Financialization

One of the things that ails us in the modern age is we have yet to adjust our thinking to the modern economy. The great political-economic thinkers lived in a time when money was either gold, backed by gold or a fiat currency. The result is our political and economic debates are based in the logic of a world that no longer exists. The modern global economy is not based on fiat money or hard money. It is based on credit money, which has a unique set of characteristics.

For instance, the US government is no longer able to print up greenbacks and sprinkle them on the economy. Instead, when they expand the money supply, they expand lending, both domestic and global. It’s not just any sort of lending either. The central bank can buy up long term notes in order to drive down long term lending rates, thus expanding lending for capital goods. Alternatively, they can buy up short term debt and increase the amount retail lending. The Federal Reserve holds close to 2 trillion in mortgages, for example.

There’s no question that this new form of currency arrangement has had benefits to the West. Libertarians and goldbugs will spend hours arguing against this sort of currency manipulation, claiming it will lead to a financial collapse, but so far, the opposite has been true. The mortgage meltdown of 2008 did not result in a global depression. The worst you can say of it is the result has been a long, localized recession. The rulers look at current asset values and see a ringing endorsement of credit money and central banks.

Putting that debate to one side, there are longer term problems that come with credit money. One is the slow eating away of the middle class by eating away at small and mid-sized business. The most obvious example is the collapse of retail. The old joke was that Amazon turned big box stores into their showroom. Consumers would go to Best Buy to look at electronics, get free advice and then go on-line to buy them. This can only last for so long and the mass closure of retail stores we see this year suggests the end is near.

The libertarian argument is that the more efficient business has displaced the less efficient business, and that’s not completely wrong, but it ignores the salient aspects of this phenomenon. A world in which everyone either works for or buys from a global company run by a Bond villain is not a world most people want for themselves or their progeny. There’s also the question as to whether it is economically sustainable. Business needs customers and customers need jobs in order to have money to be customers.

There’s also the fact that Amazon would not exist without credit money. In a world of real money, Amazon would have gone bankrupt long ago. This is true of the social media companies that now control public debate. None of them would have made it past the hobby stage if not for the financial system’s ability to conjure credit money. In effect, we now live in a world where the rulers can make their money more valuable and your money worthless, simply by manipulating the amount of credit money.

There’s another way in which the financilization via credit money erodes social stability by undermining the middle-class. Take the example of industrial supplies. This has always been a middle-class, local business. The “value” added was the owners willingness to invest in their location and facility in order to meet the needs of their local customers in the commercial trades. They were almost always family businesses with the wife running the office and the husband running the shop.

The miracle of credit money has allowed investors to back the acquisition and consolidation of these mom and pop businesses. The way it works is investors back one business buying up other shops in the area. This allows the new owner to replace the previous owners with low cost salary men. It also allows for the consolidation of accounting, IT, human resources, etc.. This makes the over all business more efficient, giving libertarian economist a tingle in all the wrong places.

This increase in efficiency does not mean lower prices to consumers. It often means the opposite. In some areas, there’s no longer competition so prices rise. The economic gains from efficiency show up in the returns to the investors. The lack of community investment, like sponsoring local little leagues and social organizations, is also stripped out and returned to investors. This is great for a Bain Capital, but it is terrible for the local communities. Instead of communities, we now have areas populated by strangers.

Another useful example is education. Just a generation ago, a college diploma had real value that exceeded the purchase price. The financialization of college has not only decreased the initial value of the diploma, it has stripped away much of its long term value through the student loan rackets. The only people benefitting from college today are the people running the colleges and the money men financing it. The school makes millions staging mock combat with retarded black men and your kid gets saddled with the debt.

Credit money has unleashed financial pirates on the American middle class, turning every small town and family business into a Lindisfarne, in the eyes of our financial class. A big reason why the economic data looks good, but the the people are revolting is the social capital that held together the American middle has been financialized and moved to the balance sheets of global financiers. Increasingly, the relationship in the modern American economy is not between buyers and sellers, but between predators and prey.

At least when the Vikings raided a village, they did not demand that the locals celebrate their ruination. It was a raid and the local authorities tried to prevent it. That’s the other aspect of this that is eating away at our civic life. It used to be that government worked to reign in the financial tricksters, not because they cared about the suckers, but because it was bad for politics. Today, if the political class has anything to say about it at all, it is usually a celebration. The Danegeld has now become an institution.

When Alfred the Great faced off against the Great Heathen Army, he quickly learned that adherence to old customs and old ways was a liability. The world had changed. In fact, it changed so much that he nearly lost his crown before he could adjust to the new realities presented by the Viking raids. The Norse played by a different set of rules and they had no respect for the Anglo-Saxon ways. In fact, they sought to exploit those ways to their advantage. To survive, Alfred had to embrace new tactics and new methods.

Eventually, Alfred resorted to guerilla tactics, something previously seen as dishonorable by the Anglo-Saxons, to weaken the Danes and maneuver them into the decisive battle at Edington. The point here is that those old economic arguments from the libertarians, like those constitutional arguments from the Buckley Right, are no longer relevant. In fact, they are now hindrances. The modern pirates have figured out how to turn our virtues into vices. That means we will need new virtues and new tactics.

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james wilson
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Glad this did not wait for Monday.

anonymouse
Guest

Outstanding essay!!!

Ned2
Member

Question is, “How far can this present bag of tricks take us?”

Member

I’d love to hear some practical examples of what those new virtues and tactics would be (i.e., developing our own bartering system, no longer feeding the “beast,” etc.)

Can anyone lay out some clear things we can start doing today?

TWS
Guest

My best thought is some kind of frontier, something to go to, challenge and produce. Idk maybe open up the federal land in the west to productive settlement. Only those willing and determined to work it could stay. Boiling off would allow a concentration of the frontier spirit, honor and pragmatism.

A.B. Prosper
Guest
The frontier is over, has been closed for nearly a century. You aren’t getting another one under nay plausible circumstances If people wanted something like one , right now Wyoming and the Dakotas would be far more developed as would the far north of California and Alaska These areas are only marginally habitable and men and especially women do not want to live there. Like it or not, the US is fully developed which means no frontier, no liber-tard opt out of social costs Vomiting up more tract homes isn’t a frontier either. The best option you have and you… Read more »
karl hungus
Guest

space

TWS
Guest

I was promised space. Then a man called LBJ came along. He sold our patrimony for a mess of pottage.

A.B. Prosper
Guest
You underestimate the costs involved. Even if we has avoided the Vietnam war and the Great society costs , this would not have been enough for a sustainable space colony There is no positive ROI for such things do to lift costs , its a cash sink of unparalleled proportions We would have had a lunar base though or maybe a Mars base but the glorious space future wasn’t going to happen if you want to know where your patrimony went , you are using it. All our research and effort went into computers and all the geeks and techs… Read more »
A.B. Prosper
Guest
It would be much much simpler to colonize the Gobi or Siberia than Mars or the moon. Both are nearly empty Bruce Sterling the SF Author I’ll believe in people settling Mars at about the same time I see people settling the Gobi Desert. The Gobi Desert is about a thousand times as hospitable as Mars and five hundred times cheaper and easier to reach. Nobody ever writes “Gobi Desert Opera” because, well, it’s just kind of plonkingly obvious that there’s no good reason to go there and live. Space colonies are so expensive that no society can afford it,… Read more »
TWS
Guest
I wasn’t expecting moon or mars colonies with thousands of people. And of course they would have strict safety rules but you wouldn’t need a police state anymore than you do on the Apollo missions. Because you wouldn’t bring people that need policing. Most of a police officer’s job is frequent customers. Most people never get anything worse than a traffic ticket. The achievement is enough all by itself. And they’ve already written fiction of an entirely settled world including the Gobi. They’ve written fiction about deep sea colonies, living on Antarctica and man made islands. Yes, most of our… Read more »
TWS
Guest
The feds have millions of acres. Some of it is marginal done of it is great. We need to return to our pre-1965 pop in composition and numbers. When I was a kid there were fewer than two hundred million Americans. We can get back to reasonable numbers. Most won’t want frontier land anyway. The point isn’t to change society but give those who need a purpose greater than a cubical or a call center some options. And an incentive for those too weak to leave. I have no illusions about what it was like. I was raised by my… Read more »
Alzaebo
Guest

Space, eventually- the whites almost escaped.
The oceans. Aquaculture, mining.
The western states- big honking canals bringing meltwater from Canada.

Abelard Lindsey
Guest

All non-pioneering human cultures are inherently pathological and, thus, contemptible.

Doug
Guest
One example may be as simple sounding as prepare for quiet revolution, develop guerrilla tactics and insurgent methods of an underground economy. All most of us can directly effect is on our very local level. Something more attainable in rural like areas, small communities and enclaves. Where I live in WV there is a natural underground economy, and over the last few years it is increasingly embraced out of necessity because of the loss of the coal mining economy. The interesting part of how it functions is based on an economy of living as mind set. Do with less, repurpose… Read more »
notsothoreau
Guest

I wonder if we will see more folks step away from new technologies. The internet is becoming a marginal benefit, in a lot of ways. Blogs are disappearing and what’s left is worthless social media. We seem to love our cell phones but what benefits do we really get from them?

Countrymouse
Guest

I can suggest one tactic. We should pass a law that every public company must pay at least 1/3 of all employee compensation in voting, dividend-paying, common stock.

Next, we should pass a law that all private companies above a certain size (say, $50MM annual revenues) should do the same thing.

That way you have many owners, spread out in the hinterlands, with real voting power.

Allan
Guest
Or we could just repeal all laws of incorporation and its associated features of limited liability, artificial personality, and perpetual lifespan. (As I recall, general partnerships also, in Louisiana, have one or more of these features.) Afterward, every business would be organized as a sole proprietorship or a partnership. This would cripple giant enterprises, for they are utterly reliant upon the incorporation trick (i) to protect their many untrusting owners from each other and (ii) to provide the irresponsible owners (who are generally strangers to each other) with the easy liquidity that undermines attachment to any community. After abolition, the… Read more »
merrell denison
Guest

“No ass to kick, no soul to damn…that is the corporation.”
Mike Mansfield – Montana Senator

Sam J.
Guest

“…pass a law that every public company must pay at least 1/3 of all employee compensation in voting, dividend-paying, common stock…”

That’s a good idea.

We could also take the Supreme courts own rulings to their logical extension. They said corporations are people and that they can spend unlimited money in elections then we should treat them like people and if the corporation commits crimes we should put all the officers, the board and all high officials in jail. They should be treated like people with liability.

Drake
Guest

GAAP rule changes destroyed the whole stock-option for employees game a decade ago. Now it’s no longer worth offering options to anyone except Executives on a contract.

Alzaebo
Guest

Plus shares of everything government.
We paid for every brick, wire, pipe, vehicle, and square foot of carpet of government assets.
We Own It- not the other way around.

Al from da Nort
Guest

Serious Question: What’s the critical difference between computerized fiat money and credit money_?

I get it that fiat money doesn’t act like hard money, both for good and for ill, but isn’t the Fed just using computers rather than actual printing presses to flood the economic zone with non-physical fiat money_?

Sam J.
Guest
“…What’s the critical difference between computerized fiat money and credit money…” Nothing except only the central banks can create money from nothing. If the Treasury wants money from the FED they give them a bond promising to pay the principle plus so much interest. The FED then “allows” the Treasury to print up the agreed amount of money. The FED produces NOTHING. ALL money is created this way in the US. So all this talk about lowering the debt is impossible as ALL money is created with debt. You may think I’m mad but that’s the way it is. It… Read more »
Member

I agree with your analysis but your solution is never going to happen. Credit money is what keeps politicians in power. They use it to buy votes and big donors use it to buy them. Why would they vote against their interests, assuming donors would allow them to, which they won’t? It’s bread and circuses as far as the eye can see. Who the new barbarians will be that overrun us is anybody’s guess.

Al from da Nort
Guest
Based on this extended discussion, don’t think the basics have changed all that much. Only the hype and speed are amped up. IOW, I agree with you in the sense that ‘savings’ are an enforceable call option on future production. If it weren’t enforceable, who would save_? The savings/calls are re-loaned by intermediaries/bankers to others willing to pay for the privilege of consuming in the current year the current production the saver is willing to forgo. Thus a debt is created and interest must be payed thereon for that privilege. Money of whatever kind is used to facilitate these transactions… Read more »
Sam J.
Guest

I’m not necessarily disagreeing with any of your points. One of the great virtues of non-debt based money is if the politicians screw up the money supply it comes much faster. Everyone knows much faster. In a debt based system the party can go on much longer and be much more damaging.

Al from da Nort
Guest
Yeah, I guess I was unclear. The point I intended to make was that wildly unconstrained fractional reserve* banking/money-lending is the culprit at bottom. The FED has made it worse by obscuring how out-of-whack the situation actually is but didn’t actually cause it (at least intentionally) at first. So I’d say boosting lending standards and reserve requirements is the better political point of attack. Privatizing profits and socializing risks/costs has been the goal of money lenders for, probably, all of human history. And they are incredibly creative, always working away at that. But, except for sovereigns, this feat was impossible… Read more »
Karl Horst
Guest
During my recent US road trip, I had the pleasure of talking with all kinds of people across the Midwest and was amazed how much debt the average person actually admitted owing. I’m not just talking about home mortgages or student loans, but all the “stuff” they’ve bought on credit – boats, jet-skis, RV’s and some were paying off holidays. When I asked how they could afford all this, they openly admitted they got it on credit and some borrowed against the value of the homes or just racked up credit card debt. How is this even possible? And when… Read more »
Member

People have different priorities for their money. Kind of like how people will say they can’t afford to eat at a five star restaurant but they can all afford cars that cost more than the meal. They are saying they don’t think it’s worth the asking price.

Sam J.
Guest

People should be allowed to declare bankruptcy for all debt. Student loans, credit cards, or whatever. Then the lenders would be more careful lending it out.

Member
In general loans have become detached from their consequences. I’ve read enough analyses of the housing boom and crash to hear every excuse possible. The normal process of a bank loaning money out based only on its chances to recover that money with a profit has been disrupted. Anything and everything that disrupted the consequences for the buyer or the bank is the problem. We wouldn’t have to worry about banks giving out bad loans if the consequence was they didn’t get paid because it would have bit them in the ass in short order. The buyer after losing their… Read more »
Member

The lenders scarcely care. They package the debt as bonds or CDOs as quickly as their algorithms let them. Then they sell them to investors. Often, the investors are government pension funds desperately looking for something, anything that will give them a high enough rate of return to stay solvent. The “lenders” are just skimming their fees off the transactions. The risk is all transferred to someone else. “Privatize profits, socialize risk” should be translated into Latin and inscribed on the coat of arms of the Cloud People.

Sam J.
Guest
You say,”… In general loans have become detached from their consequences. I’ve read enough analyses of the housing boom and crash to hear every excuse possible…” Then,”…I don’t see how your plan would accomplish anything besides making loans impossible.” Which s it? I see other entities that are able to discharge loans. Why should student loans or credit cards be different? Besides they paid the legislatures to not make them dischargeable. I think people should be able to go bankrupt if they are. A lot of people look on this as some deep inner sin but the banks don’t have… Read more »
Russtovich
Guest

“The Norse played by a different set of rules and they had no respect for the Anglo-Saxon ways. In fact, they sought to exploit those ways to their advantage.”

So… the equivalent of modern day Muslims then.

TWS
Guest

No. Because vikings are cooler than Muslims.

Ace Rimmer
Guest

Not just cooler. Way cooler.

Karl Horst
Guest

@ Ace Rimmer – I suspect the surviving English monks at St Cuthbert would have disagree with you! 🙂

Steve Evets
Guest
“There’s no question that this new form of currency arrangement has had benefits to the West. Libertarians and goldbugs will spend hours arguing against this sort of currency manipulation, claiming it will lead to a financial collapse, but so far, the opposite has been true. The mortgage meltdown of 2008 did not result in a global depression. The worst you can say of it is the result has been a long, localized recession. The rulers look at current asset values and see a ringing endorsement of credit money and central banks.” This bit speaks to the basic difference between the… Read more »
Rod Horner
Guest
I agree with much of what you said; however, i will say that the current credit dollar is, at bedrock, a sort of specie. The petro-dollar is the glue that holds the credit-expansion machine together. Endless expansion of credit is made possible by the hegemonic dollar-oil converter and as-such one could expect even a gold-backed currency to eventually turn itself into a similar bedrock-of-hegemonic-credit system too. Personally, I don’t think the economics-as-first-mover argument against credit or fiat is wrong, but I think we’d be wrong to miss the observation that credit bubble systems are indicative of over-extended empires already eating… Read more »
TWS
Guest

Have you read wolf and iron?

An interesting book of America during and post an economic correction.

RT Rider
Guest
By credit money, I assume you mean credit unbacked by savings. We know from history that excessive credit is vey unstable, leading to financial crisis on a regular basis. In my lifetime, I’ve witnessed this at least 3 times. The current arrangement depends on a cycle of asset inflation to (at the minimum) maintain asset prices, but optimally, increase them for collateral against new credit. As well, nominal income needs to increase to provide service for ever expanding debt. Currently, asset prices are at historical highs and nominal income is either stalling, or stalled. This is happening during a period… Read more »
Doug
Guest

Creating fiat out of nothing then washing it through a spoils system, breaking the debt created to wash the unbiased fiat through that system, down into derivative parts, and then selling that as something with value after most of the value has been skimmed off doesn’t strike me as exactly healthy or can be sustained. And what of those who actually create something tangible with their labor? Aren’t they the only part of this spoils system that actually originate, create tangible hard value and worth?

UKer
Guest
I would say that most money today exists in movement. Settled money — that is, when it sits in banks — has a limited value to an economy. The churn of money, or rather keeping it ‘liquid’ with credit, continues the illusion that we in the west at least are rich. But the practicalities of everyone being equally rich are frightening. On this, I recall some lefty desperately urging a poverty-stricken tribe not to accept jobs in some newly open factory in because, he said, he only wanted them ‘to keep smiling and remain happy.’ In his view. earning a… Read more »
TomA
Guest
An excellent analysis, but I would add one very important dimension that underlies this phenomenon. Governments (and large globalist companies) have evolved into the functional equivalents of addicts. Their appetite is boundless, and they will gorge until there is nothing left to consume or the drug itself brings them to the brink of death. They cannot change this behavior unless circumstances cause them to hit bottom, and the they will take everyone around them down with them. Enablers will do everything in the their power to avoid confronting the truth of this addiction and no one will see the end… Read more »
Countrymouse
Guest

But we already see the end coming … and it may be too late right now!

TomA
Guest

It’s not that it may already be too late. It’s that, for an addict, it’s inevitable.

And as far as seeing it now, that is just anxiety your feeling, not the actual appearance of hitting bottom. When it happens for real, there will be no ambiguity.

Sam J.
Guest
The people that gain the most from fiat money have been the Jews. They control the creation of money by controlling the central banks which create money from nothing. It’s worth noting that all other groups have to create their money by debt. Every last penny in the US economy has an equal debt higher than it’s value. All money created is created with debt, except for money the central bankers create for themselves. The Jews using group preferences use this money creation to take over businesses. Remember the 80’s big takeovers? Most were done by the Jews. As long… Read more »
MSJ
Guest

If I may paraphrase, you are saying that all of the world’s (8,000,000,000+ people) financial problems are caused by “the Jews” (including all the Jews of modest means and those who live hand to mouth, people you have never seen because you haven’t tried to find them). How convenient! All of the Christian, Muslim, Hindu, atheist, Chinese, Japanese etc millionaires and billionaires are entirely innocent of this crime against humanity. Convenient indeed!

RabbiHighComma
Guest

A shanda fur de goyim.

Sam J.
Guest
“If I may paraphrase, you are saying that all of the world’s (8,000,000,000+ people) financial problems are caused by “the Jews”…” Your paraphrasing to the point that the meaning has changed but I would be glad to add that they are responsible for all the ills of the world in the exact same proportion as Whites are by the Jew saying.”The white race is the cancer of human history … “. In that vein I would agree. And I’ll add I don’t don’t give a damn about starving Jews. They don’t care for me I don’t care for them. If… Read more »
MSJ
Guest

You have a good day, too!

Member

I used to run the NYC derivatives desk for the world’s largest Privare Bank.
The financialization of the economy has achieved exactly what it was supposed to: the concentration of wealth into fewer and fewer hands.

We’ve now had thirty years of Ashkenazi Jews heading the Fed. And the main beneficiaries are?

Member
“we now live in a world where the rulers can make their money more valuable and your money worthless, simply by manipulating the amount of credit money.” So, don’t own money, own land, businesses, productive assets. My own view is that for too long “savers” have been over rewarded at the expense of risk takers. What is so wonderful about the mere act of not spending that it deserves a huge reward? I’m also bitter about all the wailing about the disembowelment of the middle class. I’m middle class, doing OK. So are most of my middle class friends and… Read more »
TWS
Guest
You want to blame the victims? Great, when I was eleven my grandfather got cancer and asbestosis. We lost our ranch. We had to move five hundred miles and live in a trailer where an old busted up cowboy could still find work. I ran cattle for neighbor ranches, trapped in winter, fixed a irrigation systems, cut firewood for a dollar fifty a cord. I was big for an eleven year old so I could drive the truck and operate the chain saw. I had to split and stack it by muscle power though. We lost that finally. Here was… Read more »
notsothoreau
Guest
Back when I was working on my Novell CNE, I took a class with a guy that had been a tractor mechanic. He was getting up there in years and felt that his field was probably not going to be needing many workers. So they retrained him. I guess someone asked him if he liked computers because they signed him up for all 7 classes, back to back and put him up in a hotel for a month to take them. It was clear, first class, that he was in over his head. I have seen this time and again,… Read more »
Sam J.
Guest

“…They get rich off the left half mostly through control of the government, monopolies, rentier practices and shady credit creation where they can ride the bubbles. They can at least acknowledge the damage they’ve done…”

Exactly. Most people who go bankrupt I’ve read do so for medial reasons.

Calsdad
Guest

LOL.
Since when have savers been “rewarded” in our lifetimes?

Being against saving is to be against capitalism and being root principles of conservatism.

Doug
Guest

Funny how this great country got along just fine until the federal reserve, (which is neither, but an amalgam of banking cartels), and federal income tax was imposed upon American’s.
Guess where all that income tax is washed through?
The tail that wags the dog, that returns to its vomit?

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[…] Financialization (The ZMan, The ZBlog) […]

William Nohmor
Guest

This is a rely good essay. It pulls back the curtain on less visible macro financial trends ruining our society. I would love to share it with my financially clueless friends and family except that the line about retarded men would unnecessarily spoil the main message for them.

SWRichmond
Guest
Libertarian economics is based on a simple principle: only the market can accurately transmit true economic information in the form of prices. Any attempt to manipulate prices introduces distortions which move through the rest of the system, making it impossible to know what anything is truly worth. This leads businessmen to using inaccurate information to make business decisions. Money has two prices, one called “interest rates” and the other “exchange rates”. Since all other goods are priced in money units, libertarians can easily imagine the extent of economic distortion which can be introduced by giving someone the ability to manipulate… Read more »
Calsdad
Guest
Excellent reply. RE: Landscapers buying $400,000 homes. When the housing market imploded – even the local liberal Boston Globe was forced to run articles about how insane the housing market had become. They tried to put a ” theses people were taken advantage of ” slant on their stories – but the whole thing was so ridiculous that even that didn’t work. The one that stands out in my mind – was a story about a woman who was an immigrant from some South American country – and worked cleaning offices. She got approved for a mortgage for something around… Read more »
Member

SWR, before I up-voted your post, you had a -1. What does that say about the economic literacy of this joint?

karl hungus
Guest

it says you’re an odious douche nozzle.

Bruno the Arrogant
Guest
As much as this may astonish you, a large number of us here are former libertarians. You aren’t really telling us anything new. In fact neo-reaction began as a critique of libertarianism by former libertarians. It seems they became former libertarians when they recognized that libertarian ideas weren’t working out as well in reality as they did on the drawing board. Rather than assuming the ignorance of everyone who disagrees with you, it may pay you to shut up and try to learn something from people who have already examined your ideas a lot more thoroughly than you have, and… Read more »
Abelard Lindsey
Guest
Many of us are “Heinleinian” libertarians, which means, among other things, that most people do not value liberty as much as we do. I lived in East and South East Asia for 10 years and am well aware that most others do not value liberty as much as I do. Hence, I have come up with something I call “libertarian transhumanism in one tribe”. Far from being a part of the problem, technology, particularly bio-engineering and automation, is key part of the solution. It will allow for various factions of humanity (including the alt-right) to “go their own way” by… Read more »
Allan
Guest

SWRichmond: “This brand new, effortlessly and electronically created ‘money’ is then sprinkled on the economy as ‘deficit spending’.”

And now the money questions, all rhetorical of course: Who is near the front of the line to receive that new money? How much must those recipients kick back to politicians, party hacks, and shills like Center for American Progress in gratitude and prepayments for future favors?

That stated, Z is right to pour some scorn on libertarians from time to time. Most of them are shrinking violets or slippery apologists for capitalist racketeers. But I sense that this situation is changing.

Sam J.
Guest
I’m not so sure why SWRichmond was ranting at the zman but this statement below really pisses me off. I heard that it was $29 Trillion and maybe more though form analyzing financial records. I have no inside information but I bet that what they did with this money is buy the whole entire economy. Companies who are actually producing stuff which today is as close to hard money as you can get. One the reasons why the stock market at such ridiculous price levels. I bet they own EVERYTHING and no matter what happens they’ll be able to make… Read more »
Member

The government itself is captive to this financialization. We found out during the Ted Cruz debt ceiling thing that the financial power is greater than Congressional power.

Also, almost every state has massive pension shortfalls even at today’s high asset price valuations. And they are basing their expectation of growth at above 7% (the very long term stock growth rate) so their accounting understates their losses.

james wilson
Guest

Pensions, those which were not designed to deceive in the first place, have shortfalls not because of stock prices, which are very high, but because historical interest rate returns have been deformed to suit the financial and government rulers. Five hundred billion dollars a year, if not more, are stolen from traditional savers.

Guest
Guest
“For instance, the US government is no longer able to print up greenbacks and sprinkle them on the economy. Instead, when they expand the money supply, they expand lending, both domestic and global. It’s not just any sort of lending either. The central bank can buy up long term notes in order to drive down long term lending rates, thus expanding lending for capital goods. Alternatively, they can buy up short term debt and increase the amount retail lending. The Federal Reserve holds close to 2 trillion in mortgages, for example.” One could argue that consistently running a national debt… Read more »
Drake
Guest

I console myself by looking at the Fortune 500 from decades past. The list from 50 years ago is full of companies that don’t exist any longer – because small upstart companies destroyed them – with plenty of help from their own bureaucracies and short-sighted management.

Amazon will eventually be destroyed, stagnate into obscurity, or be sold off in pieces like AT&T, RCA, BorgWarner, and so many others.

Dutch
Guest

Everything that we look at today on the subject is based on the concept that money is now an entry on a computer screen or a spreadsheet. Money is no longer a tangible thing.

Because money is an idea, not a thing, people are comfortable running through it when it is available.

Karl Horst
Guest
@ Dutch – I think that’s going to be a real issue for the Millenians who have no concept of value of money since they rarely actually touch it. I grew up being given cash in hand for work, then later a paycheck I deposited into a bank. Today, it’s all direct deposit, no one hands you a pay envelope. These young people today never see their money come in, nor do they see it go out. Swipe a card, or scan a smart-phone, and it’s all digital. The day is coming when we are 100% cashless. The young already… Read more »
sub vexillario
Guest
Yes, we will need new virtues, and new tactics. This I believe is the meaning of Trump — the people sensing this, and casting about for some new means to fight what is destroying them. The comments below provide some interesting ideas on options for developing and implementing these virtues and tactics. At bottom, though, we can either ride the train as it now exists to the point it goes over the cliff, or we do what is needed to stop it before it goes over. And what we have to do is neither easy or pleasant, nor is it… Read more »
karl hungus
Guest

or you can get off the doomed train, and wait for the next one to come along.

sub vexillario
Guest

I don’t think this thing we call the left is that forgiving, or foolish enough to allow us to survive, if they push us past the point where we can fight back effectively. For us, there will be no more trains.

Allan
Guest
sub vexillario, rolling back leftists and secularists won’t happen without a religious awakening that disdains errors like theocracy, materialism, presentism, and the cult of willpower shared by both theocracy and secularism. Christianity, a palpably secular religion which fetishizes the body, has been discredited. There is no going back, and much of our contemporary problem is rooted also in a very vulgar and primitive craving for sensual indulgence—to which both Christianity and Islam pander with their doctrine of bodily resurrection. The Constitution, too, misleads us. No sane people would insist, as does the C with the phrase “We the people”, that… Read more »
soapweed
Guest

Shunning the inevitable thought of “violence” is seemingly a form of political correctness. The dreaded V-word and it’s physical application is a correct potential solution during times when the BS factor becomes untenable to moral humans. The thought of such does not make one a leper…..soapweed

sub vexillario
Guest
In my post above, I’m not “shunning” violence. I’m saying that my comments aren’t the ravings of some guy dreaming of cracking though the thin barrier that holds the jungle away from this …. civilization, or better world …. we’ve created. I’m just not embracing it. We will likely get there soon enough. When we do, it will be a horror. At present, though, we don’t even have the basics of a plan to deal with the threat destroying our nation, our culture, our history, our mythology, our civilization. We need to get into place a basic structure and functional… Read more »
Member

Health care. Same thing. Universities taking it over with their foundations and banks helping. Your family doc used to be a Mom and Pop business, too. I started out that way. Finished residency, hired a girl who knew how to bill and code, and the wife and I went to a business course offered by the AMA and learned double entry bookkeeping and some business law.
Now the AMA just teaches new grads how to sell their souls.

Member

Doc, I abhor the AMA as much as I loathe the ABA.

Alzaebo
Guest

Man, does this need an ‘Essential Knowledge’ page. Perhaps then I could understand what Zerohedge is talking about.

My concern is the Unacknowledged Economy, the stratosphere economy of the Nomenklatura.

Above borders, above laws.
Increasingly un- and in-humane.
Like dark matter, it warps the visible economy out of true.

Most ‘economics’ memes are marketing to cover the various flavors of carnage, consequences of
Liberal mafias (extortion, patronage, theft)
Conservative war (foreign and domestic)
Libertarian surrender

Abelard Lindsey
Guest
R Daneel
Guest

“The Danegeld has now become an institution.”

Just brilliant!

Member
“Libertarians and goldbugs will spend hours arguing against this sort of currency manipulation, claiming it will lead to a financial collapse, but so far, the opposite has been true.” How is that statement accurate? “Credit-money” is really a form of fiat currency, and it has led to cycles of boom and bust in every society that has used it. The US economy stumbles from one financial collapse to another, forever shouting the mantra that “recovery is right around the corner.” We keep having collapses, and the dollar keeps losing its value, and real people keep losing their hard-earned savings. But… Read more »
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