Alexis Tsipras - Angel Of Mercy Or "Trusty" Of The Central Bankers' Debt Prison?

Tyler Durden's picture

Submitted by David Stockman via Contra Corner blog,

Greece, Europe and the world are being crucified on a cross of Keynesian central banking. The latter’s two-decade long deluge of money printing and ZIRP has generated a fantastic worldwide financial bubble, and one which has accrued to just a tiny slice of mankind. That much is blindingly evident, but there’s more and it’s worse.

The present replay of high noon on Greece’s impossible mountain of debt clarifies an even greater evil. Namely, that the central bank printing presses have also utterly destroyed the fundamental requisite of fiscal democracy.

To wit, in the modern world of massive, interventionist welfare states, fiscal governance desperately needs an honest bond market. The latter is the only mechanism capable of taming the modern state’s primal urge to entitle, transfer, indulge, placate, subsidize and spend without the parallel pain of a commensurate burden of taxation.

Soaring bond yields and the fear of losing debt market access, therefore, are the one force that can cause the politicians, thieves and charlatans who man the machinery of democracy to sober-up and acknowledge the facts; and then to weigh the difficult options and tradeoffs, congeal a consensus and close the deal.

This proposition is based on experience, not theory——even though the logic of bond market discipline is unassailable. Approximately 33-years ago, in fact, I was part of a small group of White House staff who talked Ronald Reagan into the impossible. That is, into signing not only a giant tax increase bill at the dark bottom of the 1982 recession, but to actually embrace several more such measures over the course of the subsequent three years. When the dust settled, these so-called “tax grabs”  took back fully 40% of his cherished and sweeping 1981 tax reduction.

President Reagan crossed his own “red lines” because, at the end of the day, he knew Paul Volcker wouldn’t print the money to finance the giant 6-8% of GDP structural deficits that broke out during the first year of his administration.

To be sure, these giant deficits were accidental—-owing to too much defense spending, too little domestic cutting and too great a depletion of the revenue base in his historic 1981 tax cut—-not purposeful Keynesian deficits. But they were nonetheless real, intractable and economically corrosive.

And to his credit, the President didn’t actually want Fed Chairman Volcker to ease the intense upward pressure on interest rates and private investment that these giant deficits imposed. Ronald Reagan was thoroughly old-fashioned enough to hate the idea of monetization. That is to say, central bank imposition of financial fraud on the people by paying for the state’s consumption of good, services and labor and its transfer benefit payments with credits conjured from thin air.

But three decades latter, the world has been turned upside-down. The bond vigilantes who kept politicians semi-honest in days of yore have been exterminated by central bankers wielding giant bond buying bazookas. Sovereign debt markets have become financial whore houses.

That baleful condition is owing to the usurpation of the world’s central banking machinery by Keynesian academics and apparatchiks. The whole modus operandi of the latter is nothing less than effecting the deep, chronic and unrelenting falsification of bond prices.

And they accomplish this falsification not merely by direct bond buying in the guise of QE. That is bad enough, of course, as underscored by the fact that the world’s central banks have expanded their collective balance sheet from $6 trillion to $22 trillion over the past decade or so. That’s a whole lot of monetization——-and almost all of that $16 trillion of central bank credit conjured from thin air went into the purchase of sovereign bonds, notes, bills and numerous forms of other state guarantied debt.

These crackpots tell you, of course, that a brobdingnagian $16 trillion thumb on the scale has nothing to do with the price and yields of public debt. We are supposedly suffering from a “savings glut”, according to Bernanke and Greenspan; and by the lights of the greatest Keynesian gasbag of our times, Professor Larry Summers, ultra-low rates are owing to a mysterious secular stagnation that has induced investors to beg governments to issue them negative yield securities.

Right! Still, this massive direct monetization of sovereign debt is only the half of it. ZIRP is the dastardly accomplice of QE. Even more price falsification is introduced into the government bond market when the johns who run the whorehouse finance their speculations in the repo and other liquid money markets.

The expense of carry on the 95% or so of the bond’s purchase price which is borrowed amounts to the cost of production (COGS) for bond market speculators. Make that COGS zero for 80 months running and pledge on a stack of post-FOMC meeting statements that you will not allow money market rates off the zero bound without ample warning and you have a no-brainer yield curve arbitrage like never before imagined. And do this on a global scale, and you get the recent absurdity of the 10-year German bund trading at 5 bps of yield, or the long-term issues of the quasi-bankrupt state of Italy trading at under 1%.

So rather than loathing monetization as did much of Wall Street during Ronald Reagan’s day, today’s traders feast on it and worship it. Instead of acknowledging the false price signals and free lunch corruption it introduces into the fiscal arena, our Keynesian central bankers dismiss the danger by resorting to a red herring. Namely, that massive monetization has not caused CPI inflation to accelerate. So do not be troubled.

That is pathetic beyond words and today’s Greek showndown provides a striking example of how this monetary evil-doing imperils the very essence of political democracy. In a word, Greece bankrupted itself years ago because its politicians were served up heaping piles of cheap bonds by a so-called debt market that had been falsified  by the ECB.

Thus, in 2001 Greece’s public debt was about $150 billion and equated to exactly 100% of its nominal GDP. In a world in which bond vigilantes had not yet been euthanized by central bankers, what happened next would have been impossible. By 2010, Greece’s public debt had soared to $380 billion, meaning that it grew at a compound annual rate of 10% for an entire decade.

Needless to say, nothing had changed with respect to Greece’s notoriously corrupt, inefficient, special interest dominated economy that would have warranted a $230 billion surge in public debt—–especially given the 100% of GDP starting ratio in 2001.  Yet Greece’s 10-year bond yield dropped dramatically until 2008, and even by the time of the crisis fully hit in early 2010 it was only 5.5%.

Historical Data Chart

In the interim, the ECB had opened the spigots wide. During the same 11-year period ending in 2010, it balance sheet soared by 3X, representing a 11% annualized growth rate. In short, the printing presses in Frankfurt so drastically falsified euro bond prices, that even with a yield premium, the Greek state was able to borrow itself into bankruptcy.

Historical Data Chart

Stated differently, there is not a snowballs chance that Greece would have been lugging around $380 billion of public debt by 2010 in a honest bond market. Moreover, real bond vigilantes would never have been fooled by the phony debt-fueled boom that temporarily bloated the Greek economy during the first decade after it adopted the euro.

Specifically, between 2001 and the 2009 peak, the Greek economy appeared to surge—-with nominal GDP expanding from $150 billion to $340 billion or by 10% annually.  But that wasn’t sustainable organic growth; it was a debt fueled bubble of public and private construction investment and new household consumption on the part of Greece’s legions of public employees and social beneficiaries.

Not surprisingly, Greek politicians got exactly the wrong message from this phony boomlet. The latter ballooned the denominator of the public debt ratio (GDP), generating the appearance that it was only creeping up slowly to about 115% by 2008—- when in fact the true ratio was soaring.

Consequently, since there was no crisis on the horizon and yields were still eminently manageable, politicians—especially those of a nation addicted to leftist statism—did what they invariably do. Namely, they drastically increased pensions and other social welfare programs.

And this gets to the heart of the stupid debate between Syriza and the troika apparatchiks about “austerity”. Yes, as shown below, Greece has actually reduced nominal outlays for its pension and old age programs by 6 billion euro or 16% since the peak in 2009.  But in the prior three years alone it had increased outlays by 35% and by upwards of 60% since joining the eurozone.

The so-called rollbacks and pension cuts, therefore, actually amount to the recoupment of the huge, unaffordable largesse that Greece’s governments were induced to dispense based on a bubbling economy and the false bond market prices enabled by the ECB. Stated differently, today’s pension “red line” is an artifact of a dishonest bond market, not evidence of Greece’s original fiscal sin, as viewed by its German paymasters, or social justice, as claimed by its current government.


The Wall Street Journal

In this context, it is also evident that the “austerity” to which Greece has succumbed is not the result of elective fiscal policies that have been shoved down its throat by the Troika. The hoary argument of the Keynesian commentariat that Greece’s debt problem is the result of its shrinking GDP is mathematically correct but economically ludicrous. Greece sustainable GDP was never $340 billion in 2008; that was a debt financed mirage.

The shrinkage of its GDP toward $200 billion at present simply represents the liquidation of a bubble economy that was totally dependent upon massive and continuous new injections of debt. To pretend that this mirage can be restored by the elimination of the fiscal constraints being imposed by Greece’s paymasters is exactly the kind of Keynesian fairy tale that afflicts fiscal policy all around the world.

Historical Data Chart

This is not to say that the Brussels/Frankfurt/IMF bailouts and control regimes have any merit whatsoever. They have saddled Greece with illegitimate, onerous, predatory debt that it should have shed by default in 2010 once it became evident that Greece was bankrupt.

The $380 billion of gross public debt that existed in 2010 should have been shrunk to a fraction of that amount in the course of a proper bankruptcy.

As it happened, most of that debt was simply transferred from the banks and bond managers of Europe to the taxpayers of the eurozone. The elected politicians of Greece did not want this bailout in the first place; it was forced on them by French, German and Italian authorities in order to bailout their own financial institutions.

All that has occurred since then has been a giant farce and con job. Greece’s current public debt ratio is indeed 180% of GDP, and no one in their right mind could possibly believe it can be serviced over the long haul. Eventually, interest rates must normalize and then some—-or the Keynesian fools now in charge of the central banks will blow-up the world’s entire monetary system and financial structure. But add 300 or 500 basis points to Greece’s debt service cost upon the eventual rollover of the massive Troika obligations (@ $300 billion) and the whole edifice of debt goes pear-shaped.

Given that reality, the idea that Greece can work out from under its massive debt burden by running 1%, 3% or even 5% of GDP primary surpluses is pure bunk. The whole Troika program, therefore, is a monumental exercise in kick the can which will only end in disaster.

So if there is to be any remaining hope in the world for both political democracy and honest capitalist prosperity, today’s malignant regime of Keynesian central banking must be struck a death blow. That is, it must undergo a catastrophic failure capable of thoroughly and permanently discrediting it in the eyes of financial gamblers and politicians alike.

The endless Greek default drama—which is now just going through another temporary iteration— provides exactly that opportunity because all along this mindless, juvenile farce has been enabled and nurtured by the ECB. Draghi and his posse of financial dimwits have created what amounts to a hideous financial scam—-a disgrace to any notion of central banking which existed before 2008.

Had he not announced he would massively monetize euro sovereign debt in July 2012, Greece would have been bankrupt long ago, and the peripheral borrowers like Italy, Spain and Portugal would have had their day of fiscal reckoning, too. The eurozone would have blown sky high, and the ECB would be no more.

Likewise, were not the ECB now supplying $125 billion of funding to the Greek banking system—or actually more than its current level of fast vanishing deposits—-the latter would have crashed and burned months ago, thereby triggering a crisis which would have eventually destroyed the euro.

Ironically, the angel of mercy now hovers in the form of Greece’s intrepid prime minister, Alexis Tsipras. Too be sure, his left-wing statist economics is a complete abomination that would cause the Greek people catastrophic suffering if were ever to be implemented. But he is absolutely correct on the matter of political self-governance:

“We have no right to bury the European democracy in the land where it was born.”

That’s the essence of the issue. If Greece’s democracy is to survive, it must be cut loose from the destructive regime of superstate dictation from Brussels and monetary falsification from Frankfurt.

Ironically, going back to the Drachma would put Greece’s politicians right were they were before they were betrayed by the false monetary regime of eurozone central banking. They would be forced to run a primary surplus because they would not be able to borrow on world markets after a massive default on the debt forced upon them by the eurozone, ECB and IMF.

But the mix of taxing the rich, cutting the pensioners, catching the tax cheats, selling state assets, shrinking the bureaucracy and squeezing the crony capitalist leeches which feed on the Greek state would be up to them, not the inspectors and pompous bureaucrats from the IMF and European superstate.

More importantly, faced with a honest bond market and real bond vigilantes, the Greek state would rediscover the requisites of sustainable fiscal governance. If they should ever again choose to run large fiscal deficits in the future, they would have to deal with an altogether different kind of committee. Namely, the pricing committee of their bond underwriters syndicate.

If the bond vigilantes needed a 15% yield to buy the state’s debt based on the facts and fiscal prospects at hand, there would not ensue months and years of can-kicking, phony restructuring plans and promises and endless PR maneuvers and leaks to the financial press. Greece’s politicians would be required to either hit the bid or cut the pension checks the very next day.

Tsipras is now confronted with this kind of hard choice in an altogether different venue. If he sells out Greece one more time to the paymasters of his country’s crushing debt, it will be only a matter of time before another Greek prime minister will be forced to walk the same plank on which he now totters.

By doing what’s right for Greek democracy, by contrast, he would prove to be an angel of mercy. There is no way that the euro and ECB could survive a Greexit, nor could worlwide Keynesian central banking survive the blow of their demise.

No wonder the assembled powers of the world will move heaven and earth in the days ahead to keep Greece locked in the debtor’s prison that has replaced honest free markets in sovereign debt. To this end, they may yet turn Tsipras into a faithless “trusty” of the wards, but to do so they will have to again make pigs fly——at least for a little while longer.

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gladius17's picture
gladius17 (not verified) Jun 23, 2015 10:20 AM

At this point, what does it matter?

eclectic syncretist's picture

Well Gladius, it proves one thing.  Europe is not a collective of democracies,....it's an oligarchy governed by the ECB.

0b1knob's picture

Trusty - something which can be trusted.

Trustee - legally appointed manager of assets or benefits for another.

w a l k - a w a y's picture

Society is your parents' writ large.
Your parents were nothing but agents (trusties) of this society.
It is all a conspiracy:
  - The parents,
  - The teachers,
  - The policeman,
  - The magistrate,
  - The president — they are all together.
It is all a conspiracy: They are all holding the future of all children.
– Osho, the book of children, chapter 3, Conditioning

eclectic syncretist's picture

It proves Europe is now governed, I might add, by an entity with no intrinsic value, that produces nothing of intrinsic value, leeches the goodness out of humanity like a slow killing tapeworm parasite, and is founded on lies that it provides a necessary service. 

OC Sure's picture

 

 

What is it that you mean by intrinsic value?

Value is determined by voluntary demand. What makes a thing value-able is that a human acts to gain or keep that which they determine volitionally to meet their demands of living.

No thing has value qua value. The concept of value is predicated upon morals.

Amiright?

JustObserving's picture

they will have to again make pigs fly

There has been NIRP in at least 14 Western economies - so pigs have been flying.

How long can the Central Banksters keep bond, stock and real estate markets, as well as pigs, levitated?

See how the Fed levitates markets with fake inflation numbers:

Fed says inflation in USA was 0.8% in 2014.  Chapwood Index says it was 9.7%.  So what are the consequences?

Let's use a Zero Coupon Bond Calculator to see the effect of fake inflation on a $1000 bond  for 30 years:

A zero coupon bond is a bond bought at a price lower than its face value, with the face value repaid at the time of maturity

With Fed's 0.8% fake inflation, Zero Coupon Bond Value = $787.38

With Chapwood inflation of 9.7%, Zero Coupon Bond Value = $62.20

So with Fed's inflation assumption, you can borrow $787.38 for 30 years and pay $212.62 as interest

With Chapwood inflation, you borrow $62.20 for 30 years and pay $937.80 as interest

With Chapwood Index, if you borrow $787.38 for 30 years, you pay $11,871 as interest.  Or 55.83 times  that with the Fed's inflation  adjustment.

http://www.chapwoodindex.com/

eclectic syncretist's picture

Great analysis. I suppose the smart thing to do would be to start collecting a non-perishable commodity that will have a better chance of tracking the true rate of inflation.

KnuckleDragger-X's picture

America and most of the world economy is Greece written very, very large. No major government has the ability to pay off their debts and are merely papering over the coming disaster, but eventually they won't be able to lay fresh paper fast enough and the free shit army will have a rude awakening......

SDShack's picture

This is all by design. The sociopathic bankers have engineered the system to do exactly what it is doing. I've been saying it for years. The bankers learned from the bond vigilantes in 2008, and so they used their bought and paid for politicians and regulators to allow every "extraordinary" measure to be taken to insure the bankers survival at the expense of everyone else. The cornerstone of this plan was monetizing all soverign debt by buying up soverign bonds. A few years ago, the Fed went on a bond buying spree and controlled about 1/3 of the bond market, and I suspect through their proxies like Belgium, they actually have crossed the 51% threshold to have defacto control. The entire plan was to neutralize the bond vigilantes. Couple bond market control with ZIRP and an unlimited printing press to fuel unlimited govt spending, and you have the ultimate banker plan...a perpetual Ponzi. It's all being played out and proven before our eyes in country after country. Unlimited govt spending for "freebies" for the free shit army, and hardware for the security state to keep the free shit army contained when they get restless. The security state is also used to coerce those other rogue nations to get with the plan. The entire design is all for one thing... a New Feudal World Order with a world of Debt Slaves (serfs) controlled by a few Elites (Kings/Queens) that use defacto govts (Lords) to administer it all, with armies to enforce it (Knights). 

KnuckleDragger-X's picture

I agree mostly, but society has become incoherent. I expect 3-5 countries where the USA once was and being winner may not be an advantage.....

BeaverCream's picture

Money changers...all of em.

Money Boo Boo's picture

David

 

that was a loooooot of adjectives to describe a ponzi scheme run by oligarchs

Marco's picture

If they had accumulated this debt payable in gold they'd be in the exact same situation ...

eclectic syncretist's picture

No one would lend so much physical gold without real collateral up front.  That is the difference your presumption is missing.

rejected's picture

Except that the lender would have to have the gold to lend in the first place verse printing up free click money. Yes?

It's one thing to have real wealth and another to fake wealth with a printing press.

Lady Jessica's picture

the greatest Keynesian gasbag of our times, Professor Larry Summers

 

Doesn't get much better than that guys.  (But brobdingnagian, WTF).

tarabel's picture

 

 

He also gave a fine reference to William Jennings Bryan's "Cross of Gold" speech (updated for our own times) at the top of the article.

All "educators" need to be exiled promptly. Allowing them to teach in competing nation's schools would be far more crippling and effective than any counterforce option available.

rejected's picture

The Reich has figured out that smothering them with debt is far easier than using tanks.

semperfi's picture

augmented it:

...that getting them hooked on the "freebies provided via socialism" funded by unpayable debt is far easier...

BeaverCream's picture

So tired of this WWII bad buy, good guy, nonsense.  Bad guys=central bankers and they declared war on Germany way before the rest of the world did.

eclectic syncretist's picture

Maybe they're just pissed off because the Americans won't give them back their gold.

Fun Facts's picture

"The latter’s two-decade long deluge of money printing and ZIRP has generated a fantastic worldwide financial bubble, and one which has accrued to just a tiny slice of mankind."

Exactly as M. A. Rothschild architected this pernicious, rancorous ponzi scheme over 200 years ago.

Mission accomplished.

Serfs up.

falconflight's picture

All those Greek 'leaders' and the Greek People themselves are just unwitting victims...actually entrapped to debt finance their social welfare state since WWII?

semperfi's picture

Greece - yet another data point supporting the theory that humans are the dumbest species on the planet.  The end of this charade in Greece will be marked by civil unrest/war.

ebworthen's picture

Debt heroin, it feels so good, for a while.

Janet, where's my tax free $3 million dollar bail out?

I'll buy a house and tip well, I promise.  If it works for banks/corporations/insurers why not us serfs?

semperfi's picture

you (and the rest of us) are not in 'the club' - go off and be a good little serf and go load up on auto loan debt, housing debt, credit card debt, student loan debt, etc...

falconflight's picture

PutinStein; King of the Kapos!

withglee's picture

To wit, in the modern world of massive, interventionist welfare states, fiscal governance desperately needs an honest bond market.

The world needs a properly managed Medium of Exchange (MOE). A properly managed MOE recognizes money for what it is and always has been ... "a promise to complete a trade". A properly managed MOE guarantees free supply of money; perfect balance between supply and demand for money; universal acceptance of money; and most important ... guaranteed zero inflation of money. Bank runs and bubbles are impossible under a properly managed MOE.

All this is possible and trivial to obtain. But to do so would annihilate government's and central bank's ability to game the system to their benefit and to the detriment of traders who actually create the money. Money is created to allow simple barter to take place over time and space. It's not created to allow governments to finance themselves through inflation. It's not created to allow elite central bankers to rob fractions from all trading transactions. This may come as a surprise, as that's how money has been compromised throughout its existance.

malek's picture

Come on, tell us again how socializing bankrupty costs solves all our problems!  (Wait - aren't we already doing this?)

withglee's picture

Come on, tell us again how socializing bankrupty costs solves all our problems!  (Wait - aren't we already doing this?)

First, consider insurance as you are likely well versed on the proper management of that. That is "socializing" risk. Total premiums equals total claims. Do you have a problem with that?

Now take money. Total defaults equals total interest. You are correct. It is socializing defaults. But just as proper management of an insurance portfolio works, proper management of the Medium of Exchange (MOE) also works.

With insurance, if one trader claims damage, premiums equal to this claim are immediately collected. It's an actuarial process.

With the MOE, if one trader defaults, interest equal to this default is immediately collected. It's an actuarial process.

Just as one claim for damage does not a trader destroy, one default does not a trader destroy. But it does move them into a different class of trader that now is assessed premiums and interest at a higher rate. Continually suffer damages or continually default on trading promises, and you get priced out of the marketplace altogether.

One key element of proper management is responsiveness. Another is transparency. Another is objectivity. Another is precision accounting and accountability. Another is absolute adherence to the governing relation.

In the case of money, that relation is INFLATION = DEFAULT - INTEREST = zero.

Regarding our "already doing this".

No, we are not. First, our money is created largely by a deadbeat trader (governments) who defaults on all trading promises (rolls them over ... which is default). Second, we don't immediately collect interest equal to defaults. Ask any banker what interest should be. They'll tell you "what the market will bear". That's correct if you  are a parasite of the MOE. It's incorrect if you're properly managing an MOE. Finally look at our present MOE manager's performance. First they think 2% is the right amount of INFLATION rather than zero. Note, most of the financial gaming we take for granted doesn't work at zero INFLATION. But worse (or better for the financial gamers), the Fed has delivered not 2% but closer to 4% over their 100 years of mismanagement. And money is not in free supply. The spigot is opened and closed at the whim of the MOE manager as part of their very profitable farming operation known as the business cycle. They manipulate trade through what they call capitalism. Capital must exist before a trader can make a trading promise and get it certified. As this capital is totally an illusion ... and a totally unnecessary one at that ... once that illusion becomes apparent and then blatant, their system collapses in a domino effect ... it's chaos. We're seeing it now. They call it "capital controls".

malek's picture

 First, consider insurance [...] That is "socializing" risk.

No, it's not. I'm not forced to buy (true) insurance.

...And just as for the theory of communism, you forget to clarify how and where the "proper managers" are to be found!

withglee's picture

First, consider insurance [...] That is "socializing" risk.
No, it's not. I'm not forced to buy (true) insurance.

You are correct. You can self insure or you can be a bad citizen. But if you do buy insurance you socialize the risk. And even there you have two choices. You can go with a stock company or you can go with a mutual company.

Regarding the MOE, you're not "forced" to have your trading promises certified. For most trades people don't. They're paid by their employers in the MOE. They buy their groceries with the MOE ... all with perfect anonymity.

Just a commonly, they do get a trade to buy a house certified. They do get a trade to buy a car certified. These trades require authentication, authority, and accountability. They are not anonymous. But you are correct ... they don't have to have their trading promises certified. They can borrow from their grandmother.

...And just as for the theory of communism, you forget to clarify how and where the "proper managers" are to be found!

The quick answer: It can be managed by robots. It's an addition and subtraction problem. It's an actuarial problem. And it's a risk classification problem. All can be mechanized to a great extent. What is absolutely required is adhering transparently to the relation: INFLATION = DEFAULT - INTEREST = zero.

Just as with insurance, there is no requirement that there be just one MOE. When you wreck your car, the body shop is willing to deal with many different insurance companies. It used to be the same with your doctor.

MOE management is a little different because for efficient simple barter trade using these certificates of trading promises, the traders need to readily identify them and to trust in them. They must be non-counterfeitable.

You commonly make purchases with credit cards issued by a variety of banks. There are two major companies (Visa and Master Card). There is also AMEX and Discover. And there is PayPal ... and Home Depot ... WalMart ... Exxon ... KOA.

All these methods of payment assume the MOE managed by the Fed as the underlying (and unfortunately INFLATION varying) unit. With a competitive market of properly managed MOEs, the MOEs, would by their very nature "never" have changing exchange rates. This being the case, they would all eventually become quantified in identical units ... probably the dollar. The dollar value would be settled once as its exchange value at some single point in time ... say July 4, 2015.

Before instituting the MOE, all traders would be alerted that this will be the pricing date. After the MOE is in operation for a very short time, the initial condition will never again have to be visited ... because all traders will know INFLATION = zero, all the time everywhere, after that date. They will know prices will only vary due to supply and demand for the object ... not the money ... after that.

There is absolutely nothing keeping you from creating an MOE right now. That MOE that is properly run most efficiently will prevail over those that are not. The distinction is in tailored services and efficiency. If a properly managed MOE were available to me, I would have paid zero interest throughout my life. I have never defaulted. But in actuality, I buy my houses three times. Once from the contractor; once from the bank (interest); and once from the insurance company and government (policy required by the bank and taxes).

It doesn't have to be that way.

This isn't communism ... to each according to his need, from each according to his ability. INTEREST is applied according to propensity to DEFAULT. And "all" trading promises are freely certified. Someone doesn't have to first save for you to be able to make a promise to trade. No capitalist can close the window on you.

It is a contrivance of capitalists leading you to believe the only alternative is communism. When you peal the onion on capitalism you find it is two years. That's what it takes a bank to double its money (with its 40% interest) and take its original capital off the table.

malek's picture

 where the "proper managers" are to be found!
The quick answer: It can be managed by robots.

Well then we will need to wait for the robots to take over?

The funny thing is your dancing-around-the-elephant: the main requirement for any promise to work is a certain level of trust.

Today's world is characterized by what the author of "Inventing Money" would call a 'hidden option': the planned abuse of the majority's trust by the vast majority of higher level western deciders.

Your technicality "solution" is simply a more sophisticated form of denial, as -for starters- no workable level of interest rates is conceivable to cover the already baked-in losses of the various deceits and Ponzi schemes.
If anything the "interest" is being paid by devaluing the dollar, which you funnily fail to ever mention.

withglee's picture

Well then we will need to wait for the robots to take over?

Why?

withglee's picture

The funny thing is your dancing-around-the-elephant: the main requirement for any promise to work is a certain level of trust.

And???

Another more important factor is consequences for breach of trust. Default on a trade or two and I guarantee you, you won't be able to pay the interest and that means you can no longer create money. That means until you clear the ledger you're at a large trading disadvantage.

withglee's picture

Today's world is characterized by what the author of "Inventing Money" would call a 'hidden option': the planned abuse of the majority's trust by the vast majority of higher level western deciders.

The best-laid plans of mice and men often go awry. They can be "outplanned".

withglee's picture

Your technicality "solution" is simply a more sophisticated form of denial, as -for starters- no workable level of interest rates is conceivable to cover the already baked-in losses of the various deceits and Ponzi schemes.

(1) Where's the Ponzi scheme?

(2) What makes you think you have to cover the already baked-in losses?

You're offering up a competitive MOE that is better in all respects than that one managed by the Fed. Install it. Watch the Fed try to compete. One thing you'll quickly see. The government will disqualify itself as a trader in your MOE almost instantly by defaulting itself out of the market. A rollover "is" a default. Good riddance!

withglee's picture

If anything the "interest" is being paid by devaluing the dollar, which you funnily fail to ever mention.

Look at the governing relation: INFLATION = DEFAULT - INTEREST = zero

If you have a non-zero positive DEFAULT and smaller or zero INTEREST, what kind of INFLATION do you have? Does INFLATION not mean devaluing of the MOE?

Where is my failure to mention this? As I've said all along, proper management means guaranteeing zero INFLATION. The only way to do that is to monitor DEFAULTs and collect an equal amount of INTEREST. That "is" the concept I've been trying to get across to you. How did I fail?

Argentumentum's picture

A comment from henrymakow.com 

Debra said (June 22, 2015):

Here is what I have been reading:

“The father of Alexis Cipra, Pavlos Cipra, died in 2012. He was a billionaire with a direct link with the Mossad, he was the father of a slave BHL entrepreneur in Africa where he was trafficking in Africans. He sent dozens of Africans in Greece in order to exploit them, giving them just enough to survive in its construction companies and public travux.
The family business “SKAPANEA” was responsible for all major public works in Greece since the junta until today, construction / restoration of Orthodox churches through broadcasting. Like the Italian Mafia, the other companies have to pay a percentage to the “family” if they want to survive. “ [6] – source

Yes, you read that correctly. I have been finding people in Greece saying that Tsipras is actually “Cipra” and is of Jewish blood.

 

- See more at: http://henrymakow.com/2015/06/crisis-report-from-a-greek-island.html#sth...

bshirley1968's picture

Either way it is clear that this guy and his "team" are just a bunch of banker tools.

The choice is clear and they have made it.  They decided to go with the "pretend and extend" which is the opposite of what he said he would do when elected.  This has all been smoke ane mirrors, a con game to keep everyone distracted from how bad things are all over the world.

No one ever gets in leadership today in the Western world that will ever change the banker, whoring status quo..............without a fight.......a real fight.  If there is no real fight, then they are just another banker paid whore continuing on the same path as the whore before them.

The banksters are entrenched.  They believe they can just buy off any opposition at any time since they can print unlimited amounts of money and the whores that call themselves men or leaders today.........can pretty much be bought off........cheaply.

NEVER going to change without a fight.

This Greek Show is about over.  Time to pivot back to Ukraine.

Dewey Cheatum Howe's picture

Here is the source for the Tspiras-Cipra connection that all these 'conspiracy' websites cite.

http://ripostelaique.com/la-victoire-de-syriza-entrainera-lislamisation-...

The article is in French here is the portion of the article translated to English.

...

"The father of Alexis, Pavlos Cipra, who died in 2012, billionaire with a direct link with Mossad, was a slave entrepreneur in Africa where he was trafficking in Africans is well known: he sent dozens of Africans in Greece to operate, giving them just enough to survive. The family company "SKAPANEA" was responsible for all major public works in Greece since the junta until today, construction / restoration of Orthodox churches through broadcasting. As in the Italian Mafia, the other companies have to pay a percentage to the "family" if they want to survive."

also of note in the article

"It should be noted that Alexis is the nephew of Stylianos Pattakos (http://fr.wikipedia.org/wiki/Stylian%C3%B3s_Pattak%C3%B3s) one of the colonels junta that perpetrated the coup of 21 April 1967 (21 April 1967-17 dictatorship in July 1974) to prevent Greece from falling into the hands of the USSR. Pattakos, aged 104, lives on the charity of each other, themselves very modest, I have friends who go once a month to stock up on basic food. Father Alexis became a billionaire thanks to him and his fiercely anti-left regime, puppet and today stands as the messiah of the radical left, the savior of the little people. The "little brother peoples" however, is not able to reach out to his own uncle ... Here is a rogue's gallery of some SYRIZA MPs with the amount of their assets (no need for translation)."

...

Dewey Cheatum Howe's picture

Something else brought up in the article I've touched on before Macedonia and naming rights.

"The little brother of the people is a pawn, young, manipulated, born July 28, 1974, 12 days after the fall of the colonels and 3 weeks after my first installation in Greece where I sojourned 5 years this time. I already spoke Greek when he was still in diapers! Its main program: the Islamization of Greece, the opening of borders with Asia, the abandonment of Thrace Turks, the appellation to Yugoslav Macedonia. The real revolution is that of the Greek ancient people, being quietly reclaim its history, its civilization, in the countryside and mountains, away from the noise of the ephemeral modernity."

https://en.wikipedia.org/wiki/Western_Thrace_Turks

The country is going to be split with a half pivoted towards Russia and the other still in NATO aka the Greek Macedonia becoming a combined state with the non Greek Macedonia using those Thrace Turks as the gas pipeline glue to keep Turkey in NATO. It keeps an unobstructed path to run a bypass through the Balkans then into Eastern Europe when you carve off Eastern and Central Macedonia into it's own country or confederation of a combined Slavic/Greek Macedonia. You kill 2 NATO priority birds with one stone that way. Plus you can throw Greece out of NATO then if you admit Macedonia into NATO. Plus it is the shortest distance to run a pipeline from Turkey underwater in the Aegean to where current Greece is or if Turkey plays it right (with NATO backing) they annex Western Thrace giving them territory on both sides of the Aegean once Greece falls apart. Allows NATO to stay in the region and build the pipeline across the Aegean with no third parties involved (Turkey to Turkey). Macedonia comes next in that case.

https://en.wikipedia.org/wiki/Modern_regions_of_Greece

Dewey Cheatum Howe's picture

Older map but good visualization of why Macedonia (Greece) is geographically important. Part of the Aegean island province aka (Thasos, Samothraki possibly Lamnos also) becomes the battleground next if this is the case, i.e. do they stay in Greece if they pivot to Russia after NATO forces a split to keep a land route for pipeline intact through Macedonia.

http://radiusworkshops.com/wp-content/uploads/2012/03/Turkey-Greece-Map.gif

Remember those banksters need energy like everyone else to function. Without the gas/oil they die and their institutions cease to function. Money maybe independent of gas but the people using it aren't. No people, no money. Gas is always the higher priority here no matter what you are told. That is natural law.....

Escapedgoat's picture

Well that is the plan alright,......... for the Zio-cons.

Now the challenge is that: ARE THE GREEKS GOING TO STAY CALM  and put up OR are they, organising themselves??

Tall Tom's picture

So if there is to be any remaining hope in the world for both political democracy and honest capitalist prosperity, today’s malignant regime of Keynesian central banking must be struck a death blow. That is, it must undergo a catastrophic failure capable of thoroughly and permanently discrediting it in the eyes of financial gamblers and politicians alike.

 

 

I could not have wrote it much better than Stockman.

 

Collapse, baby, collapse.

 

Opt out. Stop spending anything other than for essentials for survival.

 

Kill the Corporatocracy. Do your part, today, and we can KILL THE FUCKING BEAST. STARVE THE BEAST FROM REVENUES.

 

It is Fraudulent. It is CORRUPT.

 

Do not participate in Fraud and corruption.

 

Otherwise it is YOU who are Fraudulent and YOU who is corrupt.

 

And you deserve everything headed your way if you want to profit upon others' misery.

 

PRINCIPLES OVER PROFITS.

 

 

 

 

gaoptimize's picture

Now, sooner rather than later, you run out of other people's money.