Loose Money And the Roots Of the Crisis
Judy Shelton
Sep 30, 2008
http://online.wsj.com/article/SB122273029076687929.html
The world is not ending. Despite the wrenching turmoil in global financial markets and morbid allusions to the death throes of capitalism, it ain't over.
But the whimpering is real, and justified, because it hurts to have your world come crashing down. And global financial markets are definitely crashing, even when the impact is momentarily softened through massive injections of artificial money -- "artificial" because the fiat money does not represent a store of genuine value but rather an airy government claim to future wealth yet to be created.
It is the money that is broken.
Mr. Greenspan is also the man who was awarded the Presidential Medal of Freedom and whose honorary titles include Knight Commander of the British Empire and Commander of the French Legion d'honneur.
So how does such an accomplished central banker turn out to be a monetary doofus?
Think of it: Nothing is more vital to capitalism than capital, the financial seed corn dedicated to next year's crop. Yet we, believers in free markets, allow the price of capital, i.e., the interest rate on loanable funds, to be fixed by a central committee in accordance with government objectives.
Whatever well-intentioned reasons existed in 1913 for creating the Federal Reserve -- to provide an elastic currency to soften the blow of economic contractions caused by "irrational exuberance" (and that will never be conquered, so long as humans have aspirations) -- one would be hard-pressed to say that the financial fallout from this latest money meltdown will have less damaging consequences for the average person than would have been incurred under a gold standard.
The entire world has been affected by the breakdown of the U.S. financial system, thanks to the globalization of investment capital. But the free flow of capital -- along with free trade -- is a good thing, the best path to global prosperity. The problem is that the role of the dollar as the world's primary reserve currency has been called into serious question, both by allies and adversaries.
Internet Censorship Alert
Internet Censorship Alert: Alex Jones exposes agenda to 'blacklist' dissenting sites (March 14, 2010)
As I predicted, the Obama Administration is trying to shut down the Internet - at least the parts he doesn't like. Barack Obamas regulatory czar, Cass Sunstein has stated that he wants to ban conspiracy theories from the internet. Think about what this means - Every video, every website, every blog, every email, that exposes or just criticizes the government for any reason whatsoever could be labeled a "conspiracy" and taken down. Your home could be raided in the middle of the night, and you could be carted of to jail for criticizing the government. All they have to do is call it a "conspiracy theory".
http://www.youtube.com/watch?v=aqAWmBLFodE
Thursday, October 2, 2008
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1 comment:
Capitalism depends on economic growth which depends on more energy and raw materials, IOW more from the biosphere. This is because money is created by debt which must the serviced by interest which needs economic product to grow.
Peak oil means the end of capitalism and the morphing of the system into feudalism. Interest did not allow the economy to grow, contrary to conventional wisdom. Rather the discovery of 1) new lands with natural wealth in the 16th century on and 2) new energy sources meant that interest could lead to economic growth instead of usary and bankruptcy. So feudalism morphed into capitalism - a temporary phase. Keynesianism worked after the Great Depression because there was more energy to be released to make the economy grow again. But Keynesianism can not work now because of natural limits to growth.
The present developing depression will be made worse by peak oil, plus peak water, peak food as it takes energy to grow food - 10 calories input to 1 calorie on your plate (not even GM crops can breach the 2nd law of thermodynamics), followed latter by peak natural gas, and peak coal by 2032 for the US and 2050 for the world.
Interest charged will not be servicable in the decades ahead. End capitalism. No more economic growth ever again.
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