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| Joined: | Mon Nov 21st, 2005 |
| Location: | California USA |
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quote:
Looking at the fundamentals from a Keynesian perspective, the Chinese should stop saving immediately and spend everything they have on bridges that dead-end into Himalayan mountains. Construct an armada of unsound merchant vessels. Erect colossal monuments that consume vast resources and spur economic activity.
quote:
China has finally restructured and privatized all of the big national banks. The Agricultural Bank of China (the third largest) recently had its umbilical cord cut and now must sink or swim on its own. This is the opposite of the direction being taken in the West.
Anyone,
I read through most of the article above and at a point in time and space the contradictions grew to an intolerable size and velocity.
In other words: the bull-crap became too deep and I had to step back to fundamental principles as a more efficient and accurate method of viewing the subject.
The subject is money as money fuels economy.
The author of the piece linked (the bull-crap shoveling artist) claims to know this or that about China, The U.S., money, finance, economy, savings, and investment.
How about some fundamental facts first?
1. When money is equal to the things that money buys, one dollar for one thing to buy, then there is economic stability.
That must be understood, in my not so humble opinion (hard earned), before moving onto any thoughts about political economy.
2. When money is made legal, or not-legal (outside of law), then the economy is politicized into a political economy where politicians control the economy.
Einstein has been quoted as saying number three:
3. Everything should be made as simple as possible, but not simpler.
If the reader can now view political economy from these three beginning principles, along with me, we can better understand what is happing now in our world (and cut though the bull-crap).
When money grows faster than the production of things that money can buy there will be a reaction to that change from a stable economy and that reaction will be an increase in the price of the things that money buys. This is very complicated when this principle is viewed on a very large scale where many different moneys are being manufactured and supplied to many people who manufacture and supply the things that money can buy. This principle is simple, the effect is complicated.
Remember this first principle well before moving on. Work your brain some with this principle and make up simple examples that help illustrate the truth of this principle.
Example:
If China makes 1 billion shoes this year and 1 billion shoes next year and 1 billion shoes for 10 years in a stable economy the price of a shoe is 1 Yuan per shoe for 10 years.
Don’t get caught up in entertaining all the things that can cause the shoe to rise or fall in price. The idea here is to know the effect on the price of the shoe caused by the production of money that is produced by the politicians in the political economy.
For 10 years the price of the shoe does not change because the number of units of money does not change, and that is how the supply of money does not cause a change in the price of the shoe.
Now, after 10 years of a stable economy, where the price of the shoe remained the same for 10 years, and the price of the shoe did not change from 1 Yuan for 1 shoe for 10 years, the politicians decide to change the supply of money.
The politicians decide to change the supply of money in one of two ways, according to their plan, the plan they decide to execute, they decide to either double the supply of money or decrease the supply of money by half.
The politicians run some computer models to see what happens to the price of shoes in both cases as the politicians decide to change the supply of money.
A. Doubling the supply of money will double the price of the shoe. The shoe will go from 1 Yuan per shoe to 2 Yuan per shoe.
B. Decreasing the supply of money will reduce the price of the shoe by half. The shoe will go from 1 Yuan to half of a Yuan per shoe.
If you, the reader, run that math problem through your head until you know it and see it for what it is, in reality, you can then begin to understand what the political economists call “inflation” and “deflation” and you really don’t need to know much more than that single and simple principle.
Which choice do you think the politicians will pick?
When the politicians pick choice A the politicians have a lot of new money to spend, and that is one reason why the politicians take over the money making business.
Now I see the very serious need to make this simple principle one step more complicated. The reader may never understand why the politicians would ever voluntarily choose the second option where the choice is to remove money out of the economy and by that choice the politicians begin the process of “deflation” – where the price of the shoe goes down instead of the price of the shoe going up.
The next step here, and now, is to look at something called “The Business Cycle”. The reasoning behind the willful choice to remove money from a stable (or booming = “inflating”) economy is to cause a recession, a depression, a crash, and a down cycle on purpose.
What on earth, you may wonder; would someone, or some group of people, be thinking when someone decides to cause an economic down turn by that decision to reduce the supply of money?
Here is where simplicity wins again against the complex answer. The idea is to cause price fluctuations on a predictable schedule where the politicians (and their business partners) know when prices are at the highest, the lowest, going up from low to high, and going down from high to low. The idea is to sell at the top and buy at the bottom.
This is not news, and this is not the simplistic fancy of an overly imaginative forum member, as many are likely to assume as they are apt to do when faced with simple logic as simple logic explains the unnecessary profusion of diversionary complexity.
Once the power of supplying legal monetary currency is in place, in the hands of those who control this power, that power can then be used to increase prices, decrease prices, and increase prices again – on schedule.
One of the best books that the reader can read to confirm this basic and simple principle is a book written by someone who saw this practice in operation. This book was once infamous. Now this book is well hidden under piles of bull-crap.
Here is a link:
http://www.mininova.org/tor/2152570
If the reader has learned something simple from my explanation and the reader wishes to further test out his or her new found knowledge, to apply that knowledge as wisdom, then I can proceed to illustrate that type of chore with thought experiments as the reader and I begin to think and act like political economists. We can pretend to be The Boss and see how our plan manages to stabilize our economy – if you wish.