On 16 Jul 2013, at 16:08, Telmo Menezes wrote:

On Tue, Jul 16, 2013 at 2:09 AM, chris peck <chris_peck...@hotmail.com> wrote:
Hi Roger

hmmm. sort of. Lowering interest rates, creating cheap money, in part
encouraged banks to lend to people they ordinarily would not have. This put more buyers on the market and that increase in demand led to a rise in house prices. Of course, when the interest rates went up, those loans became much more expensive and people found they couldn't afford the mortgages they had taken. People began to default, demand decreased and then so did the house
prices.

But, there was a whole lot more to it than that. Deregulation, (ie. free
market sensibility),
allowed banks to collect together and carve up loans
into complex derivatives and sell them on as 'high quality' assets. In other words, free market sensibility led to a situation in which banks no longer
bore responsibility for the loans they made.

We haven't had a free market in the western world for a long time now.

Banks loan money that, in turn, they borrowed from the fed (or the
ECB, or...). Central banks have the power to create money out of thin
air. They control the supply of money. This is not capitalism, it's
something else. Something insane.

Free markets assume rational agents performing symmetrical
transactions for their one self-interest. What we have in reality is a
centralised secret bureaucracy with unchecked economical and
regulatory powers.

I agree. We assist to a criminal perversion of capitalism. It seems to me that there are evidences that this has been prepared between the assassination of Kennedy and the election of Nixon.




In a real free market, I would be able to loan you money and act like
a bank myself. The big banks would have to make do with the money
reserves they had.

And the worst is yet to come when you see how Obama is handling the TPP (the Trans-Pacific Partnership trade agreement). I hear also often in that context the idea that "corporation are person", which is a non sense, and a real threat on the people.

But Obama's NDAA 2012 is quite clear, and is literally a confession of terrorism. For now I am waiting for a serious inquest for 9/11, as the official conspirary theory makes less and less sense to me. In fact they have not yet provided one evidence for their case, except a passport which has survived a fire so hot that steal melted and made a skyscraper collapsing.

I am optimist because the bandits made a fatal error: the prohibition of marijuana and drugs. You need an infinite amount of money to maintain craps like that. It might still last for some time, though, and the number of direct and indirect victims will keep growing.

But you are right, capitalism is not the problem. It is just the total perversion of the markets by special interests and corporations' unscrupulous deregulating strategies. The middle class (and banks) is taken into hostage, and is already shrinking.

Bruno




Telmo.

They just made the IOUs and
then sold them on to pension schemes. Consequently, they loaned to anybody because these derivatives enabled them to get an immediate return on the loans, rather than have to wait 40 years. Crucially, they made loans to people without demanding any kind of equity in the underlying asset. This
meant that defaulting became an extremely attractive proposition once
interest rates went up. So people defaulted willy nilly because they had no
stake in the houses they had bought.

So really it was deregulation that buggered things up and generated false hopes and deregulation that led to massively inflated house prices and then
.... bust.

________________________________
Date: Sat, 13 Jul 2013 20:11:45 -0400
Subject: Re: Capitalism : the way of creating wealth OUT OF THIN AIR
From: jami...@gmail.com
To: everything-list@googlegroups.com


How can an otherwise well educated and smart person write such stupidity? Capitalism creates wealth out of the sweat of the expolited and enslaved workforce they (the capitalists) keep on an economical/political leash.
MONEY does not grow on trees.
Doctor, you should know better!
Dr. phil - D.Sc. John M

On Sat, Jul 13, 2013 at 11:05 AM, Roger Clough <rclo...@verizon.net> wrote:

Capitalism : the way of creating wealth OUT OF THIN AIR

There are two ways of cheapening money: mechanically, by printing it,
and emoltionally, by making it more easily available
(less desirable) by lowering the interest rates.

There is also a way of enriching money, and that is by NOT doing either of
the above,
by not interfering with the market.

Here is why.

If somebody came along and told you that you can make gasoline out of water,
you'd call him a
con man. Can't be done. But I am here to tell you that you can create money
out of thin air.
The govt creates it by printing it, which is bad, for it cheapens money and
thus creates no real wealth.
This is the mechanical creation of wealth. But wealth can also be achieved
by simply believing
that it can be done (by naturally rising prices in hopes of future gain).

Profit, the magic ingredient of capitalism, is the creation of wealth OUT OF
THIN AIR, where nobody loses,
if they both choose wisely enough. Both parties can profit-- the seller by
receiving a higher price and
the buyer by paying a higher price in the hope that he can resell it at an
even higher price or make use of
it in some other profitable way, such as buying in bulk. So the hope of the
seller-- for a brighter day tomorrow--
is what creates wealth in the economy.

Before the bubble burst, the housing market was an example of this, except
that there was a third party-- the govt--
who made cheap money available by lowering the interest rate. That screwed
things up by luring the buyer
into thinking that the housing price would rise, but it didn't. That's not a
free market, and that's why
the bubble burst, because it was an unrealistic hope.

Dr. Roger B Clough NIST (ret.) [1/1/2000]
See my Leibniz site at
http://independent.academia.edu/RogerClough

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