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| Joined: | Mon Nov 21st, 2005 |
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This is precious; Mike Whitney (propagandist?) is being schooled.
Here is Mike’s question:
And how in the world is the Federal Reserve going to keep the banking system functioning when earnings can't even cover current liabilities? Do the banks have some secret source of revenue we don't know about or is the system headed for disaster?
Here is the answer:
The banks don’t have a secret source of revenue. It’s right out in the open. They will take their junk mortgages to the Federal Reserve and borrow the money at full face value. The government will be left with the junk.
It then can either take over the bank, as the Bank of England did with Northern Rock when it went bankrupt early this year, or it can let the bank “earn” money by stiffing its customers some more.
Do you have that understood; Mike doesn’t – it seems.
Later Mike offers the tired old apology for usury:
The Federal Reserve's low interest rates were the main cause of this unprecedented housing bubble
Do you see that? Mike blames economic trouble on a failure to INCREASE interest rates.
That claim followed this:
So the principle here is “Big fish eat little fish.” Wall Street will be bailed out, and banks will be allowed to “earn their way out of debt” as they did after 1980, by exploiting retail customers, above all credit-card customers and individual borrowers. There will be a lot of bankruptcies, and people will suffer more than ever before because of the harsh pro-creditor bankruptcy law that Congress passed at the behest of the bank lobbyists.
The claim that the economic problem (housing bubble) was caused by a failure to INCREASE interest rates followed this:
Michael Hudson: The credit crisis derives from “the magic of compound interest,” that is, the tendency of debts to keep on doubling and redoubling. Every rate of interest is a doubling time. No “real” economy’s production and economic surplus can keep up with this tendency of debt to grow faster. So the financial crisis would have occurred regardless of wage levels.
Quite simply, the price of home ownership tends to absorb all the disposable personal income of the homebuyer. So if wages would have risen more rapidly, the price of housing would simply have risen faster as employees pledged more take-home pay to carry larger mortgages. Stagnant wages merely helped keep down the price of houses to merely stratospheric levels, not ionospheric ones.
This is obviously a case of the capitalist mentality fogging accurate perception. The creation of a currency monopoly enables the power to INCREASE interest, without the enforced monopoly there would be no power to increase interest or even charge interest for the use of money. Banking markets would compete to offer the highest quality SERVICE for the lowest possible cost in a FREE BANKING economy.
Here is where it becomes precious:
Mike (the capitalist) says:
10 MW---The housing market is freefalling, setting new records every day for foreclosures, inventory, and declining prices. The banking system is in even worse shape; undercapitalized and buried under a mountain of downgraded assets. There seems to be growing consensus that these problems are not just part of a normal economic downturn, but the direct result of the Fed's monetary policies. Are we seeing the collapse of the Central banking model as a way of regulating the markets? Do you think the present crisis will strengthen the existing system or make it easier for the American people to assert greater control over monetary policy?
The response:
Michael Hudson: What do you mean “failure”? Your perspective is from the bottom looking up. But the financial model has been a great success from the vantage point of the top of the economic pyramid looking down? The economy has polarized to the point where the wealthiest 10% now own 85% of the nation’s wealth. Never before have the bottom 90% been so highly indebted, so dependent on the wealthy. From their point of view, their power has exceeded that of any time in which economic statistics have been kept.
Note: The answer above is true; however the answer is offered by someone who supports the anti-thesis solution. The anti-thesis to criminal capitalism is criminal socialism.
The criminal capitalists are the 10 percent who control the power to commit legal crime. When the anti-thesis solution is implemented the same 10 percent who control the power to commit legal crime merely change the name on their sign in front of their false front.
Out with the old boss and in with the new boss is called Hegelism or Thesis, Antithesis, Synthesis; also known as “divide and conquer”.
The old bad guys commit crime while in office where the old bad guys are supposedly defending things like liberty, justice, peace, and such things. The old guys pretend to champion the FREE MARKET when, in fact, their actions prove that they are enforcing an extortion racket that is only FREE from any moral sense of right and wrong; including the rightness of being honest.
Enter stage LEFT: The new bad guys claim that the FREE MARKET is to blame for all this trouble and therefore the new bad guys must control the power to enforce punishment against bad guys. How long does it take for the new bad guys to increase the rate by which the flow of wealth is extracted from honest working people by that interesting device called interest?
Right now there is a curious experiment going on in Venezuela where the power flow from the honest working people to the legal criminals is slowing down (less power is going to the legal criminals) and that measure of power flow can be accurately and simply measured by the price of oil (the price is lowering).
If the price on money can be known, then that flow of power in Venezuela can be even more accurately measured as power flows from the honest people who create power to the dishonest people who steal it. If the price (interst charge) on money lowers, then the flow of power lowers as the power flows from the honest working people who create power to the legal criminals who steal it.
What is the interest rate charged by Hugo Chavez with his new bank? Does Hugo Chavez offer a quality product for the price he charges? Is Hugo Chavez money better and less expensive money compared to the competition?
The dupes won’t know why it is importation to increase the quality of money. That is a simple way to discriminate between a dupe and someone who is not duped.
I kept reading and found this:
quote:My strong suggestion to the reader if the reader is inclined to favor one SIDE or the other in the argument between criminal capitalism and criminal socialism is the read the following with great care:
In order for the American people or any other people to assert greater control over monetary policy, they need to have a doctrine of just what a good monetary policy would be. Early in the 19th century the followers of St. Simon in France began to develop such a policy. By the end of that century, Central Europe implemented this policy, mobilizing the banking and financial system to promote industrialization, in consultation with the government (and catalyzed by military and naval spending, to be sure). But all this has disappeared from the history of economic thought, which no longer is even taught to economics students. The Chicago Boys have succeeded in censoring any alternative to their free-market rationalization of asset stripping and economic polarization.
http://anarchism.net/scienceofsociety.htm
St. Simon and those types of people constituted the type of socialism that was expressly rejected by Engles in the communist manifesto.
The anti-usury bunch figured out the whole racket and many of those people offered proven methods of avoiding the entire dynamic of dishonest power politics. The link I suggest to the reader as a very insightful work is but one of many similar ‘out of the box’ solutions to this power struggle we fact as a species.
Last edited on Sat Aug 30th, 2008 10:33 am by Joe Kelley