'It is fundamentally a problem of the politicians. They have their 'political philosophies, their 'causes', and their 'departmental interests', an eye on specific sectors of the electorate, and on top of this is simple inertia. That government must do x has become a state of mind, along with the belief that x is an absolute necessity for the government. ...they never do enough to address the problems of their reliance on borrowed money. As I have many times argued in this blog, it is a vicious cycle in which the more a country borrows, the more more the economy is structured to consume the resources of the borrowing, and the more dependent the economy is on ongoing borrowing. Increasing the borrowing sees further restructuring of the economy to service the debt, and reduction in borrowing sees the elements of the economy that are unable to survive without the borrowing exposed to the light of day. Then there is the positive feedback. The more borrowing in the economy, the more activity in the economy, the higher the GDP growth, and the greater the GDP growth, the greater the borrowing as the growth is taken to indicative of an ability to repay the borrowing. The greater the borrowing, the more the economy restructures to service the consumption that originates in the borrowing. And so it goes on.....and this is how we come to the current crisis.'

'On your territory, only you are permitted to produce money. But that is not sufficient. Because as long as money is a regular good that must be expensively produced, there is nothing in it for you except expenses. More importantly, then, you must use your monopoly position in order to lower the production cost and the quality of money as close as possible to zero. Instead of costly quality money such as gold or silver, you must see to it that worthless pieces of paper that can be produced at practically zero cost will become money. Because you can create paper money out of thin air, you can also create credit out of thin air. In fact, because you can create credit out of nothing (without any savings on your part), you can offer loans at cheaper rates than anyone else, even at an interest rate as low as zero (or even at a negative rate). With this ability, not only is your former dependency on banks and the banking industry eliminated; you can, moreover, make banks dependent on you, and you can forge a permanent alliance and complicity between banks and state. You don't even have to become involved in the business of investing the credit yourself. That task, and the risk involved in it, you can safely leave to commercial banks. What you, your central bank, need to do is only this: You create credit out of thin air and then loan this money, at below-market interest rates, to commercial banks. Instead of you paying interest to banks, banks now pay interest to you. And the banks in turn loan out your newly created easy credit to their business friends at somewhat higher but still submarket interest rates (to earn from the interest differential). In addition, to make the banks especially keen on working with you, you may permit the banks to create a certain amount of their own new credit (of checkbook money) in addition and on top of the credit that you have created (fractional-reserve banking).'

"...the experts are running such large, sophisticated ponzi schemes that are so sophisticated they don't even know it is one."

'If you are a central banker in the destination country, it might be that the flood of carry-trade money could push inflation upwards. What is the central banker or policymaker to do? The ‘hot’ money flooding into their country might be causing an asset-price bubble, or inflation. Something must be done. The problem is this: if interest rates are increased, the incentive for the carry trade is likewise increased – and might even cause the inflow of even more ‘hot’ money. If the central bank targets low interest rates, then there is the possibility that this might end the carry trade, but at the cost of creating an internal stimulus to inflation. The strengthening of the destination country’s currency might, in turn, have a negative effect on the balance of trade and the export sector of the economy. Exports will fall... Despite this, assets in the destination will be going up, while the underlying performance of the economy will be going down (albeit disguised by the inflow of money).'

'The system of central banking has created perhaps the most monumental bubble ever seen. There are literally thousands of major banks and bank branches all over the world. The downtowns of every major city in the developed world and the developing world are littered with them. People are so conditioned as to their ubiquity that they don't even notice it. Imagine if banks were actually ... tire manufacturers. Now imagine entering a strange city and seeing the entire downtown was FILLED with skyscrapers, each one representing a different, competing brand. Imagine the city and the countryside was full of branches, all selling tires. It wouldn't make any sense. Nor does it make any sense to have so many banks. But they are protected by central banks; they are appurtenances of central banking. ...the Anglosphere elites behind them will never discard a large bank. They may MERGE the bank, but they will never wish to lose it.'

'Nations engage in manic economic and political projects to get a "dopamine rush" that counters the depression and guilt about their success. Political paranoia and slow ego disintegration are seen in conspiratorial group-fantasies, fears of femininity [countered by persecution of homosexuals], imaginary humiliations by other nations [countered by a search for external enemies as grandiosity fails and Poison Alerts and sacrificial group-fantasies proliferate] [and Purity Crusades multiply as anti-modern and anti-child (Bad Boy) movements]. These are countered in the economic sphere by manic overinvestment, risky ventures, excess money supply growth, soaring debt and stock market speculations, and in the political sphere by jingoistic nationalism, expansionist ventures, military buildups and belligerent, insulting foreign affair behavior. As in drug addiction, each dopamine rush leaves a dopamine hangover that requires an even larger manic activity to overcome the resulting depression.'

'That depressions are self-inflicted wounds and not just the results of "mysteriously wrongheaded monetary policies" is still not admitted by most economists. The task of controlling growth panic by depressions is given to central banks, which first flood the nation with low interest liquidity to encourage overinvestment, excess borrowing, inflation and stock market bubbles, and then, when the expansion becomes too sinful for the national psyche, reverse the monetary expansion by increasing interest rates and reducing liquidity ("Taking away the punch bowl when the party gets going.") Depressions come because really people become depressed, reducing their spending and investment, and feel hopeless. ...nations enter into depressions because they feel persecuted for their prosperity and individuation by what Jungians have termed the "Dragon Mother" – the needy, "devouring mother of infancy who cannot let her children go because she needs them for her own psychic survival."

Pay-walled. Recommended. -- When a pyramid scheme nears its inevitable end... "...the public insist on being handed the empty bag because they think they're going to make money, they want in on the game, everyone else has been making money, they feel left out so they insist on buying these things at the peak, and they are the ones who lose everything."

'Real bill circulation will start spontaneously after the total prostration of the world's banking system. Yes, there is life after the sudden death of the banking system. People are not going to commit collective suicide at the altar of fiat currencies. People want to live. They will use whatever little gold is available to them to trade by drawing real bills against the production and distribution of goods they want to consume. It will be a repetition of the miracle at the end of the Middle Ages, when the bill of exchange was invented in Italian city-states such as Florence, Venice and Genoa. It will happen again. The world will do very well with real bills and without banks... When contract law will once again reach the level of highest respect, and promises to pay gold can once again be believed, banks may once again be in vogue. When that day dawns, the best earning assets of the new banks will be real bills drawn on consumer goods in most urgent demand maturing into gold coins.'

'The govt is not a household or a state. It does not finance spending via revenues or debt issuance. The US govt, as a monopoly supplier of currency in a floating exchange rate system simply spends. The USA does not finance spending via the bond markets. The USA issues bonds as a form of controlling the Fed Funds rate. -- #1. We tax in order to create demand for the currency. In addition, it controls aggregate demand or effectively, the money supply #2. The bond market is a monetary tool. NOT a fiscal financing tool. #3. Foreigners do not fund our spending. #4. Money must be created before govt bond auctions can occur and before taxes can be enforced. Otherwise, there is no currency in the system to tax and no money to raise via auctions. This is just basic logic in terms of the way the current system works. It can be no other way. #5. Households, states, Europe and the gold standard are not remotely similar to the modern monetary system in which the Federal govt of the USA functions.'

'Ripple is a monetary system that makes simple obligations between friends as useful for making payments as regular money. -- You create a profile on the system and indicate who you know and how much you trust them by connecting to people by email address and giving them credit limits. Then whenever you want to make a payment to another Ripple user using only friendly obligations, the system finds a chain of intermediaries connecting you to the person you want to pay, and records the payment in each intermediary's account all the way down the chain. You end up owing one of your "neighbours" on the system, and the payment recipient ends up being owed by one of her neighbours.' -- Clever, but not anonymous or untraceable.

'...the machinery of credit was used politically to try and manage and retain control the structure of power in the world. It was not a conspiracy, it was simply those in power taking the line of least resistance. -- I thought I would put up some of the films from the BBC archive from the time when there was moral disapproval by those in power of the "lower orders" wanting to "live beyond their means". The programmes are quite extraordinary and riveting in their tone of patrician sniffiness about people borrowing on the "Never Never" and Hire Purchase. And not just from the bankers who are interviewed - it is also in the commentary. But if you peer through that, you can see something else emerging in the ordinary people interviewed. It is a powerful desire to borrow money - so they can have what those above them in society have. The good life. And beyond that there is a growing envy and resentment.'

Challenging the accepted history/theory that fixed weights were the standard of value for money metals and arguing instead coins were simply credit money tokens. -- 'The value of a credit depends not on the existence of any gold or silver or other property behind it, but solely on the “solvency” of the debtor, and that depends solely on whether, when the debt becomes due, he in his turn has sufficient credits on others to set off against his debts. If the debtor neither possesses nor can acquire credits which can be offset against his debts, then the possession of those debts is of no value to the creditors who own them. It is by selling, I repeat, and by selling alone—whether it be by the sale of property or the sale of the use of our talents or of our land—that we acquire the credits by which we liberate ourselves from debt, and it is by his selling power that a prudent banker estimates his client’s value as a debtor.' -- Also mention of tally sticks, aes rude and tablets.

'When he was 19 years old, Braziel received a call from a collection agency, demanding money he didn't even know he owed. A full credit report revealed that he was already over $100,000 in debt. "There were just numerous things, including a $41,000 mortgage, that was on my credit file, and I had never owned a house, ever," he said. Braziel said he eventually discovered that his father had used his social security number to open up numerous lines of credit in his name. "It's extremely easy to do, especially when the father and the son have the same name," he said.'

'Eat, Drink and Be Merry begins with plastic, the plastic credit card and the concept of credit then leaps back in time to to the Dukes of Burgundy, which was the first state to use credit.'

'Introduces the concept of the monetary vortex, how it's driven by debt, how it controls everything in our system, including inflation and deflation. It also covers the role derivatives play and addresses how sovereign money breaks the power of the vortex.' -- Two problems: Central banks create the reserves to back bank-created credit money and banks wouldn't/couldn't create that credit (well, *they* don't, of course – we do with our signatures) without the surety of the backing – thus government with its public/private mercantilist central banks 'create' the conditions for credit inflation and are ultimately responsible for continued inflation. Next, if government and its 'sovereign' money system can be taken over by banksters – as it has been, time and time again – why will such a system be immune to predation next time? Why is government the right answer this time when it has been proven to be the wrong answer time and time again? -- Still, great explanation of inflation/deflation.

'...incessant credit stimulation has so distorted Western economies that even after two years, these economies have not yet returned to a point where banks and other investors can tell the difference between a legitimate opportunity and one that has been kept alive by various forms of governmental chicanery. This is why "stimulus" and "bailouts" are ultimately so counter-productive. They actually retard economic recovery. For monetarists – and other types of non-free-market economic-oriented journalists inhabiting the mainstream media the inability of banks to lend and the subsequent shrinkage of the money supply is cause for alarm. It is actually the most natural thing in the world. What many economists and financial journalists are calling for in the midst of a downturn is for the printing presses to reignite and for yet more faux-money to enter the economy in order to reinflate.'

'The artists provide a wide range of imaginative services. One artist, trained in yoga breathing and self-soothing, helps breast-cancer patients remain calm and centered while they are waiting to be seen. Others might read to pediatric patients in that waiting room. An actor might put on role-playing sessions for staff, helping them rehearse how to break bad news to patients and loved ones. Photographers taking pictures of newly-borns to give to the mother as a thank-you for choosing Woodhull hospital. In return, the artists earn 40 credits per hour of service. Uninsured patients at this public hospital pay a flat fee for doctor's visits, between $15 and $60 depending on their income. Most artists end up paying around $20 per service, which also includes emergency room and clinic visits. For each hour they devote to helping the hospital, they earn enough credits to pay for two medical visits. By the end of 2008, more than 400 artists had earned credit this way.'

"Because a regular store clerk wouldn't understand us if we tried to collect goods without paying, what we should be doing is giving them cash AND handing them a copy of certain forms that state who is issuing the credit (you) along with a voucher which authorises payment from your treasury account and includes the store's tax identification number. Once received, the treasury will set off the store's debt for them. And because the tax authorites know the store's debt has been offset for them, they also know the store has this extra cash (yours) which they shouldn't have. That's what a tax return is for: It's for you to claim back that over- 'paid' cash. The purpose of the tax authorities is to track down what we have put into the public and get it back for us. But nobody knows this; everyone has been programmed in school that they have to pay for everything and certain tricksters have realised that our signatures create credit and they've been stealing it from us."

"How did she get the credits in the first place?"

"How is it extortion, Sir?? How is it a threat?! Hang on, let me get my manager."

"Our client has declined your offer to buy new credits for a dollar each. She wanted to stop her addiction."

'A simple explanation of "alleged credit card debt' with one of the many debt collectors that we love talking with. We are here to help relieve stress and share self empowering information. Alleged debt resolution is only one of many services we offer.' -- LOL

'The first and overwhelming conclusion of this project is that in studying economic history, we tend to systematically ignore the role of violence, the absolutely central role of war and slavery in creating and shaping the basic institutions of what we now call “the economy”. What’s more, origins matter. The violence may be invisible, but it remains inscribed in the very logic of our economic common sense, in the apparently self-evident nature of institutions that simply would never and could never exist outside of the monopoly of violence – but also, the systematic threat of violence – maintained by the contemporary state. “Societies” are really states, the logic of states is that of conquest, the logic of conquest is ultimately identical to that of slavery. [I]n the hands of state apologists, this becomes transformed into a notion of a more benevolent “social debt”.'

'Syndicated talk radio host and documentary filmmaker Alex Jones joins us on Economics 101 to discuss the cashless society. We discuss the looming reality of the scientific control grid and how people can fruitfully resist it.' -- "Once the cashless grid is in place then the bankers can completely abandon any connection to reality." -- Gold is money and nothing else.

'Complementary Currencies is an all-embracing and flexible package which includes a mutual credit engine, and user interface. The module also provides several useful views and blocks to get you started.'

'Mutual credit is a type of alternative currency in which the currency used in a transaction can be created at the time of the transaction. Typically this involves keeping track of each individual's credit or debit balance. Although the effect is like a loan, no interest is charged, and since mutual credit allows for trading and cancelling balances with others, debts can be paid off indirectly. -- One economic advantage of mutual credit is that the currency supply is self-regulating--the money supply expands and contracts as needed, without any managing authority. The availability of interest-free loans is a great advantage to members of the system. The problem of exploiting the system by running up a negative balance is often addressed by caps on negative balance which can be raised as balances are paid off, or by limiting the system to a small, close-knit community based on trust, where the community holds people accountable.'

"Kwedit is not credit." -- No, it's debt, you sick f*cks! -- 'Kwedit Promise gives you digital content and virtual goods *now* in exchange for Promises to pay for them later. When you’re ready to pay back your Promises, you can use any of the methods provided by Kwedit Direct. Partial or late payments will lower your Kwedit Score and you may no longer be eligible to use Kwedit.'

'Thanks to a cooperation with Citi and other third-party data suppliers, Bundle is able to compile detailed statistics about how Americans are spending their money. To get started, you just enter your location, age, income and whether you are married, single or have kids. Bundle will then create an infographic that represents the spending habits of similar households in your neighborhood. From there, you can drill down deeper into the statistics. At its most granular level, Bundle displays where people are spending their money. My neighbors, for example, buy their electronics at Best Buy, Apple and Fry's.' -- Lambs to the slaughter.

'In hopes of identifying good credit customers, some financial institutions are tapping into the information you and your friends reveal online. The idea is that the friends you keep and data you disclose may help them make more accurate business decisions. -- ...profiles provide banks with insight into your behavior patterns - what you like and dislike, want and don't want, do well and do poorly. Creditors can see if people in your network have accounts with them, and are free to look at how they are handling those accounts. The presumption is that if those in your network are responsible cardholders, there is a better chance you will be too. So, if a bank is on the fence about whether to extend you credit, you may become eligible if those in your network are good credit customers. -- Having a robust online social network can also expedite loan acceptance. If you're connected to a lot of people who are great credit risks, it can speed you through the process.' -- Brave New World

'The second step is to look at where the funds are coming from, and for sure narcotics today is one of, if not the most important source of revenue. So, I would legalize drugs. I know that this is never going to happen. I sit on so many committees on this issue and I can tell you that the world’s experts on narcotics, every single one, in private will tell you, “Yes, that’s the solution. We legalize drugs, we control the drugs, we tax them and we make sure that those who are being supported by drug revenue don’t get that money anymore.” But, the real issue is the moral issue. Which government is going to tell its citizens that it’s going to legalize drugs because this is the only way to create a safer world? They’ve used the argument that drugs destroy society for so long. This would require a completely different worldview and approach to politics. However, it would cut out a lot of these illegal revenues and therefore a lot of crime.'

'Loretta Napoleoni details her rare opportunity to talk to the secretive Italian Red Brigades -- an experience that sparked a lifelong interest in terrorism. She gives a behind-the-scenes look at its complex economics, revealing a surprising connection between money laundering and the US Patriot Act.' -- "I wanted to know what turned my best friend into a terrorist and why she didn't try to recruit me."

'Antonio Maria Costa, head of the UN Office on Drugs and Crime, said he has seen evidence that the proceeds of organised crime were "the only liquid investment capital" available to some banks on the brink of collapse last year. He said that a majority of the $352bn (£216bn) of drugs profits was absorbed into the economic system as a result. "In many instances, the money from drugs was the only liquid investment capital. In the second half of 2008, liquidity was the banking system's main problem and hence liquid capital became an important factor," he said. Some of the evidence put before his office indicated that gang money was used to save some banks from collapse when lending seized up, he said.'

Brown: "People themselves create money when they take out loans. The money is extinguished when the loan is paid back, as in a community currency system. The public bank is more like a court than an "issuer" of money. This is actually the system we have now, but the middlemen are private banks, which have been allowed to pretend they are lending pre-existing money. This gives them not only unwarranted power but serious liability when they can't balance their books because of defaults, toxic assets, etc.; and because they're always siphoning profits out of the system, it has become an unsustainable ponzi scheme. In a publicly-owned banking system, the interest would return to the public, making it mathematically sound and sustainable." -- DB: "The only caveat we would have is that the playing field be level and that the public banks not benefit from any implicit backing of the government." -- That's why you need a land value tax to decentralize a central bank/government.

'Reluctant to risk their lives by visiting a bank, many subscribers transferred money to each other by passing on the serial numbers of scratch cards charged with credit, like gift vouchers. Recipients simply add the credit to their account or sell it on to shops that sell the numbers at a slight discount from the original. This impromptu market has turned mobile-phone credit into a quasi-currency, undermining the traditional informal hawala banking system. -- Criminal rings are among the parallel currency’s busiest users. Kidnap gangs ask for ransom to be paid by text messages listing a hundred or more numbers of high-value phone cards. Prostitutes get regular customers to send monthly retainers to their phones, earning them the nickname “scratch-card concubines”, while corrupt government officials ask citizens for $50 in phone credit to perform minor tasks.'

'Part three in The Renegade Economist investigative documentary series uncovering the people and practices behind the global financial crisis.'

"When it suits Wall Street to have a deflationary episode, like we saw at the end of 2008, they can open the window into their off balance sheet of trillions of debt and scare congress into forking over more funds. Then when the money is forked over, they shut that window and they say, 'don't look behind the curtain anymore, there's nothing there.' Then prices stabilize because the panic that they created subsides and they claim they did something positive and they're worth billions of bonuses. -- We have an economy that exists between two worlds: one is an off balance sheet world of infinite debt; and one is an unregulated, off-the-books, non-accountable, non-elected, non-entity that's not part of the official government: the Federal Reserve, that has $20tn of credit expansion at the flick of a switch. -- The black exchanges and the unregulated derivative world is at least 10x bigger than the visible world. This is basically the financial antimatter that's ruling the visible world."

"When it suits Wall Street to have a deflationary episode, like we saw at the end of 2008, they can open the window into their off balance sheet of trillions of debt and scare congress into forking over more funds. Then when the money is forked over, they shut that window and they say, 'don't look behind the curtain anymore, there's nothing there.' Then prices stabilize because the panic that they created subsides and they claim they did something positive and they're worth billions of bonuses. -- We have an economy that exists between two worlds: one is an off balance sheet world of infinite debt; and one is an unregulated, off-the-books, non-accountable, non-elected, non-entity that's not part of the official government: the Federal Reserve, that has $20tn of credit expansion at the flick of a switch. -- The black exchanges and the unregulated derivative world is at least 10x bigger than the visible world. This is basically the financial antimatter that's ruling the visible world."

By the grace of taxpayer bailouts, artificially low interest rates, and middleclass wannabe house price ponzi schemers: '...these children of Gordon Gekko are not just blinded by greed, unable to see themselves as others see them. They genuinely believe that they are performing a vital service for the nation, creating jobs and boosting the coffers. They argue that if they move their operations to Geneva, Britain will become a stagnant backwater and are hurt that their philanthropy has gone unnoticed.' -- The #European Banker: “The British are insane. Their Empire has gone, their industries are dying and the City is now their greatest asset, yet they insist on trashing it. The City fuelled Cool Britannia; the ripple effect was huge." -- No mate, all you've done by staying here is encourage glad-handing bureaucrats to keep interest rates low so that you can feed your gambling addiction and trick the masses into thinking that access to cheap debt/'credit' somehow makes them 'prosperous'.

'We have moved far past the Affluent Society and its marketing-aroused wants. Now it‘s real life problems – from traffic to disease – that the economy creates and then sells remedies for. In theoretical terms, environmental problems are a genre of what economists call “externalities”, which are unwanted side effects of consumption otherwise assumed to be benign. Now we are entering the realm of what might be called “internalities”—which is to say, dysfunctions inherent in consumption itself. This is a black hole to the conventional economic mind. Economists don‘t even have a language for it; the reigning vocabulary is encoded with the production imperative. An economy consists of goods and services. There are no bads or disservices—no negative products of any kind. How can economists say consumption is good when the consumers themselves think it is bad?' -- Blame cheap credit.

'#The government cannot make up for the contraction in private credit. The Government's continued mendacity in this matter is leading to the destruction of the Dollar and, potentially, our economy and government funding mechanisms. The credit system is functioning only in places where tens or even hundreds of billions in printed money are being used to "purchase" worthless (or nearly-so) loans. Fannie, Freddie and now the FHA have become embroiled in a futile attempt to prop up residential property markets, which in turn has led banks to withhold foreclosure actions as a means of hiding losses. This in turn has trapped millions of homeowners in underwater property, preventing them from moving to seek better employment opportunities and creating artificial shortages of housing in some MSAs as inventory is "locked up" by banks as a means to avoid recognition of losses that have already occurred.'

AWESOME money as debt explainer -- 'One day a thoughtful man went to see Fabian [the banker]. "This interest charge is wrong", he said. "For every $100 you issue, you are asking $105 in return. The extra $5 can never be paid since it doesn't exist. The man continued, "Surely you should issue 105, i.e. 100 to me and 5 to you to spend. This way there would be 105 in circulation, and the debt can be repaid." Fabian listened quietly and finally said, "Financial economics is a deep subject, my boy, it takes years of study. Let me worry about these matters, and you look after yours. You must become more efficient, increase your production, cut down on your expenses and become a better businessman. I am always willing to help in these matters."' -- (All the while thinking, 'Oh, but you will pay that 5%: You'll pay with your assets; you'll pay with your labor; with your future labor; with the labor of your sons and daughters, and their sons and daughters – for you are all now my debt slaves.')

'The US dollar IS our debt to each other and to the world. The US dollar is backed by all the goods and services WITHIN the United States. Legal tender laws say it is so. The dollar currently buys many things outside of the United States, but there is no law that says it always will. The only law protecting dollar holders all over the world says that their dollars can be exchanged INSIDE the US. So when Ben Bernanke issued $500 billion in swaps to 14 different foreign central banks in 2008, each one of those dollars became a new claim against us, the US. It is here in the US that those dollars are legal tender. No where else. No where else in the world is anyone required by law to accept those dollars for real goods and services. -- [Though there's acceptance by agreement i.e., Bretton Woods or by threat of force eg. Iraq] -- When new dollars are created through the credit system, they are backed by expanding asset values and by the debtor's promise to work them off.'

RIGHTEOUS!

'It still blows me away that David’s talk at Startup School 2008 was met with such enthusiasm (I know David was surprised too). The talk was simple. Come up with a product, charge money for it, make more money than it costs to run it, and you turn a profit! This is the formula that’s been in place since business began. Yet in front of a group of new tech entrepreneurs it seemed like a revelation, a brand new story never told before. David said people were coming up to him in droves after the speech thanking him for opening their eyes. Who closed them?' -- CAN HAZ MUNETIZASHUN L8R PLOX?

'Peak credit has been reached. That final wave of consumer recklessness created the exact conditions required for its own destruction. The housing bubble orgy was the last hurrah. It is not coming back and there will be no bigger bubble to replace it. Consumers and banks have both been burnt, and attitudes have changed. It took nearly 80 years for people to get as reckless as they did in 1929. 80 years! Few are still alive that went through the great depression. No one listened to them. That is the nature of the game. The odds of a significant bout of inflation now are about the same as they were in 1929. Next to none. Children whose parents are being destroyed by debt now, will keep those memories for a long time.'

But I want big debts just like the Joneses. LOL.

System addicts gots to haves its.

"A comprehensive & innovative proposal for a new system of sustainable economics." -- This is the one.

'... a fixed fiat system will not be able to prevent governments from the issue of bonds, which is of itself a dubious practice in ordinary circumstances... However, if a country is running an overall current account deficit, under the fixed fiat system, the country will find that money is flowing out of the country, and that there is a process of deflation taking place. This deflation will make the purchasing power of the currency increase, and will therefore make the goods and services of the country more attractive, as the currency will provide more goods and services per unit. This will mean that a current account imbalance, as soon as it appears, will start to correct itself. ...governments will not be able to hide irresponsible policy behind a wall of monetary policy. The current account balance between countries will become main the determinant of the relationship between their currencies.'

Hypothetical illustration: 'Production has been stimulated to some extent by lowering the reserve requirement [by 50%]; but production cannot be increased nearly as fast as credit can be. So as a result of increasing the credit supply, most prices have practically doubled. Twice the credit does not "do twice the work" as before, because each monetary unit now does, so to speak, only half the work it did before.' -- On credit inflation: '...a fractional-reserve gold system must periodically bring about business and political pressure for a further reduction of the fractional reserve required [where] a central bank, a government and a public opinion eager to keep expanding credit to start a "full employment" boom or to keep it going brings about what is known as the business cycle, that periodic oscillation of boom and bust that socialists and communists attribute, not to the monetary and credit system and central banking, but to some inherent tendency in the capitalist system itself.'

'China's banks are veering out of control. The half-reformed economy of the People's Republic cannot absorb the $1,000bn (£600bn) blitz of new lending issued since December. Money is leaking instead into Shanghai's stock casino, or being used to keep bankrupt builders on life support. It is doing very little to help lift the world economy out of slump. -- Two facts stand out about China's green shoots. While the Shanghai composite index is up 70pc since November, Chinese imports are down 25pc from a year ago. China is still draining real stimulus from the global economy. If the world's biggest surplus state ($400bn) is too structurally deformed to help offset the demand shock as Western debtors retrench, we are trapped in a long deflation slump.'

'Maybe ... credit card companies act as quasi fractional-reserve bankers, because merchants do not insist on immediate payment in actual money. Just as bank runs (in a fractional-reserve system) could collapse the money supply and hence prices back in the early 1930s, maybe in today's economy a widespread "pulling out of credit" could have similar effects. This seems to be the deflationist argument, but I have never seen it spelled out carefully. It might be right, but no one has yet convinced me. In any event, I offer the following observation: Suppose it's true that "velocity" will fall (a favorite deflationist claim), meaning that the average dollar bill turns over fewer times per year and so can support a lower level of prices. Still, what if the specific prices that take the brunt of the fall, are associated with corporate stock and US Treasury bonds? It's entirely possible that "general US prices" fall according to some measure, while the prices of milk, eggs, and gasoline rise.'

"Bottom line: The first quarter brought the greatest credit collapse of all time. Excluding public sector borrowing (by the Treasury, government agencies, states, and municipalities), private sector credit was reduced at a mindboggling pace of $1,851.2 billion per year! And even if you include all the government borrowing, the overall debt pyramid in America shrunk at an annual rate of $255.3 billion. Think consumers are about to go on a spending spree after a massive $13.87 trillion collapse in net worth? Think banks are going to start lending with this employment picture and household debt? I don't and boomer demographics makes the situation even worse. Don't forget the bleak employment picture. There is no source of jobs."

42:50 On the Fed-sanctioned pyramiding of frb/credit-money to fuel asset booms.

On The Endogenous Money Stock theory: Basil Moore: “In the real world, banks extend credit, creating deposits in the process, and look for reserves later”. 'Thus loans come first—simultaneously creating deposits—and at a later stage the reserves are found. -- ...causation in money creation runs in the opposite direction to that of the money multiplier model: the credit money dog wags the fiat money tail. Both the actual level of money in the system, and the component of it that is created by the government, are controlled by the commercial system itself, and not by the Federal Reserve. -- ...we don’t live in a fiat-money system, but in a credit-money system which has had a relatively small and subservient fiat money system tacked onto it. We are therefore not in a “fractional reserve banking system”, but in a credit-money one... -- Banks won’t create more credit money as a result of the injections of [fiat] Base Money. Instead, inactive reserves will rise.'

"The retreat of the shadow lenders has created a credit freeze globally; and when credit shrinks, the money supply shrinks with it. That means there is insufficient money to buy goods, so workers get laid off and factories get shut down, perpetuating a vicious spiral of economic collapse and depression. To reverse that cycle, credit needs to be restored; and when the banks can’t do it, the Fed needs to step in and start “monetizing” debt. So why don’t Fed officials just say that is what they are up to and put our minds at ease? Probably because they can’t without exposing the whole banking game. The curtain would be thrown back and we the people would know that our money system is sleight of hand. The banks never had all that money they supposedly lent to us. We’ve been paying interest for something they created out of thin air! Indeed, their credit money is less substantial than air, which at least has some molecules bouncing around in it. Bank credit exists only in cyberspace."

'Are cardholders suddenly logging in at 1 in the morning? It might signal sleeplessness due to anxiety. Are they using their cards for groceries? It might mean they are trying to conserve their cash. Have they started using their cards for therapy sessions? Do they call the card company in the middle of the day, when they should be at work? What do they say when a customer-service representative asks how they’re feeling? Are their sighs long or short? Do they respond better to a comforting or bullying tone? If they check their balance three times a day, are they worried or uptight?' -- IN UR CARDZ PEEPIN' UR MOTIVATIONZ

"The long economic expansion of the industrial age has fostered the massive growth of what old-fashioned Marxists used to call a rentier class – a class whose money makes money for them. Even among people who work for a living, the idea of joining the rentier class on retirement, and living comfortably off investments, has become very popular in recent years. The problem, of course, is that the age of industrial expansion is over; it was made possible in the first place only by exponentially increasing the use of fossil fuels and other natural resources; like all exponential growth curves, it faced an inevitable collision with the limits of its environment – and that collision is happening around us right now. We are thus entering a period of prolonged economic contraction – not a recession, or even a depression, but a change in the fundamental dynamic of the economy."

'... the US government and Federal Reserve are acting to reverse the loss of unsustainable consumer spending through massive expansion in money, and even greater fiscal deficits. They are making no serious attempts to reverse the deficits, and have no clear plan for how both the government and wider economy might move from deficit to surplus. For creditor nations such as China, it must increasingly look like the US is initiating the largest default in history - through the destruction of the value of the debts through inflation. If we then look at US GDP to gain an overview over recent months, the figures are quite simply dire. [GDP] is itself misleading as an indicator of economic health. For example, borrowed money creates activity, and this is included in the figures. As such, the GDP fall is taking place despite massive increases in government borrowing, which will have increased activity within the economy.'

'China, wary of the troubled US economy, has already "canceled America's credit card" by cutting down purchases of debt, a US congressman said Thursday. "I'm not sure too many people on Capitol Hill realize that this is now happening," he said.' -- Pitchfork time

'... intellectual intolerance is in the DNA of the creditor mentality because it cannot withstand awareness and understanding of its destructive effects. The “miracle of compound interest” is not achievable in practice beyond the short run. To pretend that it may form the basis for a sustainable model of wealth creation does violence to rationality and economic logic. This is why the economic theory that creditors prefer – and subsidize – is learned ignorance propagated by useful idiots. Its role is to distract attention from society’s most important economic dynamics, those of finance and property polarization via debt, evidently on the premise that what is not seen or analyzed will not be regulated or taxed. One is reminded of Baudelaire’s quip: “The devil wins at the point where he convinces people that he does not exist.” A “free market” for rentiers thus is one “free” of alternative ideas.' -- An awesome read of economic history. 'The Ascent of Money' with a moral compass.

'Being defeated by debt is as deadly as outright military warfare. Faced with loss of their property and means of self-support, many citizens will get sick, lead lives of increasing desperation and die early if they do not repudiate most of the fraudulently offered loans of the past five years. They know that it lacks the money to pay, but they are quite willing to take payment in the form of foreclosure on the nation’s natural resources, land and housing, and a mortgage on the next few centuries of its future. If this sounds like the spoils of war, it is – and always has been. Debt bondage is the name of this game. And the major weapon in this conflict of interest is how people perceive it.' --- Rape, in perpetuity. (Truly awesome article with loads of european history.)

'... there is now the news that the IMF is simply going to print money to pay for activities... Is the endless fiscal expansion based upon credit, endless expansion of the money supply sustainable? What do these people think money actually is? Is it some magic thing that can create actual wealth from nothing? Does the production of money of itself make us wealthy, or does our labour make us wealthy? Endless borrowing for consumption and spending and printing of money does not create wealth - it simply destroys it.' -- 'The G20 is a whitewash, which just promises more of the same delusion that put the world economy into this mess in the first place. It is the same people with the same delusions offering more delusions. It is not a new world order, but the maintenance of a fantasy old world order.'

'A stagnant or a falling pool of real savings implies that the economy's ability to produce real wealth is currently impaired. The issue of the good quality of borrowers cannot be fixed by an artificial cleansing of banks' balance sheets or by nationalizing the banks. What is required is the expansion of the pool of real savings. Monetary pumping and credit created out of thin air cannot fix this. Since the heart of credit is real savings, it is obvious that no government schemes, such as cleansing banks' balance sheets, can increase fully backed credit. These government plans can only redistribute a given pool of real savings. Only wealth generators can lay the foundation for the expansion of the pool of real savings and hence lending. Wealth generators, however, cannot work efficiently in an environment of government controls, and money and credit created out of thin air.' -- Credit != Capital

'"All of a sudden you have become a banana republic." What had made capitalism so strong for centuries in parts of Europe and North America was how capital - from physical property to shares - was clearly registered and recorded. What dramatically undermined capitalism since about 2000 was the growth of unregistered assets - derivatives. Now that those have turned toxic, as the loans attached to them have been defaulted on or have come to be regarded as worthless or significantly devalued, we do not even know how big the problem is. We do not know where it is either - mainly because the banks have been reluctant to reveal the truth. The UK and the US have become shadow economies... de Soto never expected that he would be giving the same advice to London and Washington as he would be giving to Africa.'

'In a bold plan, the Chinese Govt has announced the yuan currency will soon replace the USDollar as the new Asian regional reserve currency. Due to USDollar instability and unreliability, Beijing is introducing a serious currency experiment, in order to aid in the stability of the Asian economy. The Chinese intention seems clearly to decouple both China and Asia from the USDollar and to introduce the yuan as the regional reserve currency. The yuan will be infused throughout their banking system. Other Asian governments will surely follow suit and discharge reserve USTBonds in favor of the yuan currency. The full impact will be felt when Asian nations who participate in this new reserve currency begin to purchase raw materials and commodities like grains, energy, and metals in Asia, using yuan currency in hand. The giant blow taken by the Untied States will result in further isolation. That will severely weaken US$ demand in an important continent.'

"The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time. -- Squeezing the oligarchs, though, is seldom the strategy of choice among emerging-market governments. Under duress, generosity toward old friends takes many innovative forms. Meanwhile, needing to squeeze someone, most emerging-market governments look first to ordinary working folk—at least until the riots grow too large."

"The popular culture tried to warn us. For 20 years, we've had Homer Simpson's spot-on caricature of the quintessential American: childish, irresponsible, willfully oblivious, fat and happy. We knew, in our heart of hearts, that something had to give. The '80s spirit endured through the '90s and the 2000s, all the way until the fall of 2008, like an awesome winning streak in Vegas that went on and on and on. American-style capitalism triumphed, and thanks to FedEx and the Web, delayed gratification itself came to seem quaint and unnecessary. During the '80s and '90s, we were Wile E. Coyote racing heedlessly across the endless American landscape at maximum speed and then spent the beginning of the 21st century suspended in midair just past the end of the cliff; gravity reasserted itself, and we plummeted."

'... the UK and other countries have moved towards what has been described as ‘post-industrial’ economies. Countries such as the UK would provide the finance, design and marketing and so on, and people in the emerging economies could get on with the lower-value parts – making the products or providing the service. For the past ten years, the UK has laboured under the illusion that this ‘new paradigm’ was working. It is only in the past year or two that this illusion of success has been shattered. In 2007, I analysed the UK economy with a singular aim: to identify the source of its apparent strong growth, while seemingly stronger competitors were barely growing. Rather than look at GDP growth, I tried to examine what might be called the ‘root’ sources of wealth. The conclusion of this analysis was very worrying, but also confirmed my intuition.' -- Debt

"In 1999, it was rumored that investment bank Goldman Sachs had a 1,000 ton gold short position in the markets. However, much to the shock of Goldman Sachs and the central bankers, in 1999 gold stopped falling; and, because Goldman Sachs’ short position was so large, Goldman possibly could suffer catastrophic losses. This is when England’s then Chancellor of the Exchequer, Gordon Brown, on May 8, 1999 announced England would sell over 50% of its gold reserves, 415 tons of the most precious metal on earth at the very bottom of the market. The decision to sell England’s gold thereby saved Goldman Sachs and insured the political future of Gordon Brown. Goldman Sachs’ is still in business and Gordon Brown is now the Prime Minister of England. Selling a nation’s gold to save the bankers’ parasitic system is now common practice as the banker’s system continues to collapse and gold continues to rise."

'Asian savings may have provided the rope; but America hanged itself. The macroeconomic forces that drove the capital flows were hard to reverse. But what made them so devastating was that they were met by microeconomic failures... After the dotcom bust, American firms turned cautious and investment spending was weak. That ruled out a natural home for foreign capital. Faced with strong external demand for AAA-rated assets, the financial system got creative. Marginal home loans were packaged into supposedly safe securities. That supply of credit lifted house prices and spurred a boom in residential construction, which filled the gap in demand left by sluggish business investment. As these loans turned bad and losses mounted, it became clear that banks had set aside too little capital to protect themselves against unexpected losses. That left the banks crippled and the economy on its knees.' -- Continues with doubts that lessons have been learned

"This is the sound of the other shoe dropping; it’s what happens when the chickens come home to roost; it’s justice, equilibrium reasserting itself, and ultimately a good thing. The thing that is dying—the corporatized model of commerce—has not, nor has it ever been, supportive of the real economy. It wasn’t meant to be. We do not live in an economy, we live in a Ponzi scheme. Using future tax dollars to give banks more money to lend out at interest is robbing from the poor to pay the rich to rob from the poor. The current financial crisis is the best opportunity we have had in a very long time for a bloodless revolution against the faceless fascism under which we have been living, unaware, for much too long. Let us seize the day." -- Brilliant explanatory rant. Recommended.

"The news media are in the process of creating a great new historical myth: that our present financial crisis is the result of economic freedom and laissez-faire capitalism. ...Their fear and hatred of economic freedom and laissez-faire capitalism [nb: read definition inside], and their need to be able to denounce it as the cause of all economic evil, is so great that they pretend to themselves and to their audiences that it exists in today's world, in which it clearly does not exist even remotely. By making the claim that laissez faire exists and is what is responsible for the problem, they are able to turn the full force of their hatred for actual economic freedom and laissez-faire capitalism against each and every sliver of economic freedom that somehow manages to exist and which they decide to target. Their brainwashed audience — as much the product of the contemporary educational system as they themselves — then quickly follows suit and obliges their efforts to arouse hatred."

"... it appears that the US government is ever more determined to dig the economic hole it is in ever deeper. The ink on the first 'stimulus' is barely dry and already there is emergent pressure for a further stimulus... This is the argument that the stimulus is never enough. It is the same argument that suggests that the Great Depression 'New Deal' was just not large enough or it would have worked. The trouble here is that, whatever the amount borrowed and spent, there is always the possibility of someone saying (when it fails) that it just was not enough."

'The effect of keeping interest rates artificially low, in fact, is eventually the same as that of keeping any other price below the natural market. It increases demand and reduces supply. It increases the demand for capital and reduces the supply of real capital. It creates economic distortions. It is true, no doubt, that an artificial reduction in the interest rate encourages increased borrowing. It tends, in fact, to encourage highly speculative ventures that cannot continue except under the artificial conditions that gave them birth. On the supply side, the artificial reduction of interest rates discourages normal thrift, saving, and investment. It reduces the accumulation of capital. It slows down that increase in productivity... The money rate can, indeed, be kept artificially low only by continuous new injections of currency or bank credit in place of real savings. This can create the illusion of more capital just as the addition of water can create the illusion of more milk.'

"The Prime Minister believes his trip to meet U.S. president Barack Obama in Washington has paved the way for an international code to prevent dangerous risk-taking in the financial sector. Mr Brown also hopes to strike agreement on an end to tax havens, with countries who refuse to cooperate potentially being added to an international 'blacklist'." -- Morons.

'Having undermined the economy at large, Wall Street’s public relations think tanks are now dismantling the language itself. Doublethink and doubletalk with regard to “nationalizing” or “socializing” the banks and other sectors is a travesty of political and economic discussion from the 17th through mid-20th centuries. Society’s basic grammar of thought, the vocabulary to discuss political and economic topics, is being turned inside-out in an effort to ward off discussion of the policy solutions posed by the classical economists and political philosophers that made Western civilization “Western.” What is being attempted is nothing less than an attempt to destroy the intellectual and moral edifice of what took Western civilization eight centuries to develop, from the 12th century Schoolmen discussing Just Price through 19th and 20th century classical economic value theory.' -- Newspeak gobbledegoop

"The Bank of England is to create £75bn of new money in an attempt to revive lending and the battered economy. The approach, untried in the UK, was unveiled as the Bank cut interest rates from 1% to 0.5% - a fresh all-time low. While the Bank will initially add £75bn, Chancellor Alistair Darling has given it permission to extend this to up to £150bn." -- *deep sigh* You simply haven't thought this through! Goodbye GBP.

'"You have to understand, Iceland is no longer a country. It is a hedge fund.” -- When their three brand-new global-size banks collapsed, last October, Iceland’s 300,000 citizens found that they bore some kind of responsibility for $100 billion of banking losses—which works out to roughly $330,000 for every Icelandic man, woman, and child. On top of that they had tens of billions of dollars in personal losses from their own bizarre private foreign-currency speculations, and even more from the 85 percent collapse in the Icelandic stock market. The exact dollar amount of Iceland’s financial hole was essentially unknowable, as it depended on the value of the generally stable Icelandic krona, which had also crashed and was removed from the market by the Icelandic government. But it was a lot. -- It was just a group of young kids,” said the man from the I.M.F. “In this egalitarian society, they came in, dressed in black, and started doing business.”' -- SERIOUS BUSINESS!