November 2011


Money
Get away
You get a good job with good pay and you’re okay
Money
It’s a gas
Grab that cash with both hands and make a stash
New car, caviar, four star daydream
Think I’ll buy me a football team

Money
Well, get back
I’m all right Jack
Keep your hands off of my stack
Money
It’s a hit
Don’t give me that do goody good bullshit
I’m in the high-fidelity first class travelling set
I think I need a Lear jet

Money
It’s a crime
Share it fairly
But don’t take a slice of my pie
Money
So they say
Is the root of all evil today
But if you ask for a raise
It’s no surprise that they’re giving none away

“HuHuh! I was in the right!”
“Yes, absolutely in the right!”
“I certainly was in the right!”
“You was definitely in the right. That geezer was cruising for a bruising!”
“Yeah!”
“Why does anyone do anything?”
“I don’t know, I was really drunk at the time!”
“I was just telling him, he couldn’t get into number 2. He was asking why he wasn’t coming up on freely, after I was yelling and screaming and telling him why he wasn’t coming up on freely. It came as a heavy blow, but we sorted the matter out”

The Euro is currently the poster child for a fiat money. To fully understand why it is only necessary to look back at how money, free market money originated. From that analysis, it is easy to see why the current fiat monies are in trouble.

Exchange and trade originated as direct [barter] exchange. This direct exchange requires a coincidence of wants. Without this coincidence of wants, no exchanges are likely to take place due to very wide individual valuations within the two goods or commodities being valued for exchange: rather than providing a surplus value, the exchange would likely provide a deficit.

Thus various commodities arose on the market that due to their exchangability value, became conducive to indirect exchange: that is to say they started to function as money due to their ease of exchange for other goods/services, as they gained value for this service, in addition to any value they held as commodities with intrinsic value.

Gradually one or two commodities came to dominate in the commodity that held the service of money, that allowed and improved indirect exchanges: these were the metals gold & silver, but also some of the more abundant metals, copper etc. The various metals continued this convergence towards a single money: the reason? Simply because the less monies that exist, the more indirect exchange can flourish, the values of exchange become easier to know. If you have to calculate the exchange values between two monies, this is another barrier to overcome before you can actually complete the trade you first undertook to complete.

The ‘Euro’ was the embodiment of this truth of convergence. It was inefficient to have 20 different national monies. Far more efficient to all use the same money. The problem arose because of government. Governments have held the money monopoly, through which they can expropriate their populations through taxation. The Euro was however a monopoly of a different stripe: it removed the money monopoly from the various governments right at the point, where to ensure their survival, they would undertake massive devaluations. With the Euro controlled centrally by a group of primarily two countries, France & Germany, this can only happen if they allow it. The problem is of course up to this point they always did allow it: now they are not. Hence the breakdown of the European periphery who had come to rely on money expansion to facilitate their production deficits.

A non-fiat money, the free market money, gold, would never have allowed the periphery countries, or any country to borrow and continue to borrow at such low rates, thus allowing the problem to grow to such large proportions that the very survival of the country is at stake. Very high time preferences would have continued to raise the market rate of interest until the point where time preferences were forced to fall and present value consumption fell. No such signal was ever delivered by the fiat money…until now.

The result of that signal however is so unexpected and painful, that the only alternative is to reject that money and create a new fiat money. This may work for a time as most do not really understand that money is only a commodity that facilitates indirect exchange, if the goods and services do not actually exist to exchange, the money created cannot actually serve any purpose. The only way out of the box is to curb the consumption in present value and raise time preferences, viz. save more capital goods

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Bernanke seems to be readying QE3 for launch:

Nov. 28 (Bloomberg) — The biggest bond dealers in the U.S. say the Federal Reserve is poised to start a new round of stimulus, injecting more money into the economy by purchasing mortgage securities instead of Treasuries.

Fed Chairman Ben S. Bernanke and his fellow policy makers, who bought $2.3 trillion of Treasury and mortgage-related bonds between 2008 and June, will start another program next quarter, 16 of the 21 primary dealers of U.S. government securities that trade with the central bank said in a Bloomberg News survey last week. The Fed may buy about $545 billion in home-loan debt, based on the median of the firms that provided estimates.

The Federal Reserve is switching from buying Tresuries to MBS paper again. Will history rhyme?

ICAP Plc is preparing its electronic trading platforms for Greece’s potential exit from the euro and a return to the drachma, senior executives at the inter-dealer broker said Sunday.

ICAP is the latest firm to disclose such preparations, joining the growing ranks of banks, governments and other key players in the global financial system whose officials are worried enough about the stability of the common currency to be making contingency plans for a possible break-up.

Europe looks to be heading back to individual currencies. Categorically the wrong thing to do. Of course the ‘euro’ was also a mistake that was always likely to fail due to the political ramifications.

flippe-floppe-flye finally posts something that is heading towards correct.

But of course we must “take the hits now” because, after all, we’re capitalist and that’s what capitalism is all about, no? Has it ever dawned on you that none of this horseshit was capitalism in the first place? So now you want to cure a socialism problem by capitalistic means? Good fucking luck with that.

Of course the problems have been created by Socialism. Which means that Socialism cannot solve them. Capitalism can, but not without the pain. Liquidation is necessary. It cannot be avoided. The longer it is put off, the worse it will be.

Where does all this stuff that you’ve heard about on this blog – the victim, feminism, the gay rights movement, the invented statistics, the rewritten history, the lies, the demands, corruption, discrimination and all the rest of it – where does it come from? For the first time in our history, Americans have to be fearful of what they say, of what they write, and of what they think. They have to be afraid of using the wrong word, a word denounced as offensive or insensitive, or racist, sexist, or homophobic and it still gets worse.

Clearly it originates with the ‘State’ or the coercive power. However let’s not forget that historically, after the fall of Rome and the onset of the ‘Dark Ages’ it was the Church that emerged as the ‘State’. Tribal chiefs, who grew into minor Kings, and even later, still bent their knee to the Church. It was only much later that Kings threw off the constraints of the Church, in no small part due to Martin Luther and Henry VIII of England.

As we are sure you are aware there is a real concerted effort going on lately of worldwide attacks on Christian icons. Congress and the Administration must take more steps to protect religious freedom around the world, said a member of the U.S. bishops’ Committee on International Justice and Peace. This notion is well-received by our staff but the rules apply here as they do anywhere and they are simply this –

Why? Religion has always sown the seeds of war. Intolerance, ignorance, all over a subject that is metaphysical. However private property should be protected by ‘law’. In countries that have no private property rights, there will always be problems, and not just for religions. The problem raised however is when under our current sovereign governments model, private property violations take place in different areas of monopoly control.

That matters that come under siege within the confines of the United States are always treated first and foremost. And our research has indicated that there is plenty of seizing going on right here in our own country, and whilst the government is part and party to some of it, we nonetheless feel the need to make all of us aware.

“Religious freedom is not solely freedom from coercion in matters of personal faith; it is also freedom to practice the faith individually and communally, in private and public,” said Bishop Ramirez. “Freedom of religion extends beyond freedom of worship. It includes the freedom of the Church and religious organizations to provide education, health and other social services, as well as to allow religiously-motivated individuals and communities to participate in public policy debates and thus contribute to the common good.”

Again, private property rights should be respected and protected by recourse to the law. Religious groups are no more, or no less special than any other individual. It is the failure of government to protect private property through law that is at the root of the problem. Government itself partakes in violating property rights constantly, but claims exemption, that governments violations are legal. This hypocrisy will of course rot from the inside out.

Unfortunately, recent events tragically show that religious freedom is under attack in many countries around the world. A Pew study showed that Christians, more than any other religious group, face some form of either governmental or societal harassment in 133 countries.

Tolerance of anti-Christian attitudes in the United States is escalating. Recently, a woman in Houston, Texas was ordered by local police to stop handing out gospel tracts to children who knocked on her door during Halloween. Officers informed her that such activity is illegal (not true), and that she would be arrested if she continued.

In Madison, Wisconsin, the Freedom from Religion Foundation distributes anti-Christian pamphlets to public school children entitled, “We Can Be Good without God.”

Its not simply religious freedom…it is ‘freedom’ in its entirety. All freedoms that fall under property rights are under constant attack from government.

The entertainment industry and syndicated media increasingly vilify Christians as sewer rats, vultures, and simple-minded social ingrates. The FBI and the Obama White House brand fundamentalist Christian groups as hate mongers and potential terrorists.

Even a casual observance of the facts reveals growing isolation of Christians as a people group, especially school age believers. Faculty and peer efforts to convince public school children that America was not founded on Christian ideals, and that our forefathers actually wanted a secular society, permeates public school interaction. History revisionists labor to eliminate any and all contradictory historical evidence from public school curriculum, and mockingly stereotype Christians as unenlightened fringe.

Entertainment industry, educational industry, take your pick, every industry which is subject to government regulations will find that areas, and possibly in the case of education, which is wholly controlled and regulated by government, will be subjected to the dumbing down process.

Is the Fabian process of gradualism taking modern America down a similar path? Perhaps. For the past five decades Americans have allowed the liberal Left to defend the use of public funds for pornography, explicit sex education, and anti-Christian curricula. The Hollywood elite have denigrated Christian values and mocked the virtues of purity. The highest courts in the land have ruled with contemptuous decree against God, against prayer, and against the free expression of religion. Is it any wonder we have become the most profane and violent society in the industrialized world?

Left, Right, it makes no difference. Government is predicated upon Socialism. Socialism is the control of the many by the few. The few do not want the many to actually have or possess the cognitive abilities to think and reason, to be exposed to any ideas that might stimulate them to actually question the status quo. Thus the grinding suppression of ideas.

Taxes that are set to expire: from the Wall St. Journal.

The WSJ takes a look at a variety of taxes that are about to expire year end, the expiring tax cuts of 2012, and what new taxes go into effect or expire in 2013:

Expiring in 2011
• 2% Social Security payroll-tax cut for employees
• Alternative minimum tax patch
• IRA charitable contribution for people older than 70½.

Expiring in 2012
• Bush tax cuts of 2001 and 2003.
• top tax rate on wages reset to 39.6% from 35%
• top rate on long-term capital gains to 20% from 15%
• Special 15% rate on dividends
• estate-tax provisions.
• 10 million lower-income families and individuals restored to the tax rolls

When you increase taxes, government raises the time preference of all those whom it taxes. This reduces production, in that the longer, more roundabout production methods must be abandoned, with shorter, less productive methods employed. Not only is production lowered, but also the employment that results from the longer processes.

Thereby government, through it’s gross mismanagement of its own spending, viz. running current account deficits, exceeding the borrowing ceiling, prosecuting wars that it cannot afford, requires increased taxation, in part simply to service the interest payments on already incurred debt, so that it forces the higher time preference onto individuals and the general economy.

Clueless.

FIRST Greece; then Ireland and Portugal; then Italy and Spain. Month by month, the crisis in the euro area has crept from the vulnerable periphery of the currency zone towards its core, helped by denial, misdiagnosis and procrastination by the euro-zone’s policymakers. Recently Belgian and French government bonds have been in the financial markets’ bad books. Investors are even sniffy about German bonds: an auction of ten-year Bunds on November 23rd shifted only €3.6 billion-worth ($4.8 billion) of the €6 billion-worth on offer.

The panic engulfing Europe’s banks is no less alarming. Their access to wholesale funding markets has dried up, and the interbank market is increasingly stressed, as banks refuse to lend to each other. Firms are pulling deposits from peripheral countries’ banks. This backdoor run is forcing banks to sell assets and squeeze lending; the credit crunch could be deeper than the one Europe suffered after Lehman Brothers collapsed.

Consider the three ingredients for recession: a credit crunch, tighter fiscal policy and a dearth of confidence. In aggregate, European banks’ loans exceed their deposits, so they rely on wholesale funds—short-term bills, longer-term bonds or loans from other banks—to bridge the gap. But investors are becoming warier of lending to banks that have euro-zone bonds on their books and that can no longer rely on the backing of governments with borrowing troubles of their own. Long-term bond issues have become scarce and American money-market funds, hitherto buyers of short-term bank bills, are running scared.

September’s sharp decline in industrial orders is an early sign that companies are cutting back. Andreas Willi, head of capital-goods research at JPMorgan, notes that SKF, a Swedish firm that is the world’s largest maker of ball bearings and a bellwether of industrial demand, gave analysts a cautious assessment of its future revenues in mid-October. That guidance suggests a further softening of investment demand. Consumers are also likely to defer big purchases as long as the crisis is unresolved and credit is scarce.

A drop in demand for capital equipment, durable consumer goods and cars will strike at the euro zone’s industrial heartland, including Germany. Ms Boone reckons GDP will fall by around 0.5% in Germany next year and by the same amount in the whole zone. In September the IMF forecast that the zone’s GDP would grow by 1.1% in 2012 but estimated that if European banks were deleveraging quickly (as they are now), the economy could shrink by around 2%.

During the credit boom, cheap capital flowed into Greece, Ireland, Portugal and Spain to finance trade deficits and housing booms. As a result, the net foreign liabilities—what businesses, householders and government owe to foreigners, less the foreign assets they own—of all four are close to 100% of GDP. (By comparison, America’s net foreign liabilities are 17% of GDP.) Much of their debt is being financed by local bank borrowing or bonds sold to investors in creditor countries, such as Germany. Ireland is unusual in that a large chunk of what it owes is in the form of equity (all those American-owned factories and offices) and so does not need to be refinanced.

With a few exceptions, the benchmark cost of credit in each euro-zone country is related to the balance of its international debts. Germany, which is owed more than it owes, still has low bond yields; Greece, which is heavily in debt to foreigners, has a high cost of borrowing (see chart 2). Portugal, Greece and (to a lesser extent) Spain still have big current-account deficits, and so are still adding to their already high foreign liabilities. Refinancing these is becoming harder and putting strain on local banks and credit availability.

The higher the cost of funding becomes, the more money flows out to foreigners to service these debts. This is why the issue of national solvency goes beyond what governments owe. The euro zone is showing the symptoms of an internal balance-of-payments crisis, with self-fulfilling runs on countries, because at bottom that is the nature of its troubles. And such crises put extraordinary pressure on exchange-rate pegs, no matter how permanent policymakers claim them to be.

The prospect that one country might break its ties to the euro, voluntarily or not, would cause widespread bank runs in other weak economies. Depositors would rush to get their savings out of the country to pre-empt a forced conversion to a new, weaker currency. Governments would have to impose limits on bank withdrawals or close banks temporarily. Capital controls and even travel restrictions would be needed to stanch the bleeding of money from the economy. Such restrictions would slow the circulation of money around the economy, deepening the recession.

External sources of credit would dry up because foreign investors, banks and companies would fear that their money would be trapped. A government cut off from capital-market funding would need to find other ways of bridging the gap between tax receipts and public spending. It might meet part of its obligations, including public-sector wages, by issuing small-denomination IOUs that could in turn be used to buy goods and pay bills.

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