Who Steers the Businesscycle?
03-22-2017, 12:32 AM,
Who Steers the Businesscycle?
The value of a new plumbing fixture is the leak it fixes and the other troubles it eliminates.
What's leaking is purchasing power. When we examine this problem in greater detail we see that bankers have secretly tapped into our flow supply.
Start with an economy with unemployment and poverty and business losses and failures more frequent than profit and start-ups and a general opinion that "business is bad," There may or may not be a war going on to keep the corporations well fed. Most of the money being spend originates in people refinancing their homes to consolidate debt at a lower interest with a little extra "too fix up the house," but actually to meet daily expenses.
Suddenly an area of investment becomes hot, the future this new possibility will bring looks rosy, entrepreneurs begin proposing and bankers begin lending. The initial loans go to pay start-up efforts and the deposits begin transferring faster. Demand appreciably increases for many suppliers and for the stores where wage earners, now earning more, make their purchases. This increase leads to the first intimation that "business is looking up." Some businesses seek loans showing the bank lending officers increased sales or orders for their product. The banks begin making new loans. The opposite of a deflationary spiral begins. Good times are ahead.
Eventually, however, the loans that got the ball rolling again must be returned to the bank, principal plus interest is owed. The lending continues however, only the increase in profits and wages that firms pay out begin to be crowded out by payments of interest and principal to banks. Despite the continued lending at approximately an even rate, prices of goods level off and even dip slightly, as the wages and profits fall taking consumption down with them. The banks are taking in more than they are putting out since the steady flow of loans entering the economy is now less than payment of interest plus principal that is being withdrawn. In this early stage of deflation, aggregate losses creep ahead of aggregate profits in the domestic production sector. More businesses are shutting down than are opening up. Revenues look good, but the money is going to the financial sector and not to the household band production sectors.
Here the deflationary spiral begins. And here the banks slow their lending. In fact, seeing where things are headed the big banks decide to short the economy and go for assets rather than a share of profits. They do this by selling their stock in corporations. By buying government securities. And then they call in loans and drastically slow new lending. This contraction drops the economy into the deflationary spiral, speeding up the damage that simple "Loan-Less-Than-Principal-Plus-Interest" was accomplishing. (Let's invent the acronym LLTPPI .)
When Big Finance pulls the plug in this way, they first set themselves up to profit from deflation by selling their gold with the phony sales pitch that "inflation is on the way", and by liquidating their holdings of US stock. They will of course buy back all of the gold and the stock for far less then they sell them for, after the deflation bomb has devastated their victims. (We are discussing a social wrong, whether legal by the laws of bought lawmakers or not.)
The Deflation Conspiracy must work in secret. The deflation must be concealed. To accomplish this monopoly corporations are enlisted to raise prices in a deflation. The price of gasoline and fuel for factories are raised by the oil monopolies. The government, pretending not to notice, refrains from anti-Trust enforcement. In a deflation in an economy where there is no great monopoly power and where there is not much debt prices people pay will go down, but were debt obligations are big and are not allowed to shrink this side of bankruptcy and where there is monopoly power to raise the price of a basic such as fuel, the prices of consumption good remain level or even increase while the deflation works its way through job loss, business and household bankruptcies, a fall in the price of capital assets, including houses thrown on the market by depression. The crooked politicians and hireling media commentators and journalists keep selling the false idea that inflation is the problem. Hireling economists teach the false doctrine that depressions are only cured by letting liquidation run its course, by austerity -- which in reality is merely an intellectual defense - with lies - to protect the continued taking of distressed assets by the Moneyed Elites behind the deflation.
The Banking Power, speculators on the sure-thing deflation scam, end up draining the three real-sectors of their assets -- households of their only real capital, their homes and trucks and cars in foreclosures and default seizures -- the production sector in bankruptcies and reorganization under new ownership, and government in a reduction of its services and the selling off it public utilities, from highways, to parking meters, to government lands, to laboratories and defense systems that were originally funded as national security.
Over time the Bankers accumulate the wealth of the world in this way. Managing the business cycle is their chief occupation. The corporations are simply their amassed takings run buy hired help. Governments and religious denominations and colleges and civic groups and the scientific institutions all must yield to the lords of credit and money expansion and contraction. Naturally, a group that practices strict ethnic, cultural and religious separatism and that is far flung among the cities of the world will be the ones who in he end must occupy this master predator niche in the economic ecology, in human affairs on the planet.
The answer of course is simple. Each nation must nationalize credit and separate credit from banking. Banking is 1) paying for the safe keeping of money and 2) lending, as savings time deposit owners, to banks so that the bank's lending officer can lend large amounts to promising entrepreneurs or home buyers - and nothing else. As much as the stupid Austrian economists call for minimal government, the people should demand the smallest possible financial sector. The financial sector should be the handmaiden of the household sector -- totally dependent on the savings that citizens are willing to deposit in the bank. They should lend to entrepreneurs, the one with the best chance of turning a profit that comes in the door - considering time frame, risk, and all the fundamentals -- but not having resort to investing in securities or stocks or overseas or even out of state ventures.
Of course anti-trust must be greatly increased. Monopolies should be broken up and sold off as private single proprietorships or partnerships. Whatever cannot be run as either of those should be allowed to vanish or else, if the people vote for it, to be acquired as a public utility. But the people must realize this - whatever they take on as a public utility must earn its keep, because all government spending, under American-style social credit, will have to be paid for up front by direct taxation. There is no deficit financing or inflation financing by government. All money originates in the people and all government and government services comes directly from the purse of the voting and civic-minded active population. Also, taxes will no longer be withheld. When tax time comes the people will get a long itemized list of everything they are paying for and how much of their money goes to what. If I pay $18,000 in taxes, I need only look up $18,000 on the National Treasury website for a printout itemizing how much I paid for a bureau of standards, for upkeep of national highways and bridges, for airports, for the coast guard, for acquisitions by the Smithsonian institution, for water projects in the pacific northwest, for this and for that, but probably not for blowing up Moslem villages to please Zionist Money Lords who hold our national debt - because the entire national debt will be repudiated because it was fraudulently sold to the American borrowers. Fraud vitiates all contracts.============================== Exposing the lie of the hireling economics of money and banking Monetary/Macro/Banking economics a total failure: theory "QE" open market purchases "should have" increased U.S. bank deposits by complete monetary multiplier amount - but we got nothing! No domestic investment that the text books and politicians assume will occur.
We just had the Fed buy over a trillion in securities from the exclusive club of dealers who alone get to buy and sell from the New York Fed. Every banking and macro treatise and textbook tell us that open market purchases increase the monetary base and that that increase will result in an increase in total banking system deposits that is some multiple of the increase. If the required reserve ratio on checking and savings accounts are taken into account - in pure economy theory the increase in deposits -- purchasing power -- should be, say, five times the amount of the increase to the monetary base.
(Big banks and little banks have different reserve requirements, and different types of bank deposits have different reserve requirements -- but for the system as a whole they combine to one figure -- if that summary reserve requirement is 10 percent of deposits then the multiplier effect, in theory, would be 10 -- that is of course, if all of it is deposited and if the banks lend to the limit - which of course has not happened.)
In theory the QE money (money the Fed gave dealers for the securities it bought) adds to the monetary base. The monetary base is cash holdings plus reserves. The dealer gets a check from the Fed and either deposits in his bank or takes some of it as cash. When it is deposited it adds the total bank system reserves and is able to back new lending. But lending is not taking place.
Where is the purchasing power in our economy from this trillion that the Fed paid out to buy those securities from the dealers? Where the additional hiring power? Where is the debt paying power? Where is the investment in new productive capacity.
There are only a limited number of possibilities.
1) people are holding money as cash rather than depositing in banks
2) banks are getting the fresh reserves but are choosing to keep excess reserves (above what is required to cover loans outstanding) rather than making new loans.
3) the check the Fed wrote is being deposited in banks outside the domestic economy loop, in banks that don't lend in the US.
The boost to purchasing power, debt paying power, buying power, hiring power, building power, tax revenue power that should obtain from a trillion added to the monetary base - has failed to materialize because it has been lost in all three of the above possibilities.
Those dealers who got the check for the securities (the national debt they were holding, and sold to the Fed for high-power Federal Reserve money - found it better to
1) hold it as cash rather than as deposits in their own banks - since they have not intention of lending the money from their banks
2) what was deposited they have kept as excess reserves, as a conservative measure, knowing full well that the deflation premium will add to wealth faster and more sure than investing in some business venture in a United States in the midst of a deflationary depression (the murderous crushing depression, but one not fitting the totally worthless and academic definition of a recession -- a definition that does not notice that loss to 95% of the people is balanced by the gain to the 5% of a near equal amount -- the financial sector being counted in GDP along with burger flipping and Wal Mart Greeter as "service sector" earnings.
3) and yes, the dealers take advantage of the US dollar being an international reserve currency that can be invested anywhere, so that it ends up in dollar denominated deposits in other countries.
And this is how the Fed looks after our interests. I wrote you all of you about Andrew Mellon, who engineered the Harding-Coolidge prosperity with the sympathetic cooperation of Benjamin Strong, who died suddenly at age 55 one year before the deliberate margin-call-induced three black days of the Stock Market Crash, wherein, when the ticker was behind three hours the Rockefeller and Morgan banks bought up all of the middle class share ownership of American industry and at the same time caused the contraction of loans that shrunk the money supply by one third. Strong had always fought panics with liquidity. But under his successor, there was a tightening of the money supply. Also under strong, the Secretary of the Treasury, Andrew Mellon had been a member of the FOMC. But when Franklin Roosevelt took over with the New Dealers directed in finance by Morganthau and Baruch a banking reform was pushed through Congress in 1935 that removed the Secretary of the Treasury from the FOMC - the committee that is supposed to oversee open market sales and purchases of securities adding to the monetary base and by the complete money multiplier to the deposits from which business investment is came in the Roaring Twenties. But with the Administration kicked out of the FOMC there was a complete change of operation. Now Morgan and Rockefeller dealers dictated to the FOMC what purchases or sales they chose to make - and the FOMC would merely rubber stamp their decision.
That is what has happened with QE.
There is no one in the Fed at all interested in the public interest, and even if there was, the system is set up so they have no say in what will be done. The dealers determine the transactions, there is no real market, there is no Fed engaging in monetary policy to meet policy directives. The "policy" of the Fed and the guidelines for the Fed laid out by Congress are mere window dressing. The government is blind and powerless to what goes on in the Fed.
Economics is high deception. It is not the blind leading the blind, it is muggers paying hirelings to lie about what they see so as to lead the blind into a very dark alley that is in fact an economic killing field.
Don't think this is endorsement for those two blinding Austro-auric lights, Ron Paul and Peter Schiff. Yes, they are "against the Fed" but only because the Fed, if used as originally intended, as Benjamin Strong would have used it to fight purchasing power contraction with liquidity, with reflation. The gold system, or "competing currencies" system they want is deflationary, and provides a lower loop money that loses value which you will be paid in and a gold money with which you have to pay your debts and taxes. This was actually tried in Argentina following their hyperDeflation -- and the people rose up and threw out the system. (Prediction: The Tea Party and the Occupy movement will both carry "competing currencies" in on their shoulders -- that's how little people know about economics these days. You can't be for both Austrian Economics and the honest monetarism you are learning about here. One will kill you and one will cure you and you have to choose which you will support politically.
The switch to a base of gold from one of dollars would change none of this dynamic. "Rothschild" would be able to expand credit with gold and contract it. The banks would need gold reserves, making "Rothschild" the central banker of the central banks -- but "Rothschild" already is that in the current system. Banks can just as easily refrain from lending to American domestic enterprise with gold reserves as it does with Federal Reserve deposits and paper currency. American history has been a long nightmare of the gold standard booms and busts -- speculators building it all in the boom, and the banks taking possession of everything built in the default, in the bust.
Forget gold. Rather we must end private money control -- end the private Fed and the Financial Lords determining discount rate, reserve requirement and the buying and selling of securities by the "Rothschild" controlled money system. (As if going to a gold system would free you from Rothschild depredations, from debt slavery and expropriation of American citizen wealth.)
What is needed is a system that eliminates the entire game board upon which Macroeconomic and Monetary policy are now played. We must shut down the financial system as it now is and with it the phony economics that conceals more than it reveals of the organized larceny of the financial elites, crimes committed in the name of the public welfare. End it now and replace it with a new way of getting money into the economy.
What is needed is fiat money that enters the economy not as a loan, and not through the chain of elite Wall Street securities dealer to a Wall Street bank and then to any of those three places mentioned above, but not to the people and not to the companies they work for and not to the public sector that is financed from a share of citizens earnings but through borrowing at compound interest. The heck with all that noise.
We need simple fiat money - the national dollar -- which is simply deposits -- simply checking -- or banks are free to issue a check that can be circulated without endorsement - the old fashioned bank note. But the deposits will all be from one source only. There will be no fractional reserve banking. No money multiplier. Instead there will be the National Household Credit dividend, the only way new dollars enter our economy.
The Department of Commerce will authorize and create by fiat the credit dividend that goes to each citizen as a crediting of the citizens checking account. That is the Department will, out of thin air, provide free and clear an increment of purchasing power, that is, a deposit, to each citizen of every household. This fresh purchasing power coming monthly will provide sufficient aggregate demand to revive and build up a great American economy that is consumer based -- true consumer sovereignty -- because purchasing power in the hands of the people is the empowering of the will of the people -- it is the power to realize the will of the people distributed among the people!
Users browsing this thread: 1 Guest(s)