Many posters here, rightly, criticize the way monetary, fiscal and trade policy is conducted, say in the USA, and they
are probably right. It is an absolute mess. I think I have written as much about that as anyone here.
I do not critisize the way monetary policy is conducted. I critize the
existance of monetary policy. We need government intervention in the market
for money as much as we need the government paying farmers not to grow food.
If the domestic - or global - economy is growing as quickly as it is including excessive money supply growth via loose
fiscal and monetary supply policy as well as currency maniplulation on the part of oil producers and Asian exporters to
remain export competitive (trade is growing roughly twice as fast as global GDP) then by straight subtraction those
economies would be growing that much slower and creating fewer jobs in the absence of those artificial stimuli.
This is either a lie, or you don't understand economics, or both. Printing
dollars does not make societies wealthier, as Keynes and the bankers and the
bureaucrats would like you to believe. Printing dollars makes bankers
wealthier and keeps bureaucrats employed in their blood-sucking positions.
Real wealth (the things that bankers purchase with their paper), is created by
non-bankers and non-bureaucrats, those who produce things of value: the
profit-seeking laborers, carpenters, farmers, artists, software developers, the
savers, and the industrialists and the capitalists. It's no wonder bankers and
bureaucrats merge, as exemplified in the quasi-governmental structure of the
Federal Reserve System. They are of the same family of leeches. Wealth is
accumulated by consuming less than you produce. Bankers and bureaucrats
produce nothing. If printing money grew an economy, Zimbabwe would be a
paradise right now. Printing money adds nothing of value. The only thing that
printing money does is distort the economy away from the path it otherwise
would have taken. The new money allows it's owners to make purchases they
otherwise could not have made, misallocating capital away from it's most
productive lines. It is pure distortion. Sure, it seems like a boom at first,
until those distortions are revealed, the projects go unfinished, and prices
begin to rise, and we are left worse off. Then the banker quacks are quick to
return, claiming that we don't need to suffer the pain of sobering up, offering
another dose of the same inflation drug as their cure, while disparaging those
who oppose further inflation as anti-social hard hearts who care nothing about
those who are hurt during the recession. You just made yourself an example.
But on the other hand, in the case of America, these current deficits that are the manifest of that loose fiscal and
monetary policies have been accumulating non-stop since circa 1975. Over thirty years of prolific negative savings to
stimulate consumption and the economy to create jobs.
No, it was not 1975. It was 1971. 1971 was the
year we went off the last remnant of the gold standard. The year was 1971 when
the bureaucrats and bankers had once again printed so many dollars to to pay
for wars they initiated in distant lands that they were forced to renege on
their obligation to pay in gold (bankers and bureaucrats only pay in paper),
stealing the gold of the entire American society, a crime of such unimaginably
gigantic proportions that the majority of the population cannot even perceive
of it as a crime. In the past at least they "raised the price of gold",
acknowledging their embarassment but honoring a new peg. 1971 was just a big
F-you to America and the world by the banker-bureaucrats.
So really you have to conclude that many of those jobs should not have existed in the first place. Not, gee, I have been
very successful about looking after my own little patch of ground, and if it were not for the Fed, Congress and powers
that be I would have been just as wealthy, but my money would be worth more.
Since 1971 the distortions caused by the banker-bureaucrats inflation, due to
the nature of the dollar's once-revered gold payments, have literally destroyed
the enormous capital accumulated by our ancestors while they were under the
gold standard, and with the destroyed capital goes the highly-productive jobs
that accumulated capital allows, and with the highly-productive jobs goes the
middle class. All that remains is the precarious "imbalance", the clock is
ticking as the world opens it's eyes to the once-incomprehensible fact that
America is no longer capable of producing wealth. And that is why everyone on
this board should buy as much physical gold and silver as they possibly can,
while they still can. And do it anonymously, because the bureaucrats want to
track your every financial move, and the bankers will help them do it.
Think about it for a minute? The USA cannot collectively afford to pay Fed funds of just 5.25% p.a. without imploding,
and homeowners going upside down on 100% mortgages with a second and third mortgage piled on any accumulated equity on
the side. Let's turn the clock back for a second. Let's imagine real interest rates of, say, 3% p.a. over headline
inflation or about 7-8%. And a real down payment on a house of no less than 25%. No ABS market to securitize those home
loans, so banks less willing to lend. No bogus mortgage insurance because that would be akin to socializing the risk,
while privatizing the profits right. Therefore, banks would lend lower multiples of documented wages. No liar loans. The
self-employed and those that work on contracts would have to put down even higher downpayments. Whereas higher real
interest rates in the real economy would also slow growth and create fewer new jobs. And on and on.
Now I do not know about you, but I am perfectly fine with such a scenario. I have no problem paying cash for whatever I
buy. I can put down 25% on a property. I can afford higher real interest rates. But the brave new world that you and
posters like mattduke advocate or prophesize would wipe out your average wage earner overnight. Jobs that probably
should have not existed in the first place if we are honest. Nevermind the poor that you so often say you support by not
speculating in ag commodities for example. They are really the ones that have no clue and no assets to deal with the
coming crap storm.
So I am as concerned about the future as anyone here because I see how unsustainable the global imbalances have become.
But trust me when the bubble bursts it is not going to me that gets hurt financially. I have always been fiscally
conservative. I have always lived below my means. I live debt free. And I am hedged seven ways from Sunday. But never
the less I take no schadenfreude in the pain that is going to be inflicted on the majority of everyone else. Friends,
family, my community, strangers that I do not even know, the poor...
I am just glad that some posters here will never be in a position to influence public policy because their half-baked
solutions would make a grim problem infinitely worse. It is a lot easier to document everything that is wrong with the
system than to solve even one problem without creating a new one.
It's unseemly and unwise to gloat about stolen banker wealth. The traditional
escape for bankers is to dress as a woman and escape at night, like Law. Once
again, as the society realizes the extent to which the inflation has distorted
their economies, the bureaucrats-bankers return to offer more of the same
inflation drug. It's the only thing they know how to do. "Your enemy is those
who would allow the free market to set the interest rate, I am offering you the
cure" they say. But the damage is done during the boom, not the bust. The
bust is the cure. The bust is when society reallocates it's capital to where
it is most urgently needed. But the bureaucrats-bankers never want the patient
to sober up. Besides, they only make money when they are inflating. And that
is why the United States is heading towards hyperinflation, the absolute worst
possible economic disaster short of nuclear war. So yes, abolish the Fed and
the true horror of our economic situation would finally be revealed. Without
savings, interest rates would leap, providing a clear signal that we need
savings, and richly rewarding those who do save. And yes, home prices would
come crashing down, becoming once again affordable to those young families just
starting out. And price inflation would come to a screeching halt as the
printing presses were shut down. And yes, we could no longer afford a global
empire and two foreign wars. And yes manufacturing jobs would come back. And
the long, long process of rebuilding could finally at long last begin. There
is no doubt that is not an easy story to sell to the public, and the
banker-bureaucrats know it.