Posts Tagged ‘Debt’

For all the talk of liberalism, the end of history capitalism, the power of the people, it is in desparate times that everybody can clearly see the wood from the trees, and now, globally, it is the state apparatus which is underwritting and underpinning our lives….almost by choice

The question 12 years ago, in the last great crisis, was will the central banks and the governments have any fire power left to tackle the next economic downturn. This has been emphatically answered, the state apparatus will do ‘whatever it takes’ to save whom they choose to save, the fiat money system will create as much money as it sees fit to maintain CONfidence…such that there is any still left

Interest rates no longer matter…only businesses borrow at next to nothing, the end consumer (the people) may be paying historically low rates but they are still high enough to be paying additional thousands of pounds on their debt

The irony that it is a Conservative government, still proud to be assocoiated with Thatcherism, is bursting open the deficit and piling on the national debt, for future generations to pay off through an increased tax burden and reduced public/welfare services

There was much talk of helipcopter money in the aftermarth of 2008, something that had previoulsy been seen in Japan I believe, in the 80’s/90’s, but now we see a realisation of that concept in the flag bearring nation for consumerism; the United States, promising to give americans earning under a certain amount approximately $1,200 each. In the UK, qualifying workers are being paid their income by the state, up to a certain threshold

I would also like to return to the concept of the ‘Implied Guarantee’ for most large corporations, when in distress they have an unwritten insurance poilcy by the state to rescue them, therefore they have an incentive in good times to take greater risks and not make their own rescue provision. If ever there was a test that this guarantee will always be available in the worst case senario….this is it.

This system, at its core, is a state backed goliath in which every citizen will feel thay have a claim for public funded support….there is no real private sector, no fair level competition, and no limit to what the state can fund…so the next time a politican takes to a public platform to decide on spending plans…know that when push come to shove, everything is on the table, and at all other times, its a CHOICE, to do, to intervene, to save or not….

This was the maxim of Pierre Mendes-France’s concerning governments function of being decisive in the face of a multitude of options.

Recently the UK Health Secretary announced a writing off of some NHS debt. Although it was at a zero cost, and one branch of the government effectively agreeing to not honour another branch of government…

Notice the terminology of the write off

Therefore it is possible to make these calls and instances such as these should be hghlighted….however the main beneficiary here is the government itself, it was a situation made simpler by not having to worry about external parties who would loose their investment.

Ofcourse this can’t necessarily be seen as a precendent in all cases however given the emergency this pandemic has presented, it is worth noting how much is possible in such circumstances

https://www.independent.co.uk/news/uk/politics/coronavirus-nhs-debt-matt-hancock-press-conference-briefing-a9443926.html

https://www.gov.uk/government/news/nhs-to-benefit-from-13-4-billion-debt-write-off

Please read this article by MoneyWeek on the recent raising of the US debt ceiling….it continues to shatter the perception that the US is the most economically prosperous nation with a healthy growth rate

The US has just voted to blow its budget

“None are more hopelessly enslaved than those who falsely believe they are free.” – Johann Wolfgang von Goethe A cliché, and yet so pertinent. So many people think that the struggle against the New World Order is about preventing becoming their slaves. But we ARE their slaves! The essence of Slavery is that someone else […]

via From Chattel Slavery To Capitalism — Real Currencies

 

 

If he didn’t repeat himself yesterday, then I might not have known that he said the same thing back in 2015….

Bank of England governor trashes textbook theory and rips apart the workings and effects of the global financial superstructure, read the original speech here from three years ago

…and another blog which probably analyses it better than me here

Their world imagines self-interested, atomistic agents, coolly calculating odds over all future possible states of the world, writing and trading contracts with each other, all frictionlessly enforced, all achieving mutually beneficial – indeed socially optimal – outcomes.

Of course, markets only clear in textbooks. In fact people are irrational, economies are imperfect, and nature itself is unknowable.

When imperfections exist (which is always), adding markets can sometimes make things worse.

Mark Carney timeless quotes can be found throughout this speech

https://www.rt.com/shows/renegade-inc/379579-uk-finance-curse-suffer/

 

Is RT just a mouth piece for Russian imperialism….maybe, but doesn’t the great USA have mouth pieces and sensationalists such as Fox, and perhaps others media? Let us critically judge the content for what its worth.

From one of the Authors of ‘The Princes of the Yen’, view Professor Werner explain the workings of banking, but also justify some of the solutions to the issues it creates.

Many of these are scorned upon by neo liberals, often being rubbished by talk of the lack of competitiveness it would create, the lack of wealth for society as a whole….blah blah…haven’t we heard these arguments before, circulate again and again…but what haven’t we heard? How about the lack of manipulation, how about real democratic authority and accountability. What of fair pricing and transparency as opposed to superficial gains and over valued delusional self worth?

I must draw your attention to David Buik, ‘City Grandee’ of over 50 odd years experience of the city, frequently on mainstream business media, yet he didn’t even know how the City of London Corporation actually worked?? I would continue to question who these prominent experts are and what they actually know before we have them paraded in front of us as knowledgeable advisers and commentators

 

 

Note the historical parallel to contemporary Chinese and Middle Eastern dominance of US assets and currencies and their recycling of dollars back into the US dominated global economy….

An excellent history of the workings of global central banking, seen through the economic history of Japan. The Asian financial crisis, Long Term Capital Management and the recent Euro debt crises are also explored and together brought into contemplation….highly recommended

 

MoneyWeek always does a good job in joining together different strands of the reality surrounding debt and putting it all into perspective.

This piece is another example of such work, I found the following points worth noting;

• The effect cheap debt has on corporate behaviour, which in turn translates into market moves/signals

• Statistics in the shape of national debt being measured against GDP which is not entirely genuine due to the whole economy not being ‘owned’ by government . However this leads me to ponder that although government debt is initated by the State, it is all tax paying citizens that will ultimately bear its burden, hence comparing it to GDP does equate to it being the nations debt, but of course not all GDP belongs to all citizens

• How much debt is responsible for living standards. This is particularly worth contemplating, many look at material wealth and standards of living as a barometer for social advancement however if this is heavily influenced by credit and in some cases unaffordable credit, is it simply an illusion? Another house of cards, which others are vying endlessly to win a share of?

https://www.capitalandconflict.com/uncategorised/debt-solves-everything-hopefully/

For anyone not familiar with the work of Ann Pettifor – one of the few to correctly call the coming of the financial crisis a number of years prior to it arriving, and one of the main proponents of the Jubilee 2000 campaign which cancelled a portion of third world debt – please search for her various articles, lectures and opinions online.

Associated with Keynesian economics and the Labour party, her views may be dismissed by some, however upon closer inspection, I was interested in her view on the creation of money, and what this meant for resolving the debt and economic problems facing the developing world.

She is principally part of the PRIME think tank/research group, which has a number of papers on its site proving an alternative voice on economic issues

The above lecture at the LSE discusses her latest book, ‘The Production of Money: How to Break the Power of Bankers’, and gives an insight into her theories.

What I wish to highlight, are the following;

  • The issue of commodity money, and how scarce resources should not be used as a basis of any monetary system
  • The recognition that a fiat monetary system, can and should be used for the benefit of the population – outside the control of private banks, but in the knowledge that an entirely man-made system should be used to achieve a level of prosperity in all societies
  • There are certainly many socialist aspects to these beliefs, such as exerting capital controls and spending money into existence in terms of health, education and social expenditure thus increasing national debt, however interest ideally should not be necessary when such a system is implemented
  • There are some similarities with what Positive Money are advocating, but it seems there are specific differences, as this discussion points out…