I just saw this reply in my spam box ... *&^%$# POS Yahoo spam filter.
Jim,
All of your comments are addressed very well in the book.
The argument of getting a private corporation / central bank like the
Fed to create money to loan to government, instead of the government
issuing its own money and owing it to noone, in order to "control"
gov't spending, ignores the fact that gov't is effectively issued a
blank check by the Fed anyway; both methods are inflationary, if more
money is issued than that which covers economic growth. (Important
concept - inflation is caused by an increase in the money supply that
is greater than the increase in the sum total economic output. The
past 4 years the Fed has expanded the money supply at unprecedented rates)
Don't get me wrong, gov't spends waaaaaaay too much, however, realize
that over HALF of what we pay in Federal income taxes, goes to
servicing the INTEREST alone on the gov't's debt to the Fed, which
created the money out of nothing.
The most pernicious thing about our DEBT-BASED fiat currency system,
is that:
ALL NEW MONEY that is created is a DEBT; the money newly created does
NOT include that to cover the INTEREST payments. The interest
payments will have to come from SOMEONE ELSE taking out a loan. This
is a mathematical paradox, which guarantees that the only way for the
system to keep going is EVER INCREASING DEBT. The net effect of this
is that ALL MONEY in circulation is gradually replaced by DEBT. This
explains the perpetually rising debt. At the rate we are going, by
2012 or so, we will need to be taxed at 65% JUST to pay INTEREST on
the Federal debt... mostly on money printed by the Fed. It is NO
COINCIDENCE that the Income Tax was passed THE SAME YEAR as the
Federal Reserve Act (1913) - it is part of its design.
A debt based fiat currency system, is an INHERENTLY UNSTABLE SYSTEM,
leading to BOOM AND BUST CYCLES. Boom and bust economic cycles are
NOT natural, they are simply a result of having a debt based fiat
currency system. Note how Guernsey and China have not had busts.
The above paradox is called "the impossible contract" by the book's
author. It is described but not named, in the following 45 minute
cartoon slideshow:
http://www.moneyasdebt.net/
and in the following allegorical story:
http://www.relfe.com/plus_5_.html
A blogger started calling it "The Compound Interest Paradox", and
describes it in a 7 part post:
http://fskrealityguide.blogspot.com/2008/06/compound-interest-paradox-revisited.html
----------------
re: China's yuan being "overvalued"... it is a nation's sovereign
right to choose what their exchange rate should be. This is not to be
confused with the desire "free market" ...
BTW China is NOT communist anymore - they have way more capitalistic
tendencies than, say, India. I base this on conversations with guys
who have done business in both countries.
Letting a currency "float", allows it to be attacked by the Hedge
Funds (yes, the same guys
who bidded up oil futures), which have been part of several concerted
efforts to wage "economic war" on currencies. Among their victims are
Thailand, Indonesia, Mexico, Argentina, Brazil, and so on. Here is a
chapter describing it, from the Web of Debt book:
"The Tequila Trap"
http://www.webofdebt.com/excerpts/chapter-22.php
Cheers,
Jason
--- On *Mon, 6/23/08, Jim Wilson /<[EMAIL PROTECTED]>/* wrote:
From: Jim Wilson <[EMAIL PROTECTED]>
Subject: RE: NPC: NMC: Oil futures bidded up by the Hedge Funds.
And about themonetary system...
To: "'Jason C'" <[EMAIL PROTECTED]>, "'Tony Cooper'"
<[EMAIL PROTECTED]>
Cc: [email protected]
Date: Monday, June 23, 2008, 2:04 PM
Jason,
Thanks for the links, I’ll check them out.
I’m anything but an economics guy, and I understand why you are
against the gov’t paying interest on it’s own money, but it seems
to me that that acts as a 2^nd natural check against the
government devaluing it’s own currency when it puts more money
into circulation. I know nothing of Guernsey , except that I just
found it is 31 sq. miles, and has no defense budget -so it may not
be a good example for a large government; it also a 45 million
pound, and growing, fiscal “black hole”.
(http://en.wikipedia.org/wiki/Guernsey )
With regard to China, economists the world over have been
complaining that the yuan is artificially propped up to avoid
inflation and keep China’s competitive advantage of low cost
production and bring foreign currency – like the USD – into the
country.
Now, with the shrinking of the globe enabling their own economic
engine to run hotter, their currency will increase in value, and
that “artificial” holding should be required less, but in any
case, I fail to see where it can’t be honestly argued that the
currency in the communist state is subject to the same economic
forces that drive most currencies.
The reason I likened it to a perpetual motion machine is that it
seems to me that the natural tendency for governments, like
people, is to spend more and more and when you run out you get
more to spend by borrowing or, in this case, printing more. Since
either of these devalues the money, left unchecked, it’s a runaway
train.
Finally, don’t misunderstand that I like the idea of the
government paying interest to the Federal Reserve but I also
partially disagree with your statement that “This [interest]
explains the spiraling Federal debt”. I agree that the interest
is a large part of it, but like my analogy of the everyday
consumer, the government’s real problem is that it spent, and
continues to spend, more than it can afford, and now it owes it’s
life to the “credit card company” - the Federal Reserve.
Jim
------------------------------------------------------------------------
*From:* Jason C [mailto:[EMAIL PROTECTED]
*Sent:* Monday, June 23, 2008 4:14 PM
*To:* Jim Wilson; 'Tony Cooper'
*Cc:* [email protected]
*Subject:* RE: NPC: NMC: Oil futures bidded up by the Hedge Funds.
And about themonetary system...
LOL not quite. I don't have time at the moment to type a more
detailed response, but you can read parts of the book here:
http://books.google.com/books?hl=en&id=ILMGrEC524UC&dq=%22web+of+debt%22&printsec=frontcover&source=web&ots=xDrvE4l5UI&sig=gqGEIbh2IwrRNd4EGgtYSTDAPVU&sa=X&oi=book_result&resnum=6&ct=result
and here:
http://webofdebt.com (click the free chapters on the right upper
side of the page)
The book is extensively referenced, and I tried checking out some
of the references...
Apparently the governments of the island nation of Guernsey, and
China , are both issuing their own currency, and thus does not
need to go into debt. Guernsey and China 's governments, do NOT
have a public debt. Guernsey has been doing this for centuries
now. They have a flat 20% income tax, no inheritance tax, no
capital gains tax...
Passing on the power of "seignorage" (gov't creating its own
money), to a privately owned central bank such as the Federal
Reserve, which then charges interest on it, seems particularly
odious to me. This explains the spiraling Federal debt. At the
rate we're going, taxes will have to go to 65% JUST to pay the
INTEREST ALONE on this debt, interest on money created out of thin
air.
*/Jim Wilson <[EMAIL PROTECTED]>/* wrote:
Now were back to “perpetual motion” – it works just as well with
currency as it does machinery.
------------------------------------------------------------------------
*From:* [EMAIL PROTECTED]
[mailto:[EMAIL PROTECTED] *On Behalf Of *Tony Cooper
*Sent:* Monday, June 23, 2008 3:00 PM
*To:* Jason C
*Cc:* [email protected]
*Subject:* Re: NPC: NMC: Oil futures bidded up by the Hedge Funds.
And about themonetary system...
"This begs the question: Why doesn't government create its own
money for its own expenses (called "*/non/*/-debt based fiat
currency/"), instead of giving the power to create money to a
private corporation (i.e. the Federal Reserve), which collects
interest on it?"
IIRC my history correctly... Napoleon tried to do just that....
Jason C wrote:
No comments on the links I sent, eh?
*/Jason C <[EMAIL PROTECTED]> <mailto:[EMAIL PROTECTED]>/*
wrote:
Please, enough partisan talk - the Republicrats are bowling on the
same team, and they're creaming us, on the other team.
I agree with the petition. However, the MAIN reason oil prices
are going up is the HEDGE FUNDS run by *Morgan Stanley, Goldman
Sachs, Citigroup, JP Morgan Chase*. Why are they doing it?
http://www.financialsense.com/editorials/engdahl/2008/0502.html
--QUOTE--/
"today’s oil prices are really determined is done by a process so
opaque only a handful of major oil trading banks such as Goldman
Sachs or Morgan Stanley have any idea who is buying and who
selling oil futures or derivative contracts that set physical oil
prices in this strange new world of “paper oil.” "/
BTW the amount of capital the above top 4 hedge funds have is on
the order of EIGHT years of the USA 's economic output. Yes, EIGHT.
Interestingly the same companies that own these hedge funds, are
the same top corporate contributors to O-bomb-uh and McSame. Just
look at Obama's top 10 list - in there are *Morgan Stanley,
Goldman Sachs, Citigroup, JP Morgan Chase*. He ain't gonna turn
his back on them:
http://www.opensecrets.org/pres08/contrib.php?cycle=2008&cid=N00009638
<http://www.opensecrets.org/pres08/contrib.php?cycle=2008&cid=N00009638>
Now look at McSame:
http://www.opensecrets.org/pres08/contrib.php?cycle=2008&cid=N00006424
<http://www.opensecrets.org/pres08/contrib.php?cycle=2008&cid=N00006424>
Same four hedge fund companies.
To help you understand the hedge funds and the rest of the
financial cartel, read this book. It was a REAL eye opener for me
(I used to think the gold standard was a panacea, for instance):
*http://webofdebt.com*
Wonderful allusions to "The Wizard of Oz". It's a stunningly good
book which goes into the lots of historical detail of money and
money politics, fiat currencies and the gold standard, from 5,000
years ago, through Europe's middle ages, and the birth of the USA
to the present, including the present subprime mortgage mess which
has the economy teetering on a precipice, as well as the currency
speculation attacks by the same Hedge Funds on the Asian "tigers"
in the 90s (Thai Baht currency crisis), and the attacks on the
Mexico and Brazil in the 70s and 80s.
The central banks create money out of nothing (aka "fiat" money),
and LOAN it to government, expecting to be repaid WITH
interest(!). (this is called "/debt based fiat currency/") This
is done via "monetizing the debt" by the Fed. The commercial banks
do the same to consumers and corporations via "Fractional reserve
banking". This system was invented several hundred years ago in
Europe , and was one of the causes of the American Revolution.
This system is the reason for the spiralling unpayable debt of the
federal government today.
The financial corporations that got rich off of this back then are
still alive and well today. The ramifications of this system
(debt based fiat currency) are well explained in the book. This
begs the question: Why doesn't government create its own money
for its own expenses (called "*/non/*/-debt based fiat
currency/"), instead of giving the power to create money to a
private corporation (i.e. the Federal Reserve), which collects
interest on it?
Several alternate fiat systems and asset backed currencies, and
banking models, and attempts at such, are discussed in the book.
Caution: if you're like me, a voracious reader, you can't put this
book down.
------------------------------------------------------------------------
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