as credit money chased limited housing supply. This is sector inflation, created by new credit.
Housing is sticky, meaning not enough could come on line in order to meet money as demand. This stickiness was especially noticable in land-locked areas where no new housing could be built.
70% of all Credit Money is related to the FIRE sector (finance, insurance and real estate). Therefore, these assets are priced too high. This puts humans on a treadmill, and it is entirely because private credit is an improper money type to run an economy on.
The cost of real estate in the state of New York alone, exceeds all industry in the U.S. The textbooks say that bank credit is used for increasing industry...this is not true, it is a lie.
Industry uses existing profits to improve their facilities and productivity. Lately they use credit to buy back stocks, thus boosting stock prices artifically, to then make gains for Captains of Industry.
Insurance was and is definately in on the game, they are little better than bankers. Derivitives are essentially insurance.
there are no such thing as markets. just big dogs and little dogs in the playground.
'the markets' are just something people get confused about.
the fed is the most concetnrated group of big dogs that get together and do what they want.
they 'are' the market now.
you cannot argue in favor of 'markets'. only against the feds existence. and a 'market' without the big dogs having an anti-competitive cartel. good luck with that.
The universal truth about fraudulent-reserve banking: It's theft.
The universal truth about central banks: They are ponzi control centers.
The universal truth about the Fed: It is the Zionists' ponzi control center for looting the American country and the American people.
The universal truth about Bernanke: He was the Zionists' ponzi control center and looting operation's head looter. He is now an apologist for said same Zionist ponzi control center and looting operation.
The banksters need to repay us.
Guillotine the Fed. Audit the heads.
Bernanke too.
Whoever here thinks that 19th century growth is remotely possible is a little bit off his nut.
In 3 Words
Fuck You Bernanke
No April Fools: Propaganda circle complete, UK Prime Minister is related to Kim Kardashian
After the best organized gang of criminals, the banksters, have gained a stranglehold over the political economy, they cannot let go! The Fed has "no choice but to set the short-term interest rate" because IT CAN, due to the long-term successes of the conspiracies outlined by many historians, such a Carroll Quigley. The entire economic system has become so Jerry-rigged, and thoroughly manipulated by the SOURCE of the public "money" supply being privately controlled banks creating that "money" out of nothing as debts that to interrupt that would cause all of the established systems to collapse into crazy chaos, because they have become almost totally "addicted" to the banksters' systems, by the entire economic system adapting to those ENFORCED FRAUDS as their foundation, for generation after generation, after generation.
Stockman is an old-fashioned ideologue, who wants to promote the impossible ideals of a "free market," when the reality of free markets necessarily includes the history of the free market in murder, which backed up robbery and fraud. Unfortunately, it is NOW IMPOSSIBLE to go back to the ideals that the American monetary system was supposed to be backed by gold and silver, whose value was set by Congress, (with Congress providing penalties up to and including the death penalty for anyone who debased that kind of money.) The runaway systems of ENFORCED FRAUDS, as symbolic robberies, have already robbed everything worth robbing. At this point in time, political miracles that could stop that from happening would do nothing about that already having happened, more and more, faster and faster, for generation after generation, after generation.
Of course, I agree that:
"The truth is the real world of capitalism is far, far too complex and dynamic to be measured and assessed with the exactitude implied by Bernanke’s gobbledygook."
However, Stockman then repeats his kind of gobbledygook, by referring to "the age old problem of socialist calculation." Blaming "socialism" is quite common for those who promote the miracles of "free markets," without addressing how the free market in murder, namely the history of warfare, was the actual foundation of the entire system that exists now, which is why we have fundamentally fraudulent financial accounting systems, which were built on the basis of the methods of organized crimes, which surrounded themselves with controlled opposition groups.
Of course, I agree that we now have:
"... the most fluid, complex and fastest moving markets known to man ... the global financial markets for debt, equity, loans, commodities and all their derivatives."
However, Stockman grossly underestimates the astronomically amplified SIZE of those globalized systems of electronic monkey money, backed by the threat of force from apes with atomic bombs: MAD Money As Debt, backed by MAD Mutual Assured Destruction.
There is NO way to stop money being measurement backed by murder. There is NO way to avoid continuing to have to muddle through the MADNESS that the only things that actually exist are the dynamic equilibria between the different systems of organized lies operating robberies. It is ONLY those dynamic equilibria which resolve the problems that "nobody guards the guardians" because governments are necessarily the biggest form of organized crime, controlled by the best organized gangs of criminals.
Stockman concludes by using magical words:
"Now we know the real answer.
Its called the free market."
The "free market" necessarily includes the de facto free market in murder. (I.e., the history of warfare.) It is typical superficial bullshit to refer to there being some genuine alternatives between "socialism" versus "free markets." The only things that actually exist are different systems of organized lies operating robberies. Those who were the biggest and best at doing that were able to call themselves governments, and to control what those governments actually did, which effectively privatized the powers of governments, so that those powers would serve their interests.
In a world that operates through electronic frauds backed by atomic bombs, Stockman is old-fashioned controlled opposition, promoting the same old false fundamental dichotomies and related impossible ideals. The only genuine resolutions of the problems within the political economy place those inside of the human ecology, and that in turn inside of the overall general energy systems of the environment. However, when one examines how human beings and civilizations actually operate as general energy systems, one discovers that they necessarily act according to cascading fractal patterns of the principles and methods of organized crime.
Since the biggest bullies' bullshit world view dominates our civilization so totally, Stockman stays inside of those kinds of perceptual DUALITIES. He does not embrace understanding economics through UNITARY MECHANISMS, which are consistent with understanding human beings as manifestations of general energy systems, because, in order to do so, he would have to reverse the basic presumptions which he makes, namely that "free markets" could miraculously solve the problems with respect to the supreme free market being the free market in murder.
In my view, we have no choice but to have to continue to muddle through the MADNESS of the dynamic equilibria between the different systems of organized lies operating robberies, in which the international banksters' FRAUDS ENFORCED by governments are the greatest example, where the power to kill backs up the power to rob, and that primarily takes place through the symbolic forms of robbery found in the ways that the monetary and taxation systems are actually working.
I would suggest that we might be able to muddle through that MADNESS better if we stopped presuming upon DUALITIES, such as the typical false fundamental dichotomies and related impossible ideals that presume that there could exist anything else but energy systems which operate according to the principles and methods of organized crime. I would suggest that we might be able to muddle through that MADNESS better if we perceived that governments are necessarily the biggest form of organized crime, controlled by the best organized gang of criminals.
However, in order to do that, the long, long history of the biggest bullies' bullshit social stories dominating civilizations, so that the dominant natural languages and philosophy of science were constructed in ways which were consistent with the biggest bullies' bullshit world view, so that there is practically no significant opposition, because the opposition is still controlled to think and communicate through the biggest bullies' bullshit.
In my view Stockman is still primarily communicating through using the banksters' bullshit. Therefore, Stockman is typical in superficially mislabeling the "isms" that are the problem, and then promotes the impossible ideals that are supposed to be the basis for the "solutions" for those situations. None of that comes remotely close to understanding human beings and human civilizations better as general energy systems.
Indeed, it is practically impossible for people like Stockman to reconsider how profoundly mistaken they are, because they feel good by spouting their own kinds of preferred "gobbledygook." OF COURSE, I agree with Stockman that Bernanke is rationalizing his own record with his preferred kinds of "gobbledygook." HOWEVER, Stockman is NOT promoting any genuinely better resolutions, because he is not basing his solutions upon accepting that there is nothing but different systems of organized lies operating robberies, in which the biggest and best at doing that become the governments, controlled by the banksters, that got to brainwash and beat everyone else into submission, so that they mostly would agree with the bullshit that there is a valid fundamental dichotomy between government versus organized crime, when there is NOT, and there can never possibly be.
While I agree with Stockman's superficial analysis of the problems associated with the banksters' FRAUDS ENFORCED by governments, creating the public "money" supply out of nothing as debts, being DISHONEST CREDITS, I do not agree that there is somewhere some other kind of "honest credits" that exist outside of some systems of organized lies operating robberies. To the degree that genuine capitalism and free markets are valid, then they have to place the political economy inside of the human ecology, and therefore, recognize the de facto free market in murder (backing up robbery and frauds) that always existed, but only reach relatively stable dynamic equilibria when the biggest and best organized gangs of criminals become dominate within their systems, but which systems necessarily rise, plateau, decline and fall ...
I REPEAT, that we should approach understanding human systems as general energy systems, which have been deliberately misunderstood in the most backward ways possible due to the biggest bullies, currently the banksters, being able to get away with brainwashing most other people that they were somehow not operating systems of organized crime. The magnitude of that deliberate misunderstanding includes that an arbitrary minus sign was inserted into the entropy equations of thermodynamics and information theory, so that those would be consistent with the biggest bullies' bullshit world view. Namely, that power and information would be presented as having relative positive values, rather than having relative negative values. Both private property, and money have relative negative values, not relative positive values, because both are based on backing up lies with violence. Human beings MUST live that way, BUT, they should not continue to deliberately misunderstand that!
The biggest bullies' bullshit world view presents their ability to control other people through backing up lies with violence as being relative positive things. The banksters present their government ENFORCED FRAUDS as being relative positive phenomena. After those errors are magnified by many orders of magnitude, to become electronic frauds, backed by atomic bombs, the human species has become so psychotic as to be preparing to commit collective suicide: there is an attempt to privatize the planet!
Human beings MUST live as entropic pumps of energy flows, however, we are currently misunderstanding that in the maximum possible backward ways. Therefore, America still leads the world in promoting its two psychotic State Religions, in the form of its Monetary System and National Security, which are both based on the maximum possible frauds and deceits, while those are being publicly presented as being relatively positive values, rather than relatively negative values.
Stockman's magical "free market" pays almost no attention whatsoever to the realities of thermodynamics and information theory that would necessarily have to operate, and therefore, necessarily limit the degree to which there could actually be such a "free market." More importantly, of course Stockman does not have the slightest clue regarding the degree to which he is indulging in magical thinking, and therefore spouting "gobbledygook," which is fundamentally the same as Bernanke's "gobbledygook."
DESPITE DEVELOPING "the most fluid, complex and fastest moving markets known to man ... the global financial markets for debt, equity, loans, commodities and all their derivatives," which have become electronic frauds, backed by atomic bombs, the commonly accepted concepts regarding political economy have almost no rational relationship to the physical sciences that made those achievement possible. Therefore, it is practically impossible to imagine anything else than for us to continue to have to muddle through the MADNESS of the dynamic equilibria of different systems of organized lies operating robberies, each of which asserts that it is the truth, and has the right to do whatever it wants to do.
In that context, I REPEAT one of my favourite quotes:
http://www.conspiracyarchive.com/NWO/silent_weapons_quiet_wars.htm
Silent Weapons for Quiet Wars
"Energy is recognized as the key to all activity on earth. Natural science is the study of the sources and control of natural energy, and social science, theoretically expressed as economics, is the study of the sources and control of social energy. Both are bookkeeping systems: mathematics. Therefore, mathematics is the primary energy science. And the bookkeeper can be king if the public can be kept ignorant of the methodology of the bookkeeping. ... In this structure, credit, presented as a pure element called "currency," has the appearance of capital, but is in effect negative capital. Hence, it has the appearance of service, but is in fact, indebtedness or debt. ... if balanced in no other way, will be balanced by the negation of population (war, genocide)... They must eventually resort to war to balance the account, because war ultimately is merely the act of destroying the creditor ... War is therefore the balancing of the system by killing the true creditors (the public ...)"
The banksters are legally allowed to counterfeit the public "money" supply as "currency" which has the appearance of capital, but is in effect negative capital. However, against that, Stockman promotes the impossible ideal that there could be some form of "honest credit" within a "free market."
In that context, I would tend to more agree with Stockman than with Bernanke. However, they are BOTH still staying within the same basic bullshit world view, whereby the BOTH take for granted the degree to which we are living inside of a Bizarro Mirror World, or Wonderland Matrix, where everything appears proportionately backward or absurd, because the inherently negatives are being almost universally presented as positives. Since we misunderstand the concept of entropy backwards, because its meaning was inverted, we understand everything else backward. Therefore, we are taught to rely upon perceiving the world through DUALITIES, such as that there is some fundamental dichotomy between organized crime versus government, while actually governments are necessarily the biggest forms of organized crime, controlled by the best organized gangs of criminals.
The degree to which most people have been successfully brainwashed to believe in the biggest bullies' bullshit world view is then the matching degree to which the established systems develop extreme imbalances in their dynamic equilibria. Indeed, while human beings and human civilization must necessarily live as entropic pumps of energy flows, we have developed ways to do that which have become as UNBALANCED AS POSSIBLE: globalized electronic frauds, backed by atomic bombs!
Nothing that either Stockman or Bernanke writes reflects any light upon those deeper issues. Rather, BOTH merely present slightly different versions of the same old State Religions' nonsensical absurdities, which continue to deliberately ignore the progress made through profound paradigm shifts in the physical sciences, which should be surpassed by greater paradigm shifts in political science, IF we are going to survive having done that.
Human beings have become way to technologically powerful and capable to continue living using the old-fashioned attitudes of the monkeys and apes who did NOT have to be aware of, nor care about the larger issues of evolutionary ecologies. Within human society, those attitudes of evil deliberate ignorance have driven extreme social polarization, while between human civilization and the rest of that natural world, those attitudes of evil deliberate ignorance have driven mass extinctions, which could become bad enough to cause the extinction of the human species, since merely being able to be socially successful through being the best at backing up lies with violence is NOT enough to operate any better, longer term evolutionary ecology, within which the political economy must necessarily exist.
Human being MUST operate as entropic pumps of energy flows, however, it is almost impossible to exaggerate the degree to which the dominate social pyramid systems perceive that backwards. The degrees to which social pyramid systems depends upon some people being able to back up their lies with violence against other people have enabled that civilization to deliberately ignore the overall health and survival of those human systems within the natural systems. The ways that social success based on being able to back up lies with violence have maximized their short-term benefits for a few have been done in ways which have also maximized the longer term costs of those systems for everyone, including even the pyramidion people, at the top of those social pyramid systems.
Human beings have always lived by "making a killing." They have gotten better and better at that, until they have reached the paradoxical point of risking final failure from too much success. The systems of private property, measured by money, which were always based on being able to back up lies with violence, have made a few people inside those systems appear to have accumulated fantastic wealth. However, those systems were more and more fundamentally fraudulent financial accounting, which was adding up everything backwards. Therefore, the social pyramid systems developed fantastic short-term wealth for a few, in ways which were based on evil deliberate ignorance towards everything else, outside of that runaway privatization.
The bankster dominated monetary system is primarily a manifestation of the privatization of the powers of government to engage in robbery, through the symbolic frauds of those banksters, being enforced by those governments. However, it is almost impossible to exaggerate the degree to which that kind of triumph of backing up lies with violence has driven the established systems as a whole to become psychotically insane, to the degree that the runaway successes of "making a killing" are headed towards killing those systems themselves.
Within the established social pyramid systems, the monkeys doing electronic frauds, and the apes with atomic bombs, are presenting their ability to "make a killing" as a positive thing. Therefore, the more that is done, the more that those mistakes of presenting private property as money as positive things are accumulating. Once upon a time, the monkeys and apes did not have the power or capabilities to "make a killing" on the astronomically amplified scale that they do now. Therefore, they did not have to care about the larger issues of environmental ecologies, as well as could get away with misrepresenting the issues surrounding human ecology. Their ruling class centered political economy could operate successfully, in the short-term, despite being based upon backing up lies with violence, in ways which enabled attitudes of evil deliberate ignorant to be made and maintained regarding everything else outside of the interests of the ruling classes of human beings, within their social pyramid systems.
The international banksters have collectively become a group of trillionaire mass murderers, due to them being the best at "making a killing." However, they were able to do that without caring about them simultaneously killing off the future of the human species, due to irreconcilable social polarization, and even worse irreparable destruction of the natural world. The established political economy is controlled by fundamentally fraudulent financial accounting systems, which are impossible to reconcile with the general energy systems of human society, within the natural world, as a whole, except as ENFORCED FRAUDS, which are "making a killing" to such an extremely unbalanced degree that they are headed towards killing themselves off.
As entropic pumps of energy flows, human beings MUST live by "making a killing," however, the degree to which that is publicly presented in totally bullshit ways as being completely positive, instead of actually being relatively negatives, makes better balancing of the dynamic equilibria of the different systems of organized lies operating robberies practically impossible. While human beings always lived as robbers in their environment, as soon as one perceived and defined them as separate from their environment, the extreme degrees of short-term successes achieved by social pyramid systems growing their abilities to back up lies with violence, to become the current systems of globalized electronic FRAUDS ENFORCED with weapons of mass destruction, has driven that kind of psychotic social success towards its own MAD self-destruction.
Neither Bernanke nor Stockman are even remotely close to comprehending the paradoxical nature of that problem, since they BOTH stay inside of the same biggest bullies' bullshit world view, which deliberately ignores and denies the basic social facts that governments are the biggest forms of organized crime, controlled by the best organized gangs of criminals, which have no ways for their errors to be corrected within their systems, and so, their errors keep on accumulating, to get bigger and BIGGER, with the back-up systems being natural selection, or factors beyond human control.
Along the way, the attitudes that "making a killing" is completely good, rather than relatively bad, has been deeply built into the established systems, whereby the banksters are allowed to create the public "money" supply out of nothing. Stockman is relatively more correct about that problem than Bernanke. However, neither are remotely close to comprehending the magnitude of the errors that both of them are taking for granted. The banksters' frauds, as enforced by governments, are presented as relatively good things by them, and all of the other people who benefit from and depend upon those established systems of organized lies operating robberies. The magnitude to which that is an insane attitude, engendering runaway psychotic disconnections from the health of society, and the world as a whole, could barely be exaggerated.
The real problems are many orders of magnitude worse than either Bernanke or Stockman are discussing, due to the degree that both of them continue to take so totally for granted the biggest bullies' bullshit that "making a killing" is relatively positive, rather than relatively negative. The most basic objective facts regarding the bigger picture continue to be deliberately ignored or denied by all of those who take for granted operating inside of the biggest bullies' bullshit world view, that presents being able to back up lies with violence as a purely positive thing, rather than as relatively negative things.
The extreme paradoxes we face are those of the threat of final failure from too much success by "making a killing" running out of control in ways that are killing the planet. Unless the deeper issues were addressed that "making a killing" through enforced frauds was based on attitudes of evil deliberate ignorance, then it is impossible for those systems to develop any better overall dynamic equilibria. At the present time, we face the problems of electronic monkey money frauds, backed by the threat of force from apes with atomic bombs, who want to continue to misunderstand what they are doing through various old-fashioned religions and ideologies.
I am NOT saying that human beings should or could stop themselves from living as entropic pumps of energy flows that were "making a killing" in order for them to continue living. What I AM saying is that we can not develop better balances in the rates at which we do that as long as we continue to deliberately misunderstand what we are doing in the maximum possible backward ways. At the present time, the leading edges of that are the banksters' monetary systems, which are frauds enforced by governments.
While Stockman has a slightly better perspective upon that issue than Bernanke, both are still light years away from developing a monetary system based upon a better understanding of general energy systems, that enabled human ecological systems to be integrated with industrial and natural ecological energy systems. In order to do that would take a far more profound critique of the established systems dominated by the central banks than what Stockman is offering!
Benny’s Blog comment, “We have to set rates somewhere”, is a lame attempt to argue that rates are merely a result of the Feds money supply targets. Not only does it contradict the Feds explic statements about rate goals, it suggests that $1.7 trillion of excess reserves was also part of the master plan.
Like yea, you know, we might need it some day, like maybe when we have to fund World War III, which will probably evolve from our present currency wars.
Don’t worry folks, we’ve got everything under control, with this one control called a printer, which can go either fast or really really fast. We’re studying the possibility of upgrading to a modified Gameboy Joystick which will also allow us to turn left and right.
Ben
These points are all you need to know about the current monetary, economic and political system:
1. The FED gets ALL of its power from the politicians in congress, ie IF the politicians WANTED to stop the FED's monetary profligacy, they can and would - but I only hear them, eg Chuck Shumer, Elizabeth Warren, etc pleading with the FED to "keep interest rates low for longer".
2. The politicians in congress get elected by the proletariat, ALL of whom want unlimited ever-expanding freebies, eg obamacare, and christian-proletariat-democracy-nation-building around the world, all of which consume FAR MORE money than can be raised in taxes and therefore requires HUGE PERPETUAL DEFICIT spending, which requires carrying ever larger volumes of debt.
3. In order to keep the government's interest expense on the debt as low as possible the interest rates must be kept as low as possible.
4. In order to keep the hordes of living-paycheck-to-paycheck proletariat consuming to stimulate the economy and continuously self-gratified through shopping, the interest rates charged to the proletariat hordes must be kept low as possible and credit made easy as possible.
And this pattern will continue until the system becomes unstable and crashes, but that could be many, many years in the future, just look at Japan which has been doing monetary madness for 20 years.
.
Ah, ah, looking forward to a fantaisical analysis, 'american'-style.
You do get this wrong vigourously. Reversely, another category exists: the category that is on the winner's side, no matter the winner and will receive bribery for their support (members of this category often play both sides).
This category includes big economic agents like corporations, wealthy individuals etc...
Made me laugh. US citizens never stop. Delusion or duplicity? One must be an 'american' to be that stuck into fantasy.
What a fabled past this 'american' lives in. Splendid. Pouring such a foundamental error really gives no reason to debunk the rest.
Produce better propaganda.
You keep exhibiting your envy and resentment of successful people, the boogy men, all those wealthy people and corporations, that you blame for your personal failure.
The world is FULL of opportunity and money, and the crushing unbearable reality for your too-fragile ego is that you are not intelligent & skilled enough to earn your own share, so rather than accept your personal incompetence, inadequacy and failure, you blame those who have succeeded for your failure, as though their success was at your expense.
You are a nothing, and you will live out the rest of your life as a nothing unless and until you accept your responsibility for your nothingness, stop blaming the mysterious dark forces of the universe, and start applying yourself to self improvement.
Ad hominems as the only possible answer are so US citizenish.
Notice on the chart of Total Credit Market Debt as a % of GDP began expanding from 1980 on. The Full Employment Act of 1978 mandates that congress, president and federal reserve engage in central economic planning. It is interesting to note the more accelerated expansion under Republicn President, the "conservatives."
Common Sense Economics
quillian.net
In the briefest of parenthetical remarks, Stockman mentions that the required reserves that commercial banks had to maintain at the Fed in its initial phase were between 9 and 16 percent. In the rest of his rant he never once refers to these required reserves. And yet, these reserves represented the difference between pre and post 1913 banking. In the completely "free market" which Stockman adores, banks would be free to loan themseves into bankruptcy, taking their depositors along with them. Many did. It is currently fashionable to condemn fractional reserve central banking, but it provided the framework which allowed the economic expansion of the 20th century. It was only when the implied regulatory function of the Federal Reserve was neglected was it possible to expand credit irresponsibly, as occurred spectacturly in 1929 and 2007,
Some things cannot be improved upon. One of these is carrying around gold and silver coins. And NO BANKS.
Let's be clear. I'm a scientist, engineer, inventor, extreme techie and futurist of sorts. But I'm also sane, which means (in this case) I can recognize that some old time, long standing goods, practices and mechanisms are much better than any new alternative. Especially, as it turns out, when newer alternatives make fraud infinitely easier to practice and mass produce.
Physical gold and silver coins are one of these old "can't beat this" cases. A world without banks is a vastly better world. Any marginal convenience or benefit of banks existing are massively overwhelmed by the advantages of no banks existing.
All that is required for trade is physical gold and silver coins. All that is required for lending and borrowing is physical gold and silver coins (and paper + pen to document the terms and verify the agreement was made with signatures).
ANY addition to this mechanism enables and encourages fraud, and in most cases, also enables and encourages massive, widespread, automated fraud.
I understand that most human beings are programmed to have an almost immutable normalcy bias, and are not used to considering alternatives. In fact, their normalcy bias makes them increasingly uncomfortable the more unconventional any alternative is.
Those of us who are inventors, or have other reasons to observe reality without bias and/or identify fundamentals are not so intellectually or emotionally constrained. Some very simple (and sometimes ancient) items, goods, practices and systems are better than any new alternative... especially alternatives purposely created to implement massive, widespread, egregeous fraud.
PM coins in pocket are just one of many practices that have never been improved upon, and likely never will. Too bad human beings are too stupid and brainwashed to notice.
You should use your awesome CPU to study "intermediation". Banking is about much much more than just the currency, and banking does not have to be corrupted, unless of course the politicians want it to be.
Based upon what you post on ZH, I am worried about the risks involved in encountering something that you have invented.
Corrupt politicians and bankers being virtually unheard of . . .
Yeah right.
There are plenty of corrupt politicians and bankers, but FAR FAR more corrupt proletariat who live off entitlement programs, who lie about their incomes on their mortgage applications, etc, etc.
A marriage made in heaven , as they say.
So propaganda is nice and fair but provide good propaganda. And not wishful thinking.
The failure has returned, with another stooge stool dump.
Where were you all day, cashing your government entitlement check ?
Try to refute how he summarized your wishful thinking a/k/a bullshit.
More ad hominem by a barking 'american'.
Yes, banking is always corrupted. To be sure, the type and degree of banking corruption varies from time to time and place to place, but banking is always corrupt.
Sure, one can correctly say that "if every human being on earth was honest, then honest banking would be possible". True enough.
One can also correctly say that "if every human being on earth was honest, then murder and theft would not exist". True enough.
But neither is true in any real world that any human has ever lived in.
-----
As for "intermediation", I just identified and described one type of intermediation in another thread within the past couple days. So yes, I am aware of intermediation, and some forms of intermediation are helpful. Some. A few. But none of what banks do.
Incidentially, it is possible in a world of "gold and silver coins" world for debit (and possibly credit) cards to exist and maybe almost be feasible. But that would require some absolutely foolproof, unjiggerable system to assure real, physical, utterly unencumbered gold and silver are in storage for every penny of debit/credit card spending. But this is impractical because the predators in the USSA or other western or major fictitious nations will corrupt anything they possibly can.
Perfectly stated.
And then arrive the "Progressives" who want to throw out all time-tested wisdom so can meddle freely with other peoples' lives, against their will.