Debt Rattle April 10 2015
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G. G. Bain Navy dirigible, Long Island 1915 • It’s A Crime To Be Poor In America (MarketWatch) • US States Are Not Prepared for the Next Fiscal Shock
[See the full post at: Debt Rattle April 10 2015]Hi All,
Professor Steve Keen is trying to erroneously argue debt-money systems are OK based on a foundational assumption that all interest earned by banks flows right back into the pocket of the debtors (apparently, each and every one with perfect precision.
That assumption is entirely false, not to mention the other evils of debt-money monetary systems.
Head on over to Professor Keen’s blog and try to help him “see the light” so that he can fight this barbaric debt-money monetary enslavement systems instead of trying to justify them as legitimate.
The Principal And Interest On Debt Myth
https://www.forbes.com/sites/stevekeen/2015/03/30/the-principal-and-interest-on-debt-myth-2/BTW, his premise is that the interest to pay debts is created is absolutely true, but his conclusions based upon that premise are entirely false. The reason is that CONTROL over the interest falls into the Debt Money Monopoly / Multinational Corporations economy such that much of the money never makes it back into the hands of the debtors, hence, there is never enough money in the Everyone Else (think Main Street) economy.
Please help to straighten Professor Keen’s view out because he’s so close to getting the Big Picture… he just needs some nudging to go all the way.
Trivium,
I hope Karl Denninger isn’t the only one who really understands these things (or is he?) But I’m convinced he’s the only one who can seamlessly communicate them.
https://market-ticker.org/akcs-www?post=230006Maybe it’s just me, but I’ve never been impressed with Steve Keen when he’s been on stage with Nicole. But then, Nicole has that effect on pretty much everybody she shares the stage with. Just my opinion.
The details may be true, i.e. that the interest is created via the velocity over time, but if the essence of the argument is false, how come monetary base must always expand at an increasing rate or collapse? If it’s no problem for it to reverse, then what is anyone worried about? Why can’t we have a nice stiff dose of deflation without the system coming apart and being rebooted, as was done with Roosevelt’s confiscation and revaluing of gold to re-collateralize the system?
It’s because it’s not false. The system must expand infinitely at an increasing rate. That’s the “velocity” here. That is to say, the system must collapse (or reboot) by original design. Otherwise, aren’t you telling me that over time that exponents don’t compound vertically against a finite world? They do, and it can’t, so it will collapse. By design. Then the powerful use their power to seize or retain the assets that re-collateralize the new system, (as in a debt-to-equity swap) and therefore own the new system too.
Back of the envelope, what happens in Keen’s system after a few iterations of the cycle? Or if the system accrues malinvested debts that cannot self-liquidate? Don’t they have to create money to maintain it? Or possibly force the velocity to ever-increase instead? We’ve seen both. And if you write off those non-interest-paying assets, doesn’t his system then suffer from a sudden collapse of collateral to back lending/banks/activity? I suspect so.
Diogenes – I agree with you on both Karl Denninger and Steve Keen. With my very limited understanding of economics, try as I might, I cannot argue with Karl when it comes to GDP, debt, counterfeiting of money, interest, etc. In my world, that is how things work. It certainly does for the little guy who gets foreclosed on when he can’t pay, who is imprisoned if he tries to counterfeit.
Several times I’ve posted links to Karl’s articles over at Naked Capitalism. Yves inevitably says something like, “Oh, brother, there’s so much wrong with what he says that I’m not even going to bother commenting.” She says that no bank owes you interest on your money, that it takes a lot of money to run a bank. The few times I do visit her site (and I’m not trying to put her down; she is no doubt a very knowledgeable person), and when I read between the lines, she appears to embrace the status quo more than quarrel with it. It is almost as if she wants to just add more money to the situation and make it all go away, crank it all up again, paper it over.
I’d love to see Karl Denninger (with some help, as he’d be attacked from all sides) debate the likes of Paul Krugman, Larry Summers, Martin Armstrong, Steve Keen. As Karl says, math is math.
@ Raleigh reply #20422
What a brave one you are, going to Yves Smith’s Salon Naked Capitalism and Bordello. You can never tell what creatures will slither from beneath some rock there. It is one of my favourite places to not go to, they’ve brilliantly buffed turds floating in their punchbowl, caveat emptor their kool-aid.
“Mainstream economics is largely hokum, and even the economists know this. I’m interested in finance, how it actually works, not what it says in the squeaky clean, idealized economic textbooks. Because I do talk regularly to senior bankers, CEO’s, traders, and there’s two groups of people that people in finance snicker at: one is politicians and the other is economists.” David Malone.
The following video re the TransAtlantic Trade and Investment Partnership (TTIP) is very well done. David Malone breaks it down in his talk entitled, “The Death of Democracy.” He says: “The title of the talk is The Death of Democracy. I realize it is one of those titles where you think that, ‘Well, that’s just a bit over the top.’ I hope by the end of this talk you will think it is not at all over the top. I think part of the problem is we’ve been all born into a democracy. It’s very easy to just think, well, it’s the natural state of affairs, that once you’ve got a democracy, what could go wrong? The thing about democracy is it’s very hard to get, blood had to be shed to get our democracy, but giving it away is extremely easy. Giving it away can happen at the stroke of a pen, and my point is our democracy, our sovereignty, has been given away and is increasingly being given away by a small number of people.”
He speaks (1) about trade agreements, specifically the TTIP, where he points out that regulations and standards will be gone; and (2) Bilateral Investment Treaties at 12:18 of the video (which are put inside the trade agreements to take away all risk to corporations should a government change hands and decide to not honor the trade agreement the previous government made).
He says there is no judge, there is no jury, just three arbitrators (who are nearly all from Europe and North America), and they all come from the top 20 largest law firms who work for large corporations like Exxon or the large banks. Just 20 firms. Of those 20 firms, only 15 people have decided 55% of all known disputes and 75% of all known cases where the claim was for more than $4 billion. These are highly paid lawyers. “15 people who you don’t vote for, you don’t even know their names, they get to decide everything, and you have no right of appeal.” If we want to sue a corporation, we have to use the courts. If corporations want to sue countries, somehow our courts aren’t good enough and they get their own supranational tribunals to settle the dispute.
Very interesting talk, full of good facts. Please watch it if you have the time. The part about the TTIP is from the beginning to about 1:03:00. The rest is questions from the audience.
Corporations (like our wonderful banks) appear to want to take risks, like say go into Africa or another barely-developing nation, suck out the resources, pocket all the money when things are going well, but should things change, governments change, people have a change of heart re their environment being polluted, for example, the corporations get to sue your country for taking away their “future profits”. In other words, they want all the upside, take all the profits, but want to be insured against any losses (where have we heard that before?)
Raleigh,
Three minutes of Malone’s talk were particularly poignant for me, starting at an hour and a half (1:30). I probably derived more from that part of his message than he intended, but whether intended or not, he’s making a case that democracy is a fraud. We’re not children, and leaders aren’t our loving parents. Leaders, elected or not, are universally “in it” for themselves and for the empires they can build with earnings stolen from the rest of us. Period. End of discussion. Anybody claiming otherwise is delusional, and unfortunately, that includes probably 99% of the world’s population. (Gee, haven’t I seen that 99% figure in another context recently? I wonder if that’s no coincidence.)
It bears repeating: democracy is two wolves and a sheep VOTING on what to have for dinner. Benjamin Franklin: “When the people find that they can VOTE themselves money, that will herald the end of the republic.” I could go on and on with Bastiat’s and Jefferson’s warnings against democracy, but you’re probably already familiar.
The Magna Carta and U.S. Constitution are not prescriptions for democracy, but are rather rules of law limiting the powers of the state. That is, limiting the powers of the “leaders” we democratically elect. But the 99% buy the politicians’ snake oil canard that “free peoples” derive their freedom from democracy, and the shattering consequences of that myth are now evident worldwide as our “leaders” do pretty much anything they wish, with impunity.
Please watch just the initial forty-five seconds:
Rule of law in America and Europe is dying rapidly, and freedom has died with it. The TPP represents the final gasp for both. I read lots of well-intentioned pundits who say that “we, the people” are responsible for the current state of affairs, and that only through our resistance can the tides be turned. As letters of protest written to “leaders” and public demonstrations have been proven impotent, I suspect a major reason that a civil war in the U.S. has not yet gotten underway is because the first high-profile assassination of a public figure will precipitate draconian gun control legislation leading to attempted confiscation, and a couple hundred million gun owners don’t want to deal with that. But I’d remind everybody that it was the British attempt to confiscate firearms at Lexington and Concord that started the American Revolutionary War.
“A leader is best when people barely know he exists, when his work is done, his aim fulfilled, they will say: we did it ourselves.” -Lao Tsu
That isn’t the same as democracy, and in fact, I’d say it’s the exact opposite.@ Raleigh reply # 20424
“Mainstream economics is largely hokum, and even the economists know this. I’m interested in finance, how it actually works, not what it says in the squeaky clean, idealized economic textbooks. …
That is highly arguable that what you refer to as mainstream economics actually is mainstream Historical economics. Your mainstream economics is also known as neoliberal economic theology – a set of beliefs none of which can be verified in reality, given premise of virgin markets (untested, unobserved), invisible hands (ròle played by some non-existant nothing there) and an etherial perfusion of perfectly shared knowledge amongst buyers and sellers. You’ve got to believe in the chocolate Easter bunny hiding coloured eggs as well.
What you are witness to is nothing economic, that being observed is an entirely financial construction, taking advantage of near absolute and total economic ignorance; just assess the offerings of the creatures commenting this post alone. In all time have any of them so much as moved their statement of opinion so much as an iota; more likely their opinions are comprised of cut and paste memorex e.g. the golden bollix, Professor lockedinLoad (constipation?), Trivial(whatever), and the rest of the zoo of ignorance usually taking up the site’s bandwidth. You are never going to get anything original or valid out of any of their opinions and if perchance like a stopped watch get something correct, rule b, caveat emptor needs be applied.
What you are witnessing is the financial interests cook and consume the goose that laid their huevos de oro. Disinformation and doubt comprise the diet you are fed so that you will never realize what the pot you’re swimming in is getting a lot hotter than is even now comfortable. That dazzling array of toys is only to amuse you until the lid goes on the pot, your borders are sealed not only from entry but exit as well. The corporate financiers who own you will not allow your travel without your acceptance of assault on your person, your rights are spoon fed you in minuscule dollops only when no advantage is provided, and everything you do or say is recorded for all time – Total Information Awareness. That system in place cannot endure but will outlast you by about a generation, books will disappear from public memory, any sign of intelligence will be berated into acquiescence or exile, excellence will bear the mark of Cain. As G. Carlin famously said – you are owned.
The only protection you may possibly have lay in the direction of knowledge, knowledge that is slowly being drained from public access as the failure to educate gathers momentum, as memory atrophies from constant abuse, disinformation and doubt engineered just for that purpose. Excellence is under assault, none dare have head above the parapets provided by the common herd. Only knowledge will provide the measure needed to accurately judge what you encounter or what you are told, facts remain no matter the direction of the gales that assault. Civilization is under attack and its defenders are in a drugged delirium, no Horatio is seen on the bridge to stay the financial hordes coming to plunder and rape. Interesting times …
Since the commentary above has gone about three days without reply, no reply is likely at this point. I will observe several things; first of all would be the breech of normal human decorum in that when an effort to respond to some question is ignored, either out of ignorance or out of fear that ignorance is exposed; secondly this negligence may show the inability to engage in meaningful conversation with another for whatever cause; thirdly, such lack of response is likely to show in the course of discussion a closed mind or one captured by the persuasion of some agenda. Whatever. I will leave you to the tender mercies of the usual commentariat here who are for the most part promoting their private opinions with self-confirming shite they’ve found somewhere (never with contradictory information that they then successfully refute). Notice also these nom-de-blogers are without exception always telling the reader what to think, how to think or giving limits on thoughts you are allowed. Caveat emptor. You have asked some interesting questions in the commentariat and gotten a response, that effort shall not be taken again given the resultant silence; not that that effort had the answer you sought but might have led to information you had asked about or some better answer to your enquiries through dialogue. Che será será.
In case you might be interested in blatant disinformation and historical nonsense the link is difficult to top:
https://www.zerohedge.com/news/2015-04-13/when-supreme-court-stopped-economic-fascism-america
with the additional bonus that the actual historical record becomes contaminated with doubt by the publication of such drivel.
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