We are at a critical moment in the history of politics and markets. Everyday the U.S. government stares into the fiscal and monetary abyss and chucks trillions in hoping that will be enough to finally fill it.
[Ron: Actually the Trump Administration is in the throes of eliminating the Federal Reserve System (the Fed) and with it usurious, fractional reserve banking AND income taxation. the Fed is being forced to buy back all the debt it has fraudulently foisted upon the US nation so that in the end the Fed will own it all and be put into liquidation. At the same time the US Treasury is taking back responsibility for issuing US money and that money will be asset backed and usury free. A similar proceedure is being instigated all over the world with Rothschilds' owned or controlled Central Banks being eliminated and sovereign nations assuming responsibility for issuing the national money supply on a usury free basis.
Private for profit banksters have no place in issuing money for ANY nation. Every sovereign nation has the monopoly right and responsibility for issuing its own money and currency. The only reason our world suffers unemployment, poverty and war is that private banksters have been granted free, monopolies for creating and distributing money subject to interest (usury) with the entire process being free of supervision and auditing. The result has been a global dystopia. THAT is about to change. Among other things, the Covid-19 operation is the mechanism for achieving the restoration of freedom and prosperity for ALL the inhabitants of this planet.].
We stand by hoping that it will work to reflate markets collapsing from a catastrophic mispricing of assets. At least some of us do. I don't.
I hope it fails and it's because those inflated prices fuel the very global political order that is anathema to human advancement.
President Trump is finally happy with his FOMC chair, Jerome Powell, after he opened the door to unlimited quantitative easing, nearly unlimited liquidity injections via the repo markets, and taking interest rates to the zero-bound.
[Ron: This author fails to grasp what is really happening.].
It's clear that the Keynesians at the Fed and the U.S. Treasury Dept. have no answers to the problems in front of them. They are simply doing what they always do when a crisis hits. Print money and hope someone still believes the new money is worth buying.
[Ron: The difference this time is that the Trump Administration has total control of what is to be done with the "new fiat debt tokens" (currency) being created out of thin air by the Fed pursuant to Congressinal legislation AND the Fed is being forced to buy trillions of USD worth of outstanding unrepayable debt.].
The sudden supply and demand side shock to the global economy thanks to the COVID-19 coronavirus is outside of their frame of reference.
[Ron: I disagree. The Trump Administration is doing what ANY responsible community must do in a crisis situation in which a huge portion of the population is being forced to cease working and must rely on the rest of the community for sustenance. As about 70% of GDP is represented by domestic spending the governing authority has a duty to ensure that those forcibly unemployed are still in receipt of sufficient currency to enable them to maintain essential domestic spending. That spending automatically enables essential businesses to keep employing people and maintaining their operations. Apart from that, much of the additional government spending will be used to maintain essential infrastructure and enable strategic businesses and facilities to continue to function. Failure to do these things would result in major societal chaos and collapse of the future viability of the community and its production base and infrastructure.
Governments automatically do this in wartime and must do it whenever there is a major crisis. The difference on this occasion is that the Trump Administration is not going to allow private banksters to profit from the community's need to issue money to ensure that the nation survives with minimal damage to the population and the social and economic basis for its survival. To understand this process see eg: WHAT A GOVERNMENT CAN DO WITH ITS OWN BANK: THE REMARKABLE MODEL OF THE COMMONWEALTH BANK OF AUSTRALIA - http://abundanthope.net/pages/Political_Information_43/WHAT-A-GOVERNMENT-CAN-DO-WITH-ITS-OWN-BANK-THE-REMARKABLE-MODEL-OF-THE-COMMONWEALTH-BANK-OF-AUSTRALIA.shtml].
To best understand what we're dealing with here you have to understand how these people think. Modern economic theory, based on John Maynard Keynes' General Theory of 1936, imagines the economy as a bathtub.
And that bathtub is constantly draining as credit is destroyed. Money flowing out of the economy has to be replaced with a constant stream of new money, in the form of new credit, or the bathtub drains. The velocity of new money has to keep up with old money or the system drains.
When the credit markets through the transmission of new money through central bank policy cannot keep the bathtub full, governments are supposed to step up with fiscal spending in the form of deficits to make up the difference.
[Ron: WHY?!. The reason that shortages of money occur in "the bathtub" is twofold. First the banksters keep removing and keeping currency (wealth) in the form of unearned interest payments. Second the banksters regularly restrict the issuance of money by reducing the volume of loans made. This is done to cause recessions and depressions so that the banksters can foreclose on properties for pennies on the dollar. The properties thereby stolen were pledged as collateral for the banksters' loan of currency created out of thin air by electronic strokes on computers. It should be obvious to any rational observer that the banksters' are the entities that ensure that the bathtub isn't kept full in order to further increase the wealth they steal from society.].
This is then supposed to stimulate aggregate demand and, in turn, the credit markets to keep everything running. This is done to chase an ever-larger global gross product as measured by total spending.
I'm not here to argue as to why this is patent nonsense. I'm going to state that it is. And I state this without reservation. Because it places zero value on the cost of stealing time from the productive portion of the society to reinforce the unproductive.
That's why all money printing is fundamentally immoral. It's thievery, transferring wealth from the holders of money, savers, to the holders of the new money.
Ron: By money printing I assume this author means fiat currency. Money and currency are legitimate mechanisms used by human beings to facilitate the transfer of goods and services. In a highly spiritually developed society such mechanisms are not necessary but on our planet they are still necessary. Every sovereign nation has the monopolistic right to create and distribute money and currency. That responsibility cannot be legitimately granted to private, unsupervised interests not properly audited directed and controlled by the community.
It follows that it is not theft for legitimately authorised governance authorities to create and issue money and currency. BUT, it is corrupt to grant private interests that right and it is theft for private banksters to create and distribute money or currency and to charge interest (usury) on it. The theft is exacerbated by banksters creating excessive amounts of currency and providing it to their corporate mates as is typically done in our world today. Why? Because the first receivers of the new currency get the advantage of using it before it devalues all existing currency in circulation. ].
That deflation the Keynesians are so afraid of is the cure to the malinvestment of capital resources incurred because of the last time the government intervened to refill the bathtub.
This system is ultimately a Ponzi scheme piling credit on top of credit until there are no more greater fools to sell the new debt to.
That's the system we have. And it is collapsing precisely because the world is situated at the point where there is little more productive capacity to monetize and pull that capital from the future to fund the new debt.
It won't matter if we replace this system with pure helicopter money without debt as the Modern Monetary Theory proponents argue. We're already doing a version of this by having the central banks buy debt they never intend to sell on the open market. So, the debt itself is without value. The money printed from those bonds is as much scrip as if the bond had never been issued.
[Ron: I disagree for the reasons stated above.].
But the time lost by people in pursuit of uneconomic ends by mispricing risk and servicing debt they are legally obligated to service is real.
[Ron: No one is legally obligated to sevice debt created by fraud. The current global monetary system is a giant PONZI scheme forced upon the global population by threats and violence by corrupt governments who claim a monopoly on force and violence in order to enslave their citizens for the benefit of the private banksters who control them.].
So, ultimately, the difference at this point between what we're seeing from the central banks now and MMT is a matter of accounting and definitions.
[Ron: I disagree. Correctly understood MMT involves legitimate governance authorities properly creating and distributing usury free money for the benefit of the whole community. It is the banksters' PONZI scheme monetary and banking systems that resort to accounting and definitional subterfuges.].
But it doesn't solve the basic problem that prices for things want to adjust downward.
[Ron: In a properly organised and controlled monetary system the value of money remains stable and, by and large, so do prices. The main variable will be the availability of particular goods and services.].
And I remind you that Russian President Vladimir Putin understood all of this when he said no to OPEC+ and lower oil production. This pricked the so-called "Everything Bubble" and now the world is realizing just how important it is for capital markets to reflect the actual goods and services produced by the global economy not a financialized multiple of that value thereof.
It's important to make this distinction now because as a hard money advocate and Austro-libertarian thinker it is my duty to counter the rising cries for someone to save us from the evil monster of deflation.
Those most vulnerable to this deflation of asset prices are the very people who own most of those assets and use them as cudgels to beat down those who oppose them - think Iran, Venezuela and, most openly, Russia.
The good news is that they can't stop the deflation. Quantitative easing is, in the real world, deflationary because it signals to markets that the central banks are so scared of the future that it cannot be trusted to market forces. This feeds the fear and causes people to hoard money they feel is undervalued, thereby exacerbating the cycle.
And today those monies are the U.S. dollar, gold and, to a lesser extent, Bitcoin.
So, the Fed fired its bazooka. Congress fought for a couple of days in deciding how it would provide its support through government means (fiscal policy) and refill the bathtub.
The rest is now a question as to whether anyone still believes this makes any sense anymore.
The ECB has yet to truly act other than to intervene in the sovereign debt markets to keep rates from exploding to the upside. The Fed has the floor right now, the ECB is waiting in the wings. It will have to act soon as Italy's economy goes into freefall and its insolvent banking system has to find a way to survive.
Because the reality is that what is really on trial here is the idea that any of these people in charge have, collectively, one single clue as to what to do to stave off a complete collapse in confidence.
[Ron: I disagree. Arguably the Triodity of Presidents Trump, Putin and Xi know exactly what has to be done to remove the banksters' usurious banking PONZI scheme and to set our world upon a stable, confidence building, footing.].
I would like to think that they do, that they know in their heart of hearts that I am right and allowing asset prices to deflate is the cure and the inflation of prices has been the real disease we should be fighting alongside COVID-19.
[Ron: Inflation has been caused by excessive creation and distribution of currency by banksters. THAT is what devalues the currency. THAT situation is a necessary consequence of the usurious fractional reserve global banking system. Banks HAVE to continuously create ever more money because the only mechanism for creating it is the issuance of loans on which the banks charge interest; BUT THE BANKS NEVER CREATE ANY CURRENCY TO PAY THAT INTEREST. Hence there is always a shortage of money to service loans and the system would collapse if new loans for ever more money are not made.].
And the main reason they will not allow that deflation is because it directly threatens their personal power base and the fundamentally unfair system they have profited from through the extraction of unearned wealth at the world's expense.
I believe some of them understand this dynamic. The true vultures, like George Soros and Paul Singer, I'm sure do. But the vast majority of these people in charge in both Europe and the U.S. believe what they were taught about the economy in college and today execute plans based on what they have been miseducated in.
And that actually scares me far more than if they were doing this out of pure malice.
Incompetence honestly applied is far more dangerous than honest evil disingenuously applied. Because in the former environment the purely malicious can operate with few if any controls.
The world is changing before our eyes while we hide out in our homes hoping not to catch a virus that won't do more than inconvenience most of us. But we are still at a crossroads. Putin set us on the path to choose deflation, he understood the problem as I am presenting it here.
Now will we take the opportunity handed to us and tighten our belts, demand debt liquidation, corporate bankruptcies and a complete reshuffling of the global capital order?
Or will we choose to be complicit in debasing our ourselves through access to the printing press, actively devaluing our time and labor by accepting digits added to our bank balances which no one sweated or worked to produce?
Bankruptcies or bailouts? That's the question you should be asking yourself. You can't bail out Main St. without bailing out Wall St. To bankrupt Wall. St. and all that it funds a lot of us will have to be bankrupted as well.
[Ron: I disagree. Wall Street will be bankrupted by eliminating usury. THAT will actually benefit Main Street and the general population including all real workers and producers in our world. Why? because it will eliminate the bankster parasites and their associated parasitic minions including economists, income tax collectors and the financial commentariat.].
Are you willing to take that pain to stop the money machine that funds the death and destruction? If not then you aren't serious about wanting it to end.
[Ron: Arguably the pain involved in transferring to a genuine non-usurious sovereign government controlled money system will essentially be bourne by the parasites who currently live off usurious fractional reserve banking and the casino-like machinations it breeds. Ordinary folk can only benefit from a system that doesn't charge them interest for money or tax them to pay banksters for the money their governments should create and distribute free of interest.].
And that's the real crossroads we have come to, the one where we realize there is no such thing as a free lunch and our inaction to this point makes us culpable for what has been done.
[Ron: Ordinary folk don't ask for a free lunch, they just want to be able to keep and personally allocate the income they create with their own labour. Moreover, the suggestion that we are all culpable for having been born into a demonically controlled slave world is a bit THICK! Apart from the fact that most people are mind controlled from cradle to grave by the banksters and their minions, including the commentariat purveyors of bullshit as exampled by this article, anyone sticking their head above the parapet in our world tends to get it blown off along with real prejudice to his/her family.].
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The views of individual contributors do not necessarily represent those of the Strategic Culture Foundation.
WHAT A GOVERNMENT CAN DO WITH ITS OWN BANK: THE REMARKABLE MODEL OF THE COMMONWEALTH BANK OF AUSTRALIA - http://abundanthope.net/pages/Political_Information_43/WHAT-A-GOVERNMENT-CAN-DO-WITH-ITS-OWN-BANK-THE-REMARKABLE-MODEL-OF-THE-COMMONWEALTH-BANK-OF-AUSTRALIA.shtml].