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  • We can't grow ourselves out of debt, no matter what the Federal Reserve does

    posted by Keito
    2012-09-04 21:34:32
    'Let's replace our fixation on growth with a steady-state economy focusing on lower consumption, leisure and ecological health.


    Federal Reserve chairman Ben Bernanke's pledge at Jackson Hole last Friday to "promote a stronger economic recovery" through "additional policy accommodation" has drawn criticism from economists, liberal and conservative, who question whether the Fed has the wherewithal to stimulate economic growth. What we actually need is more spending, say the liberals. No, less spending, say the conservatives. But underneath these disagreements lies an unexamined agreement, a common assumption that no mainstream economist or policy-maker ever questions: that the purpose of economic policy is to stimulate growth.

    So ubiquitous is the equation of growth with prosperity that few people ever pause to consider it. What does economic growth actually mean? It means more consumption – and consumption of a specific kind: more consumption of goods and services that are exchanged for money. That means that if people stop caring for their own children and instead pay for childcare, the economy grows. The same if people stop cooking for themselves and purchase restaurant takeaways instead.

    Economists say this is a good thing. After all, you wouldn't pay for childcare or takeaway food if it weren't of benefit to you, right? So, the more things people are paying for, the more benefits are being had. Besides, it is more efficient for one daycare centre to handle 30 children than for each family to do it themselves. That's why we are all so much richer, happier and less busy than we were a generation ago. Right?

    Obviously, it isn't true that the more we buy, the happier we are. Endless growth means endlessly increasing production and endlessly increasing consumption. Social critics have for a long time pointed out the resulting hollowness carried by that thesis. Furthermore, it is becoming increasingly apparent that infinite growth is impossible on a finite planet. Why, then, are liberals and conservatives alike so fervent in their pursuit of growth?

    The reason is that our present money system can only function in a growing economy. Money is created as interest-bearing debt: it only comes into being when someone promises to pay back even more of it. Therefore, there is always more debt than there is money. In a growth economy that is not a problem, because new money (and new debt) is constantly lent into existence so that existing debt can be repaid. But when growth slows, good lending opportunities become scarce. Indebtedness rises faster than income, debt service becomes more difficult, bankruptcies and layoffs rise.

    Central banks used to have a solution for that. When growth slowed, they would simply buy securities (usually government bonds) on the open market, driving down interest rates. Investors who wouldn't lend into the economy if they could get 8% on a risk-free bond might change their minds if the rate were only 5%, or 2%. Rates that low would stimulate a flood of credit, jumpstarting the economy. Today that tool isn't working, but central banks are still trying it nonetheless. With risk-free interest rates near zero, they continue creating money through the same means as before, now calling it "quantitative easing". The thinking seems to be: "If you have more money than you know what to do with and are afraid to lend it, how about giving you even more money?" It is like giving a miser an extra bag of gold in hopes that he'll start sharing it.

    Most commentators interpret Bernanke's remarks as signalling the possibility of a new round of quantitative easing. If so, the results will likely be the same as before – a brief churning of equities and commodities markets, but little leakage of the new money into the real economy. In all fairness, we cannot blame the banks for their reluctance to lend. Why would they lend to maxed-out borrowers in the face of economic stagnation? It would be convenient to blame banker greed; unfortunately, the problem goes much deeper than that.

    The problem that we are seemingly unable to countenance is the end of growth. Today's system is predicated on the progressive conversion of nature into products, people into consumers, cultures into markets and time into money. We could perhaps extend that growth for a few more years by fracking, deep-sea oil drilling, deforestation, land grabs from indigenous people and so on, but only at a higher and higher cost to future generations. Sooner or later – hopefully sooner – we will have to transition towards a steady-state or degrowth economy.

    Does that sound scary? Today it is: degrowth means recession, with its unemployment, inequality and desperation. But it need not be that way. Unemployment could translate into greater leisure for all. Lower consumption could translate into reclaiming life from money, reskilling, reconnecting, sharing.

    Central banks could play a role in this transition. For example, what if quantitative easing were combined with debt forgiveness? The banks get bailout after bailout – what about the rest of us? The Fed could purchase student loans, mortgages or consumer debt and, by fiat, reduce interest rates on those loans to zero, or even reduce principal. That would liberate millions from the debt chase, while freeing up purchasing power for those who are truly underconsuming.

    More radically, central banks should be allowed to breach the "zero lower bound" that has rendered monetary policy impotent today. If investors are unwilling to lend even when risk-free return on investment is 0%, why not reduce that to -2%, even -5%? Implemented as a liquidity tax on bank reserves, it would allow credit to circulate in the absence of economic growth, forming the monetary foundation of a steady-state economy where leisure and ecological health grow instead of consumption.

    One thing is clear: we are at the end of an era. No one seriously believes that we will grow ourselves out of debt again. There is an alternative. It is time to begin the transition to a steady-state economy.'

    http://www.guardian.co.uk/commentisfree/2012/sep/03/debt-federal-reserve-fixation-on-growth
  • Banking Quotes

    posted by Keito
    2012-07-25 21:47:00
    Mayer Amschel Rothschild 1828 “Allow me to issue and control the money of a nation, and I care not who writes the laws.”

    Thomas Jefferson: 1816 “If the American people ever allow private banks to control the issue of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their fathers conquered.”

    President Andrew Jackson: 1829-1837 “You are a den of vipers! I intend to rout you out, and by the Eternal God I will rout you out. If the people only understood the rank injustice of our money and banking system, there would be a revolution before morning.”

    President Woodrow Wilson: 1916 “I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the civilized world. No longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men.”

    "Some of the biggest men in the United States, in the field of commerce and manufacture, are afraid of something. They know that there is a power somewhere so organized, so subtle, so watchful, so interlocked, so complete, so pervasive, that they had better not speak above their breath when they speak in condemnation of it." —Woodrow Wilson

    President Franklin Roosevelt: Nov. 21, 1933, “The real truth of the matter is, as you and I know, that a financial element in the larger centers has owned the government since the days of Andrew Jackson.”

    David Rockefeller Sept. 23, 1994 "This present window of opportunity, during which a truly peaceful and interdependent world order might be built, will not be open for too long — We are on the verge of a global transformation. All we need is the right major crisis and the nations will accept the New World Order."

    George Herbert Walker Bush: September 11, 1990: “Out of these troubled times, our objective—a new world order—can emerge. Today, that new world is struggling to be born, a world quite different from the one we have known.”

    "David Rockefeller is the most conspicuous representative today of the ruling class, a multinational fraternity of men who shape the global economy and manage the flow of its capital. Rockefeller was born to it, and he has made the most of it. But what some critics see as a vast international conspiracy, he considers a circumstance of life and just another day's work... In the world of David Rockefeller it's hard to tell where business ends and politics begins" —Bill Moyers

    "We know in the not too distant future, a half dozen corporations are going to control the media.
    We took this step (merger) to ensure we were one of them" —Time Warner spokesperson.

    "I am concerned for the security of our great nation; not so much because of any threat from without, but because of the insidious forces working from within." —General Douglas MacArthur

    "The real menace of our Republic is the invisible government which like a giant octopus sprawls its slimy legs over our cities, states and nation."-- Mayor (1918-1925) John F. Hylan of New York.
  • The Coming Storm

    posted by Keito
    2012-07-25 22:07:52
    “Then we shall have only corporate currency, and a government of the corporations, by the corporations and for the corporations—a “soulless” corporate republic.” U.S. Money vs. Corporation Currency by Alfred Owen Crozier, 1912
  • The Fed Grants $7.77 Trillion in Secret Bank Loan - Now Do You Understand Occupy Wall Street?

    posted by Keito
    2012-07-21 12:29:06
    It's an absolute travesty that one of the most honest and principled politicians in America has lost his place in the senate. Here he is explaining why Occupy exists, and why it is so important.

    The political system needs to change. When Wall Street and big businesses control it... you're gonna have a bad time.