Submitted by Charles Hugh-Smith of OfTwoMinds blog,
Reform is impossible in a system optimized for centralized power and financial predators and parasites.
The problem with optimizing private gain by any means available is you also optimize financial predators and parasites. The problem with optimizing a system for centralized power (i.e. the federal government and Federal Reserve) is that you also optimize regulatory capture, influence-peddling and the unholy marriage of wealth and power.
Optimization is a key principle of all technologies. Though the political class claims perfection is possible (with just a few more regulations and laws, heh), engineers understand every system is a series of trade-offs. If you want to optimize one output, everything else in the system is rendered secondary.
The master narrative of the status quo is that maximizing private gain by any means available is good because to get rich is glorious: the goal of getting rich motivates entrepreneurs to do wonderful things that benefit humanity while they amass vast fortunes.
This is the happy propaganda story, and we all know the few outliers who are endlessly trotted out to "prove" its truth: Steve Jobs, the Larrys (Ellison and Page) Bill Gates, et al. Nice, but the handful who fulfill the propaganda version of optimizing private gain by any means available only succeeded because there were no powerful vested interests in their way.
What our system actually optimizes is the assembly of vested interests that buy protection of their racket from the state. These vested interests include wealthy individuals, corporations, cartels and public unions.
Want to earn a 1,000% return on your investment? It's very difficult to do so by producing a good or service. By any measure, the easiest, lowest-risk way to earn a 1,000% return on your investment is to buy political protection with lobbying and campaign contributions.
What we've done is optimize financial predation and parasitism. We've created enormous incentives for too big to fail/jail banks, financiers manipulating dark pools and high-frequency trading that add nothing to the real economy, public unions guaranteeing their members unbeatable pensions and benefits while taxpayers foot the bill, politicos who enter office with ambition and few financial means who leave office with great wealth, cartels that buy protection from competition from the centralized state and corporations that rewrite the tax code in their favor with campaign contributions.
Now that we've created vast menageries of insatiably greedy financial predators and parasites, we've created monsters who want to live regardless of the cost to the nation. Parasites prefer not to kill their host, but their ability to fine-tune the process of sucking as much money out of the system as possible without bringing it down is not as well-developed as their greed.
The Global Financial Meltdown of 2008 proved this. The financial parasites and their parasitic partners in the halls of federal power were blind to the risks of collapse their insatiable greed were generating; they continued sucking the maximum private gain out of the system until the moment it collapsed in a heap.
Predators don't worry about maintaining the flock of sheep or the schools of little fish. They will dive into the swirling school of frantic fish and consume every last one.Financial predators are the same: financial predators will sell a subprime auto loan to every last debt-serf in the flock, until the ecosystem of prey collapses and there are no marks left for their cons.
This is why our system is well and truly doomed: we have optimized the system for vast menageries of insatiably greedy financial predators and parasites, and now that they exist and have gained power, they want to live and prosper regardless of the cost to the decimated prey and the nation. By optimizing centralized power, we have optimized the protection of financial predators and parasites by the all-powerful central state and bank.
Reform is impossible in a system optimized for centralized power and financial predators and parasites. The predators and parasites will gorge themselves until the system collapses.
They don't want you to start a business and get rich.
They want you to take out loans, and make THEM rich.
Predators (.gov and cronies) and parasites (free shit army). We are going to need a bigger boat.
Rackets. As old as history.
Although Tennis is invent by puffy French courtisan in 12 Century, first string racket is use by Mayor Wingfield of London in 1874. Before that is just use wood panel, but at first is just using hand. Ball is simple skin sack stuff with wool. Tennis is derive from French word, "tenir" which is English "to hold". Boris is surmise French Courtisan is like holding ball, but English is like of smack ball with wood paddle. Boris is recommend French version of game if you are provide ball.
I prefer Russian tennis
http://images4.fanpop.com/image/photos/23300000/WTA-wta-23389770-1550-11...
Yes, Russia is provide world with many nubile tennis player! But why is so bite hard on lip...? Maybe is angry and you are not want Miss Sharapova play if you are provide game ball!
Angry has its moments
So CHS now says that the system cannot be fixed from within? That the only thing left to do is to wait until it exhausts itself?
Ironically enough, this is the same CHS that once said that the simple solution to FIXING EVERYTHING was to have the Federal government just raise the minimum wage.
http://www.zerohedge.com/news/guest-post-income-disparity-solution-resto...
Boris is relate true life story... Long time ago, Boris is work at Nuclear Power Plant. Job is simple, if water is leak, Boris is use mop and bucket for extracation of excess moisture. One day, Boris is receive call at home apartment and must run (this is before Boris is receive allocation of motor vehicle transportation) to nuclear facility for emergency. Boris is careful to put on rubber boot first and while is use mop and bucket, is accidently to tip bucket on stair case which later is find out is overhead of rod control room. Boris is quick finish up and is go home, but several hour later, is learning rod is melt down because of control malfunction. In Lenin class reactor (four reactors of type RBMK-1000), this is not so good. Boris is change name and is move to Minsk.
Moral of story is everyone is want to live.
Even worse, they want to take out loans, off load the debt to the immonetarate (neologism for monetary illiterate) general public via government, keep the proceeds for themselves, bankrupt society, and then buy up society for pennies on the dollars created from the debt offloaded to society.
And people call these people stupid. Nope, we are stupid. They hire people to play stupid while their orchestrate their genious highest Art of War gambit every conceived by humans (or was it conceived by humans?).
The Debt-Money Monopoly created, or at least hijacked, the "It's the Jews" narrative IN ORDER TO CLOAK THEMSELVES!
Whike the dupes are busy blaiming "the Jews," the Debt-Money Monopoly has its way with society.
Look at history with a different eye... an ultra-nationalist guy saw the tactics of the Debt-Money Monopoly to destroy the nationalist agenda that he loved so dearly. He was duped into believing that "the Jews" were responsible simply because the Debt-Money Monopoly hired Jewish people in certain key positions. Because he was duped, he put the Jews (and anyone else who wasn't uber national... especially political dissidents like myself) into labor camps AND THE DEBT-MONEY MONOPOLY PROFITED OFF OF THEIR ENSLAVEMENT!
Hitler did business with people like Rockefeller and the Herriman Brothers, the very people aligned with those who were trying to destroy Hitler's German culture!
AND THE PUNKED HITLER DIDN'T EVEN KNOW IT! And neither did the poor victim Jewish, Gypsies, disabled, political dissidents, and other targeted groups.
That's what happened - fact check it.
JFK to 911 Everything Is A Rich Man's (Debt-Money Monopolist) Trick
https://www.youtube.com/watch?v=U1Qt6a-vaNM
Even the ittle of the Youtube video is misleading - what is a "rich man?" My CEO neighbor? No, she's being punked, too.
BLAME THE DEBT-MONEY MONOPOLY for their DEBT-MONEY MONOPOLY FASCISM...
...or else you are aiding and abetting their tyranny... even if entirely unwittingly!
Predators exist both inside and outside the government 'systems'. Just look at things like your cell phone bill, cable bill, car or house purchase agreements, real estate tax statement, hotel bills, on-line ticket purchases, etc. Every financial planner or insurance agent has tricks up both sleeves. And this stuff is being piled onto everything - and is growing much faster than the (supposed) 1.2% inflation rate.
Boris is receive internet from neighbor wireless 802.11 router (username/password = "admin/pass"). One day, is look through neighbor mailbox and is examine phone bill from internet service provider. Amazing is predatory exise of tax by city and oblast! Boris is horrify and outrage by parasite behavior of state and service provider! But what is can Boris do!?
Another Bankster bites the dust.....for a real hoot, go read the glowing comments made by fellow banksters over at Financial Times.
Jamie Dimon, chief executive of JPMorgan, said Mr Lee, 62, “was a master of his craft, but he was so much more — he was an incomparable force of nature”.
"Master of Craft"... this is master of craft of high priest of order of international bank kabal. Only force of nature bankster is innovate is deficate into rotational wind turbine.
The predators (Money changers) and parasites (corrupt politians) will gorge themselves until the system collapses.
Cannot happen soon enough.
The global stall. Before these batshit crazy fuckers eat all the fruits and everything else. Their thirst is exponetial. So ya we are burnin daylight boys.
The predators and parasites will gorge themselves until the system collapses.
This is true, and this is the USA situation with Bankers, hedge Funders and Trading Houses. But instead of seeing themselves as predators, they see themselves as the solid honest core of the productive economy. They view Workers, Small Business and the growing part time labor force as parasites!
America has had a coup, a coup from above, it took place 30 years ago and continues to tear apart the system of capitalism that we are supposed to function in.
Short version of this article: financial predators are getting everything they can right now, consequences be damned, because they know the next downturn is the widowmaker, just like we do.
Shorter version:
20 pound tick on a 10 pound dog.
It's easy to point them out at this time though, they are the only ones with any money. If any of them bothered to stop and look at what was happening while swinging wild and holding onto that debt. They just walked into a trap.
You wrote an entire article saturated with "we" and "optimized," but you couldn't squeeze in even an honorable mention of who the "we" is, let alone acknowledge the corruption -- directly, succinctly -- thereby giving the corrupt another pass.
Another enabling... lost chance, wasted energy.
That is what dooms us, Mr. Hugh-Smith.
Go Chuck. Those banksters are bad people. They are really bad people.
The latest Craig Hulet: http://www.eliasound.biz/hulet/mp3s/2015/06.16.15.mp3
I'm beginning to think the predators and parasites have switched rolls... The host is dead or dying so the maggots are feeding on what's left of the corpse.
No, this is a new predator that only feeds on maggots.
Could be... With all that, "genome research' going on.
Slimeycon Valley has all sorts of parasites eager to feed on easy credit.
This has to be the top. Ollie's Bargain Outlet has filed for an IPO.
A store that makes Family Dollar look like Neiman Marcus.
When the lowest rung shoots for the top of the ladder, you know it's over.
you mean there is more than one of those crappy stores, my god i though our town was just unlucky
Just like Rome, Nazi Germany and other such types before, they told us right up front when they made the eagle a national symbol. The eagle is a predator. Always was, always will be.
Classical economists tried to do away with rentiers, i.e. parasitism. But, they got thwarted prior to WW1. Industrial Capitalism vectored “state credit” into industry, and hence countries like Germany improved rapidly, much to England’s chagrin. The destiny of industrial capitalism “supposedly” was to strip away the parasitic feudalism hangover from middle ages (land rents, monopoly, and privileges.)
WW1 intervened as England was paranoid about Berlin to Baghdad “railroad,” where Germany would get Oil from Basra, Iraq. The railroad also threatened to tie together Eurasia, especially if it went further east and then across the Bosporus to Russia. Eurasia would then overshadow Britain’s Empire. Echoes of this battle continue to today.
England, and her “capital” markets couldn’t stand for Eurasia as her shipping monopoly was threatened by overland rail, and possibly by losing oil supplies. England had recently converted to oil burner ships under Churchill and had no domestic source of oil.
WW1 then 2 can be seen as a disaster as it enshrined “finance capitalism” as the winner. Marxists saw that the proletariat would not rise up, and so the Frankfurt crowd (Jewish) left Germany and then started working on a class they could influence, American women and minorities. The end result of this banker “capital” usury funded propaganda would be the breakdown of traditional western culture.
Frankfurters were social change agents, and Chicago School was being infiltrated by this same alien element, but with “economists.” Their main ideological thrust was to overturn Classical Economy, and replace it with monetarism. Classical economy wanted to strip an economy of rental overhead, and this overhead is always zero sum, even negative activity. Classical economists defined free markets as free from monopoly, absentee land ownership, cornering land to monopolize mineral extraction, free from monopoly pricing, special privilege, and above all free from financial usury. Classical economists wanted people to be economically free, and not made into serfs. Classical economics defines rents and how to tax them away, thus getting rid of parasitic burden.
The rentiers fought back against the Classical economists; these rentiers are the Austrian School, von Mises and Hayek, and University of Chicago’s monetarist ideologues, who redefined “free markets.” The end result is today’s Western world where markets are free for rentiers, free from government taxation of land and natural resources, and free from public price regulation and oversight. The so called Reform Era was called “the road to serfdom.” Ha. In its place, the Austrian and Chicago monetarist “neoliberals” created a post-classical “road to debt peonage.”
England has been on board with credit finance economy since BOE was created in 1694. BOE was rammed into being with stealth and intrigue by ideological and genetic cousins to the Frankfurters. Most ZH readers know what in-group tribe I am speaking of; and of course it is usually no surprise to find their fingerprints.
Not all predators and parasites are from the tribe, it is a mankind problem. But, a “special class of people” that codifies rent seeking and parasitism into religion, and uses usury money power to drive its agenda is a “special problem.”
Count on this group to resist any moves toward a rent free/usury free economy. They not only resisted classical reform, they actively undermined it.
The Debt-Money Monopolists have covertly set up a Debt-Money Fascist system. The Big Bad are the Debt-Money Monopolists.
Find out WHO CONTROLS THE INSTITUTIONS THAT DEFINE MONEY AS DEBT AND THE CORPORATIONS THAT ISSUE DEBT-MONEY FROM NOTHING, AND YOU'VE FOUND THE PEOPLE THAT ARE, OR MIGHT AS WELL BE, SATAN'S FOOT SOLDIER MANAGERS ON EARTH.
The foot soldiers themselves are unwitting dupes out to... "make a buck" that they don't even know is know is a debt receipt and an integral part of a zero sum game monetary system engineered to bankrupt planet Earth into the hands of... guess who? The Debt-Money Monopoly.
Play the game Monopoly and collect 10% of everyone's cash every time anyone passes go. Who is going to win that game - EVERY SINGLE TIME?
http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=14001
JESSICA DESVARIEUX, PRODUCER, TRNN: Welcome to The Real News Network. I'm Jessica Desvarieux in Baltimore.
So the big question in the world of economics is whether or not the Federal Reserve will raise interest rates and end their bond buying program known as quantitative easing. Chair Janet Yellen will give a quarterly economic and interest rate forecast at a meeting between June 16th and the 17th. But what would her announcement mean for everyday people? Joining us to discuss all this and the man behind the Hudson Report is Michael Hudson. Michael is a distinguished research professor of economics at the University of Missouri, Kansas City. His latest book is Killing the Host: How Financial Parasites and Debt Bondage Destroy the Global Economy.
Thank you, Michael, for joining us.
JESSICA DESVARIEUX: So Michael, just briefly can you start by explaining how quantitative easing works, for our viewers?
MICHAEL HUDSON, PROF. OF ECONOMICS, UMKC: The Federal Reserve created $4 trillion worth of credit electronically on its computers when the economy was in trouble in 2008. It could have used this $4 trillion to write down the debts. It could have used it to spend into the economy and create sort of a recovery. But instead it gave all the money to the banks, and its claim was that if you give $4 trillion to the bank reserves this is going to help the economy, because the bank is going to lend more money to the economy and drive it in, $4 trillion deeper into debt.
This was a crazy idea. Here we were in a debt crisis, and the Fed said what the economy needs to cure the crisis and get employment moving again, is more debt. So the banks got the $4 trillion. And of this was so much money that interest rates were driven down to 1/10th of 1 percent on government bonds. And the Fed was lending money to the banks at 1/10th of 1 percent. So the idea was, the pretense was that now the Feds can lend mortgage money at hardly anything at all, and people can [bid] prices, house prices even higher. And that will save the banks from losing all the money on their liars' loans--the liars were the banks--on their junk mortgage loans. Or the Fed will lend the money to industry, and corporations will now say gee, we can borrow so cheaply that all we need to do is make maybe a three or a four percent profit, and we can hire enough labor to make people all fully employed again.
DESVARIEUX: All right, Michael. Hold on, hold on, one second. Now that the federal government though is talking about ending quantitative easing, also known as QE, who would be the winners and losers of this policy ending?
HUDSON: Well, in order to say who would be the winners and losers I have to say what happened when they did the easing. When they did it it drove interest rates down to, as I said, to a fraction of a percent, what did the banks do with the money? They didn't lend to industry to hire, they lent to industry to essentially arbitrage. They lent to corporate raiders to buy out industrial corporations, and they, most of all, they lent to companies to buy back their own stock.
So in the last, for this year alone, Standard & Poor's and other agencies guess that the winners are going to be the corporations that are going to spend over a trillion dollars in buying back their own stock. Because they can borrow so cheaply, why not buy back their own stock with interest rates so low.
So this trillion dollars is not going to be invested in new goods and services and production. It's not going to be invested in hiring labor. So who will be the winners? Well first of all, the pension funds have been complaining that interest rates are so low that they haven't been able to make enough money in their funds to be assured to pay the pensions that are falling due. The cities and states, California, New Jersey now, Illinois, are all saying wait a minute, we're so far behind in our pensions because we haven't been able to make the money, that we need higher interest rates in order to make enough money to pay the pensions. And the insurance companies have said, well, look, we need higher interest rates to solve the problem that we're making so little money securely that we promised to pay all these annuities, and we may go broke.
So in principle the whole idea is to help the pension funds, insurance companies and retirees make enough money to live on. That's the promise. But it's a false promise. It's just really the cover story. Because what's going to happen, as is so often the case, solving one problem creates yet new problems.
So look at who the losers will be if the Federal Reserve stops quantitative easing. Well for one thing, if they raise interest rates here--and when they say stopping quantitative easing, Janet Yellen really means let's raise interest rates and get them high again, as if that's going to help the economy. Well the first thing is if the United States raises interest rates that's going to push the dollar way up against the Euro, and most of all against third world and Asian countries. This means that countries that owe foreign debt, that's almost all denominated in dollars, especially to the International Monetary Fund or the World Bank, they're going to have to pay much more money in higher-priced dollars for their own currency. So this is going to aggravate debt deflation and defaults in third world countries.
Secondly, all of a sudden when they raise the interest rates, all this arbitrage that's been occurring to bid up the stock market, to bid up the bond market and to bid up real estate markets is going to be reversed. Because if interest rates rise, banks are not going to lend as much money to buy stocks and they're not going to make as much money to lend real estate.
So the economy's really painted itself into a corner. Nobody's able to win at this point, that's the problem with the economy. And in that sense you can say it's not that we really have a problem. We have a quandary. And a quandary is something where there isn't a solution. Mathematicians call this the optimum solution, or the optimum position. The optimum position is one where you can't make any move without making things worse. And that's the position the United States is in right now. This is as good as it gets, which is another way of saying it's all downhill from here.
DESVARIEUX: Michael, you don't see any way of us being able to get out of this sort of, debt deflation, this worst case scenario options here? Do we have any sort of options that allow us to kind of get out of this?
HUDSON: There is one way to get out of it, but it's, they're not willing to do it. The way to get out of debt deflation is you write down the bad debts. And this is what should have been done in 2008. As a matter of fact, when President Obama was running for election he promised to write down the bad mortgage debts to bring the mortgages in line with what people could pay. Well, right now you have a lot of interest on mortgages. You have a lot of principal coming through. You have a rise in defaults on mortgages because the debts are not written down.
And as soon as Obama was elected, Barney Frank went to him and said look, I've got the Republicans to agree and Paulson at Treasury's agreed we can write down the debts. And Obama said, I changed my mind, I'm not going to do what I promised. I'm appointing Tim Geithner as the bank lobbyist in charge of the Treasury Department, and he said we have to help the banks and forget the voters. And so the debts are not written down. If you don't write down the debts, the economy is going to have to use its money to pay down the mortgage debts, to pay all the corporate debts.
Let's look at these corporations that are buying their own stock, for instance. They say, well, look. If our stock is paying, maybe, 6 percent dividend, or 5 percent, or even 4 percent, let's borrow money from the bank and buy the stock. But now if the interest rate goes up, the stock market may fall easily by 20 percent. That's what people are so worried about. Whenever Janet Yellen talked about ending quantitative easing, the stock market takes a couple of hundred points' plunge.
So if the stock price goes down, say, 20 percent, then here are these companies that have borrowed to buy their own stock. And instead of making a two or three percent gain, the difference between the 1 percent they borrow at and the 4 percent, say, that the dividend rate is, all of a sudden they lose 20 percent and they're in trouble. They've taken a huge loss.
So all of this seeming gain, this sort of fictitious capital that's been created is going to be wiped out if you don't simply write down the debts. And because you, the government and the politicians, Congress, have all said we're assigning economic policy outside of the government, we're letting the Federal Reserve be the central planner, well, the Federal Reserve is loyal to its customers and its owners, the commercial banks. So basically Congress and the executive branch has said we're going to save the banks, not the economy. And saving the banks means you impose debt deflation on the economy, you shrink the economy. There's not going to be a revival in employment under these conditions. There's not going to be rising wages. And the capital gains that have been spurring the stock and bond markets, and the real estate recovery, are going to be reversed.
The magic is not in seeing the problem, but in stating it so well.
Well, this is how Socieites Collapse...