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Guest Post: Currency Wars, Trade And The Consuming Crisis of Capitalism
Submitted by Charles Hugh Smith from Of Two Minds
Currency Wars, Trade and the Consuming Crisis of Capitalism
To understand why the euro is failing and the Swiss Franc peg is a sand castle that will dissolve in a rising tide, we must start with a historical context and the crisis of global Capitalism.
The recent 40th anniversary of President Nixon withdrawing the U.S. from the gold standard triggered an avalanche of commentary mourning this introduction of the "fiat" (unbacked) dollar. But as most financial commentators have a conventional-economics perspective, they missed the key point: Nixon had no choice.
To really make sense of the past 40 years, and the current crisis of advanced global Capitalism, we must turn to everyone's favorite misunderstood economic framework, Marxism. I recently addressed several aspects of Marx's view of the inevitability of advanced Capitalism's crises in Marx, Labor's Dwindling Share of the Economy and the Crisis of Advanced Capitalism (August 31, 2011).
Here's the thing about conventional economics: it cannot make sense of our current interlocking crises because it lacks the tools and perspective to do so. Conventional economics has failed on a grand scale. Not only has its policies failed, its account of what's really going on fails to explain the underlying dynamics because it is fundamentally self-referential, parochial, mechanistic, blind to broader forces of history and soaked in the quasi-religious hubris that reductionist equations and quant models can not only explicate reality, they can predict human behavior.
The catastrophic failure of its policies result not from poor policy choices but from a tragically inadequate intellectual foundation. Hubris, indeed.
As I note in Chapter One of my new book An Unconventional Guide to Investing in Troubled Times, Like a creature born in the morning that has only seen daylight, conventional economics has never experienced night and so it has no conception of darkness.
The Marxist perspective has its own limitations, for example its weak purchase on the role of Peak Oil and resource depletion in the coming crises, but because Marxism is grounded in a historical and philosophic understanding rather than a reductionist, mechanistic, econometric one, it offers us the only comprehensive account of what's really going on with paper money, gold, trade and the crises of advanced Capitalism.
To understand the role of paper money, credit and gold in trade, we need to understand the role of trade in advanced global Capitalism. If we don't understand this, then we cannot possibly understand the current interlocking crises.
As I described in the entry noted above, Marx foresaw that mechanization/automation and the dominance of finance capital would lead to labor's share of the national income shrinking while industrial capital's factories produced ever greater quantities of goods at prices pushed down by labor-saving machinery and software (i.e. invested capital). (Marx also laid out the inevitable progression of capital to monopoly and cartel Capitalism, but that's another entry.)
This "crisis of overproduction" has several consequences. As less labor is needed for production, then the "army of surplus labor" (the unemployed) grows while wages stagnate or decline for everyone below the professional/technical Caste. As the labor component of goods and services declines, workers no longer have enough income to buy the rising output. At that point the economy collapses as demand declines to the point that nobody can make money even as production keeps ramping ever higher.
The solution is trade: dump the surplus production (the production beyond what the domestic market of workers can buy) overseas. The ideal setup is of course Global Empire, where the home economy strips away productive capacity in its colonies and essentially forces its colonial populations to buy its surplus manufactured goods in exchange for raw materials.
This "solution" to advanced Capitalism's ongoing "crisis of overproduction" is brilliantly described in the book Sweetness and Power: The Place of Sugar in Modern History.
The second very important thing to understand is what Mish has tirelessly explained on his blog Mish's Global Economic Analysis: everybody can't have a trade surplus, as that is a mathematical impossibility. Somebody has to run a trade deficit, i.e. import others' surplus production.
With a historical perspective rather than a superficial econometric one, we can trace out the larger forces that have been at work for the past 60 years:
1. The end of World War II ushered in the end of colonialism. France lost Vietnam in 1953, and clung bitterly to Algeria into the early 1960s. Great Britain relinquished the "Jewel in the Crown," its vast market for its own goods, India, and Africa shed the shackles of colonial Empire. This meant the cozy Imperial arrangement for dumping surplus production for a fat profit in one's colonies ended.
2. Fortunately for global Capitalism, the Allies had conveniently destroyed most of Germany and Japan's industrial base, and so there was a postwar boom as the U.S. created credit and lent dollars to Western Europe to fund its reconstruction and oversee Japan's rebuilding.
Behind the scenes, global Capitalism began making other arrangements to replace the iron-fisted colonial scheme with new mechanisms for extracting raw materials from former colonies and selling surplus goods overseas. Unfriendly regimes were replaced with pliable, corrupt dictators, etc.
3. This boom created a demand for labor, and as a result labor's share of the national income rose: with labor in scarcity, wages rose, and this enabled a "consumer society" that was mutually beneficial to both labor and capital: workers got a more affluent lifestyle and capital earned ever-higher profits. This fed a "virtuous cycle" in which higher revenues and profits led to higher wages and an expanding workforce, which was then enabled to buy more goods and services, which drove profits higher, and so on.
4. Globalization at this stage was limited to the flow of capital and goods: trade was in the classic model where one nation's advantages in production of one good was traded for another country's comparative advantages in another good. American capital flowed around the world, constructing a new kind of global Empire that wound together diplomacy, finance, trade and military might.
Here's the thing about this globalization: once the postwar Cold War reshuffling in Europe, China and Pakistan/India was complete, people mostly stayed in the nation of their birth. Labor was in scarcity in advanced and rising economies because labor was not yet flowing across borders as freely as capital, and that capital was mostly invested in facilitating trade, not in manufacturing goods overseas for domestic markets.
5. As the "leader of the free world," the U.S. had powerful geopolitical and economic reasons to fund the rebuilding of Japan and Germany as bulwarks against global Communism, and to do so on the "export model": the U.S. would open its domestic markets to German and Japanese manufacturers to ensure their stability and growth. Japan and Germany were the "frontline" linchpins in Asia and and Europe against the (at the time) formidable forces of totalitarian Communism.
As a result of these dynamics, the U.S. accepted the role of importer of surplus production from our allies and client states. That was the Grand Bargain: to corral the Communist enemies in the East, America would become the importer of the entire free world's surplus production.
6. But as Marx foresaw, eventually domestic "organic demand" for goods was sated, and automation's relentless shedding of jobs overtook the postwar expansion of employment. By the peak of the postwar boom in 1966, everybody in the advanced countries already had everything: a telephone or two, a TV, a car, a moped, a washing machine, etc.
7. The "solution" was to manufacture demand with sophisticated and increasingly pervasive marketing, and to create a "consumer credit economy" which enabled labor to leverage its income via credit cards to buy more stuff.
8. By the late 1960s, the Grand Bargain was untenable. The rest of the world had increased production to such a degree that America's trade deficit was now structural and growing. Simply put, if the U.S. had to pay for its imports with gold fixed at $35/ounce, it would soon run out of gold and the Grand Bargain would implode, endangering the entire geopolitical stability of the free world.
Recall that in the early 1970s, the Soviet Union was still a powerhouse of space technology, a vast military power and a ubiquitous global player. It was a formidable and dangerous opponent to American domination and the free world.
As a result, Nixon had no choice but to jettison paying trade debt in $35/ounce gold. With huge structural deficits required to soak up the surplus production of the free world, the gold would soon be gone and so would the U.S. market for allies' goods. That had the potential to destabilize the entire security of the free world and global Capitalism, so Plan B was the only conventional choice left: a "fiat" unbacked currency, the dollar.
9. Cheap oil, an unquestioned foundation of postwar prosperity, also went away in the early 1970s. The Arab exporting nations awoke to their geopolitical significance, and the rise of OPEC upended the advanced Capitalist nations' semi-colonial reliance on cheap oil from the Gulf states.
10. The end of the "organic growth" phase of the postwar boom and cheap oil led to stagflation in the 1970s. As the "importer of last resort," the domestic U.S. economy began facing intense competition from our allies, who still held the great advantage of undervalued currencies.
11. The U.S. and Saudi Arabia reached a new mutually beneficial stalemate understanding about oil. Nixon had ferried A-4 Skyhawks across the Atlantic to Israel in the crisis phase of the 1973 Yom Kippur War, enabling Israel to reassert the crucial air superiority that it had lost to the Soviet-supplied Arab combatants. Saudi Arabia punished this "save" with an oil embargo that triggered panic and rationing in the U.S.
But Saudi Arabia learned something important in this exercise of geopolitical leverage: Saudi surpluses had already reached the point that its investment income from capital invested in the West matched or exceeded it oil revenues. Choking the West via oil embargoes also snuffed out its investment income.
12. Nixon realized the West was at that time potentially vulnerable to the Soviet Empire for the reasons outlined above. His "outside the box" solution was to peel China away from the Soviet sphere of influence and create a "second front" for the Soviets to deal with, while freeing the U.S. from any live threats to its Asian alliances, which had been frayed by the Vietnam War. Tired of its erstwhile Soviet "ally," China had its own reasons to welcome detente.
13. The high inflation of the 1970s had effectively written down domestic debt, and so the vast expansion of credit/debt in the Reagan years created a fertile ground for consumption. The solution to the Grand Bargain of the U.S. as "importer of last resort" was simply massive quantities of credit: we would buy the Free World's surplus production with credit and printed dollars.
14. Fast-foward to the present. The "importer of last resort based on credit" scheme is unraveling, as the U.S. allowed its own production capacity to be hollowed out and replaced by ever-higher and more burdensome credit-based consumption. The "virtuous cycle" has ended and now credit creation to fund consumption is a self-destructive force.
The rest of the world is delighted to dump its surplus production and resources into the U.S.-- the U.S. is literally the only nation with a globally meaningful trade deficit--but the "grease" of that Grand Bargain--printed fiat dollars--is now causing complaints as its value weakens under the flood of credit issued by the U.S. to maintain its vast consumption.
Alas, you can't have it both ways, and that is a key dynamic in the Crisis of Advanced Capitalism: if you want to dump your surplus production on America, then you have to accept its paper money in exchange. If you decline that deal, and cease producing a surplus, your domestic economy will implode and your political stability will unravel.
Given the choice, the rest of the world accepts the dollars while complaining that it had a better deal in the good old days. Meanwhile, the U.S. consumer, hollowed out by intolerable debt loads, a declining asset base (the family home) and a domestic economy based on ever-expanding credit, is unable to continue the decades-long buying spree without massive transfers from the Central State, which must borrow $1.6 trillion every year to keep the whole creaky structure from collapsing.
China jumped on the export-model as its engine of growth and political stability, and it guaranteed that stability by pegging its currency to the U.S. dollar, making the renminbi a proxy of the dollar.
In the oil-exporting world, OPEC has lost its cartel powers as non-OPEC exporters gained market share and the cartel divided into those who benefit from investing in the West and those who benefit solely from higher oil prices.
If we put all these pieces together, we have a clearer understanding of the long-term historical forces at work: the global consumer society funded by credit is in its end-game, and is the "Central State as guarantor of private consumption" model in which governments borrow/print vast sums of fiat currency to distribute to their citizenry to prop up consumption.
Once exports go away, then domestic economies the world over implode. Ironically, perhaps, the one nation which doesn't depend on exporting its surplus production for its stability is the U.S.
This is one reason why the Swiss pegging their fiat franc to the Euro will fail to hold back the ceaseless tide eroding the Euro. You can play games with currency pegs for awhile, but ultimately the value and utility of a fiat currency is established by trade, energy and the geopolitical issues outlined above.
If we don't understand trade flows, surplus production, the surplus in labor and the resultant decline in its share of national income, credit and currencies in this Marxist-inspired historical perspective, we cannot make sense of the financial/political crises which are sweeping over the global economy. The end-game is at hand, and we need models that are up to the task of explaining the vast forces now in play.
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I like the comment that free-market economics is not zero sum. Wealth creation made possible by the very technologies that temporarily create surplus in labor, thus driving its price down, is something the left never understands. This is a great article from a lets-lay-out-the-history perspective, but why do we need Marx to understand it? If you expect some kind of teleological dialectic end-game as you latently assert, you will miss the boat. There are cycles, but not telos. We are on a downstroke. If the intellectual framework of the left/statism is applied as the solution it may turn out to be very deep down stroke. If, however, it results in the creative destruction of outmoded statist structures, there will be a powerful upstroke.
Forget Hegel and brush up on Shumpeter and Hayek and Von Mises (sp al?)
Your enthusiastic "upstroke" is no different than from that "other side." Both positions horribly flawed!
The trajectory of any "stroke" is that of oil exrtaction/production. The US's trajectory is already well established in this regard, though many are still in denial (hinding behind other trivial conjectures).
Ron Paul on Bloomberg TV with Tom Keene between noon and 1pm
http://www.bloomberg.com/tv/
Was just about to post the same.
RP is utterly clueless and adult talking about fairy tails. The capitalists know what a loon he is. They have no use, nor ever did, for "free markets". I can't believe grow-ups listen to the guy
The great flaw in his logic is that prices are supposed to drop as the cost to mass produce drops.
Thus allowing people to afford more goods and services.
But something has ruined this dynamic, now what could it be? What could cause the price of everything to rise while simultaneously mass-producing?
Fiat, of course.
Capitalism (assuming we are talking about honest Capitalism, not the crony kind) will never force the buyer into a state where he cannot afford the goods or services. The prices will always drop to force the maximum amount of sales dollars. The rich people want income as well as the poor people. You cannot do that by producing a good that nobody can buy.
There are a lot of people out there who want these goods and services, and they want work. The problem? There is limited cash available.
Why is there limited cash? Because it is all servicing the mountainous debt created by a usurious fiat currency.
Very simple if you stop and think about it.
exactly, prices are supposed to drop, not go up as they have. Where did the added wealth go? not to the people it has all been concentrated at the top all becuase of the rise of the mega publicly traded corporation.
I could easily open a store and sell products forless than Walmart and make money, it it were possible for me to easily open a store.
What the hell happened at noon? The stock market jumped almost 100 points and gold took a bath, PPT? WTF?
Just ask the Swiss retailers: dropping prices are BAD.
Consumers start to WAIT for later instead of SPEND NOW.
That is no more true than people buying now because prices may rise 2-3% next year.
People do not spend in deflation because they have little money and high debt.
The great flaw in his logic is that prices are supposed to drop as the cost to mass produce drops.
Thus allowing people to afford more goods and services.
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But what people?
Labour is a consumption item. Surplus of labour should drive its price down. People getting paid less and less being able to afford more goods and services?
Ummmm, yep, ricky yep...
what just happened to gold?
Read Harvey Organ later for analysis: http://harveyorgan.blogspot.com/
Check my comment and the replies of others above for possible explanations.
technical moves...or maybe this... ransquawk - (unsubstantiated) market talk of central banks selling gold
But as Marx foresaw, eventually domestic "organic demand" for goods was sated, and automation's relentless shedding of jobs overtook the postwar expansion of employment. By the peak of the postwar boom in 1966, everybody in the advanced countries already had everything: a telephone or two, a TV, a car, a moped, a washing machine, etc....The "solution" was to manufacture demand with sophisticated and increasingly pervasive marketing, and to create a "consumer credit economy" which enabled labor to leverage its income via credit cards to buy more stuff.
First of all, human nature doesn't need any artificial, capitalist construct to desire more stuff or become envious of others who have more stuff of dubious or real utility.
Second of all, where's the grand theory of late-stage, peak government ...that nut you have to make and pay for every month whether you like it or not? Can the government's share of GDP or the public sector/private sector ratio continue to grow without any undesirable consequences or without huge amounts of capital being mis-deployed? (I guess in Marx's plan we all end up in the public sector). When the government is half the economy is capitalism still the boogey man for society’s ills?
Waning organic demand was also the promise of technology: labor saving devices galore and more time to spend on leisure with most of life's necessities able to be met with very little effort. For the most part this has come true (and we're still not happy! - see how that organic demand thing works?). Americans -especially- today have the caloric intake of a Roman emperor and much longer, leisure filled lives than their grandparents (and certainly their great-grandparents) ever dreamed of. What seems to be limitless is the government leviathan’s demand for ever more control over every aspect of your life, liberty and property and ever more money to pay themselves with in exchange for "services" of lesser value.
We already know Marx’s remedy for capitalism’s problems (uh…thanks anyway Karl). Let’s get government shrunk down to some manageable size (or watch it happen the messy way) and see if free enterprise and free markets don’t just find a way to allocate human and other capital more effectively than what we're seeing now.
excellent post.
First of all, human nature doesn't need any artificial, capitalist construct to desire more stuff or become envious of others who have more stuff of dubious or real utility.
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And human nature does not any artificial, capitalist construct to desire not more stuff and not look at others who have more stuff of dubious or real utility.
US citizens love to placate their own nature, which is eternal, to the rest of human kind. Their system favours jealousy, greed and whole and therefore promote easily human beings who are naturally greedy and envious.
It does not mean that all human beings are like them. Human nature is much and can not be sumed up to US citizens eternal nature.
It is like this story of indigenous people. US citizens can not stand the fact they are not indigenous to the Americas then every other people on face of Earth has to be non indigenous.
US citizens should stand for their unique experiment drivel and accept the consequences of it.
"It does not mean that all human beings are like them."
...also very true, including all US citizens. for all native-born citizens anywhere on this earth are indigenous to the land, as much as the culture, that they were born on/in-to, whether they choose to realize it or not.
You really need to get your winged feet over to a good source of info, and look into "manufactured desire" and the PR industry. Psychological basis of the 'century of the self'? Beeeeeernaaaays sauce, bitches.
Hint: Desire = sex; Desire = product = replacement for sex.
Q: Why are Americans so prudish and scared of boobies in films, but love violence?
A: Desire shall not be sated by non-products. You shall be ashamed of sex. But not ashamed of coming in your pants over that tight, sweet, tasty, luscious Harley Davidson. Or that hand bag. Makes your senses tingle, doesn't it?
I'll unpack this for you if you meet basic criteria of non-muppetry
The "shrink govt" crowd just wants there to be enough govt there to protect Their asses, and do so w/o paying for such service, all the while besmirching govt because it meddles in "free trade."
Can't have your cake and eat it to, sorry. Blast Marx as you want, whip the dead horse, distract from the failing's of one's own (borrowed) logic and pretend that all would be righteous if only one's beliefs/ideas were universally applied. This movie just never ceases to get air time...
Grow the fuck up, people. ALL THINGS LOOK TO GROW, THAT INCLUDES GOVTS! Your options are only one of two:
1) A growing govt (until things stop growing and all collapses);
2) NO govt. (which means no free protection of "property rights").
I'm sure that there will be folks who will claim that things can exist within these two ranges. I don't claim that there couldn't be; but... there are ONLY three states that a thing can be in:
1) Increasing;
2) Static, but this is only a moment in time, transitory to #1 or #3;
2) Decreasing.
If there was plenty to go around, LOTS of surplus I'd bet that we wouldn't be seeing so many whiners/blamers. None of what you pine for is going to do squat to deal with the world's declining resources. You can't go whining to mother nature now can you?
Of course government wants to increase (not an original idea either). What's important is how big it gets compared to everything else (public vs. private sector) and how intrusive it gets vs. the alternatives. The original framework for limiting the power and scope of government while also allowing it enough power to protect life liberty and property was called The U.S. Constitution.
Natural resource depletion (real, imagined or future) is not the reason nobody wants to open a business, hire more employees or put capital at risk right now.
It was a formidable and dangerous opponent to American domination and the free world.
Enough said...musical chairs will continue and where you decide to live will dictate what kind of life you will have...if we are not mobil we are not free...
It was a formidable and dangerous opponent to American domination and the free world.
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It was just another propaganda bit in this article.
The USSR is just rationalization for the move by the US.
The evidence is that the US is behaving the same and will try to behave the same as long as it is possible, in spite of lack of credible formidable and dangerous opponent.
At the bottom of the basket are to be found threats like Somali pirates. When reached, the US will keep behaving the same.
Because it is what comes naturally as a consequence of the system the US has been founded on. Formidable opponent or not.
"The secret plan is that we're going to keep doing exactly what we've been doing, for as long as we can."
- Daniel Quinn, in, "What a Way To Go"
i just love all these "capitalists" who tell us we haven't had capitalism for over a hundred years. do you all think that we are going to go back to the gilded age of fisk? no one "likes" what capitalism has become. too damn bad. what you see is what you get. birth, growth, maturity and then death. get it through your thick skulls that we are not going back to 1900. ever. its like alchemists lamenting the fact that we haven't had real alchemy in a thousand years. wake up to history before it puts you to sleep. permanently.
"what you see is what you get"
And you are the one who proclaims it so? Sorry, I can make my world what I want (as long as it conforms to nature it's got a basis in reality).
"get it through your thick skulls that we are not going back to 1900. ever."
Thanks for that one, Nostradamus! Yes, we cannot reverse time, but if you're referring to "conditions" from this era, well, you're totally wrong. As a matter of FACT, 1900 would look pretty swell compared to how things will be when the next ice age hits.
Perhaps you know well of the "thick skulls" of which you speak. In the future it might be a worthy attribute...
...get it through your thick skulls that we are not going back to 1900.
With these central planning bozos in charge I'm thinking more like 1500.
And how are YOU planning for the next glacial period?
These people only care about power. And, well, wish them luck when the next ice age comes.
You see, the fact of the matter is that neither YOU/I/THEM can do a fucking thing about it. The nature of the beast coupled with folks' clamoring for "limited govt/property rights" guarantees exactly what we now have. Can't have "god" without "satan."
Sigh, such hubris...
Yeah they point to the "golden age" of 9 year olds working in coal mines and corporate brut squads machine gunning strikers. Of course, this was after the "state" gave away 100,000s of square miles of land to rail roads and farmers in the biggest government handout in history. What a joke. They live in fantasy land> Ahhh, late-stage capitalism is going to be tough for fantasy island.
Of course, this was after the "state" gave away 100,000s of square miles of land to rail roads and farmers in the biggest government handout in history.
Yeah, people don't really want to talk about the ill-gotten origins. It's like those who lambast the blacks for (still) being upset. Giving "equal rights" after 150 years, yeah, give anyone 150 years headstart and then call it even! (allow me to create a business and have NO competition for 150 years- think I'd be successful?) I think that the native American Indians can speak to this "fairness." And now, I won't name names, some people here repeatedly put down minorities, and I say to them: you shit in the bed, you sleep in it! It should be a lesson to all that the time to do things right HAVE to come from the START. Don't like it? paying for the sins of your forefathers? tough shit! be more humble, try to correct the errors and instill in your society the understanding of what NOT to do. Or, you can repeatedly pretend that the skeletons in the closet don't exist, and forever more look over your shoulders.
The US was just another land grab by the wealthy. And the wealthy wield that wealth but don't want to admit where those wealth-launching assets on their books came from. People in this country are under the illusion that there's more upward mobility than, say, in Europe, but the sorry fact is is there isn't. Ah, the Grand Illusion! An amazing slight of hand by a (then) new crop of elitists!
It was always meant to be a small club:
http://www.hermes-press.com/completing.htm
Pardon if some of the links are bad (I do my best, but alas...)
http://www.archive.org/details/historyofgreatam01myeruoft
History of the Great American Fortunes
By Gustavus Myers
http://www.soilandhealth.org/03sov/0303critic/030304lberg/030304toc.html
The Rich and the Super-Rich
A Study in the Power of Money Today
By Ferdinand Lundberg
http://www.docstoc.com/docs/9523160/the_robber_barons_the_great_american...
http://yamaguchy.netfirms.com/7897401/josephson/josephson_index.html
The Robber Barons: The Great American Capitalists, 1861-1901
by Matthew Josephson
http://yamaguchy.netfirms.com/7897401/pettigrew/pettig_list.html
http://www.archive.org/details/triumphantplutoc00pett
Triumphant Plutocracy
The Story of American Public Life from 1870 to 1920
By Richard Franklin Pettigrew
http://www.users.uniserve.com/~synergy/welcome.htm
Feudalism, alias American Capitalism
OK, How about this?
http://www.masongaffney.org/essays/Four_vampires_of_capital.pdf
Looks like profit taking on PM's and another round of "bottom fishing" in beaten down loser sectors.
Everyone has to "make their year" in 2011.
LOL....
Capitalism? Try corpocracy ;)
Yeah, the failings AREN'T due to capitalism. Oh, and they're NOT due to "statism" (socialism or whatever) either. Even in some perfect tab/vacuum world where REAL "capitalism/socialism/whatever" would be free to exercise its superior ways, it would STILL FAIL! For every fucking argument about this or that failing because it hasn't been "tried" in some pure form I can provide a similar argument from the "other side of the fence." This whining gets fucking old, tells me that people will NEVER get it!
As long as you have "systems" that are predicated on ever-expanding growth you're going to eventually run into FAILURE! I don't pretend to be some scholar, but I don't believe that capitalism is designed to operate in a no-growth/negative-growth environment. I'm pretty sure that all other pet systems are likewise incapable.
The music stopped, we're racing around looking for a chair, telling everyone that the music really is still playing. Deception is an essential part of human nature. I, for one, am NOT going to buy this "<system X> is better than <system Y>" crap for the very reason that these systems are all demonstrably incapable of delivering what people claim (and spare me the theoretical, this is an imperfect world, populated by billions of deceivers).
A capitalist system based on fiat will fail.
A statist/socialist system based on fiat will fail.
So simple, and yet so hard to teach to people.
Yup! And what's common is that its a base in something that's NOT anchored to reality. And when I say reality I'm talking about nature's reality (people can feel free to insert "god" in place of "nature," same same).
I do believe that all systems "aim" to disperse goods and services in the best way theoretically. But, like anything that we sell ourselves into believing, we end up lying to ourselves. Good intentions and all... I don't think that it's as sinister as many might believe (nor that I might state, from time to time). We are torn between compassion and carrying capacity. We cannot readily deal with the moral dilemmas: religions purport to address them, but they don't- they tend to externalize THE issue by encouraging purgings of the non-believers.
A capitalist system based on fiat will fail.
A statist/socialist system based on fiat will fail.
So simple, and yet so hard to teach to people.
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Big correction here, based on expansion.
Currency hard or fiat have little to do with the outcome once has chosen to tread on the path of expansion.
And I wont use fail because expansion has always followed the same pattern. Hard to call it failure when there can not be success.
I've never seen so many adults make excuses like 2 years olds. Capitalism is failing. There is no magical invisible hand jobs. Capitalism is a fairy tail that from day one needed constant state intervention. Hell, laissez faire was a planned doctrine.
You need to educate yourself more.
Try reading some material on Kondratief, or even better..... Read "War Cycles, Peace Cycles" by Richard Kelly Hoskins.
There is no capitalism without the process of capital reproduction. A growthless capitalism is not capitalism.
What Seer appears to be saying is that predicating your economic model on perpetual growth guarantees you'll get the same results as all perpetual motion machines, a failure. I agree 100%. Any economic model without room for contraction is doomed from the start. Taming the business cycle is impossible. Any success just steals from the future and makes the collapse bigger.
High minded idealism isn't just for religionist or liberals. Government responsibility is a fine line.
If not going into debt to buy imports, and having to toil for longer hours to pay higher taxes to pay for bankers ponzi schemes, what else are sheeple living for?
Nothing.
Llyod and Jamie are calling gotta go...
Every time we have an economic downturn these Marxist come out of the woodworks. We have had thousands of economic crisis before and we will keep having them and they will get increasingly volatile and more frequent given that the central planers increasingly manipulate the world markets. Again economic crisis are good they clean out the excesses and misalocations in the economy. They make way for new booms.
Yeah all the marxists aren't planning a revolution - they are planning on running away and isolating themselves from the failings of capitalism. So no need to worry
Indeed. And another thing, every time the system goes into another boom period all these Marxists are gone with the wind.
You know I am stupid enough to realize we will never have 100% pure capitalism but in many ways we are very tilted already to Marxism in the way that Politicians and Central Bankers increasingly manipulate and even downright control many parts of the world markets today. By stealth they impose a system of central planning. This way they can blame the side effects of central planning on capitalism. I must admit this is very intelligent indeed.
Absolutely Construct.
Arent the markets the central point in free markets capitalism?
You only have booms with cheap debt and plentiful and cheap energy sources to extract and produce the objects that fuel consumption.
You no longer have any of these. Each feeds the other.
The Wheel is permanently broken.
But please do cling to your religion.
Reality will show you that your religion has no god that heeds your beliefs. It was simply an idea thought up by men.
re: jumotron.
There is nothing wrong with having a credit driven system. Other issues are the problem. Bailouts etc.
the important thing to understand is that the marxists are not running the world - anywhere. they have no power. you need to understand that and attend to the problem - your side.
If you think Charles Smith is a socialist then you haven't read his Survival+ book. I submit he is an independent/libertarian and I have read his books and most of his articles.
Hey! We'll have none of THAT here, no talk of anything that could be critical of the god that is Capitalism! Smith brings up negative aspects, either rightly or wrongly (I'll just take it as data points), therefore he's a nasty SOCIALIST, or COMMUNIST, or STATIST or...
I can readily blast a hole through every mainstream economic system. I cannot promote ANY of them because of the massive flaws of EVERY one of them! That is, if the aim is long-term survival I cannot condone that which projects us to, and over, the cliff!
But... is, as the poster above accused Smith, partaking in a "fairy 'tail'" a bad thing? I mean, getting a little "tail" isn't bad, is it?
"As the labor component of goods and services declines, workers no longer have enough income to buy the rising output. At that point the economy collapses as demand declines to the point that nobody can make money even as production keeps ramping ever higher."
This is nonsense beyond temporary distortions.
Perhaps a different perspective is to view Japan, China, and others as vendors supplying both product and vendor financing. This surplus production perspective is also nonsense. Are we to consider a Japanese owned auto plant in the US surplus?
"Are we to consider a Japanese owned auto plant in the US surplus?"
Anything that's above and beyond Food, Shelter and Water IS surplus!
But... I get your point. As a matter of fact, Adam Smith stated that countries should NOT engage in trading "like products!" Japan selling cars in the US and the US selling cars in Japan. And if anyone believes that this is due to "socialism/communism" then you really need to take a hard look at yourself in the mirror.
It's ALL fucked up. The music has stopped and nature will dictate things from here on (gravity will now have a greater impact).
A Japanese auto plant in the US is classified as A US OWNED AUTO PLANT by the FEDS !
Why?
To get around import tarriffs. And besides....even if it were considered a Jap plant, it still produces cars that are sold here into a market where the demand is lower than supply.
So yes.,....it is a surplus.
What the hell momo stocks are starting to turn green. Apple is green, Netflix has been green, Amazon green, Green Mointain Green, others just pennies away from green.
Somebody pushed the buy button at the Fed. Who else would buy RIM, also now green.
Something leaked from somewhere because this is insane.
Typical, its not time for the real fall yet...low volume rise, end the day on -50 or less...
Why does it always have to be one or the other... I think the inflation is now.. but the economy is so week that we're rolling over already into a Credit Destruction Spiral that no entity(s) on earth can fix. A qudrillion in Derivatives will come crashing down and cash and bullion will be the only options. The US dollar as bad as our economy is ... is still the only trading vehicle that is some what universal and big enough for trade.
I was reading an interesting article froms Hoover's time... There are differeing thoughts on the liquidity and gold transfers of the time.. but It seems to me that the Banks were screwed just as they are now with bad loans. They halso had terrible bond issues which are coming here also.
Thus Huge Delfation is coming. Cash will be King! All assets will crash! Keep some gold for now for insurance.. But the time to buy presious metal will be after the asset crash. (80%+) from top... and I believe 40 -50% from here.
Pretty much on target, IMO.
"But the time to buy presious metal will be after the asset crash."
I'd advise caution on this one. Economies of scale in reverse will make essential physical goods harder to obtain. In the future you'll want to have the basic things for life (well, this has always been true, but it'll be much more obvious in the future). Obtaining PMs in the future should only happen as the result of exchanging physical goods, not as any "investment." Right now PMs are an investment; but, see them as they are: an investment in the future. Fiat has no future... Sigh, but for the near-term the USD is still managing, thanks to everyone else crashing and burning, to be the best looking horse at the glue factory...
Survive the short-term, but plan for the long-term.
Wow he cites both Marx and Mish in the same article. Who woulda thunk it?
Lot like Maxists complaining that they never had real marxism.We can debate the merits of Marx as a political scientist(poor).However as a sociologist, he is very good.
Interesting reading.A few points:
You mention correctly that each great power wanted its colonies as a resource provider and product buyer(having monopoly on both of these).Back to present now does this system reminds you of Eurozone?The only way Germany is going to let Eurozone fall apart is only through revolutions in Europe.
You accuse others views of being mechanistic,but yours is too.What's the drivind force behind all the history you wrote.That's the real question.
Send in the National Guard....oh wait, they're in Afghanistan.....oh well.
http://www.msnbc.msn.com/id/44405434/ns/weather/?GT1=43001
you free-marketeers are not wrong to say that the problem is that we don't have free-market capitalism, WERE THIS ANALYSIS TRUE.
the problem with this analysis is that it explains our actions as resulting from a proximate cause of government interference with capitalism - that is a geo-political strategy to win the battle over communism - which in turn corrupts our capitalism. smith is handing you your "corrupted free markets" argument and you don't even realize it. you think you are disagreeing with him, but you are saying the same thing.
but smith is wrong. in actuality, our actions are the proximate cause of capitalism itself - in particular, the incentive for a few to make shitloads of money.
for instance - the example of opening / trade with china. the proximate cause was not geopolitical to divide the communist states of russia and china, it was because the bank holding companies and ceos saw this as a way to clean up, regardless of the ultimate disaster it would be for america (and china). ship jobs to china - they can't afford to buy what they make - so ship the shit back here, make out like bandits, while everyone else ultimately suffers.
so smith is wrong with his analysis, and most of you are wrong with your comments. what we are seeing is the inevitable collapse of capitalism because it sows the seeds of it's own destruction. not because of some altruistic battle to save the world from communism, or to make the world safe for democracy, but because capitalism eats it's own tail.
you're welcome.
"what we are seeing is the inevitable collapse of capitalism because it sows the seeds of it's own destruction"
It's got a glaring design flaw, one that exists in all other models, that being that it does not properly take into consideration our finite planet. It's mass denial. We all know that things work until they don't, until they stop. Yet, we NEVER want to discuss/factor in for this inevitability!
Capitalism on an infinite planet/universe would be GREAT (the best)! That's the theoretical world. We don't live in one of these...
From this point forward no human system will dictate things. Nature now takes over.
“Men argue…nature acts”
- Voltaire
right. and it has another, rather gaping, hole in it too. it believes in free-markets, which means it does not believe in a real world populated with human beings. for example, the labor arbitrage problem i cited above. this "free" trade with china isn't actually a "free" market, is it? given the disparity in development and wages and limitations on movement of labor. but guess who says it is, and slits throats to take advantage of it? the very people selling the randian free-markets evangelism.
free-market ideology is ultimately just cover for the parasitic overlord destroyers of worlds.
I don't think that hardened capitalists can explain how property rights and free trade can coexist. Property rights, by all arguments that I see (around here), are necessary, yet not really possible w/o the State (laws). And once you have the State you have interference with "free trade."
I think that people are mistaken if they think that we can have a "small" government when EVERYTHING is encouraged to grow. I don't want ANY govt, but this puts me at odds with "property rights" folks... Can't have "property rights" without an entity willing and able to commit violent acts. I don't want ANYONE committing violence in my name.
If not for the fact that I believe in evolution I'd see things as 100% totally hopeless (hopeless in the face of facts).
Beating up one another over this system or that is a waste of time. Same with proposing any "solution" (when nothing is permanent, which is what "solution" means). Capitalism can claim no more rights than socialism, or any other... Nature will be the arbiter. My greatest fear is that "victory" (always only temporary) will go to those willing to commit the greatest acts of violence: we'll sweep aside the real reason for mass violence -quest for diminishing resources- which will condemn us to repeat it all over again (though perhaps with just sticks and stones, if we're luck).
i enjoyed your post.
what about privatized enforcement of property rights? ie: enforcement only for those who have the most to lose? isn't that the natural progression?
"Beating up one another over this system or that is a waste of time."
i agree generally - for the rest of us, that is. for the oligarchs, spreading the free-market evangelism has the decided effect of reaching the "tipping point" required to deliver the votes needed to control a democracy. crazed devotion to the system by a segment of the public whose interests are in actuality opposed to the system is required in a democracy, for the oligarchs to maintain power.
what about privatized enforcement of property rights? ie: enforcement only for those who have the most to lose? isn't that the natural progression?
:::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::
In what way would that be different from now?
"Beating up one another over this system or that is a waste of time."
You couldn't be more wrong with that weak premise. You argue all systems are flawed including capitalism therefore no system is inherently better than any other. We have all of history, however, to show us quite clearly that people live much better lives under capitalism as flawed as it might be. You statists never point to the successful examples of central planning do you? Of course not, because the only glaring accomplishment of Statist regimes is that they are exceptionally good at killing people. You quake in your boots in fear of the oligarchs, yet the oligarch's encroachment on our lives and freedoms is made exponentially greater through the power of government. Free markets will never be topped bitchez. We might not see them again for some time, but whatever is in their place will definitely be worse.
You can argue all you want, but you'd still lose.
"You statists never point to the successful examples of central planning do you?"
Fucking moron! I'm NOT a statist. Can you not fucking read what I write? You and your superior BS is EXACTLY why humans are fucked! And I'm rooting for evolution to clean things up...
Capitalism, as most would point to, has been around for a LONG time! Yet, you pedantic morons (or do I repeat myself?) pretend as though it magically sprang into existence with the spawning of the great plunder that was the "American Revolution?"
It's the best, therefore it's good. LOGIC FAIL!
You're living on the receiving end of the spoils. Nice tidy world you have there. Meanwhile, on planet earth, where 2/3 of the worlds population lives on $3/day or less (I've been to the "less" parts), things are different...
Humans have been on this planet for, depending on your belief or non-belief in evolution, at least several thousands of years.
Capitalism is a great weaver of the hanging rope- Jevons Paradox, bitches! The price of hubris...
"Capitalism on an infinite planet/universe would be GREAT (the best)! That's the theoretical world. We don't live in one of these..."
Are you saying that you indeed do know for a fact the the universe is finite?
If so what is at the end of space? Is time also finite?
When it comes to capitalism and humanity, the Universe is finite.
Quite funny, you see, I see many US citizens wanting to spread the idea that globalization is of late.
When told that it is not, they often play one of their favourite card, a troubled relationship with the past: globalization should have started from day one of humanity.
In fact, speaking of globalization makes only sense from the moment the actual means to carry out globalization appeared.
Until the Universe is not infinite to humanity, that the means to take advantage of the infinity of the Universe are actual and ready to be used, the Universe will be finite when it comes to humanity problematics.
There are possibilities and then there are probabilities. I operate in the realm of probabilities. And the probability of the universe being finite is quite high (esp given that there are other scientifically "known" universes, but I'll leave that one for the "experts"): and, yeah, the "expanding universe" thing can also be thrown into the mix.
The POINT is that, for all practical (read "probable") purposes, basing all of humanity on the likelihood of the improbable (rocket-shipping all of our asses to some new safe harbor, or having an invisible hand come down out of the clouds and scoop up "believers") isn't a good bet.
BTW - Time is only a construct of the human mind.
But you can't eat tungsten
http://www.cnbc.com/id/44374685?slide=8
Hold on, let me check.
Yup, I still have to pay my bills in FIAT.
Yup, the farm stand up the road is still open and selling organic veggies dirt cheap.
Yup, my lights are still on.
Yup, my bank still has the same name, not that I care what its name is at all.
Yup, my guns and ammo are still all here.
99.99999999999999999999999999999% of the world does not give a shit about what 99.9% of everyone here does. Nor does it matter.
I would argue that Mr. Smith just presented one of the best macro economic articles I've read in a long time. Not only do the dates and events match up with his thesis, the thesis is a sound one and he explains his rationale for using Marx's theories. He mentions, in slightly different language what I have been saying for years; every time we buy some thing made in another country, we import the standard of living that the labor content of that good or service represents.
Let the junking begin....
Adam Smith warned against trade between countries of signficantly dissimilar economic power.
i think you are correct, but he got the MOTIVATIONS wrong throughout his analysis.
he seems to think his 15 or so points were taken in the good fight against communism and oppression. they were not. they were taken to rape obscene profits for a small group of people who control the world.
i would think thats a pretty important error.
No Nixon was screwed by France, England, etc to pay off it's WAR debts with gold.
No Vietnam war, a war for the benefit of France and England, no large debt to screw us over and let monetarism run amok.
The guy is basically saying that nixon had no choice but to usher in the age of floating exchange rates, outsourcing jobs, etc?
Bullshit.
THERE WAS NEVER A REASON TO UNLEASH MONETARISM.
France and England suckered our MI complex via wall street to put pressure to launch Vietnam War.
We incur debts being the sucker.
Then France and England say we're running too much deficits (our 'thanks' for doing their dirty work), and want to exchange such debt for gold.
They gave us the middle finger around every turn after they ensnared us. Yet overlooking this completely destroys any other 'monetary colored lens' viewpoint.
So in pure nixon fasion, he acted like a dumbass, listened to his crooked wall street advisors and decided to unleash imperial monetarism upon the world once again. Supposedly to 'screw them over' by reducing how much gold could be converted because it 'floated'. But on the back end, it opened the door for all the rest of this shit.
Wall Street Knew
Nixon didn't.
Now we come up with revisionist history that forgets the Vietnam war and the Gold redemption operations being launched on the United States by the same people, with a whole lot of motives.
We got set up by france and england and their monetary whores, and they succeeded in knocking us down. That's what happened. They got us off the gold standard. They ditched fixed exchange rates. Then they launched their free trade bullshit. Of course the Inter Alpha group of banks was fully ready from day 1 for this new (OLD) transition back to THEIR folly.
Nixon gave back to Europe the ability to fuck over the world, and with wall street's help, we joined them. Lessons of WWI and WWII were lost the day Nixon started us down that path.
Banksters got the ability to start and postulate the scams of old and new, and everybody with that new found 'freedom' to do more 'financially' became poorer. In reality, even the banksters. Because in the real world the banksters are the brokest people on the planet, in their world (which they force us to subscribe to) they are the wealthiest. Thank You Nixon for unleashing this hell upon us.
With a big fuck you to ALL the presidents that have come after Nixon for only making it worse. Selling America down the drain for monetary folly.
Glass-Steagall
So, the US didn't have any interests in southeast Asia?
More blind nationalism...
Who are you going to blame when the earth is incapable of giving up our "entitled" materials?
The chimera that is/was "America" was premised, as all man-made governing systems have been, on a grow-till-you-die paradigm. People tend to overlook the "die" part...
You've go the right time period to focus on, but you miss the REAL event, and that was peak US oil production. Wealth comes from accumulating positive trade balances. Shifting from a net energy exporter to a net energy importer was the moment that the US hit the downhill trajectory. If you don't believe that this is significant guess again: energy imports account for nearly 1/2 of current US trade deficit.
Insufficient access to natural resources is the marker for declines of civilizations. Wars against communism/terrorism is nothing but a cloak. And most people are programmed to not be able to look behind the cloak (blind nationalists).
seer.13:19,
Who are you going to blame when the earth is incapable of giving up our "entitled" materials?
No one will be here when that occurs.
We have NEVER hit REAL US Peak Oil production, reason, Green Weenies, and a Govt that has stopped tapping known reserves, and allowing exploration for new one's.
When, and if we are ever allowed to use, tap, and explore and 100% determine we are at PEAK anything in the US, make that statement.'
We all know it's NOT true that we are at peak anything.We have been artificially STOPPED,in OUR use, and searches for more.
That we KNOW exist.We would likely not have any trade deficit if not for the U.N.'s Nirvana Project.
All nations dependent on each other, ends wars..........so we allowed our manufacturing base to be destroyed.
FACT, we could just as easily re-start it, and get this ship pointed in the right direction, if it was the WISH of the PTB.
It's not their PLAN. They are why we are screwed.
"We have NEVER hit REAL US Peak Oil production"
Sigh, another attempt to suck the debate into a black hole...
Well, I "could" support this argument, especially given ubber capitalist Forbes' (can't recall which spawn) statement back in the 70s that the US would be best off keeping/hording (how capitalist is that? that kind of talk cause the US to overthrow govts today) its own oil and depleting everyone else's first. This is a pretty heavy conspiracy if true, and I will admit that it's a possibility; but, again, I deal in probabilities, and I'm going with the assertion that it's probably not a policy that got wings.
The ONLY FACTS that we have is the ACTUAL data that shows that the US's oil production HAS declined. Is there a rabbit in the hat? Would you base the existence of your progeny (shudder) on this?
No other country's oil production has peaked? No oil well's production has EVER peaked?
Sigh, I think you're pushing against a pretty big rock, climbing a very long mountain...
Your logic would have it that the very thing that is controlling us via oil would somehow magically give us freedom by providing us with MORE of what it uses to control us, so, we can have more "freedom?"
TPTB, who maintain power based on the status quo are going to intentionally destabilize the system so that they can maintain power? Sorry, but I'm just not seeing that this is a very controllable strategy. Possible? Yes. Probable? NO.
But, drill baby drill! Strength through exhaustion! Maybe you need to saddle up that unicorn to make your trek up that (lonely and) long mountain...
Thanks for playing!
what i have been saying, and smith's big error.
the driver in this was wall street / the oligarchs - not government. in this way, smith can be seen as planting a particularly crafty "false flag". a seeming marxist, actually making an argument that benefits the oligarchs, by blaming the oligarchs front organization the government.
pretty slick if intended that way.
Spending a bunch of time trying to disect nuances of power distracts from the big picture...
Discredit/distrust (concentrated) power in all forms (except the sun).
in fact i agree with you!
i decided some time ago that trying to figure out motivations in this game was a distraction. for instance - why is obama doing douchebaggy things? if you believe he is being rolled by the opposition, you might have sympathy for him. it's more important to hold him accountable for what he does - not why he does it.
however, you've got to admit it's a fun intellectual exersize!
My wife is from the Philippines, she says that there their politicians provide the entertainment and the entertainers provide the politics. I've educated her that, despite all the massive sales job stating otherwise, it's no different in the US: and given the amount of money in circulation things are much more corrupt in the US than in the Philippines; it's just that the US is highly polished (be it public OR private entities).
I find ample entertainment in my farm. I have little use for the empire's pitchmen. The storm clouds are coming and I've got work to do...
If you reread the article, and it's a good article IMO, there's not one word spent in discussing the aging of the boom generations. You could institute worldwide Communism, Marxism, or Capitalism and still get the same result when your growth oriented, consumer based economy runs right into the brick wall of the aging consumer. Spare me what Marx said about sooner or later everyone having everything they want. Young consumers cannot be satisfied. They will endlessly buy iPod version 1 to 100. The young spend their money like fools, no? Waning comsumption isn't a function of your economic system, it is an inescapable consequence of the age of your consumer.
Proof of the above can be found in the global economic recession affecting all different societies and systems. No economic system is immune to the aging of the consumer, so why discuss the benefits of one over the other?
Only one of you even mentioned Kondratieff. He was right, everybody else was wrong. We are lemmings, consuming and populating our environment until our population reaches Peak Consumption and the inevitable economic collapse begins. Our innate nature cannot be overcome by paltry human economic constructs.
Bottom Line: Economic systems differ in their ability to hold off the inevitable, but the better they are in staving off the crash (like global trade under the USD) the bigger the crash.
Join me fellow lemmings, in jumping off the cliff, weeeee!
I agree...
"The young spend their money like fools, no? Waning comsumption isn't a function of your economic system, it is an inescapable consequence of the age of your consumer."
Well, the young are young and foolish because they're, well... they're young, and the young aren't yet wise to the ways of the world. In days long past it used to be that the un-wise would tend to fall by the wayside. That said, I think that this goes more against "adults" than the youth. It is the adults who are programming the youth in such ways: we program the youth to buy iCraps, salute a flag and pledge their lives to defend the rich adults (and their offspring). But... as much as I hate the term, humans have ALWAYS been "consumers." What we will find is that our "consumption" will be returning to that more closely related to sustainance. I only hope that we become more humble...
"You could institute worldwide Communism, Marxism, or Capitalism and still get the same result..."
That statement is utter nonsense, I feel like I'm reading the ranting’s of the University crowd before they rush off to their next class to worship political correctness from their emasculated professors. It's true this corrupted American Capitalism is going down in flames but nowhere have the statists been successful. Even the socialist/capitalist hybrid of Europe would have been immensely poorer without the American engine of innovation - the result of Capitalism from a day when it was not so corrupted. Equating all economic systems is absurd, they have demonstrably shown to have different lifespans with central planning jumping straight to maximum human misery and minimum freedom. I guess you boys just fancy that you will be on the committee's that get to decide how things will be allocated, good luck with that.
"Even the socialist/capitalist hybrid of Europe would have been immensely poorer without the American engine of innovation - the result of Capitalism from a day when it was not so corrupted."
Someone else who missed history class... You can opt to remain ignorant, or you can educate yourself- your choice.
And when innovation can no longer have the resources to propel it?
BTW - I'm not a "statist."
Here's what's at play, CHS: Antal Fekete outlines the gold-suppression, bond-support scheme | Gold Anti-Trust Action Committee
Written in 2006, 2 part essay. Just one excerpt:
In a two-part essay posted at 24hGold, the economist Antal Fekete provides a compelling interpretation of the gold price suppression scheme, which is also a scheme for the support of U.S. government bonds. Fekete writes:
"The government has the following desiderata:
"1) To have a floor below the bond price.
"2) To have a ceiling above the gold price.
"Indeed, without such a floor and ceiling, the bluffing epitomized by check-kiting could be called, and the international monetary system would unravel.
"To promote these desiderata, the bond and the gold markets are manipulated. It is true that the Treasury and the Federal Reserve prefer not to play a direct role in it. Speculators are induced to do it for them through the lure of risk-free profits.
"Simply put, the role of the derivatives market is to make phantom bonds available to buy, and phantom gold available to sell, for the benefit of speculators. It is no problem to make speculators want to buy phantom bonds. They have the incentives. They know that the Federal Reserve is going to buy, rain or shine. This offers a risk-free opportunity for profits. All the speculators have to do is to pre-empt Federal Reserve purchases -- that is, to buy beforehand. So let them.
"The tricky part is how to make speculators want to sell phantom gold. This problem is solved by setting up a gold mine as a front, beefing it up as the world's largest gold-mining concern, and letting it introduce a phony hedge plan."
I don't believe in any sort of "isms", it doesn't change the fact that I don't own a car
I'm kind of partial to truisms to tell you the truth...
The end of the great debt experiment is nearing and everything is pointing towards a big credit crash coming up. The world’s monetary system needs to be backed by gold in order to move forward with a sound financial system that does not allow banks create money out of thin air. Money should not be based on debt, but on sound intrinsic value.
Check out the latest from the Capital Research Institute (CRI): The Debt End Game
www.capitalresearchinstitute.org
Blah, blah, blah, Charles. The problem that lies at the heart of all your analysis and pontifications about the ongoing crisis, are legal tender laws which force the state's monopolistic money system on every nation and, in case of the world, the US dollar as it's "reserve currency." The only legitimate analysis of markets are those which have competitive forms of currencies and monetary instruments (all forms of competition are good, no?). Lacking an open and competitive market in money and currencies, there are no free markets or capitalism. Just systems where the top scams as much wealth as they can from those below them.
Is the current post-WWII paradigm a fraud? Why yes! Your blog must have some seriously clueless readers to not know that by now. How many more ways can you express the same complaint? That which was once novel, now just becomes a repetitive rant on why we all must accept the particular cargo cult you're selling. Oops, I forgot, it's those brilliant bipolar folks who have all of man's answers to man's self-inflicted ills. Seems you've become locked in a positive rhetorical feedback loop whose only purpose is to show everyone how clever you are, especially to yourself.
Try to stop imbibing on your own bath water, it has taken you down a truly ugly path. How is your grandiose designs to have a ruling elite manage markets, based of course on your moral world view, any less destructive than what we have now? How does it not devolve to the current multiple Ponzi scheme under which we all currently suffer? Put the "truly" moral and ethical in charge? Whose morality, Charles, whose ethics? What philosophical standards shall be imposed to determine both and whose philosophy? Yours? Arthur's? Marx's? Yeah, that last one worked out real well. And where do we find such angels, Chuck? I believe the Germans tried this back in the 1930's under the concept of: Führerprinzip. It didn't end well for them, why do you think it will now work for us?
Power rarely draws in either the moral or the ethical, especially concentrated power. The founders of the US explicitly laid out a political model which restrained and discouraged the growth in concentrated political power. Look about you, it failed, big time. Am I to believe you have a newer and better option? Your various missives have yet to convince me that this is so.
But thanks nonetheless, your descent into bipolar delusions now saves me the time once spent reading your articles on more productive and meaningful efforts. Regards........JB
"The founders of the US explicitly laid out a political model which restrained and discouraged the growth in concentrated political power."
As you note, it (has) failed. But, I don't believe for a second that it was predicated on such noble ideals as you (or anyone else) might suggest: see this: http://www.hermes-press.com/completing.htm). I suspect that the real intent was to maintain control in their (limited) rich hands: who are we kidding? really, who in power doesn't seek to maintain it?
I can read the Declaration of Independence, I can read the Federalist Papers (and the anti-federalist papers as well), I can read the constitution and the bill of rights. The philosophical and political intent is quite clear. Of course you and your sources will now tell me I don't understand basic English, I suppose?
Let's just look at the bill of rights:
Congress shall make no law...or prohibiting...or abridging
...shall not be infringed.
No Soldier shall...
against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue,...
No person shall be held to answer...nor shall any person be subject...nor shall be compelled...nor be deprived of life, liberty, or property...nor shall private property be taken...
...no fact tried by a jury, shall be otherwise re-examined in any Court of the United States...
Excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted.
...shall not be construed to deny or disparage...
and finally, just to bring the point home:
The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.
Now I said the purpose of their governmental model was to restrain and discourage the growth in concentrated political power, how does the above text not affirm that? Do I need to bring forth more examples?
Finally a grown-up, thanks G., very refreshing after reading all that pedantic, masturbatory "look at me I'm a thinker" ranting.
Negative and Positive freedoms are two sides to the same coin.
And as we're seeing, coins are devaluing. Time to think outside this paradox:
http://www.youtube.com/watch?v=NbInZ5oJ0bc&feature=related
it is good to hear the law
Which are MORE powerful, words or actions?
It's been clearly demonstrated (which the article that I presented, which puts your panties in a twist, points out) by ACTION that the words presented were NOT, in FACT, applied.
Slavery. Land owners only apply. Women w/o equal rights. Extermination of native peoples.
MY POINT, was that it is nothing more than a ruse. It's no different that all the religions claiming superiority. If one wants to feel better about oneself there are plenty of other writings to read (I'm sure that the devote religious folks can suggest some good reading).
Whether you miss the actions by way of ignorance or intent (look the other way) it matters little. The result is hardly indistinguishable from that of the oligarchs that the "founders" ran from.
Communism, capitalism (and democracy) all make promises of future betterment. Just give today and all will be better tomorrow. Well, for some that "tomorrow" took 150 years.
People confuse the effects of landing a treasure trove of resources with the "system" harvesting the plunders. The US wouldn't have been shit if not for the "wide open plains" and inexhaustible natural resources. The papers that you fawn over are cheer-leading documents encouraging the continued plunder for "all" (except, as we know by FACT, those that were less fortunate to start with).
Wasn't it George W. Bush who stated that the Constitution was just a "goddamned piece of paper?" Did the socialists/marxists/other-than-beloved-capitalists get George to say this?
Again, there are words and then there are actions. To paraphrase what one of Bush's good pals stated while he was in office: while you all are talking about what we're doing we're off and creating a new reality. While you are talking about how great the origins of the US were (which is a highly white, rich, male centric view) I'm off making a new reality :-) (easier to do when one isn't spending time trying to defend the undefendable or that which shouldn't be defended)
Thanks for playing!
The words are clear, the actions that followed failed them. Which is my point exactly. No matter how one tries to limit consolidated political power, no matter how explicit one is in their instructions and expressed ideas to contain the growth in political power and control, the political process will rationalize it's never ending expansion and dominance.
The only solution then, is the abolition of the state and the efforts then utilized to keep the growth of the state in check (eternal vigilance) would be better exerted in keeping society free of the state.
"The only solution then, is the abolition of the state and the efforts then utilized to keep the growth of the state in check (eternal vigilance) would be better exerted in keeping society free of the state."
I was with you up through this part: ""The only solution then, is the abolition of the state"
Sigh, but after clearing the slate you propose to set it up for another round of the same! I fully understand that you don't want it to turn out the same, but you offer NO reasons as why it would do anything but.
No one could possibly accept a reset unless there was a complete redistribution of everything, debts and assets: and this would encounter so many problems and battles that it could NEVER happen without massive bloodshed. Otherwise it would be no more than continuing the dominance of the oligarchy, which IS the problem.
In a perfect world we'd have people who would watch over things, but that ain't going to happen. It will, as how it's happened up until this point, allow corruption to take place once again through "state/national security" measures. And, thanks to the high-tech corporate world that demands such high levels of attention, people wouldn't have the time to thoroughly monitor the deceptions which would take place.
Having a "small govt" doesn't mean that the govt doesn't have power and that it doesn't get used by the powerful. It's the powerful who are clamoring for "less govt regulations" so that they can do even more damage without social/public scrutiny.
Theories are fine. So too are nice-sounding documents, but human nature is human nature. If you want powers to support property rights you're going to have to bow to powers that can be used to kill you. I try to explain this very thing to liberals- if you want social programs then you're going to have to pay for it in militarism, the two go hand-in-hand.
Anyone envisioning "small govt" best not expect to see one outside of a small community. Small communities can create lifestyles that people want and accept. A broader govt, from some national level, cannot do that: yeah, the founders tried to give states power, but power concentrates and before you know it it creates the "security" apparatus (social and military).
I'm pretty sure that we understand what the real problems are, and that we don't approve of them. As is The case, it's the pesky solution that's a sticking point. As Eric Sevareid stated: The chief cause of problems is solutions.
Peace.
Oh, and if you're reading this Charles, I'll take issue with your disdain for replies on your blog, or any others, by your readers. I see those replies (though a majority of them might be trite) to be an informal form of peer review. A feedback which helps to keep a blogger's ego in check. As the blogger grows in popularity, so does his/her sense of self-importance. It's good that the crowd can stand up and take the errors and misjudgements on the blogger's part to task.
The imperator had his face painted red and wore a corona triumphalis, a tunica palmata and a toga picta. He was accompanied in his chariot by a slave holding a golden wreath above his head and constantly reminded the commander of his mortality by whispering into his ear: "Respice te, hominem te memento" ("Look behind you, remember you are only a man")
What a bore. I had this discussion at least 49 times in 1964 alone.
Wake up!!! We are moving lightspeed forward --->.
There is nothing back there <--- to see.
Cordially,
TwoHoot
That was excellent, Charles! Marxist inspired, which I guess makes it evil, but for those who are willing to risk thinking bad things, definitely worth the potential damnation.
You are on a beautiful roll, man.
Make-Work Jobs Programs
So, consumption is more addictive than heroin due to the social positive feedback construct, and the Corporate solution is more legacy heroin, continuing the policy of locking out intelligent talent with increasingly insidious capital controls, playing chicken with itself.
What you should see by now is that there is no intelligent leadership on the legacy system side. The consumption half-cycle (of half-cycles) is a revenue escalator with a parabolic cost curve, which employs an initial surplus of exploitable resources and off-book accounting to hide the latter stage losses. There were no surpluses during the “Clinton” years.
The legacy system employs government to operate at the deficit required to maximize debt, which it has no intention of repaying, by monetizing nonperforming assets to collect maximum tax, pulling “revenue” forward and pushing costs back, enslaving the participants to the consumptive black hole generated. The airline is not a business; it generates no return on capital, and Boeing is a derivative of the airline. The real price of Boeing stock is negative. The legacy system is simply a collection of historical social programs replicated across the participating populations.
Economic profit is not recurring; it is quantum, and is triggered when the new battery on the event horizon reaches max voltage. The corporate system seeks to split the idea from the idea-holder at least cost, to feed the nonperforming legacy system at the expense of effective new family formation, the “competition,” continuously throwing the idea-holders back into the “controlled” churn pool. Those capable of creating economic profit jump the system. The legacy system gets better and better at outlawing intelligence, distilling intelligence.
The NPV multiplier is the time the electron travels through the legacy system, now approaching 0, and it is multiplied by real income for the year, revenue created by the electron at legacy cost, approaching negative infinity, discounted by churn pool turnover momentum, approaching infinity. Hence the black hole. Effective communities turn that upside-down in a virtual dimension, unseen by the Corporation.
Bless you! Someone who gets it!
The hubris of thinking that we're all out here doing "god's work" making iCrap and such (clearly more important than ANY work that is done in the name of govt, so They say).
Not that it's going to matter much, but I will attempt to rectify my sins* by becoming a farmer. At the very least I will have helped prepare land for a future generation; it's not mine, it's borrowed merely from them.
* Of not properly recognizing the fundamentals that are Food, Shelter and Water.
Any "new" system will be small (bigger does not equal better), be localized, will understand that a greater reverence for the land is essential, that technology is just a set of plans for equipment that will become obsoleted by nature and that life itself shouldn't be anchored to it.
Are we at the end game? Forbes would say America's innovation and spirit will get us back on track. But it looks like American freedom was just a blip on the radar and we're just getting back to the Imperialism of our age. It depends a lot on your world view as to whether you think in evolutionary terms; we're the ferris wheel, or Christian, says we're on a definite chronological line heading to a culmination of history. Make your wager.
"Innovation" and "freedom" are buzz words used by the ruling elite to keep us interested in Their game.
If you think innovation is enough to overcome all else then how about we test that by sending you up to the moon so that you're totally free to innovate? Sarcasm aside, I'll continue to argue that all these fluff words are just that, fluff in the face of resource deficiencies. To all the cornucopians out there: I use "deficiency" in relation to total population sizes (it's a per capita measure).
As far as cycles go, there's really only one that's pretty sure, and that's that the earth will cycle into another glacial period in the not-to-distant future (which, in the scheme of geologic time, is due to happen... tomorrow :-) ).
Very interesting article, thank you very much.
This is so juvenile
all are juvenile
how can you spout such trash
wasted words all
tiring
soooo tiring
Samuelson lied about suppy and demand in Econ 101. (There shoud not be so many retail/commercial space vacancies. Price of rents should lower to meet demand and occupany shoud be near 100%).
So as far as I can see. All "economics" is a lie.
Your economics and premis is flawed. You need to understand the creation and circulation of money. Fiat currency with lose loan standards os to blame. And nixon took the US off the gold standard because other nations currency was tied to the depreciating dollar. The contry was already bankrupt and the international bankers were trying to jump ship.
Your economics and premis is flawed. You need to understand the creation and circulation of money. Fiat currency with lose loan standards os to blame. And nixon took the US off the gold standard because other nations currency was tied to the depreciating dollar. The contry was already bankrupt and the international bankers were trying to jump ship.