Tuesday, July 28, 2009

[government backed notes] starting now

Much shorter post this time. The long one is here.


Vox Day would like to know when the experts say the turnaround is going to be:

I am in need of a quick summary of every major economist, CNBC talking head or organization's position on the current prospects for recovery for the second half of 2009 and beyond.

Vox, there ARE NO EXPERTS. They are under the mesmerizing spell of the fictional theory of the natural business cycle. There IS a business cycle but we have to get it into our heads that it is INDUCED. We remain in the clutches of the very people who should not be controlling our money supply - the private central banks.

This is not my theory, this is the practical observation from most of the U.S. presidents through to Milton Friedman. The people of America seemed to understand the situation in Jackson's day, understand it very well:

Biddle wrote to a federal judge in February 1834: “This worthy President thinks that because he has scalped Indians and imprisoned Judges, he is to have his way with the Bank.” By the fall of that year, Biddle was so reviled for his nationwide curtailment of credit that he was hunted by mobs in Philadelphia, forcing him to bar the doors of his house and post armed guards.

Why, oh why can't we wake up? I wrote a comment at Vox's:

Vox, you write as though this recovery is going to make itself. It is, as it has always been, dependent on when the Fed and the other central banks decide we've been squeezed enough to have made their current round of profits and new monopolies - just look at Goldman Sachs! As Milton Friedman put it:

The stock of money, prices and output was decidedly more unstable after the establishment of the Reserve System than before. The most dramatic period of instability in output was, of course, the period between the two wars, which includes the severe [monetary] contractions of 1920-21, 1929-33, and 1937-38. No other 20-year period in American history contains as many as three such severe contractions.

... and again:

I know of no severe depression, in any country or any time, that was not accompanied by a sharp decline in the stock of money, and equally, of no sharp decline in the stock of money that was not accompanied by a severe depression.

... and:

The severity of each of the major contractions is directly attributable to acts of commission and omission by the Reserve authorities. Any system which gives so much power and so much discretion to a few men, [so] that mistakes – excusable or not – can have such far reaching effects, is a bad system.

The two culprits in all the so-called "cycles" have been and are fractional reserve banking and the Fed's [and other CBs'] power to contract and expand money and to control credit.

The solution

1. Pay off the debt with Treasury backed notes [the old greenbacks in American parlance but the principle is the same in Britain] whilst at the same time raising reserve percentages of the small banks to halt inflation, [in line with population growth];

2. Abolish fractional reserve banking and move, within two years, to full reserve banking, with the issuance of money and control of credit in government hands;

3. Repeal the two acts of 1913 and 1864, [it's more difficult over here], with the Fed property and that of the Bank of England and other central banks now acting as repositories for the Treasury;


4. Withdraw from the IMF, BIS and World Bank.

Do this, despite all the Nicholas Biddles and foreign pressure, the attempted wars, the induced depression due to the further contraction of money [and so on], the spread of doom and gloom.

The first two years will be the worst but all we need fear is fear itself.

This is the ONLY sustainable solution. As long as those vipers sit over the power to create money out of thin air [ten times the value of the created money], then the laughably called "cycle" will continue. A physician first treats the root cause, not the symptoms.

If every person wrote his or her Congressman or local member and educated him/her, the thing would be possible. Lincoln was isolated but we need not be.

Objections

The economists will say it's not possible in what has become the most complex money system in history, The central banks will immeidately shout "inflationary".

It does not have to be so.

If the statutory requirement to match the flow of notes, earmarked to pay off bond and other debt, to gradually increased small bank reserve requirements takes place, the spectre of inflation would be held at bay.

The only danger is the havoc which the Biddle type central banks will wreak, trying to hoodwink you into thinking the scheme doesn't work.

I myself will either be roundly ignored or told I'm no economist. Do you need to be an economist to realize that debt-free notes, backed by a government as legal tender, are a solution? Blind Freddy can see that.

Finally, it would work because sufficient people WANT it to work. Ways can always be found round the flood of problems which accompany any adjustment, provided people wish to solve those problems, understand the real causes and are agreed to work together to overcome them.

Again


As long as we try to erect defences whilst we're down in this nest of vipers, the vipers still control the space we live in. They have immersed and held us in a debt economy where the issuance of interest bearing bonds and their buying of them as a simple bookkeeping entry is then multiplied many times over due to fractional reserve banking.

There are already proposals by Brown and the world financial authorities for a radical reconstruction of the financial system.

THIS IS ENTIRELY UNNECESSARY.

Simply follow the four steps listed above and the problem of the flow of money is solved within two years. Other social problems will take two generations. If you need an example of how to do it, look at the island of Guernsey.

An island is no different to the world in that the same principles of money issuance apply. KISS. Lincoln showed that it was possible but he was isolated and under attack, with the distraction of the Civil War. Many presidents have spoken of the matter.

You, the blogosphere, the readers of the MSM, the people out there, the economists locked into a way of thinking you've been induced to by your economic education and decades of practice in thinking along those lines, reinforced by organs such as the FT and the Economist - you only need go back into the realm of actual history, not into any new economic theory.

This is a very old principle we're talking about here.

All of us, all of you, can simply demand of our local member, of our Congressman, that the Treasury in each of our countries:

Begin to issue government backed, debt-free notes.

That, ladies and gentlemen, is where we start. That's our starting point.

The original video is here.

12 comments:

xlbrl said...

I suspect you are wrong about the conspiracy angle, if nothing else.
I take seriously your maxim that there are no experts, but what you are claiming is that there are in fact a few--ones that are manipulating economic cycles to their profit by stripping we rubes of ours in a plan that is brilliant and diobolical. If someone was that good I would hire them to run the system.

I tend to think this beast is the product of an evolution of good and bad motives and needs--many of each--and the result is not of one design. Some people are a lot better at riding that critter than others. All we can be certain of is that the mixing of wine and sewage does not result in wine.

It is also unclear to me what the difference is between wealthy individuals or banks manipulating events, and a government or cabal of governments, or the former doing it through the latter.
Modern governments are more powerful than they have ever been, and can be counted on to project their own propagation, not the citizens interest which you have at heart. It is hard to see the organizing of abstinence in a whorehouse.
I am not helpful.

James Higham said...

There's no conspiracy - you're right.

Collusion, on the other hand, between the central banks has long been a given - that's just the nature of banking itself - what banks do as part of their normal business. And that's what the Fed actually is - 12 private banks and naturally ... they collude.

The only question is if that collusion is good or bad.

Biddle's and all the other quotes in the three posts show it to have been bad.

Presidents, congressmen, commentators and economists are at one on this. I think I'm inclined to accept what they say.

The remaining question is what can be done to stop them.

The issuing of debt-free notes seems the best way of doing that.

Bob B said...

For the mainstream, try these links:

http://www.economist.com/printedition/displaystory.cfm?story_id=14030288

http://www.economist.com/printedition/displaystory.cfm?story_id=14030296

There's also a good editorial in Tuesday's FT:
www.ft.com/cms/s/0/530b042c-7adf-11de-8c34-00144feabdc0.html

Bob B said...

Try this news report from March 2003 on: "House-price 'bubble' [in Britain] may devastate economy - IMF"
http://www.independent.co.uk/news/business/news/houseprice-bubble-may-devastate-economy--imf-599409.html

And this back in 2002 about the house-price bubble:

"CHARLES GOODHART, a former member of the Bank of England's monetary policy committee [and economics prof at the LSE], warned yesterday that the Bank is failing to take sufficient account of the house price boom in setting interest rates.

"His warning comes amid growing fears among economists that house prices, fuelled by the lowest interest rates for 38 years, are getting out of control. Yesterday, new figures showed that homeowners are borrowing record amounts against the rising value of their homes. . . "
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2002/04/06/cngood06.xml

If only we had taken heed of this warning in 2003 about derivatives from Warren Buffett:

"The rapidly growing trade in derivatives poses a 'mega-catastrophic risk' for the economy and most shares are still 'too expensive', legendary investor Warren Buffett has warned."
http://news.bbc.co.uk/1/hi/business/2817995.stm

And what did Gordon Brown do about it?

James Higham said...

Good stuff.

I fear people are a bit fazed by this eco stuff so I'll give it a rest for a few days now.

Bob B said...

Macroeconomic theory is tough stuff for those unfamiliar with a daunting literature going back at least to Keynes's General Theory of Employment, Interest and Money (1936). Try Nobel laureate Paul Krugman on macroeconomics:

"In a recent lecture, Paul Krugman, winner of the Nobel prize in economics in 2008, argued that much of the past 30 years of macroeconomics was 'spectacularly useless at best, and positively harmful at worst.'"
http://www.economist.com/printedition/displayStory.cfm?Story_ID=14031376

A thought about macroeconomics
http://krugman.blogs.nytimes.com/2009/06/26/a-thought-about-macroeconomics/

THERE'S SOMETHING ABOUT MACRO
http://web.mit.edu/krugman/www/islm.html

Sonus said...

When does collusion become a conspiracy?

I dealt with that question in an earlier article.

Here is an article that deals with part of the conspiracy, - a small part, as the total conspiracy is greater than the sum of the parts.

I note that the holders of these etfs, JPM and HSBC are the bullion banks consistently holding massive short positions in the precious metals as part of the taxpayer funded precious metals suppression.

This article explains the mechanism in detail

Recently Bernanke was questioned under oath concerning currency swaps and "coincidental" fluctuations in the $ index. He lied, - naturally

I tend to think this beast is the product of an evolution of good and bad motives and needs--many of each--and the result is not of one design.

True, the conspiracy, or the economic results of the conspiracy, are out of control. The conspirators problem is that a hard core of the public have realised their game plan.

The entire plan was/is based on economic nonsense, as Bob has pointed out. The fact is that the entire whorehouse will ultimately come tumbling down.

Mainstream financials now recognise the conspiracy

In concert with Others, that tumble may be soon, and rapid as explained here, or slow and controlled.

Either way, without more currency swaps, the Fed exhausts current supplies in October of this year!

Sonus said...

Prime conspirator speaks economic nonsense

Anonymous said...

both fascist and communist systems are “based on naked, unfettered political power and individual coercion. Both systems require monopoly control of society. While monopoly control of industries was once the objective of J.P. Morgan and J.D. Rockefeller, by the late nineteenth century the inner sanctums of Wall Street understood that the most efficient way to gain an unchallenged monopoly was to ‘go political’ and make society go to work for the monopolists,” and that, “the totalitarian socialist state is a perfect captive market for monopoly capitalists, if an alliance can be made with the socialist power brokers.”[15] Thus, the major money powers of the west decided to put their money behind the creation of a totalitarian communist state in Russia, in order to create a captive economy, which they could exploit and remove from competition.

James Higham said...

"I suspect you are wrong about the conspiracy angle, if nothing else."

We're still getting this from people, despite the mass of material on this site alone, thanks to Anon, Sonus and other contributors, supplying links and data.

The problem now is that there is so much evidence that people are turning off, rather than reading it.

Sackerson said...

We seem to be in the position of mice petitioning the cat to bell itself.

James Higham said...

Aye, we are.