Mish: Instead of having dinner with those that caused the problem and have no idea how to fix it, the powers that be should have instead sat down with the top 20 economic bloggers as to what to do. We have been warning about these problems for years.
Volcker, for his part, says the current crisis has its roots in the lack of restraint inherent in the highly leveraged system that evolved, one in which winners were rewarded exorbitantly but the inverse didn't seem to hold.
"The first panacea for a mismanaged nation is inflation of the currency; the second is war."
-- Ernest Hemingway, Esquire magazine, September 1935
"Price stability is something which is essential for the poorest and the most vulnerable of our citizens. They cannot protect themselves against inflation. It is extremely important that we understand that moderation today is necessary if we want to deliver price stability in the medium term."
- European Central Bank president Jean-Claude Trichet, April 2008
I am posting up here, above all comments
I am posting up here, above all comments, or my post will be squizzed, I am afraid, to one letter wide, eventually.
No sense in trying? I am not that gloomy. Go ahead, do what you can. You're funny when you say I lay you down low. Am I?
Anyway, so you think to be a slave with a bronze chain is better than to be a slave with an iron chain, huh? Well, getting down to nitty-gritty of it, of couse it is better. Every ounce that you can make your chains lighter by, is a relief. The only question is, what is the point of living if you're a slave of someone else? If you have no liberty, then what good is your existance?
I am not talking it in an absolute sense. I understand that one can not have a liberty to kill another, because that conflicts with that another's liberty to live.
I am saying that if the fruit of my labor constantly taken away from me, in order to be given to somebody else who doesn't want to produce, how is this not a slavery? If a fruit of my labor is taking away to provide for projects I have no need in, (NASA), how is that not a slavery? I can not make a desicion and deny my support, in fact what I think doesn't even matter. What matters is what others think on how they can use the fruits of my labor! Again, since I have mentioned NASA, there are a lot of people who do not want to work, but they think that it is nice to be proud of having a space program (since their own image brings them little sense of accomplishement), so they vote to take from me by force and plow it into the dumbest thing ever (just my private view on NASA). Again, I would not mind if they plow their own money only into their projects, and leave me alone, but this is not how soviets did it, so we must neccessarily emulate every dictatorship, to feel the pride.
So, now let us consider your point of gradually changing to the better, over the course of say, 20 years. Do you think it is possible? I disagree.
I would see your point on doing things slowly, reasonably, thinking it through, if I saw that at the end we would arrive to some semblance of freedom.
But, I happen to think that while you do your slow changes to the good, there are going to be a lot of changes to the bad. I don't think this progression to worse could be slowed down. The reason I don't think so is that first, we can see that whole history of United States is nothing but a regression. It all went down hill, since the beginning. This downhill movement never stopped nor slowed down. Secondly, I don't think this progression to the worse could be slowed down, is because we all are subjects of this system. You and I, are equally enslaved. And so are others. Anyone who doesn't want to sit still, and wants to be productive, immediately find himself enslaved in favor of needs and grandiose desires of those who is not producing.
(I keep saying this, but I feel I have to explain. I am reffering to everyone having right to vote, even if they are net consumers of total economic product, which removes any possible reason for them not to approve ever more grandiose projects and greater wealth redistribution.)
And so, since we are all subjected to it, what is happening is people are looking for ways to escape this predicament. One way would be to corrupt a government official, another to participate in black market, yet another is simply to remove oneself from this economy by moving out to china. This happens every day, and it only gets deeper and deeper. Noone likes government thieves in his pokets, but not everyone talks about it, like I do, pointing at wrong system as a root cause, and searching for solution. It is for this reason, every single bad law, will always produce several worse laws, because whoever is affected unfairly by such a law, must find a way to escape unfair prosecution, and the easiest way to do this is by quietly breaking the system.
Therefore, while you may make a progress of say 20% in five years, the situation will worsen 40% in the same time period. While you and others who feel great in this system because they have already found how to escape the persecution by unfair taxation, there are others who has not yet found the way. But they will find it, just as sure as a weed is striving to find sunshine, even if it had to break a concrete slab to do it. And so, while your comfort will not neccessarily decrease, other people will find themselves in much worse situation 20 years down the road, and not in the better one. Thus, I have explained, why I think slow betterment isn't possible at all.
Also, you may ask yourself why did founding fathers not have chosen the slow betterment, by begging the crown for one mercy after another.
I think that is because a major change needs to be done, in order to stop people from ruining the state even further. But this major change will not be accepted, as I ahave pointed out in my earlier post, because of Universal Suffrage.
Now, I didn not call for a revolution. You are attributing this to me for no reason. I said, America is gone, and will never return. I said forget it. If revolution should happen to day, this might be the worst thing that could happen, because the people are mostly thieves these days, and such will be the result of the revolution too. What we create is in our own image. As majority is living on other people taxes, so the outcome of any possible revolution will most likely be disastrous, not unlike the bolsheviks revolution in Russia.
And one more point. I think you can try, and may-be even you should try, that is if you'd ask me should you try or not. I just happen to think that it won't work, as all the current clusterfuck of laws is a result of some people trying to walk the three legged cow, while others are trying not to be stepped on by it. Perhaps, I am very mistaken in my analysis, and after hundreeds of years of moving to the worse, we are going to move to the better. Still might be, no matter how skeptic I am about it.
Greenspan
Hard to believe Greenspan isn't familiar with the work of vonMises since he was an Ayn Rand acolyte and held beliefs at that time consistent with honest money and fiscal restraint. In fact, if he didn't have those principles as a matter of public record, it is likely he would not have gotten away with the policies he actually implemented. Confidence on the part of investors, with an emphasis on the con, went a long way for lucky Al. Real Ben, considering what he has on record, may not be so lucky.
The idea that the global housing boom was caused by abundant global savings has little merit. Real Ben promotes this baloney too. A more likely cause for the dramatic fall in long term interest rates was the dramatic fall in short term rates promoted by Central banks. This furthered the ability of speculators, many of them with access to inside information, to massively borrow short and lend long. They were secure enough to borrow knowing that currencies like the yen would be capped by a dirty float and that when rates rise they go up in baby steps. That game may be over for now, maybe for good as far as the U.S. dollar but there are other currencies for the same trade.
He says we are idiots
Greenspan is implying that we are such imbeciles, such idiots, that we can't even put 2 and 2 together to see that it doesn't equal -4 !
Global saving glut? And why then our debt went up like never before? At best, we had finally surfaced at the zero between being in red and being in black. If his fathom saving ever existed, then deducting the debts that is what we will see. But savings glut? Who he thinks he is kidding? I would add a contempt of court. It is no different than to say "the girl just slide right under my car" when being asked why you run the child over. Judges call it contempt.
When he took his post at the FED, he should have stepped down if he thought that the FED mandate is impossible to achieve. Now that he took the pay and failed, he should be prosecuted according to the importance of his failure. I vote for a death penalty for Greenspan. I think he clearly deserved it for not achieving any stability and full employment.
Thumbs down on this dog.
death to Greenspan
That's very harsh, cRavias. Greenspan was a fine fellow in 1963 but he became too ambitious. It is the system and the ridiculous mandate that needs to go. Price stability consistent with full employment guarantees inflation every time the Fed head has to go in front of the congressional representatives. Full employment calls for easy credit and low interest rates, always, always, always. Ask Senator Sarbanes and the many other interogators like him. Congressman Paul is one of a kind. Greenie may look good before Bernanke gets finished. He thinks inflation is all in our heads!
What about America?
He knew all about inflation. We can's say he didn't understand what he was doing. He is on the record, saying that inflation robs The People. Next thing we know, he is offered a cushy job and all he ever does is robbing The People.
Now, since 2000, The People have lost 50% of their money, because of what Greenspan has done to our money.
The constitution says, that an office not authorized by the supreme law of the land is null and void. Why haven't we seen Greenspan petitioning Supreme Court about an unconstitutional mandate that he was asked to work on?
Where does simplicity and pretend patriotism stops and loyalty to American Republic begins? If no one is ever asked to follow the constitution, no one ever will. He didn't have orders. He had offers. That was all it took to sell America wholesale to FED stockholders.
I don't think I judge too harshly. Obviously the call for the thumbs down is just my opinion, (and actually, a bit premature without a court making their moves) but what do you think, is it ever a good time to ask our bureaucrats to answer? Is it ever a good time to take a moment and think of our country? Of our people?
If he was given orders, then he shall name those who had given him the orders that he knew will impoverish The People. Did he objected?
Are we ever going to grow-up and take care of things, or are we forever going to be fooled by "uh, I donno, I was just following my mandate", while Republic is being robbed blind?
It needs to start somewhere, with someone. These officials who act against our constitution need to start to be prosecuted and the supreme court needs to wake up and read the constitution once again.
No one should be allowed to assume a big office without actually ever being responsible for anything. This is the real moral hazard, in that we never seem to want to ask questions. This creates the situation that officials expect to do anything they might want, without any regard to the real law of the land.
Am I an extremist?
Am I an extremist
Your views are no more extreme than mine as far as what you think is right. I only mean that if you want to persuade people, in a peaceful manner, that classical American republican government is in their best interests, it is best to show how their own policies work against their own stated objectives. If you are frustrated to the point of armed revolt, you are farther along than I. You could be right - under the current rules it may not be possible to carry the day by rational discussion and persuasion. The Supreme Court has been a huge disappointment. They should be directed to interpret the Constitution within the context of the times in which it was written. While there would still be room for disagreement, the idea that these judges can make up new meanings to agree with what they think is appropriate for today would be dispensed with. The balance would still be there if not for absolutely inexplicable appointments like John Paul Stevens and David Souter. The socialist team never, ever seems to make these mistakes. I'm going to read Breyer's book again to see if it makes any more sense on second reading. I can't imagine it could.
You're right about that
I am not good to persuade people when they don't want to know or care. Certainly, I won't find any understanding, and I know that.
An armed revolt? I don't think so. I know that constitution call for that. But I doubt there are enough people that have enough conviction to follow the supreme law. People are listening to Hannah Montana and the like, and not to supreme court or the constitution. Obviously, the supreme court would never ever interpret this part of the constitution as anything else but our "right to vote" to redistribute fruits of someone else's sweat. We are reduced to thieves, and told to be proud of that.
Besides, personally, I believe that bloody revolutions have 100% chance of ruining the future, and that American Revolution was an exception.
My best recommendation (however useless) would be to peacefully refuse to participate in both, the politics and economy (refusal to use FED's note for trade) for as long as we forcefully denied freedom under pretense of bettering our circumstances.
Anyway, this is pointless. Either way you act, it does not matter anymore, because it is too late. Not every change is a reversible one, and I believe we have gone through a series of irreversible changes. I guess our little blogging here, is nothing but ranting. You may still believe in Supreme court judges, but I don't think it matters. For every two of us, there are a million people who only want to know about iPod and similar things. You can't take millions of uneducated people and show them the light. They won't see it, and they won't know what are you talking about. It is irreversible. America is no more. Gone, baby, gone. Can't you see that.
Can't you see that
Yes, I can see that.We can only try. It is worth the effort. If I had the chops for it I would run for office myself. We can always take seps to protect ourselves whatever the circumstances. I would prefer that at least the society not break down into mob rule. In the meantime, I believe we should pursue our ideals even if we don't succeed 100%. Whether it is worth the effort is a personal decision.
If you were a president
What would you do? Remember, this is a democracy, if the majority doesn't like what you're doing, then you're out or neutered.
Now, what would you do?
What would you do?
Very big question but I;ll have a start. Of course I would prefer to put the country on a monetary system that did not include a national bank and the U.S. Treasury would be directed to coin silver and gold as it is brought to them by U.S. citizens, including corporate entities based here that could bring mined metal from anywhere they could find it. But this is not going to happen in todays environment. If we have a total crash I would be proud to lead the populist charge against big banks of all kind and implement such a system.Even those who want to redistribute income would have to fix this problem if they don't want to end up like Weimar,Argentina or Zimbabwe.
But for now let's stipulate that the system that exists trudges on a bit longer. There are some politically possible things that can be done to at least establish that this country intends to handle its debt responsibly. Other countries will be pleased to help by not dumping our bonds and notes. First we commit to not wasting money on wars of occupstion and nation building, no matter how well intentioned. We can't afford these. WE can still spend on defensive weapons, all we need, including Star Wars type defenses and better. We emphasize special forces that can take care of business in a day. If the intelligence is wrong, we're out of there at once. No more deficit spending at the national level. No excuses, no exceptions. You get 2 years to balance. The House of Representatives is recognized (again) as mainly responsible for spending. The President can contribute ideas and veto legislation. If he doesn;t veto the entire bill what is left goes into law unless congress doesn't want it under those conditions.
There is so much. Take Social Security. I don;t want it but if it is there, I would recognize that it is, and always has been, mostly a welfare program. Many don't like this idea but when it was originally proposed the intent was to eradicate extreme poverty for the elderly who had no place else to turn. Since elderly is not 65 any more we must move the program from 62 - 67 to 70 -75 before any benefits can be drawn. This program has always counted on some of the potential recipients not collecting due to death. The disability part can be returned to the States and private charities. The age for Medicare goes up as well. Medicare was a 60's add on that is becoming unaffordable. Medicare gets scaled back to a basic plan that gives access to care from doctors and very liberal use of nurse practicianers. Hospitals are mostly obsolete so most care would take place in smaller, less institutionalized settings. There could even be house calls For the more radically expensive procedures we would have to go with high deductible insurance policies. No more guarantees that every test and operation is covered but after, say, the first $5000 things would be covered. Don't want to bankrupt people but if they are willing to put up significant money this plan would surely work better than the one in place now. If we have to raise the cap on income exempt from contributions so be it. It should be small and the employer part could be waived with the explanation that those costs will only be passed on as higher prices for consumers and lower salaries for the employees.
I don;t want to ramble on' I mean to say that if we take some steps in the right direction the country could still be looked upon as a good credit risk. We don't have much time. Even now, if they can actually sell 30 year bonds into the international market for 3 - 4% this would greatly help us fix the longer term problems. I am not sure this could be done but why the choice was made in the 1990's to move to fnancing almost everything short term has escaped me. This is one of the things that introduced the great leverage into the system.If I were a cynic I would say it was designed to do just that. But I am merely a skeptic.
Even I won't be voting for you
My friend. As much as I want for America to be again blessed with success and freedom, I don't think I'd be voting for you, if, of course this wasn't just a game we play.
Why? Because you want to keep the dirtiest of American secrets, such as there is HELL-NO-FREEDOM as everyone gets robbed to support the welfare state, in favor of painless existence of those who did not give a fuck. Social Security and Medicare are communist features and these should have no place in capitalist society. Roosevelt was a liar, why can't we simply acknowledge that and move-on? The biggest feature that makes these programs wrong, unneeded, and characteristically communistic is that they are not voluntary. And that is one and single thing that helps them to "keep the nose above the water". If the voluntary involvement is allowed, these programs will be gone as if they never were here. Why wouldn't these programs survive in voluntary environment? Because communism can only survive by forcing other into it.
Why should I cover ANY operation or cost for elderly at all? They are at the end of their long life. How did it happen that they have no savings? If they have rejected the American values, and trusted the government for their survival, shouldn't they now receive exactly what they believed? Let the bankrupt government repudiate, default otherwise screw them, so that there is fairness. Why didn't they raised the questions we raise today? Let me guess, the life was easy. Many boomers paid for few retirees and they believed that by paying a little bit to the government, it is possible to receive the same security as if they were saving a lot for their own future. The believed this easy promise, even though this envolved to become a traitor to American Ideals. And these are the people that in your opinion shall receive some help for their part of covardly destructing the nation, and they shall not learn the lesson?
In regards to a monetary/fiscal system, we have to have a crash. There is no question. We must end-up as Zimbabwe, or Weimar Republic, if we want to change anything at all.
To propose that there is a way to fix the system without a crash, would mean that our economy will remain eight miles high, comfortably on a cloud of irredeemable promises. It is no different than a drug user who just wants to stay high all the time, calling that a "solution".
We have got here by borrowing like there is no tomorrow. How can we be back to honest dealing if we are not to pay back the borrowed? And if we are, then the borrowed will have to be deducted from our output well into the future. And the people in the future aren't the same as people in the past, So, how are you going to make the people of the future to pay for the people of the past? With freedoms?
Let me reiterate this in another way:
If you were to borrow ten years of your future, receive them and live your life "to the fullest" completely consuming those ten years, then by the time you're done consuming, you would have a gap of ten years right in fron of you, that cannot be lived through. Now, you either have to keep borrowing from ever more distant future of you have to drop dead. Or, you could borrow 2.5 years out of every decade for next 40 years, to cover what you have consumed. This means that you'll be living using only 75% of every year's worth for both savings and expenses, and pay back 25% of every year's worth for next 40 years towards your debts. I am sorry, but there is just no escape from reality. What about the interest? What if you have already borrowed more than 10, or if you don't have another 40 in front of you, from which you could spend 25% repaying?
This is exactly what China is doing, living in the dirt while we are getting fat of their work. They are paying their country back by rebuilding what was destroyed or not built. They are returning the fun borrowed from the future.
Notice how there is little freedom in china. That is because most would prefer not to participate in repayment. Why should they? The ones who borrowed it all are all retired! They now are creeping around wanting more help to keep their dirty little hearts going. They are proudly displaying the stamps and medals from the government, in support of their stinking claim that just because they were soldiers of evil, they were nevertheless soldiers. They have killed China, but this truth can not be let out. They have borrowed and spent their sons future. So, repayment must necessarily involve lack of freedom. Their sons future is now used to rebuild China. Sons aren't liking it, but hey, thanks mom and dad, there is no choice.
This is what we have to go through. There is no magical way of fixing the system and not suffering. If you keep the counterfeit money system in place, then you will have deficits. Because our economy is on drugs, and has been on drugs since 1913, it is only capable of returning a dollar if two dollars were borrowed to finance it. So, you either have to borrow (deficit), or you have to let it fall and be negative, and then the foreign obligations must come due.
So, you must take away the future of Iraqi children if you want to replace what you have borrowed from your own. You would have to force them to price their oil in dollars. If you choose not to have deficits, then you will have the deepest recession ever.
phantasm08037,
I understand that I have asked you an unfair question. You, never the less, still replied and stated what is your quick estimate on what to do. I am not blaming you in my reply. I am just showing that there is nothing anyone could do. America is still around us, but not unlike a dead body in a coffin. We can take a few more looks at it, but we can't save it. America is NOTHING without freedom. Repayment will involve removal of freedoms. We can only go further into forcing others to lend their output to us, or we would have to start repaying thus completing the burial of America.
We shall direct the biggest thanks, not even to Roosevelt or Greenspan, but to countless number of everyday "Americans", who sold this country out for a shiny promise of communism. I am talking about those same boomers, who didn't save for their own old years, and who were happily spending our future on their own muscle cars. They have spent their young years discovering the alternate realities, and when it become clear that they will have no way of earning enough to catch up on savings, they signed up to the same evil they always called "commies" or "reds", for they had no choice. Between their own wellbeing and that of their offspring, they have chosen their own. Thanks mom and dad.
You could theoretically, just switch to gold and default of any and all promises of government and declare that those who trusted the government now need to reread the constitution and be damned for no obeying it. America would then remain America, and it wouldn't need to remove freedoms, because it wouldn't need to repay anything. Those who followed the reds will all perish and become workers, cheaper than even Chinese ones. Those who didn't, will own their labor. But this isn't possible to do either because of Universal Suffrage. There is no way the majority will acknowledge their own sins. They would never accept "each for himself" principle of freedom, for they have already finished their parties, now they need your labor to keep their oxygen mask on.
No sense in trying?
What a long winded, big bunch of gloom and doom. I hold that title in my circle of friends but you lay me low. Life is too short. Have a bottle of sunshine and come back to the real world. There are lots of things that can be done to make the current system incrementally better, although, not without some pain. There is just not suffcient support for an immediate switch to an ultra-libertarian position on monetary policy right now. It will take at least a 20 year plan to implement a new system based strictly on the U.S. Constitution. Wish it weren't so but unless you want blood in the streets (I don't), even if only "qualified" persons were permitted to participate in political life, these same people are likely already successful enough in life not to want throw everything out at once. I/we/they don't need a revolution. We just want steady, intelligent, incremental reform. You may be for Ron Paul or revolution if you don't get your way at once. I am not one to let the perfect be the enemy of the good.