Thursday, May 19, 2011

The New 3-6-3 For Banksters And The Debt Ceiling Ruse. Our Financial And Political System Is Rife With Dummies …. All Day Long

Okay, First off I am backed up with a follow up post I said I would get up a month ago.  That post, for those waiting, will be put up over Memorial Day weekend. 

Let’s stretch our legs with an out of the box post to stimulate our minds as the political idiots and financial clowns make a mockery of our democracy with their histrionics and ignorance over our debt ceiling and the incessant and mindless babble about U.S. debt default. 

This is an example of where linear thinkers, ideologues and monetary neophytes are being exposed for having  no idea what they are talking about.  That includes people like Bill Gross and John Mauldin, two examples of the status quo we have criticized for their limited and often completely inaccurate views of finance.  Primary dealers in US Treasuries are obligated by law to eat Treasuries at auction whether they want to or not.  Mental midgets who believe banks are going to quit buying Treasuries because the U.S. is issuing too many of them, are sadly short on their facts let alone their rudimentary understanding of money. 

Additionally, the Federal Reserve can supplement any shortfalls in purchases or demand for Treasuries all day long.  Let me repeat that.  All day long.  We don’t need to place government spending as debt instruments in the Treasury bond market.  We can print the money.  And we can do it all day long.  One more time.  All day long.  I wrote this back in the fall of 2008 when financial markets are collapsing and we have said countless times since that quantitative easing changes the game.   At least it changes the game for a while.  Either until something major blows up again, until the Congress forces change into Federal Reserve policy or some other exogenous event occurs outside of the scope of Federal Reserve policy or that requires Congressional approval for allowance of Federal Reserve action.   

This doesn’t mean government can print money without limits and not experience consequences.  It doesn’t mean we should grant this authority to a massively corrupt political system without strict controls and political reform.  It doesn’t mean the Federal Reserve itself doesn’t perpetuate massive fraud.  It doesn’t fix the political fraud in Washington that has destroyed our economy.  It doesn’t impact the economic slavery to corporations and elitist con men in our country.  It doesn’t mean financial markets aren’t going to collapse again.  All it means is the rules of the game have changed for monetary policy, at least for now; something we wrote about at the time these policies were put into place.  

If most people actually actually had a modicum of knowledge as to what was going on, they would be able to string together enough facts to see that borrowing money and paying massive interest on our debts that is now forcing austerity into democratic government programs, is one of the greatest cons of all time.  But the system hasn’t been and isn’t transparent so very few Americans understand any of this.  As we have remarked before, the Federal Reserve, by being so aggressive in saving a criminal system, is exposing  how the system works and how ridiculously simple and corrupt it is.  All in due time. 

Since Bill Gross of Pimco sold out of his Treasury positions (or went synthetically-short) squawking of their doom due to excessive government debt, Treasuries have rallied substantially.  ie, Gross has been perfect.  Perfectly wrong.   Just as we said he would be.

How about a question?  What if the U.S. economy was never to grow again and we had invented the perfect automation systems that never failed and no one needed to work to produce any of our national output?   (We are much closer to this dynamic than people realize and we will talk about this and its implications in more detail later this year.)  Does that mean we would have no money and our society would crumble because of it?  Ridiculous. 

How about another question?  The Soviet Union isn’t any great example of anything other than massive fraud, corruption and centralized planning by bureaucratic idiots but it’s still a valid example that can help people think beyond that of equally ridiculous financial idiots who control the microphone in our country.  Who do you think the Soviet Union borrowed money from in comparison to the U.S. government borrowing money from private banksters?   Because it wasn’t part of the global system of private banking corruption, a different monetary system developed.  By the way, just as did many different scientific achievements and theories.  And that something different was that they didn’t borrow their money from anyone in their domestic economy.   

And as incompetent, brutal and corrupt as Soviet central planners were,  as murderous as the thugs were who ruled the country, and as ridiculously incompetent as their banking and monetary system was, it was a nation that had a higher standard of living than all but the handful of successful democracies in the world.  Their people were fed, albeit often gruel, their educational system often produced scientific brilliance, their literacy rate was much higher than our country today, their citizens, albeit slaves to a state of tyranny and fear, had access to some modicum of modern health care and people all had a home with running water and electricity.  The life of most people may have was one of relative misery but that was because of lack of freedoms and systemic bureaucratic incompetence that a fear-based society demands.  (And one we are becoming)  But then, what do you think life is like for 45 million people on food stamps or the other 30 million who probably should qualify for food stamps?  Or for people who must choose death or bankruptcy because they cannot afford health care in the U.S.?   Or the millions being kicked to the curb while bankers commit endless foreclosure fraud?  Or those slaving away in a corporate culture that demands 80 hour work weeks and no quality of life to speak of to enrich a few criminal bureaucrats in the corner offices who decide to enrich themselves through the toils of others by pay that is often 1,000x that of the average worker?   How’s that working out for you?   Economically, the United States is often just as corrupt as the Soviet Union.   And misery here is rapidly on the rise.  

I have made vague remark of this some time ago but we don’t even need money in a democracy.  One could provide an argument that money is an outdated concept.  Frankly, all that we really need is a system that meets the basic human needs as outlined by Maslow’s hierarchy.  Whether one agrees with this is not the point.   It is one of many valid positions.  Rather than working for money, we would work for our share of the output and national income of the country.  And we could create this dynamic in an incentivized-market based economy that rewards initiative just like our system is supposed to do today.  (But doesn’t do a very good job of it.)   

More important than whether money is even needed, there is zero reason for a sovereign nation to ever issue debt to pay for its core recurring domestic and social programs.  The only reason to ever issue government money as debt, and thus tax society, is to sop up excess liquidity or sterilize spending when the monetary measurements are showing signs of excessive economic activity in a booming private sector or too much government spending or both.  (A vibrant private sector would relieve the need for much, if not most, government services except in times of temporary duress.)  Or to issue debt for major one-time spending events that could cause aberrant monetary phenomenon such as wars or possibly for discretionary monetary-intensive initiatives like a massive infrastructure upgrade or even something like sending astronauts to Mars.   The need for debt issuance could and should expand and contract as demanded by society and its demands for money; thus allowing greater control over full employment and economic opportunity.   Effectively, on some level, this is what the Federal Reserve is doing today.  Albeit, the system is massively corrupt so its effects are limited to perpetuating corruption rather than economic recovery.  Additionally, the system today artificially limits employment opportunity by limiting money available in the economy as we have remarked before.    Right now does anyone see excessive inflation happening anywhere?   Bueller?  Bueller?  Anyone?  Hardly.  And, if you think you see it, then you don’t know what you are talking about.  What you see is rising prices created through corruption.  The same reason housing prices were blowing higher before they collapsed.  You see commodity prices rising because of corruption, manipulation and fraud by financial institutions both inside and outside of the U.S. enabled by deregulation of capital.

We have a system the way it is because we are being duped by corrupt elements seeking to control society.  And, by the way, why are these examples any different than supplementing the needs of Social Security or Medicare via the creation of debt-free government money?   They aren’t.   You can apply this construct in one form or another within properly set boundaries and rules all day long to Social Security or Medicare as well; be that something like credits for food, shelter or health care or outright money creation.  All day long. 

None of the ideologues in our financial system and very, very, very, very few economists seem to grasp anything beyond the end of their nose.  They think with their eyes rather than actually understanding monetary economics 101.   And none of them seem to have any concept of democracy and economics.  We don’t live in a capitalism.  We live in a democracy.

The thought of the U.S. going bankrupt or defaulting is ridiculous.  As I said before, it would be a conscious act of aggression or belligerence against specific bondholders to do so.   And it is pure manipulation and a form of political terrorism to intimate it is possible as Timmy Geithner has recently done.  So, I wouldn’t put it past the Washington con men to default on Chinese debt at some point when the nations are at each other’s throats as they most likely will be at some point.   We have seen this type of belligerence in the past.  We saw it during the Great Depression.  Not in the U.S. but elsewhere.  We simply revalued our currency and could easily do the same thing again by swallowing a massive sum of our debt, which is effectively what we did eighty years ago.  And as we have written numerous times, I believe it is quite plausible we will eventually do so, thus exposing our debt-based system as an illusionary fraud that is needlessly enslaving our society and needlessly cutting social services to our democracy because the status quo is morally corrupt on every level.

As we have remarked before, those who think China holds sway over the U.S. because it owns a trillion dollars of our debt are ridiculous.   And there are a lot of ridiculous people out there.  They play the role of the useful idiots in today’s debate over the future of our country and our economy.  They hijack and deflect from the true debates that we should be having in our democracy.  That is, restoring our economic freedoms, our democratic freedoms and the rule of law that places the sovereignty of this country back into the hands of We The People and out of the hands of political idiots, fascist corporations and criminal banksters.

We’ll talk more of these dynamics in coming months when we take more pot shots at the gold money morons who wish to take us back to an equally corrupt monetary system. 

We need a new economic model and a public banking system.  Yes, one that uses debt or credits for private and some public investment.   And to first do that, we need to get rid of the dead wood and mindless bureaucrats keeping us from achieving our destiny as a free nation of free economic opportunity for all people. 

All day long. 

posted by TimingLogic at 9:23 AM