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'Greek' Finance In America: Pensions, Medicaid, & Entitlements Will Bankrupt State And Local Governments

Tyler Durden's picture




 

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

The template of over-indebtedness as a response to soaring obligations is scale-invariant, and it always ends the same way: default.

When you can't pay your bills, you can either cut expenses, borrow money or if you're extraordinarily privileged, print money. If you borrow money without cutting expenses, the interest on the borrowed money piles up and you can't pay that, either. Then not only do you have a spending crisis, you have a debt crisis, and so do those who lent you the money.

Because the funny thing about borrowed money is it's a debt to you but an asset to the lender.

Not only is your debt listed as an asset on the lender's books--it's collateral that supports whatever financial leverage the lender might engage in.

If you default on the debt, not only is the lender's assets impaired--all his leveraged bets built on the collateral of your debt are suddenly impaired, too.

The preferred solution nowadays to a spending/debt crisis is to borrow your way out of the crisis: if you can't pay the interest and debt that's due, just borrow more to cover the interest payments and roll the old debt into new loans.

In a variation that we can call The Japanese Solution, the lender decides not to list your defaulted loan as impaired--he places your loan in a special zombie debt column--it's neither a performing loan nor a defaulted loan; it is a zombie loan.

The other solution (again from Japan) is to roll the defaulted debt into new loans at near-zero rates of interest that allow the borrower to pay a nominal sum every month, just to maintain the illusion of solvency. If you owe the bank $10 million, the bank loans you $11 million at .01% rate of interest and you promise to pay $100 a month.

There--problem solved! The loan is now performing because the borrower is once again making payments. But is either the borrower or lender actually solvent? Of course not.

Another trick is to guarantee the borrower is solvent. It's all smoke and mirrors, of course, but the empty guarantee is enough to smooth things over and maintain the illusion of solvency right up to the moment when the house of cards collapses.

Debt and all these tricks to mask insolvency are scale-invariant, meaning they work the same on household debt, corporate debt and national debt. Many of these scams were used to mask the subprime mortgage debacle, and they are being routinely applied to private and public debt.

Why? To avoid the consequences of losses being forced on overleveraged private banks and other lenders. Were those losses to be taken, those entities would be insolvent: their assets would be auctioned off, their shareholders, bond holders and creditors would receive pennies on the dollar (if that) and the lender would close their doors.

The losses to the Financial Aristocracy, pension funds, etc. would be immense. So rather than deal with the realities of an insolvent, overleveraged, over-indebted and intrinsically corrupt financial system, everyone plays shadow games to maintain the illusion of solvency.

If you can't print money or slash expenses, you have to borrow more money. The more you borrow, the greater the odds that in the next downturn, you won't be able to pay your bills, the interest on the debt, and roll over debt coming due into new loans.

That's the template not just for Greece, but for many state and local governments in the U.S. As Gordon Long and I discuss in GREECE: A US State & Local Template?, state and local governments share key characteristics with Greece: they have soaring pension, Medicaid and employee healthcare obligations, but their tax revenues are either stagnant or prone to boom and bust cycles--and the current boom cycle is now entering the inevitable bust phase, when tax revenues plummet but the obligations just keep piling up.

The template of over-indebtedness as a response to soaring obligations is scale-invariant, and it always ends the same way: default, more financial tricks to mask the default, and eventually, insolvency, bankruptcy and massive losses being distributed to everyone foolish enough to choose financial trickery over dealing with reality back when the pain would have been bearable.

As for printing your way out of a spending/debt crisis: that's just another form of financial trickery that keeps the illusion alive for a few more years.

GREECE: A US State & Local Template? (27:46 video, with Gordon T. Long)

 

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Sun, 07/12/2015 - 15:55 | 6303245 Newsboy
Newsboy's picture

Yeah, we are all in line to be Greeks, getting a spanking all the way down the row.

Sun, 07/12/2015 - 16:07 | 6303284 UndergroundPost
UndergroundPost's picture

International Socialism must be destroyed

Sun, 07/12/2015 - 16:13 | 6303296 Supernova Born
Supernova Born's picture

Baseless fiat is the foundation of banksterism and socialism.

Sun, 07/12/2015 - 16:11 | 6303297 johngaltfla
johngaltfla's picture

Bingo. To save Illinois and Calfiornia, citizens of Florida and  Texas must pay more taxes including selling their 2nd born male into government slavery.

It's the only way.

(using Eurologic)

Sun, 07/12/2015 - 17:15 | 6303521 Not Too Important
Not Too Important's picture

That's not Eurologic, that's Goldman-Sachs logic.

We ain't seen nuthin' yet.

Sun, 07/12/2015 - 16:53 | 6303431 Really20
Really20's picture

High taxation and a massive social welfare state has nothing to do with socialism. It is connected to social democracy (which in Europe mislabels itself socialist) - a mechanism of maintaining capitalist/banker ownership of the economy while fooling the people with high levels of social spending. It is founded in debt and financed by onerous taxation, and its only legitimate purpose is as a transitional system between capitalism and democratic socialism. (Ownership of all major enterprises by the workers directly, sovereign money/mutual credit economy without banker money.)

Sun, 07/12/2015 - 16:02 | 6303272 indygo55
indygo55's picture

Right but during the difficult negotiations of rewriting the US debt like they are doing in Europe now, do we all get to stay in fancy hotels and eat really nice food? I hear we have a lot to look forward to. 

Sun, 07/12/2015 - 17:19 | 6303547 NoTTD
NoTTD's picture

Excellent!!

 

Oh...you don't mean that in a good way...

Sun, 07/12/2015 - 15:56 | 6303247 Prober
Prober's picture

This is why Greece MUST be crushed economically - to make a dramatic illustration of the inevitable fate that awaits EVERY society that allows the socialism cancer to exist.

Sun, 07/12/2015 - 16:14 | 6303307 DutchBoy2015
DutchBoy2015's picture

The Useless Snakes is more socialist than any other nation.   50 million on food stamps?  and how many million on the dole of 20 year miltary retirements etc.   And don't give me this crap that they EARNED it.,   Most military members never see a day of combat

Sun, 07/12/2015 - 16:26 | 6303344 Arthur Schopenhauer
Arthur Schopenhauer's picture

True. Many miliary people sat around playing cards and checkers all day while you sat around in schools learning how to be a pompous ass all day.

Sun, 07/12/2015 - 16:16 | 6303311 DutchBoy2015
DutchBoy2015's picture

WE have more small businesses per capita and real free market here in my country than the USA has.

You fucktards and your socialism    America is socialist and almost communist.

Sun, 07/12/2015 - 18:59 | 6303947 flysofree
flysofree's picture

I got news for you, the same thing has been going on for 5,000 years, even before peoples' life expectancy went beyond 40 years and even before Keynes, Marx or Lenin.

Sun, 07/12/2015 - 16:11 | 6303249 Supernova Born
Supernova Born's picture

Jubilee or WWIII.

Sun, 07/12/2015 - 15:57 | 6303250 Oquities
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Puerto Greekan!

Sun, 07/12/2015 - 16:02 | 6303268 KnuckleDragger-X
KnuckleDragger-X's picture

It only works if everyone plays the same game and the more players you have, the more uncertain things become. We have too many players wanting too many different things. I expect someone like Chicago to be first to test the limits of financial sanity and how that plays out will tell us how bad things will be.....

Sun, 07/12/2015 - 16:12 | 6303293 ebworthen
ebworthen's picture

Yes, the U.S. is Greece, just on a much larger scale.

And how are France, Spain, Italy, Germany and the rest of Europe any different?

They're not.  Financial engineering (alchemy) unhinged from sound money, pretended that debt was an asset, and that central banking flooding banks with free money to employ generational usury was somehow sustainable.

It isn't, it's an unsustainable Ponzi.

Hang the bankers and the complicit politicians.

Sun, 07/12/2015 - 16:14 | 6303305 Thirtyseven
Thirtyseven's picture

"Generational Usury" like you said is exactly how all of us in our 20's feel about asshats in their 50-70's.  Fuck those bastards, and I hope those who never planned for their own retirements get it right square in the 'bama.

Sun, 07/12/2015 - 17:00 | 6303428 Philo Beddoe
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I am in my 40s and no there will be know pension for me. I am just trying to figured out who is more fucked..the boomers who may watch everything vanish like a fart in the wind or the  young who will surely be receiving fuck all in the form of pensions but have time to react.  

At least I had a chance to make some decent bank for a few years to pay off the house.  The fuckers will probably get that as well somehow. 

Sun, 07/12/2015 - 17:00 | 6303450 Really20
Really20's picture

The only reason Schäuble et al. want to cut Greece loose now is that they have stripped it of anything that could be fed to the financial black hole created by Germany, France, UK, and tax haven Luxembourg. The only reason that the central countries of the EU were able to survive this long is due to the favorable balance of trade they had with the peripheral EU countries, enabling them to keep ahead of interest payments in the debt-as-money system. (The UK being the sole exception to this, which is possible because much of the money ends up in the City of London anyway.)

Now that the periphery seems poised this year to stand in solidarity against the banker devils both locally and in the EU central countries, the banksters ought to be scared. For years they were able to "extend and pretend" for the central countries by forcing debt upon the peripheral countries that went straight back to the wealthy corporations and banks in the center. Now the base of the pyramid will fall and Germany, France and the rest will have to face the bankers themselves.

Sun, 07/12/2015 - 17:18 | 6303541 Not Too Important
Not Too Important's picture

The northern countries can't survive without the rest of the world buying their exports. That well is running dry faster than they can keep up. They're all fucked, just at the end of the line.

In the long run, Russia will have it's resources and Iceland will be the only country without cannibalism.

Sun, 07/12/2015 - 16:12 | 6303298 Thirtyseven
Thirtyseven's picture

They'll get bailed out. 

"OH NO, can't let all these Boomer leeches (especially our 'glorious & exhalted' government workers) who never saved a damn dime in their lives go broke!"

 

 

Sun, 07/12/2015 - 17:42 | 6303627 Stumpy4516
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You and many others only look at the surface of the water.  Or try to make choppy waves of internal warfare to hide the true leeches that have been sucking the US dry.

They are the jmafia (jew mafia) and their minions.  If not for them the US would be prosperous beyond your dreams.

Sun, 07/12/2015 - 18:38 | 6303867 daveO
daveO's picture

Bailed out with fiat. This is, in the long run, gold/silver bullish. Ride the wave of the coming hyperinflation while they struggle to make ends meet.

Sun, 07/12/2015 - 16:13 | 6303301 RMolineaux
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But the question has to be asked:  how is it that some states and municipalities remain solvent?  The answer is competent leadership - a quality that seems to be always in short supply.

Sun, 07/12/2015 - 17:20 | 6303545 Not Too Important
Not Too Important's picture

The only municipalities that are solvent are the ones that haven't hit the pension cliff yet. They will.

Math is math.

And then there is the issue of the states stripping the coffers of the successful cities and counties to support their pensions. That happened in Greece, it just became impossible to enforce. Not so the rest of Europe and the US.

Sun, 07/12/2015 - 16:13 | 6303302 davidalan1
davidalan1's picture

What would a democrat do? ....

Sun, 07/12/2015 - 18:31 | 6303838 serotonindumptruck
serotonindumptruck's picture

The exact same thing a Republican would do.

What do I win?

Sun, 07/12/2015 - 16:14 | 6303306 Trucker Glock
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Money woes force St. Clair County Fair cancellation

http://m.sj-r.com/article/20150710/NEWS/150719978

Sun, 07/12/2015 - 16:16 | 6303312 sunkeye
sunkeye's picture

Working - and contributing to my employer's pension fund - for the past 30 years, I didn't take time to check Ancestry dot com.

Just banked my 1st retirement check end of last month.  Never knew ... turns out my bloodline's  got Greek in it?  No problem on my end fellas.  

Let's see how this play ends.

PS - I cut my own hair. No joke.

Sun, 07/12/2015 - 16:19 | 6303320 davidalan1
davidalan1's picture

Would love to see the mysteriious ONE down voter at his/her laptop as they giggle at the power they wield,,,

Sun, 07/12/2015 - 16:22 | 6303325 wendigo
wendigo's picture

I keep telling myself that everything ends in tears, one big crunch that ruins everyone. That's what I prepare for. 

 

Still. I have this nagging feeling that maybe they can keep this shit show going forever, with a slow, gradual decline rather than one big crash. 

 

Maybe our future isn't the Weimar republic but Mexico. A few people are very rich and the vast majority of the population becomes very poor. Crime everywhere, waves of americans leaving to find work in other nations. 

Sun, 07/12/2015 - 16:37 | 6303375 centerline
centerline's picture

Wouldn't rule it out.  I have been saying for years we might wind up in a Hunger Games world.  I believe that is the goal of the elite.

Sun, 07/12/2015 - 17:22 | 6303555 Not Too Important
Not Too Important's picture

Our future is North Korea.

Then 'The Road'.

Sun, 07/12/2015 - 16:22 | 6303329 chubbar
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Well, I think the bloom is coming off the rose up here in No. NH. While the tourist industry appears to be strong and the contractors I know are still busy, the housing market is decidedly a buyers market. A buddy who is a realtor tells me that locally 15 houses a day are coming on the market in a population of about 15K. I see the listings coming on every day. Of course the property taxes are sky high as well and many are 2nd homes from the wantabees from Mass that come up and partake of the mountain activities during winter and summer. It's been crowded and looks like another banner year for the local businesses but I think the housing market is an early tell for what is coming our way.

As an aside, the fucktards that run the local gov't all gave themselves nice raises and pension increases during the RE boom years. When the downturn hit they just raised the mill rate as prices declined. Now I see houses that have an annual tax that is equal to 2.5% of the asking price of the house being sold and each year the town feels it necessary to increase taxes (for the children). Anyone who thinks that is sustainable is out of their fucking mind. No way would I pay 25% of  my house value for 10 years of living in it and maintaining it. Fuck them, bunch of entitled idiots who apparently have no clue of how to run a town gov't. Cutting spending for them is lowering next years tax increase down to 3% from 8% (no lie) and they pat themselves on the back for being so thrifty.

I reminded my representative once that all people only have 100% of their income to pay taxes with and since taxes go up not by a dollar amount but by a %, what % she felt would be OK for me to keep of the money I earned? She ended the call immediately. They know, they just don't have a fucking clue how or what to do about it.

Sun, 07/12/2015 - 16:40 | 6303387 centerline
centerline's picture

They are going tax the fuck out of everyone to keep the party going. 

Own a house - pay up.

Have a car - pay up.

Want to eat - pay up.

Have a phone - pay up.

Want power for your house, water, etc. - pay up.

They are going to creep in from every direction.  Money for the schools, seperate fees for fire/emt coverage, added BS on tags, ... you name it.  Federal, state, and local.

Deflationary spiral to hell.

Sun, 07/12/2015 - 17:22 | 6303553 Doug997
Doug997's picture

Chubbar, that’s me, live in MA, house on the big lake. Prices are unbelievable but they keep on moving.  Taxes are unbelievable and I get nothing for it.

Sun, 07/12/2015 - 17:24 | 6303562 Not Too Important
Not Too Important's picture

Housing lives and dies by QE now. Good luck to all of us.

Sun, 07/12/2015 - 17:40 | 6303620 FreeNewEnergy
FreeNewEnergy's picture

2.5%?

Pikers. Come to NY. I bought a house in 1999, in what used to be a decent neighborhood, now run down, but still OK. $13,800. 3BR, 1bath, HUD-owned. Lived there 11 years. Taxes averaged 1400 a year.

Do the math. I paid for the house twice. It's OK. Now I rent it out and collect. Haven't paid taxes in six years and the city sells the liens to ATF in Jupiter, Florida, a company funded by Wells Fargo.

Thank you, uncle Warren!

Sun, 07/12/2015 - 16:25 | 6303340 Caleb Abell
Caleb Abell's picture

Bullshit.

 

The US will be bankrupted by the trillion dollar/year MIC (wehrmacht) budget and the trillion dollar/year Homeland Security (Schutzstaffel) budget.

Sun, 07/12/2015 - 17:09 | 6303488 Cloud9.5
Cloud9.5's picture

State and city governments are in the same boat as Greece.  The federal government has chosen the path of Zimbabwe.  They will borrow conjured money to the point that it becomes worthless.  When that happens is anyone's guess.

Sun, 07/12/2015 - 17:28 | 6303569 Not Too Important
Not Too Important's picture

Right about when they turn off medical care to cancer patients, from the Fukushima radiation and GMO food.

10 years tops. It's already in the works. Ask an oncologist.

Sun, 07/12/2015 - 16:32 | 6303360 disabledvet
disabledvet's picture

"The destroy the euro fuckwads and in so doing destroy their American fuckwad fellow travelers."

Sounds about right to me.

Needless to say "the number of viable Presidential Candidates is about to drop considerably."

Right now appears to be only one actually...

Sun, 07/12/2015 - 16:48 | 6303413 kchrisc
kchrisc's picture

By the way, Perry of Texas IS Zion's next President-select.

You heard it here first.

Liberty is a demand. Tyranny is submission..

Sun, 07/12/2015 - 17:54 | 6303679 LongOfTooth
LongOfTooth's picture

When Jebber has more campaign funds that all the other candidates combined? He'll outspend them and thus buy his way in, just like his brother did.

 

 

 

Sun, 07/12/2015 - 16:39 | 6303383 Hubbs
Hubbs's picture

Fuck the internet connection. So many drop outs you can't understand fully what they are saying. Just like our bridges, railways and highways, so it goes with the internet.

 

Sun, 07/12/2015 - 16:46 | 6303407 kchrisc
kchrisc's picture

The sooner they collapse the sooner and easier it will be to subdue them, sweep their criminal refuse out into the guillotines and reestablish Liberty.

Liberty is a demand. tyranny is submission..

Sun, 07/12/2015 - 16:51 | 6303422 Lea
Lea's picture

The USA, that spends by itself HALF the WHOLE WORLD's military budget, is going to be crashed by its Medicaid? 

Puh-leeze!

Do you know how much these piles and piles of weapons cost apiece? Go check the figures, your heads will reel.

 

Sun, 07/12/2015 - 17:03 | 6303464 Prober
Prober's picture

60% of gummint spending in the USA is ENTITLEMENT PROGRAMS - you STUPID IGNORANT SOCIALIST COLLECTIVIST PARASITE VERMIN SCUM !!!

Sun, 07/12/2015 - 17:13 | 6303511 Really20
Really20's picture

The "entitlement" programs have got three primary purposes:

1. Keeping the lower classes away from a revolution for true liberty and freedom.

2. Generating market demand for the industries of the wealthy out of whatever little the "middle class" (actually working class) can scrape.

3. Because money must come into existence as debt, shoring up the banking system through mass issuance of "safe" government bonds.

All of the money winds up in the pockets of banks, corporations, and the top 0.1% who own most of their shares. These are the people you should be targeting, not "STUPID IGNORANT SOCIALIST COLLECTIVIST PARASITE VERMIN SCUM". The programs have absolutely nothing to do with socialism which is the ownership over the large enterprises by workers, and ownership of the money supply by a democratically elected government, rather than selling off both to capitalist banker scum.

We're all in the fight against the bankers/corporates/ultra-rich together, and we need to learn to live and work with the views of others who are on our side. Infighting will get us nowhere and only serves the purpose of the aforementioned parties. That's why they pit against each other Democrats and Republicans, Christians and atheists, middle-class and poor, white and black. Only by transcending these boundaries can we muster the popular support we need for final victory.

Sun, 07/12/2015 - 18:50 | 6303924 daveO
daveO's picture

IMO, name throwers are typically gov./political trolls that are best ignored. They're the tar babies of the internet.

Sun, 07/12/2015 - 17:52 | 6303665 LongOfTooth
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@Prober: When you refer to entitlement programs are you including the monies that has been given to the banksters over and under the table?

 

Sun, 07/12/2015 - 17:14 | 6303480 Really20
Really20's picture

The US "health care" plans are designed to ensure "market competition": i. e. eliminate completely the price reductions that the government's economy of scale would bring to the table. This raises prices to ridiculous levels. In nearly every other industrialized country, medical care is much more accessible due to the lower cost. Health care is the only place that Europe "gets it right", in my opinion.

The only reason that we have these plans at all, though, is not to help the people but so the elites can stave off revolution and continue their ownership of the means of production and the money supply. Of course, they are financed with debt whose interest is paid with taxes, shoring up the banking system until all possible assets are stripped from a country. There is a much more sustainable way to run these programs (debt-free money issued by the state) but it would cut bankers out of the equation by eliminating nearly all interest not associated with productive investment activity.

Sun, 07/12/2015 - 21:16 | 6304387 Beltain
Beltain's picture

US spends more on education ie. Teacher's pensions and graft than on defense. Some districts spending 21K or more per student per year.

 

 

Sun, 07/12/2015 - 17:11 | 6303499 Kirk2NCC1701
Kirk2NCC1701's picture

The various levels of Government will go bankrupt all right, but not before the Oligarchs acquire all vital Real Assets (private and de-nationalized), to set up their rent-seeking Neo-Feudal regimes.

The Reset will be forced by the Banksters/Elite on the Grounds/Pretext of the very Socialism that they 'financed'.


The level of gullibility, the propensity to fall for Misdirections, and to swallow Red Herring arguments is amazing among the Sheeple.  Even among Libertarians.  Pavlovian Conditioning and Group-think is strong in all groups.

Sun, 07/12/2015 - 17:21 | 6303551 Escrava Isaura
Escrava Isaura's picture

 

 

Kirk2NCC1701

Good and corrected post.

 

Just would like to add these two prognosis:

 

First: 2015 - IT IS 3 MINUTES TO MIDNIGHT - http://thebulletin.org/clock/2015 

 

Second: Reg Morrison: The human brain remains a piece of stone-age machinery, however you look at it, and no amount of culture can make it otherwise. Genetically speaking we are a finished product, not a prototype. What you see is what you get—there will be no bright utopian future. The Spirit in the Gene, page 247.

 

Sun, 07/12/2015 - 17:16 | 6303528 Ajax_USB_Port_R...
Ajax_USB_Port_Repair_Service_'s picture

Forget black swans. We just bought root beer and vanilla ice cream. We're having root beer floats tonight or as they're called around here, 'black cows'. Might be corn bread and Spam in a few weeks. At least WE see it coming!

Sun, 07/12/2015 - 17:17 | 6303535 withglee
withglee's picture

Because the funny thing about borrowed money is it's a debt to you but an asset to the lender.

Not only is your debt listed as an asset on the lender's books--it's collateral that supports whatever financial leverage the lender might engage in.

This is a "major" flaw of capitalism. Since capitalism dictates (except for a few elites) that capital must exist before a trader can get a trading promise certified, this allows capitalists to (1) throttle the money supply, (2) throttle the interest rates, and (3) pick up troubled assets for pennies on the dollar. It's their farming operation. They call it the "business cycle".

But the whole charade of capitalism makes up long chains. Capital supporting one trading promise came for another trading promise ... which came from another trading promise ... etc. If one trade in the chain fails, the whole chain breaks up. After the elites take their chips off the table, it shows up as a bank run in the face of "capital controls".

It's amazing we have tolerated this system at all ... let alone for this long!

 

Sun, 07/12/2015 - 18:55 | 6303943 daveO
daveO's picture

You can thank our fine team of anesthesiologists. Greenspan, Bernanke, Yellon, etc. 

Sun, 07/12/2015 - 20:09 | 6304180 withglee
withglee's picture

You can thank our fine team of anesthesiologists. Greenspan, Bernanke, Yellon, etc.

It goes all the way back to Alexander Hamilton and the Federalists. We started going into this detestable tank on the first day. All of the tricks we see being used now were employed then ... e.g. delaying important must-pass legislation to the last day ... and keeping bills secret (we must pass it to see what's in it). It is described vividly in William Maclay's Journal documenting the first two year's activity of the USA senate and ancillary activities.\

http://memory.loc.gov/ammem/amlaw/lwmj.html

Sun, 07/12/2015 - 17:43 | 6303636 withglee
withglee's picture

and roll over debt coming due into new loans.

And a "roll over" is DEFAULT.

With a properly managed Medium of Exchange (MOE), DEFAULTS are "immediately" mitigated with INTEREST collections. This guarantees zero INFLATION of the MOE by the relation: INFLATION = DEFAULT - INTEREST = zero.

This new INTEREST load is a natural negative feedback that makes later trading promises more difficult to get certified. The result works like an automatic governor on an engine. As the speed increases, the governor automatically and immediately throttles back the fuel supply. As trades begin to fail, the punchbowl is automatically and immediately nudged away ... without affecting any other existing in-process trading promises.

Another characteristic of a properly managed MOE is that it employes no capital. It doesn't require anyone to first save before a trader can get his trading promise certified. It is the "entire trading community" that feels the effect of the DEFAULT ... not the counter-party.

The capitalist version of the mismanaged MOE we have now does as this comment illustrates: It rolls over DEFAULTs rather than mitigating them immediately with INTEREST collections. The effect is similar on the marketplace ... the whole marketplace feels INFLATION and thus uncertainty in existing trading promises ... uncertainty that wouldn't exist in a properly managed MOE. And worse, it always results in things getting out of control and blowing up. It always results in a destructive chain reaction.

I keep reading essays like this but I have yet to see one propose a workable solution ... though a workable solution is obviously at hand as I have illustrated here.

Why is that? Because it makes government counterfeiting and bankers' farming operations impossible. That's why!

Sun, 07/12/2015 - 17:45 | 6303642 NaiLib
NaiLib's picture

Now you knnnnnow why Krugman is blaming others. Krugman is coming to the end of his line. (hopefully)

Sun, 07/12/2015 - 18:03 | 6303713 Buster Cherry
Buster Cherry's picture

We have a turd in the Houston City Council named Clarence Bradford, who will be getting a HUGE pension when he finally bails out.

Just racking up the time.....so we can pay for his worthless ass the rst of his life.

Sun, 07/12/2015 - 18:23 | 6303785 flysofree
flysofree's picture

The problem with Capitalism is that eventually you run out of taxpayer money to fund the contractors. That's why elites like the Peterson Foundation, American Heritage Foundation, Americans for Prosperity and the many other such incarnations created and funded by the Koch Brothers, Rockerfeller and Ford Foundations keep sponsoring bloggers to spew out pro austerity agenda.

 

What costs more Medicaid or F-35 program?

Sun, 07/12/2015 - 18:28 | 6303824 Dixie Flatline
Dixie Flatline's picture

Sheer lunacy.

Sun, 07/12/2015 - 18:35 | 6303852 flysofree
flysofree's picture

Tell it to a F-35 contractor? And yes, taxpayers are on the hook for all the military contractor pensions? Does OfDimWit know that? If Charles Smith is not funded or supported in any way by the Right Wing weasels like the Koch brothers, then yes I will be wrong? Just don't count on it!

Sun, 07/12/2015 - 19:13 | 6304001 OutaTime43
OutaTime43's picture

Of course, everyone of those things goes straight to support the economy. Direct payments are spent. Austerity does the opposite.

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