Saturday, July 30, 2011

The Manufactured Debt Crisis – Lies, Damn Lies And Statistics. Reason Has Been Replaced By Insanity And Corruption.

First off, let me say that there is no debt crisis in the United States.  You can agree or disagree whether you want the government to issue more debt, (and you should want them to issue more debt or print more money until they fix the economy or it will collapse) but beyond the histrionics, ideology and idiocy on blogs, in the media and in Washington, Treasury rates are essentially at all time lows.   This isn’t Greece and it never will be Greece as we have written ad nauseam.   The debt markets are not throwing up on U.S. debt.  To the contrary, demand for debt has driven interest rates to the lowest in our history.   This is all essentially a game of political extortion driven by Republican kooks.  Mind you, I don’t find much redeeming value in any politician but the Republican party leadership really disgusts me.  I can’t even bear to turn on the television or read any mainstream news about this issue.

Now, on some level I am sympathetic to the Tea Party stance because many of these people see Washington out of control and corrupt, and they are right, but you can’t elect people who hate the government to fix it.   I have a high disdain for the state and its endless corruption, elitism, cronyism, seamy back room deals, fascism and corporate welfare just as most Tea Party congresspersons do.  But I don’t hate the government nor wish to dismantle it.  And I think most people of reason can agree with this basic premise of sanity in lieu of government haters.

Government which is the will of the people should reflect the ideals of the human condition.  That is, an imperfect but beneficial bureaucracy which seeks to enforce the rule of law, assist those in society who cannot assist themselves, provide some basic dignity to those who have experienced catastrophe (often not of their own accord),  right the wrongs of the tyranny of the majority, minority, bigotry, corruption, etc.  And do it completely transparency as public servants.  The Tea Party is involved in the same back room smarmy negotiations as those they wished to replace.  And most of them are economic idiots that frankly hold very negative extremist views towards any government. 

The national debt issue has brought an endless stream of ridiculous remarks out of the wood work.   First off, many financial savants who say that monetizing the debt will cause inflation are ridiculous.  I would like to know how wiping away debt or money that has already been spent will cause more inflation.   That is complete and utter nonsense but it is a position held by some self-proclaimed expert bloggers who obviously really don’t know what they are talking about.

Additionally, some say monetizing any debt would cause the dollar to collapse.  There are multiple methods of monetizing debt that would support the dollar if that is a concern.  And I see absolutely no evidence (supply and demand)  anywhere that it should be.  Multiple methods of monetization can be used depending on how the government wants to regulate the money supply and the dollar.    In fact, Britain, when it held the world’s reserve currency defaulted on some of its debt obligations and its currency rose.  And if you understand the role of a reserve currency, you should understand why.  Defaulting or monetizing, either one, is not going to cause a currency collapse regardless of what the self-proclaimed experts beliefs are.  My God, I’ve been listening to this bullshit for a decade.  Will they just please go away.

Similarly, the remarks arguing for the debt limit to be raised because the U.S.’s credit rating could be severely harmed are making a mountain out of a mole hill.  The concept of a credit rating has become moot in any country on earth.    This is akin to your personal credit rating.  Who cares about a country’s credit rating or their personal credit rating?  Seriously?  That system is imploding and there is a very good chance neither will mean a damn thing at some point.  The entire world is insolvent due to corruption.  Everyone’s credit rating is awful.  So what’s the point? 

The U.S'’s credit rating is only important if the U.S. desires to enslave the world in dollar-denominated debt.   Just like your own personal credit rating is only relevant if you wish to become a slave to debt.  There is zero difference.  Additionally, there is never a reason why the U.S. should borrow money from private for-profit bankers.  Ever.   To that point, we could easily have a credit, non credit or combination monetary system where the U.S.’s credit rating is completely irrelevant because there would be no credit ratings.  And we don’t need to use new currency or blow the entire system up.  We could start a new system using the same currency and the same government institutions and we could do it starting tomorrow.   We could have a new monetary system that would issue debt, when necessary or appropriate, and there would be times we should, to society and do it in such a way that  pandering to any of the  fictitious credit rating agencies would not be necessary.  We can get rid of the credit rating agencies just like we can get rid of Wall Street.  Neither are necessary for a functioning, market-based and/or capitalist economy or monetary system. 

When all of that Wall Street criminal behavior was rated as AAA by the fictitious and incompetent ratings agencies, how’d that work out for you?  Or when the banks in the U.S. or Europe were highly rated, how’d that work out for you?  Or when Greece’s credit rating was fictitiously made to look better than it was, how’d that work out for you?  Why would we then believe that a threat of a downgrade from these incompetent and unnecessary institutions would mean the end of society as we know it when the ratings agencies are so systemically wrong and so systemically incompetent?  Treasury interest rates are set by supply and demand or by the government.  Not by credit rating agencies.  Equally fictitious is the belief that supply and demand is set by credit ratings.  That is utter nonsense.  (By the way, we could have a very functional market-based system that also doesn’t need the credit rating agencies for local or state government or the issuance of corporate debt either.)    Now, what a downgrade or default could do is force a hand for transformational change and that just might be a very, very good thing as long as it was very temporary.   But as long as our government remains captured, they will try to destroy institutions serving democracy while maintaining the fascist state as both parties and our president are doing today.

Somehow ideologues howl and scream that the United States government creating money to build bridges or pave roads or fix sewer systems or fix the levies in New Orleans or give some a measly $12,000 for Social Security so an eighty year old indigent grandmother must cause inflation.   They are wrong.  They have no idea what they are talking about and those statements prove it.  The system can easily be designed/modified to manage those dynamics.  But I will tell you what does cause inflation.  That is private for-profit banking criminals printing money out of thin air to piss away on their endless criminal Ponzi schemes of manipulating commodities, speculating in endless financial schemes, shoveling thousands of illegitimate companies onto grandma’s retirement account in the Internet bubble IPO Ponzi scheme, blowing bubbles with their criminal mortgage schemes, funding mergers that create monopolies that enslave society and giving people loans to buy flat screen televisions.   In other words, self-rule and government,  if transparent and freed of lobbyist and banking corruption, is substantially more virtuous than Wall Street sociopaths will ever be.  And the system can easily be designed to enforce strict discipline.  Just like you are able to maintain discipline in your personal finances.  As we have noted before, the time for an economic constitution has arrived.

Additionally, the histrionics around interest rates exploding if the U.S. defaults are equally not true.   While interest rates may rise, we aren’t headed for Greece.  Greece’s rates are so high for two primary reasons.  One, they outsourced their monetary policy and have no tools to deal with their debt enslavement and two, because mostly U.S. financial firms are manipulating Greek interest rates through the totally unregulated credit derivatives market. 

In a worst case scenario, the U.S. government could freeze all interest rates.  Ideologues howl about this as communism or against the free markets or whatever choice words of lunacy they can dream up to terrorize people but the the U.S. has done it before.  And frankly, societies have been essentially freezing interest rates for thousands of years.  They were called usury laws – something that this fascist country remembers nothing about as it beats its citizens into poverty under the guise of free market bullshit.  This free market con game where banks can charge 25% interest on credit cards and other choice criminal behaviors are recent additions to the American lexicon of corruption.   The only reason fixed interest rates would ever create a problem in America is because we have a private for-profit banking and financial system (instead of a public banking system serving democracy and human development)  that speculates and manipulates interest rates spreads and distorts the economy as a result.  The longest periods of prosperity in human history were accomplished under capped interest rates.   And it wasn’t under communism, socialism or other ridiculous hate speak.  

The U.S monetized all of society’s debts in the Great Depression by devaluing the dollar against gold.  That can’t be done today because gold is not money.  But they can accomplish the same thing by monetizing some of our debts.  In the Great Depression, doing so  immediately provided some relief to the banking crisis, allowed a marginal recovery of employment (although it didn’t solve the root cause of the problem that caused the Great Depression or high unemployment) and within half a dozen years, the U.S. economy was back to 3% unemployment and experienced the greatest boom in our history in the following thirty years.  (Again, not as a result of monetizing our debts.)    But here’s the point.  Debt is an illusion.  That’s all it is.  It’s not real.  And the minute that most people figure that out, the party is over.   Maybe this will be the impetus.  Maybe not.

But, one thing we do know is there is no debt crisis.  This is an attempt by the fascist Republican leadership and their elitist masters to dismantle democracy to serve their own political and undemocratic goals.

There is a vacuum in the search for truth and reason in Washington.   As people look for answers within that vacuum, it creates an opening to radical elements in society espousing paranoia, conspiracy theories and hatred.  These unsavory elements, similar to the same elements in Washington, speak to gain an audience for purely self-interested reasons.  And many of those self-interested reasons include an ideology to dismantle democracy. 

I saw a constitutional lawyer talking the other day and he said that the Republican leadership has already dismantled the Constitution by using this manufactured con game to politicize and threaten the full faith and credit of the U.S. government.  In other words, our political parties are acting on unconstitutional grounds.  And that their behavior should be stopped by the rule of law if necessary.   Why does that not surprise me?  No one in Washington seemingly gives a damn about the rule of law or what is morally just.  Why should they?  Politicians spend much of their time subverting the rule of law and morality.  

And so the nonsensical political theatre in Washington continues.  All the while no one in Washington has proposed a single solution to solve the largest problem in our country – economic opportunity and the restoration of the economic rule of law dismantled by said politicians. 

posted by TimingLogic at 1:57 PM