derryl

Money Appears to Be Tiptoeing Back into Emerging Markets

Of the emerging markets, I have a hunch Brazil will prove strongest. Brazil strikes me as bold and innovative and those traits should bear fruit for anybody who can figure out how to invest and cash in on this.

2009 Economic Forecasts Ignore Demographic Shift

Mr. Hansen has pulled all the factors together in one article and given us a clear eyed look into a murky crystal ball. In a time before econometrics piled assumption upon assumption into computer models that 'predicted the future', what Mr. Hansen is doing used to be called intelligence.

Free Trade Agreements = Evaporated Jobs Worldwide

Jamaican in Africa writes,

"If we are globally managing our resources in such a way to minimising waste, increase efficiency and provide the highest return we can on an investment, then all over the world consumers benefit from high quality good, produced at the lowest cost for all consumers and the highest profit for investors.
Please advise me why this is a bad thing."

I'll answer that. It is a bad thing because unemployed people have no income to enjoy all these efficiently produced goods.

Besides theft, the only 3 ways people can get money to buy goods is to earn incomes by working or to borrow money or to share via redistributive taxation the incomes of other people.

Earned income is the only sustainable and morally noncontroversial source of consumer demand. Taxation robs Peter's income so Paul can have money to exist. Debt is temporary as loans must be repaid.

The globalist claim that these unemployed will be reemployed at more productive work is simply false. The very purpose of the drive to efficiency is to eliminate the need for labor while producing ever greater quantities of higher quality goods. But for the vast majority of people the only way to obtain the power to consume is by earning income through work.

How do people benefit from a global economy that is capable of producing plenty for all, if increasing numbers of people have no realistic opportunity to work and earn incomes to share in the production and consumption of this wealth?

Maybe 2 billion people should die off? 4 billion? 6 billion? Atlas Shrugged is the logical outcome of a morality where production is the only value and a ruthless drive to efficiency is the corresponding policy. This assumes that we live to work.

But what if we work to live? Then consumption becomes the value and production is just the means to that end. Furthermore, what if human nature is such that we actually need to work, not just consume? Then destroying jobs in the name of economic efficiency does not serve the interests of people, given the human nature that we actually have.

I think it is the case that people need to work to live. I think welfare is soul destroying. I think redistributive taxation is socially destructive because producers hate the 'worthless parasites' who consume their taxes and welfare recipients hate the 'greedy capitalists' who want to keep all the money they earned.

Industrialization has enabled humanity to produce everything we need and want without full employment. But for most people employment is the only means to earn the right to share in the goods.

We are highly advanced industrially/economica... and still moving fast forward on this front, but the evolution of human economic nature has not kept pace. We have a world where work is being eliminated but people still need to work.

If the fast forward pursuit of economic efficiency does not serve the interests of people, then maybe we should heed Mr. Hansen and rethink the virtues of this policy.

Can Central Bankers Prevent a Great Depression?

bosun.j,
I just watched the Money Masters video, all 3 1/2 hours of it. I knew the Fed was not a public bank but I had always imagined it was something in the nature of a Crown corporation because of the fact it was established by an act of Congress. I was under the misapprehension that bond interest paid by Treasury to the Fed reverted to Treasury after the Fed deducted its operating expenses, but now I know that interest is the private profit of the unnamed owners of the Fed.

So the US government, which has the Constitutional authority and responsibility to issue US money, has ceded that power to a private bank which now controls the creation of all US money as debt at interest. ALL money is debt in this debt-money system, so if you pay out all the debt you remove all the money from the economy. No money, no economy. It's a permanent world of debt and this world is owned and operated by the nameless people who own the Fed and the world's other central banks and the colluding/participatin... large commercial banks..

What Congress enacts, Congress can revise or repeal. The video advocates repealing the Federal Reserve Act and outlawing fractional reserve banking and Treasury replacing Federal Reserve notes with US Notes as legal tender. This would be the ultimate solution but it would be the most strenuously resisted.

An initial step could be an article authorizing new "Special Treasury Bonds" that are legal tender for buying and repaying Fed money. The Fed cannot refuse to purchase these legal tender bonds or refuse to accept them as redemptions of previous bonds, so the government monetizes its national debt and begins recovering control over the country's money.

The Special Bonds would have no legal value for anything except paying the Fed so they would be worthless on the open market. And Treasury doesn't have to tax Americans to get money to repay the Fed because it can just write a new Special Bond to pay off the old bonds as they come due. If the old bonds bear interest then just write a bigger number on the new Special Bond that you use to payout the old bonds. As this new debt-free money is spent into the economy raise commercial bank capital ratios, eventually to 100% as the video advocates, to prevent inflation.

Regardless of the implementation details the solutions to our financial problems are monetary, not fiscal or economic. Anything other than monetary solutions completely misses the cause of the financial troubles. The cause is DEBT. Without first resolving unrepayable debt there are no solutions to the fiscal or economic equations.

Can Central Bankers Prevent a Great Depression?

I think this is an excellent article showing examples of the kinds of monetary measures that could actually work.

Despite the obvious and inescapable potential hazards of "mere humans" handling these monetary powers, I think quantitative easing and monetizing of federal debt is exactly the right way to move forward. Following Japan's method of creating a predictable monetary environment and steady release of "free" money into the system, governments, individuals and firms will have access to money to pay down debts, or to spend and invest if their debt levels are manageable.

Fed/Treasury money is "free" in the sense that when Treasury sells Fed a bond for $1 trillion, all that really happens is that Fed adds $1 trillion to Treasury's bank account balance and Treasury can spend that money into the economy. Treasury "owes" Fed the trillion ONLY if Fed EVER redeems the bond, and that NEVER has to happen. When there comes to be too much money in the economy and price inflation starts rising, Treasury can raise taxes to suck out money and payout some of its Fed debt. What I mean by "free" new money is money that was not borrowed from/created by a commercial bank, which always has to be paid back within some timeframe. Commercial banking is the best way to micromanage an economy's finances, but Fed/Treasury monetary measures are the best way to macromanage national finance.

"Free" money could be injected via stimulus checks to people, grants or low/no interest loans to states or municipalities, federal infrastructure spending, federal investment in R&D and industrial development, etc. Remember, I already noted the obvious hazards of giving people money/power, but I don't see any way to avoid it if easing and money injection are going to be done. We have no gods or machines to do the job for us so all we have is whatever checks and balances can be imposed in a democracy.

Adding new money into a high debt economy like the present US, many people who get their hands on some of that money will use it to pay down their mortgages and other bank debts. Repayment of a bank loan eliminates that amount of money from existence because a bank "loan" is really the creation of new money, not the loan of existing money. So adding new free money into the US economy right now would probably have the effect of reducing the money supply, not raising it.

This would do little if anything to get consumers buying and businesses producing and selling, until people's debts were paid down to a psychologically tolerable level. In the meantime infrastructure and other productive spending would put earned income in people's pockets and this is the kind of money people are less reluctant to spend. Over the longer term as debt/GDP shrinks to appropriate levels (I have no idea what ratio might be appropriate, and it may be an empirical/experimental question of waiting to see what happens then seeing what ratio obtains and getting the answer by experience, not theory) people will feel financially "normal" and the monetary measures can be adjusted to promote stability rather than financial salvation.

I think this could be a good thing.