Will Gold Reach 5000+? 809
Armstrong believes that gold is NOT a hedge against inflation but rather a hedge against a loss of confidence in government. There is a difference, and Martin does a good job explaining it. He is reiterating his latest papers in stating that a loss of confidence in the government sector is coming soon if not here already.
He gives a complete technical update for gold stating:
“I have provided the technical analysis on Gold based on a monthly chart. The first real resistance is formed by the Primary Channel that shows $1,350 - $1,750 between 2010 and 2012. this represents still a plain old normal technical move with nothing that would reflect a meltdown. It is breaking this overhead resistance where it becomes support that we enter in the “danger zone” of a true meltdown in PUBLIC CONFIDENCE.
Most of the projected resistance from the major low back in 1999, shows various targets from $1,700 to $2,750. However, if gold exceeds this level and it too forms the subsequent support, now we are looking at the $3,500 to $5,000 target zone. This is where we see the potential for Gold is a true economic meltdown of CONFIDENCE.”
http://fofoa.blogspot.com/2009/08/no-free-lunch.html
Bron writes...
Here is the problem though, kids. Most mature investors retain their life savings fully invested within the financial industry, denominated in dollars, and will not get off these tracks even when they see the train coming. They will stay there because it is impossible for them to believe they occupy the wrong position! Who can blame them or call them fools? They have been trained their whole life to believe in saving for the future inside of a monetary system that serves no purpose other than as a medium of exchange.
Worse, they perceive that all of their assets are correctly valued by this system that does not care about the value of a digit. How can they possibly be correctly valued in a system that only functions properly as a medium of exchange, not a store of value? How can assets meant to be stores of value be correctly valued when denominated in a unit whose value DOESN'T EVEN MATTER in the context of its primary function? They can't. They shouldn't. They aren't. And soon this FACT will be known by everyone.
I would add.
When the economic and geopolitical stress behind the scenes become explicit and overt
and when Japan and then the gulf States, one by one, move to reorder their monetary systems by way of a tilt to regional currencies and a dollar depeg, gold will move.
And considering the size of the bond market, which rests entirely on the US treasuries, a mad rally in equities in spite of fundamentals might be expected if smart money was sensing the inevitability of hyperinflation.
We are not there yet..but.
30 August 2009
29 August 2009
Buy gold, buy silver, have faith.
I've got a lot of respect for Schoon and I see the name of this blogs voice of balance in the PM debate (that you Bron )has also turned up. All this sounds very positive to me...
Looming Crises Golden Exits
by Darryl Schoon | August 27, 2009
Print
To survive a transformative crisis, institutions, nations, and individuals must all change. Those who do, will. Those who don’t, won’t.
In July, Vienna’s Erste Bank, released its 2009 Special Report on Gold, In Gold We Trust. The analysis of the current gold market and its future direction by Ronald-Peter Stöferle and his colleagues at Erste Bank is commendable both for its information and its timeliness; for, today, the future of gold is inextricably interwoven with everyone’s future—whether they know it or not.
The current economic collapse has its roots in a crisis caused by the decline in the value of paper money over time resulting from the removal of gold and silver from global monetary systems. Previously, for much of mankind’s history, money was gold and/or silver and its value was intrinsic and fixed.
Then, following the lead of the Bank of England, the US central bank, the Federal Reserve in 1913 began issuing US dollars in the form of paper money convertible upon demand to gold or silver. But by 1971, even that artifice was no longer true as the amount of paper dollars issued by the US far exceeded the underlying amount of gold.
Today, as a consequence, the US dollar, along with all paper currencies, is not convertible to anything of fixed value; and, while others may wonder why we are having a financial crisis, I don’t. To me, the cause of the current crisis is clear as the uncertain value of money itself.
Paper currencies are now backed only by “the full faith and credit” of their increasingly bankrupt and insolvent issuing governments. Economies based on currencies of variable and declining worth are no more stable than housing developments built on quicksand. The reasons for our economic problems are clear whether we want to know them or not.
The consequences of the degradation of money over time are now with us; and because the loss of value was gradual, it went largely unnoticed, much as an undetected cancer grows surreptitiously until it is too late. What is happening now took decades to develop and its resolution is not over.
This is where we are today, in a late-stage monetary crisis where only massive doses of borrowed money from heavily indebted governments buying their own debt are keeping major economies afloat, e.g. the US, the UK, and Japan. The global economy is surviving only because it’s on full blown artificial life-support
MONETARY TRIAGE
NO EXIT NO CURE
The 2009 Special Erste Bank Report on gold begins:
Since our initial recommendation in 2007 at USD 650, gold outperformed almost every other asset class. The gold bull market has been running with an annual performance of 16% since 2001. Gold closed the year 2008 with the eighth annual increase in a row. And in the year to date, the performance has been outstanding as well; the gold price has recorded an increase of 7 % (in USD) and 8 % (in EUR), respectively. The average price in 2008 was USD 872/ounce, i.e. 25% higher than in 2007 (USD 695).
The Erste Bank report also noted the considerable influence of central bank policy on the future price of gold:
Central banks are laying [the] perfect foundation
The strongly expansive policy followed by the central banks and the resulting money creation at historic levels as well as the massive expansion of government debt around the globe might make inflation literally the problem of the coming years. In conjunction with the almost worldwide zero-interest policy and the rising criticism regarding the US dollar as global reserve currency, in our opinion this situation offers a perfect basis of further increases in the gold price.
Central banks are monetary paper mills singularly synonymous with paper currencies and their monetary effluence, e.g. inflation, recession, deflation, hyperinflation, etc. The increasing instability of central bank paper currencies is now threatening the heretofore unquestioned belief that central banks are prerequisites for economic well-being in modern economies.
Indeed, the very opposite is true; and, very soon, central banks themselves will be engaged in a fight for survival—as it becomes more and more obvious that our economic well-being is being threatened by theirs.
MYTHS, FACTS & FALLACIES
The Erste Bank Report on Gold covers a number of subjects, e.g. technical analysis, cycles, the gold supply, de-hedging, gold leasing, backwardation, and, a well-deserved acknowledgement to the home team (Austria) with the topic Money Supply Development According To The Austrian School of Economics.
One of the report’s most interesting headings is The Most Common Arguments, Myths, And Points of Criticism About Gold. Here, Stöferle and his colleagues deconstruct and refute the main arguments of those who persist in disbelieving gold’s rising value as an asset and investment in these times.
An Erste Bank chart comparing gold and the S&P 500 completely demolishing the myth that gold is a poor investment. In a period that includes the greatest bull run of stocks in history, gold clearly outperforms the S&P 500:
The distance between those who believe in gold and those who still believe in paper is similar to the distance that once separated the few who believed the earth was round and the many who believed it flat.
As one whose world still appears flat (notwithstanding apparently irrefutable scientific fact to the contrary), I find Erste Bank’s dismissal of the gold-deniers’ arguments refreshingly substantive and accurate, especially now when gold-deniers far outnumber gold-believers (note: gold-deniers are about to get a crash-course in denial that will irrevocably point out the error of their ways as nothing can compare to a real-time demonstration).
GOLD FUNDS ALTERNATE CURRENCIES AND ALTERNATE REALITIES
Last month, when Martha and I were in San Francisco, we interviewed Professor Antal Fekete who was lecturing at the San Francisco School of Economics. With the Professor was Sandeep Jaitly of the London investment group, Soditic.
The interview, now posted on YouTube, focused on a gold fund being created by Soditic, to be managed by Mr. Jaitly. However, Martha and I were in San Francisco not only to interview Professor Fekete and Mr. Jaitly, I was there to address a members-only gathering of favors.org.
The founder of favors.org, Sergio Lub, has a deep interest in matters of money. His circle includes Bernard Lietaer, author of The Future of Money and once named the #1 currency trader in the world by Business Week, Thomas Greco, author of The End of Money and the Future of Civilization, and Ellen Brown, author of The Web of Debt and others with similar monetary concerns.
Lietaer’s and Greco’s books, The Future of Money and The End of Money and the Future of Civilization focus on the possibilities presented by “alternative currencies”. Alternative/local currencies spontaneously emerged during the Great Depression in the US as they had in Germany during the Weimer hyperinflation.
In each instance, alternative currencies were effective countermeasures to monetary chaos, a hyperinflation in Germany and a deflationary depression in the US. Few know that alternative currencies were able to restore the flow of goods and services in each instance. Few also know that both the German and US governments soon outlawed their use.
The reason for the US and German government prohibition of alternative currencies is the same—alternative local currencies pose a threat to those whose power depends on controlling the supply of money and credit in society.
It didn’t matter that alternative currencies could restore the flow of goods and services during desperate times. What mattered to those in power was the continuation of their power, not the alleviation of bitter, widespread social suffering.
Issues of money and power are inextricably bound together in today’s world. To understand the connection between the two is to understand the conduct and behavior of both bankers and politicians; and, to ignore the connection is to persist in ignorance of what causes the behavior of each.
Once this connection is understood, citizens will no longer expect governments to solve their problems. Politicians achieve power not to solve society’s problems but to personally benefit from their privileged positions, positions that over time indebts and impoverishes those they rule.
In my talk before favors.org, I said that to survive the coming economic collapse, it is helpful to understand derivatives. Then, I explained what I meant. I meant derivative realities, not financial derivatives.
Philip Barton of the Gold Standard Institute had flown in from Australia and had heard my previous talks on money. What I spoke about that evening, what Philip heard, was different than my usual presentation. That evening, I stated that the crisis was more than about economics and money.
The crisis was about life itself and the crisis was going to be of such magnitude that in order to survive, we were going to have to understand that just as our paper money is not actually money, our reality is not actually reality—that our reality is, in fact, a derivative reality.
THE SUPERCONSCIOUS AND THE COMING CRISIS
In 1981, Buckminster Fuller wrote that mankind would soon be entering a period of unprecedented crisis, a crisis meant to transform humanity. I believe this financial crisis is just the beginning of the crisis that Buckminster Fuller predicted, a crisis that will become increasingly severe in order to achieve its purpose.
Fuller believed the purpose of this crisis is to force humanity out of its present competitive, difference and scarcity-based consciousness into the deeper understanding that humanity is one, and that as a harmonious, cooperative and interdependent whole, we can create a world of abundance and well-being instead constantly experiencing war, scarcity, and strife.
What must change are not only our notions about money, but our notions about ourselves as well. That process is now in motion as evidence of higher and deeper levels of consciousness are occurring in greater measure.
One such occasion occurred in 1985 in which I was further convinced that life was far more than we experience or can even imagine. That year, my 12 year old son was attending a private school where he had been exposed to the ideas of Plato, Socrates, and others; and, for his final paper, he had been assigned to write a 10 page paper on The Role of the Superconscious in Art and Culture.
He never wrote that paper. Instead, frustrated with the assigned subject, he asked his “higher self” for help and instead of the 10 page paper assigned, he wrote an extraordinary one page essay called The Superconscious. (the YouTube link is http://www.youtube.com/watch?v=LDrvMUIU-8o ).
The truths presented in The Superconscious are stunning as they are true; and, they offer us a way to deal with a present increasingly filled with crises, crises that are forcing me to finally put into practice what was suggested in that essay 24 years ago. That’s what crises are for.
This November in Canberra, Australia, Professor Fekete will lecture on The World Financial Crisis and The Vanishing Gold Basis. Sandeep Jaitly (Soditic /London), Nathan Narusis (Bullion Management Group/Canada), Bron Suchecki (Perth Mint/Australia), Rudi Frisch (Gold Standard Institute/Canada) and I will be speaking and/or participating as panelists, http://www.goldstandardinstitute.com/html/events.html
WHAT’S NEXT
Just as economists did not expect the recent collapse of global markets, they do not expect what will happen next. So much money is now in circulation, economists actually believe that rising stock markets reflect expanding economic activity instead of reflating speculative bubbles.
The trillions of dollars of credit being pumped into the global economy is only an interim solution to a long-term systemic problem; and, until those problems are fixed, the consequences will continue, consequences which now include a severe deflationary depression coupled with the possibility of hyperinflation.
These are the real possibilities which now face the global economy, no matter how optimistic the ostriches believe the future to be.
Buy gold, buy silver, have faith.
Copyright © 2009 Darryl Schoon
Looming Crises Golden Exits
by Darryl Schoon | August 27, 2009
To survive a transformative crisis, institutions, nations, and individuals must all change. Those who do, will. Those who don’t, won’t.
In July, Vienna’s Erste Bank, released its 2009 Special Report on Gold, In Gold We Trust. The analysis of the current gold market and its future direction by Ronald-Peter Stöferle and his colleagues at Erste Bank is commendable both for its information and its timeliness; for, today, the future of gold is inextricably interwoven with everyone’s future—whether they know it or not.
The current economic collapse has its roots in a crisis caused by the decline in the value of paper money over time resulting from the removal of gold and silver from global monetary systems. Previously, for much of mankind’s history, money was gold and/or silver and its value was intrinsic and fixed.
Then, following the lead of the Bank of England, the US central bank, the Federal Reserve in 1913 began issuing US dollars in the form of paper money convertible upon demand to gold or silver. But by 1971, even that artifice was no longer true as the amount of paper dollars issued by the US far exceeded the underlying amount of gold.
Today, as a consequence, the US dollar, along with all paper currencies, is not convertible to anything of fixed value; and, while others may wonder why we are having a financial crisis, I don’t. To me, the cause of the current crisis is clear as the uncertain value of money itself.
Paper currencies are now backed only by “the full faith and credit” of their increasingly bankrupt and insolvent issuing governments. Economies based on currencies of variable and declining worth are no more stable than housing developments built on quicksand. The reasons for our economic problems are clear whether we want to know them or not.
The consequences of the degradation of money over time are now with us; and because the loss of value was gradual, it went largely unnoticed, much as an undetected cancer grows surreptitiously until it is too late. What is happening now took decades to develop and its resolution is not over.
This is where we are today, in a late-stage monetary crisis where only massive doses of borrowed money from heavily indebted governments buying their own debt are keeping major economies afloat, e.g. the US, the UK, and Japan. The global economy is surviving only because it’s on full blown artificial life-support
MONETARY TRIAGE
NO EXIT NO CURE
The 2009 Special Erste Bank Report on gold begins:
Since our initial recommendation in 2007 at USD 650, gold outperformed almost every other asset class. The gold bull market has been running with an annual performance of 16% since 2001. Gold closed the year 2008 with the eighth annual increase in a row. And in the year to date, the performance has been outstanding as well; the gold price has recorded an increase of 7 % (in USD) and 8 % (in EUR), respectively. The average price in 2008 was USD 872/ounce, i.e. 25% higher than in 2007 (USD 695).
The Erste Bank report also noted the considerable influence of central bank policy on the future price of gold:
Central banks are laying [the] perfect foundation
The strongly expansive policy followed by the central banks and the resulting money creation at historic levels as well as the massive expansion of government debt around the globe might make inflation literally the problem of the coming years. In conjunction with the almost worldwide zero-interest policy and the rising criticism regarding the US dollar as global reserve currency, in our opinion this situation offers a perfect basis of further increases in the gold price.
Central banks are monetary paper mills singularly synonymous with paper currencies and their monetary effluence, e.g. inflation, recession, deflation, hyperinflation, etc. The increasing instability of central bank paper currencies is now threatening the heretofore unquestioned belief that central banks are prerequisites for economic well-being in modern economies.
Indeed, the very opposite is true; and, very soon, central banks themselves will be engaged in a fight for survival—as it becomes more and more obvious that our economic well-being is being threatened by theirs.
MYTHS, FACTS & FALLACIES
The Erste Bank Report on Gold covers a number of subjects, e.g. technical analysis, cycles, the gold supply, de-hedging, gold leasing, backwardation, and, a well-deserved acknowledgement to the home team (Austria) with the topic Money Supply Development According To The Austrian School of Economics.
One of the report’s most interesting headings is The Most Common Arguments, Myths, And Points of Criticism About Gold. Here, Stöferle and his colleagues deconstruct and refute the main arguments of those who persist in disbelieving gold’s rising value as an asset and investment in these times.
An Erste Bank chart comparing gold and the S&P 500 completely demolishing the myth that gold is a poor investment. In a period that includes the greatest bull run of stocks in history, gold clearly outperforms the S&P 500:
The distance between those who believe in gold and those who still believe in paper is similar to the distance that once separated the few who believed the earth was round and the many who believed it flat.
As one whose world still appears flat (notwithstanding apparently irrefutable scientific fact to the contrary), I find Erste Bank’s dismissal of the gold-deniers’ arguments refreshingly substantive and accurate, especially now when gold-deniers far outnumber gold-believers (note: gold-deniers are about to get a crash-course in denial that will irrevocably point out the error of their ways as nothing can compare to a real-time demonstration).
GOLD FUNDS ALTERNATE CURRENCIES AND ALTERNATE REALITIES
Last month, when Martha and I were in San Francisco, we interviewed Professor Antal Fekete who was lecturing at the San Francisco School of Economics. With the Professor was Sandeep Jaitly of the London investment group, Soditic.
The interview, now posted on YouTube, focused on a gold fund being created by Soditic, to be managed by Mr. Jaitly. However, Martha and I were in San Francisco not only to interview Professor Fekete and Mr. Jaitly, I was there to address a members-only gathering of favors.org.
The founder of favors.org, Sergio Lub, has a deep interest in matters of money. His circle includes Bernard Lietaer, author of The Future of Money and once named the #1 currency trader in the world by Business Week, Thomas Greco, author of The End of Money and the Future of Civilization, and Ellen Brown, author of The Web of Debt and others with similar monetary concerns.
Lietaer’s and Greco’s books, The Future of Money and The End of Money and the Future of Civilization focus on the possibilities presented by “alternative currencies”. Alternative/local currencies spontaneously emerged during the Great Depression in the US as they had in Germany during the Weimer hyperinflation.
In each instance, alternative currencies were effective countermeasures to monetary chaos, a hyperinflation in Germany and a deflationary depression in the US. Few know that alternative currencies were able to restore the flow of goods and services in each instance. Few also know that both the German and US governments soon outlawed their use.
The reason for the US and German government prohibition of alternative currencies is the same—alternative local currencies pose a threat to those whose power depends on controlling the supply of money and credit in society.
It didn’t matter that alternative currencies could restore the flow of goods and services during desperate times. What mattered to those in power was the continuation of their power, not the alleviation of bitter, widespread social suffering.
Issues of money and power are inextricably bound together in today’s world. To understand the connection between the two is to understand the conduct and behavior of both bankers and politicians; and, to ignore the connection is to persist in ignorance of what causes the behavior of each.
Once this connection is understood, citizens will no longer expect governments to solve their problems. Politicians achieve power not to solve society’s problems but to personally benefit from their privileged positions, positions that over time indebts and impoverishes those they rule.
In my talk before favors.org, I said that to survive the coming economic collapse, it is helpful to understand derivatives. Then, I explained what I meant. I meant derivative realities, not financial derivatives.
Philip Barton of the Gold Standard Institute had flown in from Australia and had heard my previous talks on money. What I spoke about that evening, what Philip heard, was different than my usual presentation. That evening, I stated that the crisis was more than about economics and money.
The crisis was about life itself and the crisis was going to be of such magnitude that in order to survive, we were going to have to understand that just as our paper money is not actually money, our reality is not actually reality—that our reality is, in fact, a derivative reality.
THE SUPERCONSCIOUS AND THE COMING CRISIS
In 1981, Buckminster Fuller wrote that mankind would soon be entering a period of unprecedented crisis, a crisis meant to transform humanity. I believe this financial crisis is just the beginning of the crisis that Buckminster Fuller predicted, a crisis that will become increasingly severe in order to achieve its purpose.
Fuller believed the purpose of this crisis is to force humanity out of its present competitive, difference and scarcity-based consciousness into the deeper understanding that humanity is one, and that as a harmonious, cooperative and interdependent whole, we can create a world of abundance and well-being instead constantly experiencing war, scarcity, and strife.
What must change are not only our notions about money, but our notions about ourselves as well. That process is now in motion as evidence of higher and deeper levels of consciousness are occurring in greater measure.
One such occasion occurred in 1985 in which I was further convinced that life was far more than we experience or can even imagine. That year, my 12 year old son was attending a private school where he had been exposed to the ideas of Plato, Socrates, and others; and, for his final paper, he had been assigned to write a 10 page paper on The Role of the Superconscious in Art and Culture.
He never wrote that paper. Instead, frustrated with the assigned subject, he asked his “higher self” for help and instead of the 10 page paper assigned, he wrote an extraordinary one page essay called The Superconscious. (the YouTube link is http://www.youtube.com/watch?v=LDrvMUIU-8o ).
The truths presented in The Superconscious are stunning as they are true; and, they offer us a way to deal with a present increasingly filled with crises, crises that are forcing me to finally put into practice what was suggested in that essay 24 years ago. That’s what crises are for.
This November in Canberra, Australia, Professor Fekete will lecture on The World Financial Crisis and The Vanishing Gold Basis. Sandeep Jaitly (Soditic /London), Nathan Narusis (Bullion Management Group/Canada), Bron Suchecki (Perth Mint/Australia), Rudi Frisch (Gold Standard Institute/Canada) and I will be speaking and/or participating as panelists, http://www.goldstandardinstitute.com/html/events.html
WHAT’S NEXT
Just as economists did not expect the recent collapse of global markets, they do not expect what will happen next. So much money is now in circulation, economists actually believe that rising stock markets reflect expanding economic activity instead of reflating speculative bubbles.
The trillions of dollars of credit being pumped into the global economy is only an interim solution to a long-term systemic problem; and, until those problems are fixed, the consequences will continue, consequences which now include a severe deflationary depression coupled with the possibility of hyperinflation.
These are the real possibilities which now face the global economy, no matter how optimistic the ostriches believe the future to be.
Buy gold, buy silver, have faith.
Copyright © 2009 Darryl Schoon
27 August 2009
Satyajit Das - China Syndrome ~ LNL audio
LNL's financial crisis analyst explains how the Chinese economic growth model developed under Deng Xiaoping, and the way China used its export income to invest in US dollars and US Treasury bonds. This meant that by the beginning of the 21st century China was effectively providing the funds for Americans to purchase Chinese products.
http://mpegmedia.abc.net.au/rn/podcast/2009/08/lnl_20090826_2205.mp3
http://mpegmedia.abc.net.au/rn/podcast/2009/08/lnl_20090826_2205.mp3
What is patriotism?
This is the anchored and nuanced community patriotism that springs from the central paradox of human freedom, which is, according to Durant, that it can arise only out of the rule of law. Civilisation is the contract with fellow citizens that sets us free (within parameters)....
It was the Law that gave us our high estate via the idiosyncratic Brits and complete accident. The Lessons of History suggest that our soceity will thrive only to the extent that we show each other respect, are slow to judge and confine our arguments to the cool terms of our collective common good.
Clearly I related to this peice, then, which you can hear here.
A young Australian academic wants to redefine Australian patriotism and he's approached the subject from the point of view of Australia's most recent arrivals.
Tim Soutphommasane is 26. His parents were Chinese and Laotian, he was born in Paris, and he grew up in Sydney's southwest suburbs. He's just spent three years at Oxford, doing a PhD, and his book, Reclaiming Patriotism: Nation Building for Progressives, is published next week.
TIM SOUTPHOMMASANE: Patriotism doesn't have to be about cultural superiority. It doesn't have to be about racism. It can be a very positive sentiment that binds citizens together and motivates them for improving their community.
MARK COLVIN: So how do you distinguish these two types of patriotism?
TIM SOUTPHOMMASANE: Well that's the challenge I think. I think progressives or liberals in Australia in recent years have been content to sit back and allow conservatives and reactionaries to claim the language of national values and I think progressives and liberals really sold themselves short there.
They never actually tried to articulate and alternative to what I see as the two strands of patriotism that have emerged in recent years and they are 1) the narcissistic strand of patriotism that is associated for instance with tattooing your body with the southern cross or draping yourself in the national flag and 2) the neo-conservative strand of patriotism that you see for example on the right when they belief that patriotism has to involve a missionary pursuit of Judeo-Christian values.
MARK COLVIN: Why do you associate it with the right? I mean, it was Dr Johnson who was high Tory of the 18th century who said that patriotism was the last refuge of the scoundrel.
TIM SOUTPHOMMASANE: Feelings of patriotism in Australia haven't always been associated with the right. I think there's a very long left-wing tradition for instance of radical nationalism. Don't forget values of egalitarianism, mateship and the fair go have always been tinged with a very left-wing nationalistic flavour, until recently.
I think John Howard was very effective in seizing this territory from the traditional left during his prime ministership with his form of Anzac nationalism so I don't think it's always been that case, the case that patriotism has been of the right, but it certainly is the state of play at the moment.
MARK COLVIN: All right but we are a multicultural society and inevitably that means that you've got some people who call themselves Australian but who barrack for the English cricket team or still count themselves a bit Greek when it comes to the soccer or, you know, people have dual-allegiances. How are you going to ask them to suddenly be patriotic?
TIM SOUTPHOMMASANE: Well I think there is room for difference within patriotic sense of national identity and that's a nuance that hasn't always been articulated convincingly. Where I start is civic values.
I think when people think of patriotism, they think that you have to love meat pies, you have to drink VB, you have to love sport. But they're very superficial things. They're lifestyle components of Australia.
But I want to focus on civic values and I guess being Australian in my view means taking very seriously things like the fair go, egalitarianism and mateship and those values don't just exit in vacuum but exit in a context of a very discrete, national history.
I think Australians tell stories very well but we don't get our civic stories right all the time. Our civic history might not have the same flair or flamboyance as the Americans say. We weren't born of a revolution but I think there's a very distinguished and sober record of democracy as well that's worth celebrating and I want to shift the emphasis back on those aspects of the national history and the national story.
MARK COLVIN: There are some people in this country who have come here really to get away from nationalism. I think about people from the Balkans for instance. What wouldn't they be suspicious of any project that says, "let's be more nationalistic".
TIM SOUTPHOMMASANE: Well I think their suspicions are quite often very well grounded. I think the mistake is to think however, that a love of humanity or that cosmopolitanism will be enough. Stories and communities still count, not least national ones and I always say to people we don't for example see our politicians speaking to us in Esperanto but they speak to us in a national language appealing to a discrete national history in order to motivate citizens
The real challenge is really to get the balance right and I think there is a possibility of a moderate, liberal patriotism or national pride that we can celebrate. But I certainly don't want to deny that there are instances such as the Balkans where nationalistic excess have ended in bloodshed. That's not the kind of nationalism I would like to defend.
MARK COLVIN: From the peace movement to the globalisation supporters, from left to right, there is a stream of thought that says that nations themselves are, should vanish away, that we are international, that we are a world community.
TIM SOUTPHOMMASANE: What do I think of that? Well I think that yes, there has been a movement towards globalisation but that doesn't mean that the nation state has already been superseded. We still live in a world of nation states. The big decisions affecting us are made primarily by national governments. Our democracy takes a national flavour. We can't run away from that and I think there is a need for a dose of sociological realism if you will in these debates.
MARK COLVIN: So this is about civic virtue for you? Where do you start to build that in the society?
TIM SOUTPHOMMASANE: Well a lot I think depends on getting the language of leadership right. I think liberals and progressives in Australia have a great opportunity at the moment to build a new social contract for the 21st century. But that requires a consensus for reform.
I think Kevin Rudd has shown us that he's a very philosophically engaged leader but I think there's an opportunity for him here to engage in a new cultural narrative and to articulate a vision of citizenship.
MARK COLVIN: Surely you just can't do this with politics though?
TIM SOUTPHOMMASANE: Well of course not but I think...
MARK COLVIN: If you're talking about patriotism, it's got to imbue the society or it won't mean anything.
TIM SOUTPHOMMASANE: No indeed. But the starting point I think must rest in politics. Language and debates percolate from the top down I think. But I think with a dose of cultural leadership, we will see a more diffuse debate at large among Australians.
I think this really is a debate that Australians have wanted to have for a long time and it's a debate that isn't stuck I think in the old paradigm of left and right. I think we're talking really about a new generational debate here.
MARK COLVIN: Tim Soutphommasane whose book, Reclaiming Patriotism, Nation Building for Progressives is published next week.
It was the Law that gave us our high estate via the idiosyncratic Brits and complete accident. The Lessons of History suggest that our soceity will thrive only to the extent that we show each other respect, are slow to judge and confine our arguments to the cool terms of our collective common good.
Clearly I related to this peice, then, which you can hear here.
A young Australian academic wants to redefine Australian patriotism and he's approached the subject from the point of view of Australia's most recent arrivals.
Tim Soutphommasane is 26. His parents were Chinese and Laotian, he was born in Paris, and he grew up in Sydney's southwest suburbs. He's just spent three years at Oxford, doing a PhD, and his book, Reclaiming Patriotism: Nation Building for Progressives, is published next week.
TIM SOUTPHOMMASANE: Patriotism doesn't have to be about cultural superiority. It doesn't have to be about racism. It can be a very positive sentiment that binds citizens together and motivates them for improving their community.
MARK COLVIN: So how do you distinguish these two types of patriotism?
TIM SOUTPHOMMASANE: Well that's the challenge I think. I think progressives or liberals in Australia in recent years have been content to sit back and allow conservatives and reactionaries to claim the language of national values and I think progressives and liberals really sold themselves short there.
They never actually tried to articulate and alternative to what I see as the two strands of patriotism that have emerged in recent years and they are 1) the narcissistic strand of patriotism that is associated for instance with tattooing your body with the southern cross or draping yourself in the national flag and 2) the neo-conservative strand of patriotism that you see for example on the right when they belief that patriotism has to involve a missionary pursuit of Judeo-Christian values.
MARK COLVIN: Why do you associate it with the right? I mean, it was Dr Johnson who was high Tory of the 18th century who said that patriotism was the last refuge of the scoundrel.
TIM SOUTPHOMMASANE: Feelings of patriotism in Australia haven't always been associated with the right. I think there's a very long left-wing tradition for instance of radical nationalism. Don't forget values of egalitarianism, mateship and the fair go have always been tinged with a very left-wing nationalistic flavour, until recently.
I think John Howard was very effective in seizing this territory from the traditional left during his prime ministership with his form of Anzac nationalism so I don't think it's always been that case, the case that patriotism has been of the right, but it certainly is the state of play at the moment.
MARK COLVIN: All right but we are a multicultural society and inevitably that means that you've got some people who call themselves Australian but who barrack for the English cricket team or still count themselves a bit Greek when it comes to the soccer or, you know, people have dual-allegiances. How are you going to ask them to suddenly be patriotic?
TIM SOUTPHOMMASANE: Well I think there is room for difference within patriotic sense of national identity and that's a nuance that hasn't always been articulated convincingly. Where I start is civic values.
I think when people think of patriotism, they think that you have to love meat pies, you have to drink VB, you have to love sport. But they're very superficial things. They're lifestyle components of Australia.
But I want to focus on civic values and I guess being Australian in my view means taking very seriously things like the fair go, egalitarianism and mateship and those values don't just exit in vacuum but exit in a context of a very discrete, national history.
I think Australians tell stories very well but we don't get our civic stories right all the time. Our civic history might not have the same flair or flamboyance as the Americans say. We weren't born of a revolution but I think there's a very distinguished and sober record of democracy as well that's worth celebrating and I want to shift the emphasis back on those aspects of the national history and the national story.
MARK COLVIN: There are some people in this country who have come here really to get away from nationalism. I think about people from the Balkans for instance. What wouldn't they be suspicious of any project that says, "let's be more nationalistic".
TIM SOUTPHOMMASANE: Well I think their suspicions are quite often very well grounded. I think the mistake is to think however, that a love of humanity or that cosmopolitanism will be enough. Stories and communities still count, not least national ones and I always say to people we don't for example see our politicians speaking to us in Esperanto but they speak to us in a national language appealing to a discrete national history in order to motivate citizens
The real challenge is really to get the balance right and I think there is a possibility of a moderate, liberal patriotism or national pride that we can celebrate. But I certainly don't want to deny that there are instances such as the Balkans where nationalistic excess have ended in bloodshed. That's not the kind of nationalism I would like to defend.
MARK COLVIN: From the peace movement to the globalisation supporters, from left to right, there is a stream of thought that says that nations themselves are, should vanish away, that we are international, that we are a world community.
TIM SOUTPHOMMASANE: What do I think of that? Well I think that yes, there has been a movement towards globalisation but that doesn't mean that the nation state has already been superseded. We still live in a world of nation states. The big decisions affecting us are made primarily by national governments. Our democracy takes a national flavour. We can't run away from that and I think there is a need for a dose of sociological realism if you will in these debates.
MARK COLVIN: So this is about civic virtue for you? Where do you start to build that in the society?
TIM SOUTPHOMMASANE: Well a lot I think depends on getting the language of leadership right. I think liberals and progressives in Australia have a great opportunity at the moment to build a new social contract for the 21st century. But that requires a consensus for reform.
I think Kevin Rudd has shown us that he's a very philosophically engaged leader but I think there's an opportunity for him here to engage in a new cultural narrative and to articulate a vision of citizenship.
MARK COLVIN: Surely you just can't do this with politics though?
TIM SOUTPHOMMASANE: Well of course not but I think...
MARK COLVIN: If you're talking about patriotism, it's got to imbue the society or it won't mean anything.
TIM SOUTPHOMMASANE: No indeed. But the starting point I think must rest in politics. Language and debates percolate from the top down I think. But I think with a dose of cultural leadership, we will see a more diffuse debate at large among Australians.
I think this really is a debate that Australians have wanted to have for a long time and it's a debate that isn't stuck I think in the old paradigm of left and right. I think we're talking really about a new generational debate here.
MARK COLVIN: Tim Soutphommasane whose book, Reclaiming Patriotism, Nation Building for Progressives is published next week.
The Dollar, denial and money printing ~ News Review
Aug. 21 (Bloomberg) -- The dollar’s role as a good store of value is “questionable” and the currency has a high degree of risk, said Nobel Prize-winning economist Joseph Stiglitz.
“There is a need for a global reserve system,” Stiglitz, a Columbia University economics professor, said at a conference in Bangkok today. Support from countries like China should ensure orderly discussions on a new reserve system, he added.
http://www.bloomberg.com/apps/news?pid=20601103&sid=aH9O..zWjeHs
Denial is a psychotropic, mind-altering drug that by comparison makes crack cocaine look like health food, and addiction to it shuts down the brain. America’s denial about its out-of-control spending, non-repayable debt, financial sector fraud and deceit, decadent political institutions, epic dereliction of leadership duty, fiscal and monetary immorality, and disastrously dishonest system of cronyism is leading the nation into an economic nuclear winter of desolation and chaos.
http://www.24hgold.com/english/contributor.aspx?contributor=Stewart%20Dougherty&article=2289016786G10020
On average, people in the cities surveyed worked 1,902 hours per year, but in Lyon and Paris they worked 1,582 and 1,594 hours respectively. In Cairo, they worked 2,373 hours, while in Seoul they worked 2,312 hours.
The richest workers are in New York and Zurich, where they would have to work nine hours to buy an iPod nano, while workers in Mumbai needed to work 20 nine-hour days – nearly one month's salary – to buy the gadget.
Copenhagen, Zurich, Geneva and New York were the cities where employees had the highest gross wages.
In terms of the most expensive cities, London fell from the top of the list to the 21st place because of the pound's devaluation, the survey showed.
Oslo is the world's most expensive city now, followed by Zurich, Copenhagen, Geneva and Tokyo, while New York was on the list at number 6.
'76 percent of the Europeans estimate that the crisis will not be over by 2012' (GlobalEurometre June 2009)
A potted history of Fed chairpersons by Quinn.........
http://www.financialsense.com/editorials/quinn/2009/0825.html
US money printing goes full tilt....Summary
The Federal Reserve and the federal government are attempting to "plug the gap" caused by a slowdown of private credit/debt creation.
Non-US demand for the dollar must remain high, or the dollar will fall.
Demand for US assets is in negative territory for 2009
The TIC report and Federal Reserve Custody Account are reviewed and compared
The Federal Reserve has effectively been monetizing US government debt by cleverly enabling foreign central banks to swap their Agency debt for Treasury debt.
The shell game that the Fed is currently playing obscures the fact that money is being printed out of thin air and used to buy US government debt.
http://www.chrismartenson.com/blog/shell-game-how-federal-reserve-monetizing-debt/25806
http://www.zerohedge.com/article/fed-enabling-foreign-central-banks-swap-out-their-agency-debt-treasuries
“There is a need for a global reserve system,” Stiglitz, a Columbia University economics professor, said at a conference in Bangkok today. Support from countries like China should ensure orderly discussions on a new reserve system, he added.
http://www.bloomberg.com/apps/news?pid=20601103&sid=aH9O..zWjeHs
Denial is a psychotropic, mind-altering drug that by comparison makes crack cocaine look like health food, and addiction to it shuts down the brain. America’s denial about its out-of-control spending, non-repayable debt, financial sector fraud and deceit, decadent political institutions, epic dereliction of leadership duty, fiscal and monetary immorality, and disastrously dishonest system of cronyism is leading the nation into an economic nuclear winter of desolation and chaos.
http://www.24hgold.com/english/contributor.aspx?contributor=Stewart%20Dougherty&article=2289016786G10020
On average, people in the cities surveyed worked 1,902 hours per year, but in Lyon and Paris they worked 1,582 and 1,594 hours respectively. In Cairo, they worked 2,373 hours, while in Seoul they worked 2,312 hours.
The richest workers are in New York and Zurich, where they would have to work nine hours to buy an iPod nano, while workers in Mumbai needed to work 20 nine-hour days – nearly one month's salary – to buy the gadget.
Copenhagen, Zurich, Geneva and New York were the cities where employees had the highest gross wages.
In terms of the most expensive cities, London fell from the top of the list to the 21st place because of the pound's devaluation, the survey showed.
Oslo is the world's most expensive city now, followed by Zurich, Copenhagen, Geneva and Tokyo, while New York was on the list at number 6.
'76 percent of the Europeans estimate that the crisis will not be over by 2012' (GlobalEurometre June 2009)
A potted history of Fed chairpersons by Quinn.........
http://www.financialsense.com/editorials/quinn/2009/0825.html
US money printing goes full tilt....Summary
The Federal Reserve and the federal government are attempting to "plug the gap" caused by a slowdown of private credit/debt creation.
Non-US demand for the dollar must remain high, or the dollar will fall.
Demand for US assets is in negative territory for 2009
The TIC report and Federal Reserve Custody Account are reviewed and compared
The Federal Reserve has effectively been monetizing US government debt by cleverly enabling foreign central banks to swap their Agency debt for Treasury debt.
The shell game that the Fed is currently playing obscures the fact that money is being printed out of thin air and used to buy US government debt.
http://www.chrismartenson.com/blog/shell-game-how-federal-reserve-monetizing-debt/25806
http://www.zerohedge.com/article/fed-enabling-foreign-central-banks-swap-out-their-agency-debt-treasuries
26 August 2009
China's gold demand sparkles in Q2 ~ Shanghai Daily
THE demand for gold jewelry in China grew in the second quarter, driven mainly by the country's better-than-expected economic growth.
The demand rose 4 percent annually to 78.7 tons in the second quarter in China, including the mainland, Taiwan and Hong Kong, the World Gold Council said in its quarterly gold demand report.
There was an even stronger year-on-year growth in demand on the Chinese mainland of 6 percent, which boosted its appetite for gold jewelry to 72.5 tons in the period, it said.
"China's mainland proved to be the most resilient among global jewelry markets," said the WGC.
"The mainland stands out in comparison to the 26 percent decline recorded across the rest of the world."The relative stability of the yuan and China's economic growth have been instrumental in propping up jewelry demand, WGC report said.
A surge in bank lending has helped cushion the impact from the global credit crunch, while an aggressive stimulus package has underpinned the domestic economy.
China's economy grew 7.1 percent in the first half, with a better-than-expected growth of 7.9 percent in the second quarter.
The 24-carat gold market is the most resilient while demand for 18-carat jewelry has eased.
The lackluster 18-carat gold jewelry market may be due to a shift in consumer preferences toward platinum, which has benefited from a price fall of about 40 percent at the retail level this year.
The retail gold investment rose 47 percent on the Chinese mainland to 17.1 tons in the second quarter.
China mining
24 August 2009
Greed & The Other Seven Deadly Sins ~ Satyajit Das
The Das nails it again. Anyone with brains isn't hot on ideologies, dig. Hat tip, Jesse..
Greed & The Other Seven Deadly Sins!
Greed is back already, perhaps it never went away. On the back of revived earnings, compensation for star bankers is looking up. Even signing and guaranteed bonuses are stirring.
Excessive executive remuneration is widely viewed as a symptom of ‘greed’, one of the seven deadly sins.
For some, excessive pay contravenes ideas of ‘equality’. Bankers should be paid the same as a nurse who should be paid the same as a doctor.
This misunderstands the concept of equality. Anatole France observed: “The law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread.” It challenges concepts of motivating achievement through reward. Objective assessment of different contributions is also likely to prove difficult.
Concern about excessive pay also focuses on ‘allocation’; ‘who’ gets ‘what’. Mark Twain once admitted: “I am opposed to millionaires, but it would be dangerous to offer me the position.”
For others, the issue is ‘proportionality’; a chief executive’s reward is disproportionate to his or her contribution.
Tight, in-bred circles of directors and consultants determine senior executive salaries. ‘Benchmarking’ exercises merely reinforce the ‘norm’ with packages being justified as ‘needing to buy the best talent’ or ‘meeting the demands of a competitive market’. Results are also easily manipulated to meet specified performance hurdles for bonuses. Recent severance payments highlight that failure is better rewarded than success.
John Kenneth Galbraith identified this pattern long ago: “The salary of the chief executive of the large corporation is not a market award for achievement. It is frequently in the nature of a warm personal gesture by the individual to himself.”
But who is responsible? Many people are now shareholders, directly or through superannuation schemes. Critics ironically acquiesce in the award of generous senior executive packages. They either actively vote in favour of these contracts or fail to challenge the arrangements, as is their right.
There may be a double standard. Critics were willing to hand executive generous pay packets so those talented managers would make them richer. Many turned a blind eye to excesses when they became richer through higher share prices and dividends. George Orwell reminds us: “People sleep peaceably in their beds at night only because rough men stand ready to do violence on their behalf.”
Criticism of excessive remuneration packages ironically necessitates committing the other six deadly sins. Critics secretly perhaps ‘lust’ after the same riches that they are now censure. Their desire for increased wealth to fuel excess consumption – the sin of ‘gluttony’ – drives greed.
Critics are guilty of ‘sloth’ in their laziness in not exercising their power as shareholders to rein in compensation excesses. Critics may be guilty also of the sin of ‘wrath’ as they now indulge their righteous anger. They commit the sin of ‘envy’ as their stand may be merely resentment at those in the world who have done better.
Finally, critics are almost certainly guilty of ‘pride’, being conscious of their superiority in making their principled stand against greed.
In truth, critics are looking for scapegoats and simple answers to the losses suffered as a result of the Global Financial Crisis. This is evident in the return of large paydays as share prices have rebounded. John Stuart Mill cautioned: “Panics do not destroy capital; they merely reveal the extent to which it has been previously destroyed by its betrayal into hopelessly unproductive works”.
Excessive executive remuneration is not a simple matter of ‘greed’ but symptomatic of deeply flawed economic and social systems. In their classic 1933 book – The Modern Corporation and Private Property – Adolf Berle and Gardiner Means argued that companies were akin to feudal kingdoms run by “princes of industry” consistent with their own interests. Half a century later, directors and managers (with modest shareholdings) in conjunction with, for the most part, benign investment managers still run enterprises in a manner not always consistent with the interest of ‘absentee’ shareholders.
John Maynard Keynes was aware of this: “Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.”
All systems are flawed. The real issue is their effectiveness. Unfortunately, as Keynes wrote: “The decadent international but individualistic capitalism in the hands of which we found ourselves …. is not a success. It is not intelligent. It is not beautiful. It is not just. It is not virtuous. And it doesn't deliver the goods.”
Genuine reform of executive remuneration requires understanding of the true problems and reforming the economic system rather than merely treating one of the symptoms.
© 2009 Satyajit Das
Satyajit Das is the author of ‘Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivative’. This article is based on a contribution to the Adelaide Festival of Ideas.
Greed & The Other Seven Deadly Sins!
Greed is back already, perhaps it never went away. On the back of revived earnings, compensation for star bankers is looking up. Even signing and guaranteed bonuses are stirring.
Excessive executive remuneration is widely viewed as a symptom of ‘greed’, one of the seven deadly sins.
For some, excessive pay contravenes ideas of ‘equality’. Bankers should be paid the same as a nurse who should be paid the same as a doctor.
This misunderstands the concept of equality. Anatole France observed: “The law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread.” It challenges concepts of motivating achievement through reward. Objective assessment of different contributions is also likely to prove difficult.
Concern about excessive pay also focuses on ‘allocation’; ‘who’ gets ‘what’. Mark Twain once admitted: “I am opposed to millionaires, but it would be dangerous to offer me the position.”
For others, the issue is ‘proportionality’; a chief executive’s reward is disproportionate to his or her contribution.
Tight, in-bred circles of directors and consultants determine senior executive salaries. ‘Benchmarking’ exercises merely reinforce the ‘norm’ with packages being justified as ‘needing to buy the best talent’ or ‘meeting the demands of a competitive market’. Results are also easily manipulated to meet specified performance hurdles for bonuses. Recent severance payments highlight that failure is better rewarded than success.
John Kenneth Galbraith identified this pattern long ago: “The salary of the chief executive of the large corporation is not a market award for achievement. It is frequently in the nature of a warm personal gesture by the individual to himself.”
But who is responsible? Many people are now shareholders, directly or through superannuation schemes. Critics ironically acquiesce in the award of generous senior executive packages. They either actively vote in favour of these contracts or fail to challenge the arrangements, as is their right.
There may be a double standard. Critics were willing to hand executive generous pay packets so those talented managers would make them richer. Many turned a blind eye to excesses when they became richer through higher share prices and dividends. George Orwell reminds us: “People sleep peaceably in their beds at night only because rough men stand ready to do violence on their behalf.”
Criticism of excessive remuneration packages ironically necessitates committing the other six deadly sins. Critics secretly perhaps ‘lust’ after the same riches that they are now censure. Their desire for increased wealth to fuel excess consumption – the sin of ‘gluttony’ – drives greed.
Critics are guilty of ‘sloth’ in their laziness in not exercising their power as shareholders to rein in compensation excesses. Critics may be guilty also of the sin of ‘wrath’ as they now indulge their righteous anger. They commit the sin of ‘envy’ as their stand may be merely resentment at those in the world who have done better.
Finally, critics are almost certainly guilty of ‘pride’, being conscious of their superiority in making their principled stand against greed.
In truth, critics are looking for scapegoats and simple answers to the losses suffered as a result of the Global Financial Crisis. This is evident in the return of large paydays as share prices have rebounded. John Stuart Mill cautioned: “Panics do not destroy capital; they merely reveal the extent to which it has been previously destroyed by its betrayal into hopelessly unproductive works”.
Excessive executive remuneration is not a simple matter of ‘greed’ but symptomatic of deeply flawed economic and social systems. In their classic 1933 book – The Modern Corporation and Private Property – Adolf Berle and Gardiner Means argued that companies were akin to feudal kingdoms run by “princes of industry” consistent with their own interests. Half a century later, directors and managers (with modest shareholdings) in conjunction with, for the most part, benign investment managers still run enterprises in a manner not always consistent with the interest of ‘absentee’ shareholders.
John Maynard Keynes was aware of this: “Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.”
All systems are flawed. The real issue is their effectiveness. Unfortunately, as Keynes wrote: “The decadent international but individualistic capitalism in the hands of which we found ourselves …. is not a success. It is not intelligent. It is not beautiful. It is not just. It is not virtuous. And it doesn't deliver the goods.”
Genuine reform of executive remuneration requires understanding of the true problems and reforming the economic system rather than merely treating one of the symptoms.
© 2009 Satyajit Das
Satyajit Das is the author of ‘Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivative’. This article is based on a contribution to the Adelaide Festival of Ideas.
Taleb ~ a real actual hyper-conservative
I'm reading Taleb now. He is a philosopher and a big thinker. Being a Popperian sceptical empiracist myself, the idea of the man signing off on the the bullshit that passes from the nexus between banking and politics, not to mention climate change denial, is absurd. Hat tip to Duncan.
LETTER TO THE GUARDIAN ---
Dear sirs,
I am extremely honored to see my conversation with MP David Cameron at the RSA so repeatedly covered in your paper. However I was astonished by the representations that you made as they were in complete reverse to my positions on three subjects: the environment, market crashes, and taxation of the rich.
1) Climate Change. I am hyper-conservative ecologically (meaning super-Green). My position on the climate is to avoid releasing pollutants in the atmosphere, regardless of current expert opinion (climate experts, like banking risk managers, have failed us in the past in foreseeing long term damages and I cannot accept certainty in a certain class of nonlinear models). This is an extension of my general idea that one does not need rationalization with the use of complicated models (by fallible experts) to the edict: "do not disturb a complex system" since we do not know the consequences of our actions owing to complicated causal webs. (Incidentally, this ideas also makes me anti-war). I explicitly explained the need to “leave the planet the way we got it” .
Instead, I, a super -Green was presented as a “climate-change denier” (Lucy Mangan), and my environmental views summarized by “Climate change is not man-made” (Nicholas Watts).
2) Crashes. By some coincidence I spoke at the same venue, the RSA, some 30 months earlier, way before the current crash, as part of my crusade against the risk of financial collapse and the need to robustify society. I find it depressing that the British public could have saved several trillion pounds and hundreds of thousands of jobs had they minded these hidden risks in the system. My position is that a robust system needs to produce frequent crashes, with citizens immune to them, rather than infrequent total collapse, for which we have no robustness. By constraining cycles and assuming “no more boom and bust” (as your current government did) you end up with a very large bust –and I am sure that I do not need more events like the most recent crisis to prove the point.
Instead, the anti-Black Swan crusader was portrayed as someone who “loves crashes” (Nicholas Watts and Lucy Mangan). Go figure.
3) Social Fairness. I spent 13 years fighting bankers bonuses (when nobody else did) and am currently crusading for bankers clawbacks as I have shown how regular taxpayers have been financing bonuses of millionaire bankers (“socialism for the losses, capitalism for the profits”). I said explicitly during the meeting that we are financing today those who got us here, with tax hikes on those who do the right thing, and larger tax break for those who blew us up. Companies who made mistakes and fragilized the system are being financed by the countercyclical ones who make it more robust.
Instead, I was quite shocked to see the headline “David Cameron's guru Nassim Nicholas Taleb says rich should not pay more tax to help the poor”. This transformation of my ideas by Nicholas Watts is extremely wicked.
The depressing part is that nowhere does your paper discuss my central idea, that the risks that were there 30 months ago are still there now, and that unless we lower debt to “definancialize” the economy (instead of increasing deficits through stimulus) we face more risks of blowups.
As someone trying to be systematic thinker with a body of work around these risk management ideas --not a politician with ad hoc opinions -- the game of selective (and aggressively biased) quoting does not work very well. With the same game one could easily make Karl Marx an apologist of capitalism and Adam Smith a promoter of communism.
Nassim Nicholas Taleb, PhD.
Distinguished Professor of Risk Engineering, New York University, principal, Universa LP, and author, The Black Swan
PREVIOUS COMMENTS
Culprits (journalists I despise): Guardian (Nicholas Watt), Scotsman (Gerri Peev). How can I ever believe what they write about some other thinker I have never read? How? How?
Perhaps the worst of this story is the fan mail I’ve been getting from right-wing anti-environmentalists.
LETTER TO THE GUARDIAN ---
Dear sirs,
I am extremely honored to see my conversation with MP David Cameron at the RSA so repeatedly covered in your paper. However I was astonished by the representations that you made as they were in complete reverse to my positions on three subjects: the environment, market crashes, and taxation of the rich.
1) Climate Change. I am hyper-conservative ecologically (meaning super-Green). My position on the climate is to avoid releasing pollutants in the atmosphere, regardless of current expert opinion (climate experts, like banking risk managers, have failed us in the past in foreseeing long term damages and I cannot accept certainty in a certain class of nonlinear models). This is an extension of my general idea that one does not need rationalization with the use of complicated models (by fallible experts) to the edict: "do not disturb a complex system" since we do not know the consequences of our actions owing to complicated causal webs. (Incidentally, this ideas also makes me anti-war). I explicitly explained the need to “leave the planet the way we got it” .
Instead, I, a super -Green was presented as a “climate-change denier” (Lucy Mangan), and my environmental views summarized by “Climate change is not man-made” (Nicholas Watts).
2) Crashes. By some coincidence I spoke at the same venue, the RSA, some 30 months earlier, way before the current crash, as part of my crusade against the risk of financial collapse and the need to robustify society. I find it depressing that the British public could have saved several trillion pounds and hundreds of thousands of jobs had they minded these hidden risks in the system. My position is that a robust system needs to produce frequent crashes, with citizens immune to them, rather than infrequent total collapse, for which we have no robustness. By constraining cycles and assuming “no more boom and bust” (as your current government did) you end up with a very large bust –and I am sure that I do not need more events like the most recent crisis to prove the point.
Instead, the anti-Black Swan crusader was portrayed as someone who “loves crashes” (Nicholas Watts and Lucy Mangan). Go figure.
3) Social Fairness. I spent 13 years fighting bankers bonuses (when nobody else did) and am currently crusading for bankers clawbacks as I have shown how regular taxpayers have been financing bonuses of millionaire bankers (“socialism for the losses, capitalism for the profits”). I said explicitly during the meeting that we are financing today those who got us here, with tax hikes on those who do the right thing, and larger tax break for those who blew us up. Companies who made mistakes and fragilized the system are being financed by the countercyclical ones who make it more robust.
Instead, I was quite shocked to see the headline “David Cameron's guru Nassim Nicholas Taleb says rich should not pay more tax to help the poor”. This transformation of my ideas by Nicholas Watts is extremely wicked.
The depressing part is that nowhere does your paper discuss my central idea, that the risks that were there 30 months ago are still there now, and that unless we lower debt to “definancialize” the economy (instead of increasing deficits through stimulus) we face more risks of blowups.
As someone trying to be systematic thinker with a body of work around these risk management ideas --not a politician with ad hoc opinions -- the game of selective (and aggressively biased) quoting does not work very well. With the same game one could easily make Karl Marx an apologist of capitalism and Adam Smith a promoter of communism.
Nassim Nicholas Taleb, PhD.
Distinguished Professor of Risk Engineering, New York University, principal, Universa LP, and author, The Black Swan
PREVIOUS COMMENTS
Culprits (journalists I despise): Guardian (Nicholas Watt), Scotsman (Gerri Peev). How can I ever believe what they write about some other thinker I have never read? How? How?
Perhaps the worst of this story is the fan mail I’ve been getting from right-wing anti-environmentalists.
why money is collapsing and why central banks need adult supervision
Hat Tip Taichi
Introduction: Ellen Brown developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest book, she turns those skills to an analysis of the Federal Reserve and "the money trust." She shows how this private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Brown developed an interest in the developing world and its problems while living abroad for eleven years in Kenya, Honduras, Guatemala and Nicaragua. She returned to practicing law when she was asked to join the legal team of a popular Tijuana healer with an innovative cancer therapy, who was targeted by the chemotherapy industry in the 1990s. That experience produced her book Forbidden Medicine, which traces the suppression of natural health treatments to the same corrupting influences that have captured the money system. Brown's eleven books include the bestselling Nature's Pharmacy, co-authored with Dr. Lynne Walker, which has sold 285,000 copies.
Daily Bell: Nice to meet you.
Brown: My pleasure!
Daily Bell: Nice to meet you.
Brown: My pleasure!
Daily Bell: Can you tell us your book's thesis in a nutshell?
Brown: Our money is an illusion. Except for coins, which compose only one ten-thousandth of the money supply, all of our money today consists of debt to private banks. Banks always take back more money in principal and interest than they put into the money supply as principal, making the system basically a pyramid scheme. After 300 years, this scheme has spread around the world and has now reached its mathematical limits. The whole world has been captured in the debt trap of a private international banking monopoly.
Daily Bell: These are clearheaded deductions about economics. How did you get interested?
Brown: In my earlier books, which were on health and the politics of health, I saw the pharmaceutical industry as the force to be reckoned with and exposed. I was on the legal team of a Tijuana cancer therapist named Jimmy Keller, who showed Ed Griffin's documentary "World Without Cancer" to all his patients. I read Griffin's book of the same name and realized that the banking, drug and oil cartels were basically the same entities, and that their power came from the power to create money that they had usurped from the people themselves. This was such a mind-boggling insight that I felt I had to write about it.
Daily Bell: How did you make the jump from nutrition to finance?
Brown: My first book was on nutrition but my later books focused on the politics of health and what is wrong with our health care system. I feel we have been misled about drugs and healing, and I wanted to expose that and set it right. After reading "World Without Cancer," I read Ed Griffin's book "The Creature from Jekyll Island," which I thought was great right up to the end; but I felt his solution would not work. I then read other books on the subject and got my grounding in it. I actually got interested in writing on economics and the Federal Reserve in the seventies, but that was before the Internet, and I wasn't able to follow my hunches to the end. When that remarkable tool became available, the missing puzzle pieces fell into place and I could see the larger picture and had to write about it.
Daily Bell: Tell us some more about your background, where you grew up and when you traveled.
Brown: I was born in California, grew up in the Detroit and Denver suburbs, graduated from UC Berkeley in English and then from UCLA Law School. I met my husband Cliff in law school, and we worked as attorneys in L.A. for 10 years (11 for him), until he burned out on Beverly Hills law and decided to join the U.S. Agency for International Development. He always wanted to go abroad, and it gave me a chance to write and have more time with the kids (we have two). From 1989 to 2000, we lived in Kenya, Honduras, Guatemala and Nicaragua. Then I got divorced and returned to the States, where I discovered this most interesting of writing subjects. I'm still good friends with my ex; I just ran out of topics overseas! There was more to it than that, of course, but I do feel I had to come back to the States to find this topic du jour. My daughter now works for a U.N. N.G.O. and my son is a graduate student in economics in Michigan.
Daily Bell: What's been the reaction to your book?
Brown: Remarkably good. I get flooded with email, which is great. With my other books, I didn't have much contact with readers and felt like a ghostwriter. With this one, I feel like a lightning rod, attracting ideas from everywhere. I credit it to the Internet, an amazing historical development that has changed the game worldwide.
Daily Bell: Are you familiar with Austrian finance? What do you think of it?
Brown: I am, and I enjoyed reading Murray Rothbard; but I don't think the Quantity Theory of Money is correct. Prices do not benignly adjust to a contraction in the money supply; this has been shown historically. When the money supply contracts, workers get laid off, businesses shut down, and the economy goes into a recession or a depression. It's a fallacy to think you can control prices by controlling the money supply - or even that you can control the money supply ("you" meaning, of course, the central bank). In the 1970s and 1980s, when Milton Friedman's monetarism was popular, attempts were made to regulate prices by regulating the money supply, and they didn't work. Some major recessions resulted, and Third World countries got locked hopelessly in debt from a radical increase in interest rates, but the money supply couldn't be controlled.
The Federal Reserve doesn't create money; banks do. The Federal Reserve just responds by providing the reserves they need after the fact if they come up short. And adding money to the system doesn't raise prices - not if workers and materials are available to make goods. If you add money to the system, the money will go looking for goods, and merchants will respond by making more. Supply and demand will go up together and prices will remain stable. An increase in interest rates is more likely to raise prices. Merchants raise their prices to cover their costs, and interest is a major cost.
Daily Bell: Are you a free-market economist or something else?
Brown: I believe in free markets, but I don't believe we have them today. Virtually every market now is manipulated and controlled. We lost our free markets when we gave away the power to create money to a private banking elite. They got their power through sleight of hand, and it can be reversed only by reversing the sleight of hand. Ironically, to get back our free markets, we need some government intervention. The economy has been captured by thieves, and we need some rules and regulations to put the genie back in the bottle.
Daily Bell: What's wrong with a gold or silver monetary system?
Brown: To answer that question properly will take more than a few sentences, but I'll try to be succinct. There are three ways a precious metal system could be set up: (1) a "gold-backed" fiat currency, of the sort we had until 1933 domestically and until 1971 internationally; (2) 100% gold coins, as Ed Griffin recommends; or (3) gold, silver and anything else trading freely with dollars, as recommended by Ron Paul.
The first alternative failed historically and doesn't work mathematically. Nixon had to take the dollar off the gold standard internationally after DeGaulle traded in his dollars for gold and the British then tried to trade in theirs, and the U.S. was about to run out of gold. In a "fractional reserve" system, only a fraction of the gold necessary to cash in all the dollars "backed" by gold is actually held in the banks' vaults. When people figure that out, you get runs on the banks and the banks have to close their doors. Roosevelt was faced with the same problem. People had panicked and were trading in their dollars for gold at the banks. The dollar was then 40% backed by gold, so whenever anyone cashed in $2 in paper money, $3 in loans had to be called in. The result was a radical collapse in the money supply.
Option #2, an all-gold currency, won't work for a number of reasons, but I'll just mention one: where are you going to get the gold? To be fair, the government would have to swap all the dollars in the money supply for gold. Assume a $13 trillion money supply (M3) and that there is $4 trillion worth of gold in the world (per the last report I saw). Even if you could acquire every penny's worth of gold, you'd have to revalue the gold so that it was worth $3000/ounce. Goldbugs say that's doable, but here's my question: how are you going to get the gold? What are you going to buy it with? Your paper dollars are going to be worthless. What Indian woman wearing that gold around her neck is going to be foolish enough to trade it for your paper dollars?
Ed Griffin would just divide the outstanding money supply by the gold in Fort Knox, but we don't know if there's any gold left in Fort Knox, and even assuming there is, the dollar value per ounce is going to be so far from anything resembling the real market value of gold that tying the dollar to gold will lose all meaning. If you want a fixed money supply, why not just have Congress order up X number of dollars, forbid any more to be issued, and make it illegal for banks to create credit on their books? Let them lend what they have and no more. Even that won't work though; you'll quickly degenerate into recession or depression, because there won't be enough money for innovation, development and the like. The ability to create and extend credit is a good thing and is necessary to a thriving economy. It's just a question of who gets to create it, private banks (which then proceed to charge interest on it that they siphon off the top as profits) or public banks, drawing on the "full faith and credit of the United States" because they are the United States and can return the profits to the United States, maintaining a mathematically sound system?
The third idea - allowing people to trade in any currency they want - doesn't solve anything and just creates new problems. What's the exchange rate going to be between these various domestic currencies, and who is going to set it? Are you going to allow shortselling between currencies, derivative bets, etc.? If you have silver and gold coins trading together, what happens if gold goes up in value relative to silver? Will you have to change the face value of the coins? They could be left unstamped, but then you won't really have coins; you'll just have round gold bars. Then why not just keep your gold bars and sell them for paper dollars as needed? If the paper dollars lose value, as goldbugs are sure they will, the gold bars will fetch more dollars when sold, so value will have been preserved just as it would have been if the gold were actually turned into gold coins.
Daily Bell: You are somewhat cynical about government, yet your solutions feature government involvement. Can government really be trusted to do the right thing?
Brown: I have faith in the sort of government "of the people, by the people, for the people" described by Abraham Lincoln; but we don't have that now. What we have is government controlled by a few giant corporations, and they got their power by acquiring the power to create the national money supply. "Allow me to issue and control a nation's currency," Amschel Mayer Rothschild allegedly said in the 18th century, "and I care not who makes its laws." That statement may be apocryphal, but that is how they did it, and that is the power we have to get back if we want a just and trustworthy government that represents people rather than wealthy corporations.
Daily Bell: Do you believe in a business cycle - and that central banks aggravate it by printing too much money?
Brown: We had obvious business cycles in the 19th century when we were on the gold standard. Banks would issue banknotes that were many multiples of the gold they held in their vaults, until the paper money supply so far outstripped its backing that people realized the banks could not make good on all their gold-backed notes and there would be runs on the banks. "Fiat money" was not the problem though. The whole system was a ruse. The gold backing allowed private bankers to create paper money on a printing press and lend it at interest, pretending it represented gold the bankers did not really have in their vaults. Privately-issued paper money that is only partially backed by precious metals is a form of counterfeiting whether the sums are prudently managed or not.
Daily Bell: Was central banking over-printing of money the proximate cause of the economic crisis?
Brown: No. Alan Greenspan did lower interest rates to ridiculously low levels in 2001, precipitating the housing bubble that precipitated the current crisis; and he gave his blessing to derivatives, which allowed banks to move loans off their books, package them up, and sell them to investors, making room on their books for more loans and fanning the housing bubble. But it wasn't the central bank that over-printed money. It was the commercial banks, and of course they don't actually "print" it. They just create it as accounting entries on their books. The "crisis" came when there was a sudden shift in accounting rules, from "mark to fantasy" to "mark to market". The idea was to rein in the over exuberance\ of the banks; but the banks were just doing what they had to do to keep the Ponzi scheme going: create ever more loans. The real cause of the crisis was the Ponzi scheme itself: it just ran out of its food source.
Daily Bell: What are the best investments to make throughout the business cycle, and do they change over time?
Brown: They change over time, and because markets are so heavily manipulated, you can't really know what they are unless you're an insider. The rest of us just have to pay very close attention and ride the roller coaster. A case in point was a year ago, when gold was about to break through $1000, oil was hovering near $150/barrel, bank stocks were plummeting, and so was the dollar. Suddenly in July, everything miraculously reversed - the dollar and bank stocks shot up, and gold and oil plunged. What happened? The Japanese central bank later admitted in its local paper that the central banks had colluded to manipulate the markets.
Daily Bell: What do you think of the current economic crisis. Are Western countries handling it well?
Brown: Yes and no. The credit system has collapsed and Western central banks are trying to pump it back up with "quantitative easing," which is a better approach than President Hoover took when he tried to tighten the government's belt and "balance the budget" in the early 1930s. But bailing out the banks is the wrong approach. Governments should be using quantitative easing (essentially money-printing) to build infrastructure and pay the government's bills rather than trying to clean up the toxic books of failed banks. The problem is that the central banks are there to serve the banking system, not the people. We need truly national central banks. England and Canada technically own their central banks, but their governments still borrow from private banks. They don't use their central banks as if they owned them. China, Malaysia, and South Korea do; and they're faring quite well these days.
Daily Bell: Do you believe in the bailouts taking place in America?
Brown: No. We've been extorted into them. We've been made to believe the only way we can save our credit system is to spend our hard-earned taxpayer money to save the banks that got us into the mess, but that's not true. We can set up our own public credit system and let the private parasitic cartel fend for itself. They made billions in the free market; let them go down in the free market.
Daily Bell: Can you explain the genesis of the financial crisis?
Brown: Taking the long view, it's the end of a 300 year Ponzi scheme. Virtually all of our money is created by banks as loans; but banks create only the principal, not the interest necessary to pay their loans back. More is always owed back than is created in the first place, and new borrowers must continually be found to take out new loans to create the money to pay this extra interest. After 300 years, the whole world has been locked in debt, and the parasitic pyramid has run out of its food source.
All sorts of scams and schemes were devised to plunder the last dollar out of borrowers - securitization of subprime mortgages to move them off the banks' books and make room for more, derivatives to supposedly eliminate the risk of subprime default and induce investors to buy, etc. But the schemes have been exposed, and the "shadow lenders" - the investors induced to buy these bundles of subprime debt - have gone away and they aren't coming back any time soon.
The shadow lenders made up $10 trillion worth of the mortgage market. Virtually all of our money consists of credit (or debt), and a big chunk of this credit has disappeared. The money supply is collapsing, and that is what has caused the financial crisis. The solution is to put money back into the system; but the banks can't do it, because the Bank for International Settlements has imposed a tourniquet on lending with the Basel Accords.
We need to set up our own public banks, which cannot run short of "the full faith and credit of the United States" because they ARE the United States (or whatever local government is setting them up). In the U.S., we should nationalize the Federal Reserve and let it operate like a real government-owned bank, issuing money and credit on behalf of the public for infrastructure and other government expenditures. States could also set up their own credit mechanisms by setting up their own banks.
Daily Bell: Do you believe that some of your ideas will be taken up officially?
Brown: I keep trying, knocking at any doors I see; but it's a slow-moving machine. The first step is mass education and popular understanding.
Daily Bell: Have you heard from Wall Street about your ideas?
Brown: No.
Daily Bell: Are you at all worried about the reaction to your ideas?
Brown: I try to suggest solutions that are good for everyone. I think the private banking business has actually come to the end of the line. They're scrambling desperately to hold it all together, but there's not much more they can do. The whole multi-trillion dollar derivatives edifice was constructed in an attempt to bring business back that the banks were losing to their competitor non-bank institutions, but it didn't work in the end. I think the bankers might be relieved to pass the baton. Not that they want to lose their existing fortunes, but they might be ready to retire to their favorite islands and let the next generation tackle the problem; or to take jobs exercising their expertise in a new public banking arrangement with the stable backing of the government.
Daily Bell: You do a great deal of public speaking. What do you emphasize most in your talks?
Brown: Solutions, solutions, solutions. This nut can be cracked. We've been looking at the problem wrong. When we step outside the box and look again, it's all quite simple. Truth is simple.
Daily Bell: What are the most important - seminal -- articles of yours that you would encourage everyone to read? Where can they be found?
Brown: My articles can all be found on my website at WebofDebt.com. I try to write one every week or two, and they're quite topical, but the most popular (per the OpEdNews ratings) have been "It's the Derivatives, Stupid!", written in September 2008 after the Lehman/AIG collapse; "Borrowing from Peter to Pay Paul: The Wall Street Ponzi Scheme Called Fractional Reserve Banking" (December 29, 2008); and "Toward a Solution to the Debt Crisis in California" (July 13, 2009). My latest article is "The Public Option in Banking: How We Can Beat Wall Street at Its Own Game" (August 8, 2009), posted on the Huffington Post among other places.
Daily Bell: On behalf of all of our readers we thank you for sharing your views with us - and for your courageous and important work.
Brown: You're welcome. I don't feel courageous; I just write. I live with my 90-year-old mother in a senior village. I need the excitement!
http://www.thedailybell.com/496/Ellen-Brown-Web-of-Debt.html
Introduction: Ellen Brown developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest book, she turns those skills to an analysis of the Federal Reserve and "the money trust." She shows how this private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Brown developed an interest in the developing world and its problems while living abroad for eleven years in Kenya, Honduras, Guatemala and Nicaragua. She returned to practicing law when she was asked to join the legal team of a popular Tijuana healer with an innovative cancer therapy, who was targeted by the chemotherapy industry in the 1990s. That experience produced her book Forbidden Medicine, which traces the suppression of natural health treatments to the same corrupting influences that have captured the money system. Brown's eleven books include the bestselling Nature's Pharmacy, co-authored with Dr. Lynne Walker, which has sold 285,000 copies.
Daily Bell: Nice to meet you.
Brown: My pleasure!
Daily Bell: Nice to meet you.
Brown: My pleasure!
Daily Bell: Can you tell us your book's thesis in a nutshell?
Brown: Our money is an illusion. Except for coins, which compose only one ten-thousandth of the money supply, all of our money today consists of debt to private banks. Banks always take back more money in principal and interest than they put into the money supply as principal, making the system basically a pyramid scheme. After 300 years, this scheme has spread around the world and has now reached its mathematical limits. The whole world has been captured in the debt trap of a private international banking monopoly.
Daily Bell: These are clearheaded deductions about economics. How did you get interested?
Brown: In my earlier books, which were on health and the politics of health, I saw the pharmaceutical industry as the force to be reckoned with and exposed. I was on the legal team of a Tijuana cancer therapist named Jimmy Keller, who showed Ed Griffin's documentary "World Without Cancer" to all his patients. I read Griffin's book of the same name and realized that the banking, drug and oil cartels were basically the same entities, and that their power came from the power to create money that they had usurped from the people themselves. This was such a mind-boggling insight that I felt I had to write about it.
Daily Bell: How did you make the jump from nutrition to finance?
Brown: My first book was on nutrition but my later books focused on the politics of health and what is wrong with our health care system. I feel we have been misled about drugs and healing, and I wanted to expose that and set it right. After reading "World Without Cancer," I read Ed Griffin's book "The Creature from Jekyll Island," which I thought was great right up to the end; but I felt his solution would not work. I then read other books on the subject and got my grounding in it. I actually got interested in writing on economics and the Federal Reserve in the seventies, but that was before the Internet, and I wasn't able to follow my hunches to the end. When that remarkable tool became available, the missing puzzle pieces fell into place and I could see the larger picture and had to write about it.
Daily Bell: Tell us some more about your background, where you grew up and when you traveled.
Brown: I was born in California, grew up in the Detroit and Denver suburbs, graduated from UC Berkeley in English and then from UCLA Law School. I met my husband Cliff in law school, and we worked as attorneys in L.A. for 10 years (11 for him), until he burned out on Beverly Hills law and decided to join the U.S. Agency for International Development. He always wanted to go abroad, and it gave me a chance to write and have more time with the kids (we have two). From 1989 to 2000, we lived in Kenya, Honduras, Guatemala and Nicaragua. Then I got divorced and returned to the States, where I discovered this most interesting of writing subjects. I'm still good friends with my ex; I just ran out of topics overseas! There was more to it than that, of course, but I do feel I had to come back to the States to find this topic du jour. My daughter now works for a U.N. N.G.O. and my son is a graduate student in economics in Michigan.
Daily Bell: What's been the reaction to your book?
Brown: Remarkably good. I get flooded with email, which is great. With my other books, I didn't have much contact with readers and felt like a ghostwriter. With this one, I feel like a lightning rod, attracting ideas from everywhere. I credit it to the Internet, an amazing historical development that has changed the game worldwide.
Daily Bell: Are you familiar with Austrian finance? What do you think of it?
Brown: I am, and I enjoyed reading Murray Rothbard; but I don't think the Quantity Theory of Money is correct. Prices do not benignly adjust to a contraction in the money supply; this has been shown historically. When the money supply contracts, workers get laid off, businesses shut down, and the economy goes into a recession or a depression. It's a fallacy to think you can control prices by controlling the money supply - or even that you can control the money supply ("you" meaning, of course, the central bank). In the 1970s and 1980s, when Milton Friedman's monetarism was popular, attempts were made to regulate prices by regulating the money supply, and they didn't work. Some major recessions resulted, and Third World countries got locked hopelessly in debt from a radical increase in interest rates, but the money supply couldn't be controlled.
The Federal Reserve doesn't create money; banks do. The Federal Reserve just responds by providing the reserves they need after the fact if they come up short. And adding money to the system doesn't raise prices - not if workers and materials are available to make goods. If you add money to the system, the money will go looking for goods, and merchants will respond by making more. Supply and demand will go up together and prices will remain stable. An increase in interest rates is more likely to raise prices. Merchants raise their prices to cover their costs, and interest is a major cost.
Daily Bell: Are you a free-market economist or something else?
Brown: I believe in free markets, but I don't believe we have them today. Virtually every market now is manipulated and controlled. We lost our free markets when we gave away the power to create money to a private banking elite. They got their power through sleight of hand, and it can be reversed only by reversing the sleight of hand. Ironically, to get back our free markets, we need some government intervention. The economy has been captured by thieves, and we need some rules and regulations to put the genie back in the bottle.
Daily Bell: What's wrong with a gold or silver monetary system?
Brown: To answer that question properly will take more than a few sentences, but I'll try to be succinct. There are three ways a precious metal system could be set up: (1) a "gold-backed" fiat currency, of the sort we had until 1933 domestically and until 1971 internationally; (2) 100% gold coins, as Ed Griffin recommends; or (3) gold, silver and anything else trading freely with dollars, as recommended by Ron Paul.
The first alternative failed historically and doesn't work mathematically. Nixon had to take the dollar off the gold standard internationally after DeGaulle traded in his dollars for gold and the British then tried to trade in theirs, and the U.S. was about to run out of gold. In a "fractional reserve" system, only a fraction of the gold necessary to cash in all the dollars "backed" by gold is actually held in the banks' vaults. When people figure that out, you get runs on the banks and the banks have to close their doors. Roosevelt was faced with the same problem. People had panicked and were trading in their dollars for gold at the banks. The dollar was then 40% backed by gold, so whenever anyone cashed in $2 in paper money, $3 in loans had to be called in. The result was a radical collapse in the money supply.
Option #2, an all-gold currency, won't work for a number of reasons, but I'll just mention one: where are you going to get the gold? To be fair, the government would have to swap all the dollars in the money supply for gold. Assume a $13 trillion money supply (M3) and that there is $4 trillion worth of gold in the world (per the last report I saw). Even if you could acquire every penny's worth of gold, you'd have to revalue the gold so that it was worth $3000/ounce. Goldbugs say that's doable, but here's my question: how are you going to get the gold? What are you going to buy it with? Your paper dollars are going to be worthless. What Indian woman wearing that gold around her neck is going to be foolish enough to trade it for your paper dollars?
Ed Griffin would just divide the outstanding money supply by the gold in Fort Knox, but we don't know if there's any gold left in Fort Knox, and even assuming there is, the dollar value per ounce is going to be so far from anything resembling the real market value of gold that tying the dollar to gold will lose all meaning. If you want a fixed money supply, why not just have Congress order up X number of dollars, forbid any more to be issued, and make it illegal for banks to create credit on their books? Let them lend what they have and no more. Even that won't work though; you'll quickly degenerate into recession or depression, because there won't be enough money for innovation, development and the like. The ability to create and extend credit is a good thing and is necessary to a thriving economy. It's just a question of who gets to create it, private banks (which then proceed to charge interest on it that they siphon off the top as profits) or public banks, drawing on the "full faith and credit of the United States" because they are the United States and can return the profits to the United States, maintaining a mathematically sound system?
The third idea - allowing people to trade in any currency they want - doesn't solve anything and just creates new problems. What's the exchange rate going to be between these various domestic currencies, and who is going to set it? Are you going to allow shortselling between currencies, derivative bets, etc.? If you have silver and gold coins trading together, what happens if gold goes up in value relative to silver? Will you have to change the face value of the coins? They could be left unstamped, but then you won't really have coins; you'll just have round gold bars. Then why not just keep your gold bars and sell them for paper dollars as needed? If the paper dollars lose value, as goldbugs are sure they will, the gold bars will fetch more dollars when sold, so value will have been preserved just as it would have been if the gold were actually turned into gold coins.
Daily Bell: You are somewhat cynical about government, yet your solutions feature government involvement. Can government really be trusted to do the right thing?
Brown: I have faith in the sort of government "of the people, by the people, for the people" described by Abraham Lincoln; but we don't have that now. What we have is government controlled by a few giant corporations, and they got their power by acquiring the power to create the national money supply. "Allow me to issue and control a nation's currency," Amschel Mayer Rothschild allegedly said in the 18th century, "and I care not who makes its laws." That statement may be apocryphal, but that is how they did it, and that is the power we have to get back if we want a just and trustworthy government that represents people rather than wealthy corporations.
Daily Bell: Do you believe in a business cycle - and that central banks aggravate it by printing too much money?
Brown: We had obvious business cycles in the 19th century when we were on the gold standard. Banks would issue banknotes that were many multiples of the gold they held in their vaults, until the paper money supply so far outstripped its backing that people realized the banks could not make good on all their gold-backed notes and there would be runs on the banks. "Fiat money" was not the problem though. The whole system was a ruse. The gold backing allowed private bankers to create paper money on a printing press and lend it at interest, pretending it represented gold the bankers did not really have in their vaults. Privately-issued paper money that is only partially backed by precious metals is a form of counterfeiting whether the sums are prudently managed or not.
Daily Bell: Was central banking over-printing of money the proximate cause of the economic crisis?
Brown: No. Alan Greenspan did lower interest rates to ridiculously low levels in 2001, precipitating the housing bubble that precipitated the current crisis; and he gave his blessing to derivatives, which allowed banks to move loans off their books, package them up, and sell them to investors, making room on their books for more loans and fanning the housing bubble. But it wasn't the central bank that over-printed money. It was the commercial banks, and of course they don't actually "print" it. They just create it as accounting entries on their books. The "crisis" came when there was a sudden shift in accounting rules, from "mark to fantasy" to "mark to market". The idea was to rein in the over exuberance\ of the banks; but the banks were just doing what they had to do to keep the Ponzi scheme going: create ever more loans. The real cause of the crisis was the Ponzi scheme itself: it just ran out of its food source.
Daily Bell: What are the best investments to make throughout the business cycle, and do they change over time?
Brown: They change over time, and because markets are so heavily manipulated, you can't really know what they are unless you're an insider. The rest of us just have to pay very close attention and ride the roller coaster. A case in point was a year ago, when gold was about to break through $1000, oil was hovering near $150/barrel, bank stocks were plummeting, and so was the dollar. Suddenly in July, everything miraculously reversed - the dollar and bank stocks shot up, and gold and oil plunged. What happened? The Japanese central bank later admitted in its local paper that the central banks had colluded to manipulate the markets.
Daily Bell: What do you think of the current economic crisis. Are Western countries handling it well?
Brown: Yes and no. The credit system has collapsed and Western central banks are trying to pump it back up with "quantitative easing," which is a better approach than President Hoover took when he tried to tighten the government's belt and "balance the budget" in the early 1930s. But bailing out the banks is the wrong approach. Governments should be using quantitative easing (essentially money-printing) to build infrastructure and pay the government's bills rather than trying to clean up the toxic books of failed banks. The problem is that the central banks are there to serve the banking system, not the people. We need truly national central banks. England and Canada technically own their central banks, but their governments still borrow from private banks. They don't use their central banks as if they owned them. China, Malaysia, and South Korea do; and they're faring quite well these days.
Daily Bell: Do you believe in the bailouts taking place in America?
Brown: No. We've been extorted into them. We've been made to believe the only way we can save our credit system is to spend our hard-earned taxpayer money to save the banks that got us into the mess, but that's not true. We can set up our own public credit system and let the private parasitic cartel fend for itself. They made billions in the free market; let them go down in the free market.
Daily Bell: Can you explain the genesis of the financial crisis?
Brown: Taking the long view, it's the end of a 300 year Ponzi scheme. Virtually all of our money is created by banks as loans; but banks create only the principal, not the interest necessary to pay their loans back. More is always owed back than is created in the first place, and new borrowers must continually be found to take out new loans to create the money to pay this extra interest. After 300 years, the whole world has been locked in debt, and the parasitic pyramid has run out of its food source.
All sorts of scams and schemes were devised to plunder the last dollar out of borrowers - securitization of subprime mortgages to move them off the banks' books and make room for more, derivatives to supposedly eliminate the risk of subprime default and induce investors to buy, etc. But the schemes have been exposed, and the "shadow lenders" - the investors induced to buy these bundles of subprime debt - have gone away and they aren't coming back any time soon.
The shadow lenders made up $10 trillion worth of the mortgage market. Virtually all of our money consists of credit (or debt), and a big chunk of this credit has disappeared. The money supply is collapsing, and that is what has caused the financial crisis. The solution is to put money back into the system; but the banks can't do it, because the Bank for International Settlements has imposed a tourniquet on lending with the Basel Accords.
We need to set up our own public banks, which cannot run short of "the full faith and credit of the United States" because they ARE the United States (or whatever local government is setting them up). In the U.S., we should nationalize the Federal Reserve and let it operate like a real government-owned bank, issuing money and credit on behalf of the public for infrastructure and other government expenditures. States could also set up their own credit mechanisms by setting up their own banks.
Daily Bell: Do you believe that some of your ideas will be taken up officially?
Brown: I keep trying, knocking at any doors I see; but it's a slow-moving machine. The first step is mass education and popular understanding.
Daily Bell: Have you heard from Wall Street about your ideas?
Brown: No.
Daily Bell: Are you at all worried about the reaction to your ideas?
Brown: I try to suggest solutions that are good for everyone. I think the private banking business has actually come to the end of the line. They're scrambling desperately to hold it all together, but there's not much more they can do. The whole multi-trillion dollar derivatives edifice was constructed in an attempt to bring business back that the banks were losing to their competitor non-bank institutions, but it didn't work in the end. I think the bankers might be relieved to pass the baton. Not that they want to lose their existing fortunes, but they might be ready to retire to their favorite islands and let the next generation tackle the problem; or to take jobs exercising their expertise in a new public banking arrangement with the stable backing of the government.
Daily Bell: You do a great deal of public speaking. What do you emphasize most in your talks?
Brown: Solutions, solutions, solutions. This nut can be cracked. We've been looking at the problem wrong. When we step outside the box and look again, it's all quite simple. Truth is simple.
Daily Bell: What are the most important - seminal -- articles of yours that you would encourage everyone to read? Where can they be found?
Brown: My articles can all be found on my website at WebofDebt.com. I try to write one every week or two, and they're quite topical, but the most popular (per the OpEdNews ratings) have been "It's the Derivatives, Stupid!", written in September 2008 after the Lehman/AIG collapse; "Borrowing from Peter to Pay Paul: The Wall Street Ponzi Scheme Called Fractional Reserve Banking" (December 29, 2008); and "Toward a Solution to the Debt Crisis in California" (July 13, 2009). My latest article is "The Public Option in Banking: How We Can Beat Wall Street at Its Own Game" (August 8, 2009), posted on the Huffington Post among other places.
Daily Bell: On behalf of all of our readers we thank you for sharing your views with us - and for your courageous and important work.
Brown: You're welcome. I don't feel courageous; I just write. I live with my 90-year-old mother in a senior village. I need the excitement!
http://www.thedailybell.com/496/Ellen-Brown-Web-of-Debt.html
21 August 2009
Iceland evades rentiers ~ FT
Can Iceland and Latvia pay the foreign debts run up by a fairly narrow layer of their population? The European Union and International Monetary Fund have told them to replace private debts with public obligations, and to pay by raising taxes, slashing public spending and obliging citizens to deplete their savings.
Resentment is growing not only towards those who ran up the debts - Iceland's bankrupt Kaupthing and Landsbanki, with its Icesave accounts, and heavily geared property owners in the Baltics and central Europe - but also towards the foreign advisers and creditors who put pressure on these governments to sell off the banks and public companies to insiders. Support in Iceland for joining the EU has fallen to just over a third of the population, while Latvia's Harmony Centre party, the first since independence to include a large segment of the Russian-speaking population, has gained a majority in Riga and is becoming the most popular national party. Popular protests in both countries have triggered rising political pressure to limit the debt burden to a reasonable ability to pay.
This political pressure came to a head over the weekend in Reykjavik's parliament. The Althing agreed a deal, expected to be formalised today, which would severely restrict payments to the UK and Netherlands in compensation for the cost of bailing out their Icesave depositors.
This agreement is, so far as I am aware, the first since the 1920s to subordinate foreign debt to the country's ability to pay. Iceland's payments will be limited to 6 per cent of growth above 2008's gross domestic product. If creditors thrust austerity on the Icelandic economy there will be no growth and they will not get paid.
A similar problem was debated 80 years ago over Germany's first world war reparations. But many policymakers remain confused over the distinction between squeezing out a domestic fiscal surplus and the ability to pay foreign debts. No matter how much a government may tax its economy, there is a problem turning the money into foreign currency. As John Maynard Keynes explained, unless debtor countries can export more, they must pay either by borrowing or by selling off domestic assets. Iceland today has rejected these self-destructive policies.
There is a limit to how much foreign payment an economy can make. Higher domestic taxes do not mean a government can translate this revenue into foreign exchange. This reality is reflected in Iceland's position on its Icesave debt - estimated to amount to half its entire GDP.
In taking this stand, Iceland promises to lead the pendulum swing away from the ideology that debt repayments are sacred.
In the post-Soviet economies the problem is that independence in 1991 did not bring the hoped-for western living standards. Like Iceland, they remain dependent on imports. Their trade deficits have been financed by the global property bubble - borrowing in foreign currency against property that was free of debt at independence. Now the bubble has burst and it is payback time. No more credit is flowing to the Baltics from Swedish banks, to Hungary from Austrian banks or to Iceland from Britain and the Netherlands. Unemployment is rising and governments are slashing healthcare and education budgets. The resulting economic shrinkage is leaving large swathes of property in negative equity.
Austerity programmes were common in developing countries from the 1970s to the 1990s, but European democracies have little tolerance for such an approach. As matters stand, families are losing their homes and emigration is accelerating. This is not what capitalism promised.
Populations are asking not only whether debts should be paid, but - as in Iceland - whether they can be paid. If they cannot be, then trying to pay will only shrink economies further, stopping them becoming viable.
Will Britain and the Netherlands accept Iceland's condition? Trying to squeeze out more debt service than a country could pay requires an oppressive and extractive fiscal and financial regime, Keynes warned, which in turn would inspire a nationalistic political reaction to break free of creditor-nation demands. This is what happened in the 1920s when Germany's economy was wrecked by the rigid ideology of the sanctity of debt.
A pragmatic economic principle is at work: a debt that cannot be paid, will not be. What remains an open question is just how these debts will not be paid. Will many be written off? Or will Iceland, Latvia and other debtors be plunged into austerity in an attempt to squeeze out an economic surplus to avoid default?
The latter option may drive debt-laden countries in a new direction. Eva Joly, the French prosecutor brought in to sort out Iceland's banking crisis, warned this month that Iceland would have little left but its natural resources and strategic position: "Russia, for example, might well find it attractive." The post-Soviet countries are already seeing voters shift away from Europe in reaction to the destructive policies the EU supported.
Something has to give. Will rigid ideology give way to economic reality, or the other way round?
The writer is professor of economics at the University of Missouri
http://www.ft.com/cms/s/0/610316c4-8ac4-11de-ad08-00144feabdc0.html?nclick_check=1
Resentment is growing not only towards those who ran up the debts - Iceland's bankrupt Kaupthing and Landsbanki, with its Icesave accounts, and heavily geared property owners in the Baltics and central Europe - but also towards the foreign advisers and creditors who put pressure on these governments to sell off the banks and public companies to insiders. Support in Iceland for joining the EU has fallen to just over a third of the population, while Latvia's Harmony Centre party, the first since independence to include a large segment of the Russian-speaking population, has gained a majority in Riga and is becoming the most popular national party. Popular protests in both countries have triggered rising political pressure to limit the debt burden to a reasonable ability to pay.
This political pressure came to a head over the weekend in Reykjavik's parliament. The Althing agreed a deal, expected to be formalised today, which would severely restrict payments to the UK and Netherlands in compensation for the cost of bailing out their Icesave depositors.
This agreement is, so far as I am aware, the first since the 1920s to subordinate foreign debt to the country's ability to pay. Iceland's payments will be limited to 6 per cent of growth above 2008's gross domestic product. If creditors thrust austerity on the Icelandic economy there will be no growth and they will not get paid.
A similar problem was debated 80 years ago over Germany's first world war reparations. But many policymakers remain confused over the distinction between squeezing out a domestic fiscal surplus and the ability to pay foreign debts. No matter how much a government may tax its economy, there is a problem turning the money into foreign currency. As John Maynard Keynes explained, unless debtor countries can export more, they must pay either by borrowing or by selling off domestic assets. Iceland today has rejected these self-destructive policies.
There is a limit to how much foreign payment an economy can make. Higher domestic taxes do not mean a government can translate this revenue into foreign exchange. This reality is reflected in Iceland's position on its Icesave debt - estimated to amount to half its entire GDP.
In taking this stand, Iceland promises to lead the pendulum swing away from the ideology that debt repayments are sacred.
In the post-Soviet economies the problem is that independence in 1991 did not bring the hoped-for western living standards. Like Iceland, they remain dependent on imports. Their trade deficits have been financed by the global property bubble - borrowing in foreign currency against property that was free of debt at independence. Now the bubble has burst and it is payback time. No more credit is flowing to the Baltics from Swedish banks, to Hungary from Austrian banks or to Iceland from Britain and the Netherlands. Unemployment is rising and governments are slashing healthcare and education budgets. The resulting economic shrinkage is leaving large swathes of property in negative equity.
Austerity programmes were common in developing countries from the 1970s to the 1990s, but European democracies have little tolerance for such an approach. As matters stand, families are losing their homes and emigration is accelerating. This is not what capitalism promised.
Populations are asking not only whether debts should be paid, but - as in Iceland - whether they can be paid. If they cannot be, then trying to pay will only shrink economies further, stopping them becoming viable.
Will Britain and the Netherlands accept Iceland's condition? Trying to squeeze out more debt service than a country could pay requires an oppressive and extractive fiscal and financial regime, Keynes warned, which in turn would inspire a nationalistic political reaction to break free of creditor-nation demands. This is what happened in the 1920s when Germany's economy was wrecked by the rigid ideology of the sanctity of debt.
A pragmatic economic principle is at work: a debt that cannot be paid, will not be. What remains an open question is just how these debts will not be paid. Will many be written off? Or will Iceland, Latvia and other debtors be plunged into austerity in an attempt to squeeze out an economic surplus to avoid default?
The latter option may drive debt-laden countries in a new direction. Eva Joly, the French prosecutor brought in to sort out Iceland's banking crisis, warned this month that Iceland would have little left but its natural resources and strategic position: "Russia, for example, might well find it attractive." The post-Soviet countries are already seeing voters shift away from Europe in reaction to the destructive policies the EU supported.
Something has to give. Will rigid ideology give way to economic reality, or the other way round?
The writer is professor of economics at the University of Missouri
http://www.ft.com/cms/s/0/610316c4-8ac4-11de-ad08-00144feabdc0.html?nclick_check=1
19 August 2009
Rant or Revelation: My Money's on Revelation
Rant or Revelation: My Money's on Revelation
August 18, 2009
Correspondent Michael Goodfellow's rant reaches revelation.
Frequent contributor Michael Goodfellow and I correspond on a great number of issues. Having worked in technology and software his entire career, he brings an engineer's sensibility and rigor to many issues. Recently he wrote a commentary which he titled "A Charles Smith Moment" which leaves rant and enters revelation in my view.
He suggested I introduce it with the phrase "this is what I get when he's in a bad mood..." but I think you'll find a succinct indictment here:
A "Charles Smith" Moment
Unfair to you to call it that, but when reading this item about Iraq off Cato,
Time to Leave Iraq
(and these links on Social Security/Medicare and the Federal budget SSA Trustees Report and Tax Policy Center)
I had that feeling that the whole country is just a Ship of Fools headed into the rapids and there's nothing I can do about it.
It's not just that I disagree with the neocons -- their values, their goals, their plans and their politics. It's that they don't even seem to care. They don't clarify their goals or strategy, they don't learn from their mistakes and they don't even want to look at whether Iraq is a success or failure. It's as if they don't even believe what they say.
They just want to act out some WWII-inspired fantasy of turning countries into democracies and being the world's policeman. But now Iraq is just "so 2005", so ignore it, wrap it up, and off to Afghanistan! And both wars have so much momentum that even the President can't seem to slow them down or divert them, let alone call them off. He'd rather let both wars be huge failures than take any short-term political heat. Again, it's as if no one, even the other party, cares what we accomplish. Thousands of American soldiers die, tens of thousands of Iraqis die, trillions are spent, and for the politicians, pundits and public, it's just "whatever!"
And it isn't limited to the wars. On health care, the Republicans are patting themselves on the back for derailing ObamaCare, but neither side is facing reality. We can't afford existing Medicare. The baby boomers start hitting 65 in a couple of years. Time is up for dealing with that crisis. Even if the Republicans stop health care legislation, they still have that to deal with. And not in some "future generation", but during their term of office. What can they possibly be thinking?
But what can the Democrats be thinking? It's not as if there's any cost control in the ObamaCare plan. They seem surprised that CBO keeps scoring the plan as expensive. Can't any of them do arithmetic? 45 million uninsured times $2000 a year (a very cheap insurance policy) is $90 billion a year, or about a trillion dollars in ten years. CBO is only scoring the first five years of the plan, since it phases in. Still, any back-of-the-envelope calculation would have told them the tab was going to be in that ballpark. And this is on top of the Medicare problem, Social Security, Cap and Trade, and the financial crisis. How does anyone think we can afford all of that?
In fact, the one thing that does seem to unite both parties is a complete disinterest in what the legislation will actually do. They just want to let the usual special interest groups fight it out, write a thousand pages of incomprehensible regulatory gibberish, and call it done. Just don't ask us to read it!
The same was true during the financial crisis. The whole attitude of Congress was "Keep this away from me! I don't understand any of it! You, Federal Reserve, here's a blank check. Just solve this problem and don't even tell us what you are doing."
Again, this isn't a matter of values or priorities. It's beyond incompetence. It's a complete disinterest in the results of their actions. I would call it panic, but that requires a certain alertness. This is some kind of psychosis.
So I look at the entire political system and I think how unreal it all is, and how tired. Republicans are running on intellectual fumes -- neocons and old warhorses like McCain; anti-gay, anti-immigrant, anti-trade sentiment and populist know-nothings like Palin. No awareness of where the country is right now, and no willingness to stick to any principles at all.
I still like the libertarian arguments on Reason and Cato, but they have their problems as well. First, they are a tiny minority. Second, they mostly criticize the system without offering practical, politically possible steps in the right direction. And third, they are hopeless nerds. I watch those guys on video and I think "This guy couldn't sell me ice cream on a hot summer day! And I'm someone who agrees with him!"
I could never take the Democrats seriously either. From the various bailouts to all their plans for the economy, health care, environment, it has the same feel of unreality as the Republicans. As if they just don't want to know whether any of these plans can possibly succeed, or whether we can afford to even try. They just want to act out their fantasies, where they save the Earth, bring healing to the poor and end racism.
I wrote to one guy on global warming that the only thing that matters is what gets invented in a lab somewhere. If we can build better batteries or solar panels, do carbon capture or geoengineering, then we can make a difference. But the hair-shirt conservation measures have no real effect. And you can prove that with statistics about efficiency and the savings they could possibly get.
If you actually cared about global warming, you'd want to know what works. (and build nuke plants, which is apparently being shot down by the Obama administration.) But he doesn't even want to talk about that. It's just "if we don't pass cap and trade, the oceans will rise and the Earth is doomed." And if you don't agree with him, you are an evil "denier." It's not even a reasoned argument. Where am I supposed to go with that?
http://www.oftwominds.com/blog.html
Like you, I expect a train wreck at some point. Unlike you, I don't expect chaos. Instead, it will just be a hunker-down, "do something, anything!" government-orchestrated mess. More of the same, with increasing instability and poverty. I don't think that knowing how to grow veggies or collect rainwater will make any difference at all.
The thing to remember is that most of the third world has worse governance than we do, worse financial problems, fewer natural resources and a less educated population. Still, from Argentina to Poland to India, they just limp along. Anarchy does not break out. I see no reason for it to do so here either. It will just suck.
Thank you, Michael. Such clarity is a rarity these days.
Those of you who have slogged through my free eBook (shameless plug) Survival+: Structuring Prosperity for Yourself and the Nation will recall parallel descriptions of fantasy, disinterest and psychosis.
The entire structure of response and policy is what I term simulacrum, facsimiles of solutions, pseudo-solutions which as Michael points out, are being "sold" with the sort of half-heartedness of those who know full well they are props and facades and thus utterly illusory.
No nation can borrow 13% of its GDP without consequences, but rather than face our situation with what I term an adult understanding of triage and trade-offs--that you can't get everything you want right now, that priorities must be assessed and difficult trade-offs made--we as a nation have entered the delusion that we can just borrow the money to put off any hard choices.
Wars going badly? Borrow another trillion to "stay the course"--whatever that means. As Michael notes, the policy has always been incomprehensible, switching from finding WMDs to fostering democracy to stopping terrorism in Mosel before it gets to Miami to the ideological-flavor-of-the-month.
Sick-care unsustainable and broken? Borrow another trillion, write a 1,000 pages of gobblydigook to placate and pander to the special interests involved, solving nothing and doing nothing to actually cut costs, and then "declare victory": Mission accomplished!
It rings hollow because it is hollow: nothing of substance has been accomplished because as I put it, those with asymmetric stakes in the game are pouring every dime and every ounce of energy into the game to protect their share of the swag, while we citizens and "consumers" are expiring from death by a thousand cuts--none deep enough to spark concerted action.
While the government and corporate Elites protect their fiefdoms, the citizenry are distracted by trash-talk radio and TV, courtesy of a mass media owned lock, stock and barrel by six corporations.
Complacency and fatalism reign supreme, and the Elites are loving it because a confused, doped out, distracted, apathetic, complacent, fatalistic populace is easily duped and manipulated.
What Michael foresees as our future is what I term devolution. We differ on two points, which Michael already knows from our voluminous correspondence. So I want to be sure to note that I am not reading this into Michael's commentary--these are my thoughts.
I think we will devolve to "tipping points" or phase shifts where systems will break down. This won't necessarily lead to chaos but it will lead to something beyond complacency and fatalism. It could be negative or it could be positive; that choice is ours.
I believe that the loss of wealth, the extremes of income inequality and the credit/debt implosion are all phase shifts which have already occurred, but the status quo Power Elites and citizenry alike are in denial, hoping that some miracle of additional borrowing will re-set the clock back to the era of bogus "prosperity."
Those hopes will be proven futile because simulacrum is not reality and delusion is not a practical substitute for actual solutions.
I differ somewhat with Michael on solutions, as I think all solutions come from the margins. While I hope for technological solutions, I am skeptical because our consumerist mindset is fixated on the notion that "buying something new" will somehow solve all our problems.
Mo offense to Prius owners, but I suspect we've all been sold a bill of goods on its benefits. The entire cost of a vehicle, or any manufactured object, is called its lifecycle costs. This means calculating the cost in money, energy and resources of everything required to manufacture the vehicle--not just the steel, but the cost of pumping water to make the steel, mine the ore, etc.
Now a Prius has two components which simply do not exist in a stripped down ICE (internal combustion engine) vehicle: a large battery pack and extremely complex electronics for switching between electric and ICE drive.
Batteries require a stupendous amount of costly resources to manufacture. Until batteries are made of sand (silicon) or equivalent materials and do not require highly complex processes, they will remain costly. They are also toxic and therefore costly to recycle/ dismantle properly.
Thus I suspect that if you include the full lifecycle costs of manufacturing a Prius, the cost of maintenance and the fuel it burns (or the electricity used to recharge its batteries) and the disposal/recycling of its components, and weigh them against a high-mileage cheaper vehicle like a Honda Civic or subcompact Ford/GM, the Prius is probably less efficient and less environmentally sound than the cheap ICE vehicle.
"Buying something new" might not be the answer at all except at the margins--transformers that lose less energy, electronic power converters which are suddenly mandated to be efficient rather than energy hogs, etc. etc. Perhaps the Consumerist Gods will fail to be the "solution."
Just as technology changes at the margin, so too does behavior. I have to disagree with Michael about growing veggies, because as I have said before, "a garden and a homecooked meal are revolutionary acts." These simple acts are revolutionary because they upend the oppressive regime of agribusiness, packaged/fast food and the sick-care system--all parts in a seamless system of ill-health, derangement, torpor and chronic disease which can be treated with enormously expensive and mostly needless medications and procedures.
This is what I term an integrated understanding of the entire system of growing and consuming food and health. Agribusiness, fast food, high salt, high fat and high sugar processed "foods" (poisons is a more accurate term), chronic illness and various derangements, and an immensely profitable sick-care system are all one. There can be no "solutions" without an integrated understanding that simple behaviors are the heart of any and all real solutions. Buying something "new" is a simulacrum "solution" marketed to reap profits.
The solution to sick-care starts not with 1,000 pages of legislation, paid for with trillons of dollars of borrowed money but with an understanding of the causal connections between gardening, vegetables/food, cooking rather than consuming, self-reliance, goal-directed activity and responsibility for one's health.
The market will create the proper incentives to conservation and wise choices if it is given a chance. When gasoline is $10 a gallon (and it will be), then people will change their behaviors as common sense dictates. When peaches cost $10 a pound, then all the fruit that drops to the ground to rot now will be collected before it rots.
I read somewhere about a town in Alaska (I forget the source) which lost its electrical service and had to rely on costly generators for some time. The cost was passed onto consumers. As if by magic, electrical consumption dropped 40% overnight. No new devices were required; the Consumerist Gods were shedding tears and wailing mightily, for the "solution" was behavioral.
Yes, technology promises many innovations, but how we live offers much cheaper, easier and more environmentally sound solutions without waiting around for mechanical/electronic saviors promoted by the Consumerist Gods.
I would like to end with a mindful haiku from resident haiku poet Jed H.:
End of an Era
A Culture of Corruption
End of the Empire.
Here it is with Jed's notes:
END of an Era ( i.e., the Boom-times: 2000- 2007 a la 1920s )
A Culture of Corruption
END of the EMPIRE ! ( i.e., US of A is on its Downhill Slide, like Romans ! )
Thank you, Jed, for a poetic summation of "the end of an era."
August 18, 2009
Correspondent Michael Goodfellow's rant reaches revelation.
Frequent contributor Michael Goodfellow and I correspond on a great number of issues. Having worked in technology and software his entire career, he brings an engineer's sensibility and rigor to many issues. Recently he wrote a commentary which he titled "A Charles Smith Moment" which leaves rant and enters revelation in my view.
He suggested I introduce it with the phrase "this is what I get when he's in a bad mood..." but I think you'll find a succinct indictment here:
A "Charles Smith" Moment
Unfair to you to call it that, but when reading this item about Iraq off Cato,
Time to Leave Iraq
(and these links on Social Security/Medicare and the Federal budget SSA Trustees Report and Tax Policy Center)
I had that feeling that the whole country is just a Ship of Fools headed into the rapids and there's nothing I can do about it.
It's not just that I disagree with the neocons -- their values, their goals, their plans and their politics. It's that they don't even seem to care. They don't clarify their goals or strategy, they don't learn from their mistakes and they don't even want to look at whether Iraq is a success or failure. It's as if they don't even believe what they say.
They just want to act out some WWII-inspired fantasy of turning countries into democracies and being the world's policeman. But now Iraq is just "so 2005", so ignore it, wrap it up, and off to Afghanistan! And both wars have so much momentum that even the President can't seem to slow them down or divert them, let alone call them off. He'd rather let both wars be huge failures than take any short-term political heat. Again, it's as if no one, even the other party, cares what we accomplish. Thousands of American soldiers die, tens of thousands of Iraqis die, trillions are spent, and for the politicians, pundits and public, it's just "whatever!"
And it isn't limited to the wars. On health care, the Republicans are patting themselves on the back for derailing ObamaCare, but neither side is facing reality. We can't afford existing Medicare. The baby boomers start hitting 65 in a couple of years. Time is up for dealing with that crisis. Even if the Republicans stop health care legislation, they still have that to deal with. And not in some "future generation", but during their term of office. What can they possibly be thinking?
But what can the Democrats be thinking? It's not as if there's any cost control in the ObamaCare plan. They seem surprised that CBO keeps scoring the plan as expensive. Can't any of them do arithmetic? 45 million uninsured times $2000 a year (a very cheap insurance policy) is $90 billion a year, or about a trillion dollars in ten years. CBO is only scoring the first five years of the plan, since it phases in. Still, any back-of-the-envelope calculation would have told them the tab was going to be in that ballpark. And this is on top of the Medicare problem, Social Security, Cap and Trade, and the financial crisis. How does anyone think we can afford all of that?
In fact, the one thing that does seem to unite both parties is a complete disinterest in what the legislation will actually do. They just want to let the usual special interest groups fight it out, write a thousand pages of incomprehensible regulatory gibberish, and call it done. Just don't ask us to read it!
The same was true during the financial crisis. The whole attitude of Congress was "Keep this away from me! I don't understand any of it! You, Federal Reserve, here's a blank check. Just solve this problem and don't even tell us what you are doing."
Again, this isn't a matter of values or priorities. It's beyond incompetence. It's a complete disinterest in the results of their actions. I would call it panic, but that requires a certain alertness. This is some kind of psychosis.
So I look at the entire political system and I think how unreal it all is, and how tired. Republicans are running on intellectual fumes -- neocons and old warhorses like McCain; anti-gay, anti-immigrant, anti-trade sentiment and populist know-nothings like Palin. No awareness of where the country is right now, and no willingness to stick to any principles at all.
I still like the libertarian arguments on Reason and Cato, but they have their problems as well. First, they are a tiny minority. Second, they mostly criticize the system without offering practical, politically possible steps in the right direction. And third, they are hopeless nerds. I watch those guys on video and I think "This guy couldn't sell me ice cream on a hot summer day! And I'm someone who agrees with him!"
I could never take the Democrats seriously either. From the various bailouts to all their plans for the economy, health care, environment, it has the same feel of unreality as the Republicans. As if they just don't want to know whether any of these plans can possibly succeed, or whether we can afford to even try. They just want to act out their fantasies, where they save the Earth, bring healing to the poor and end racism.
I wrote to one guy on global warming that the only thing that matters is what gets invented in a lab somewhere. If we can build better batteries or solar panels, do carbon capture or geoengineering, then we can make a difference. But the hair-shirt conservation measures have no real effect. And you can prove that with statistics about efficiency and the savings they could possibly get.
If you actually cared about global warming, you'd want to know what works. (and build nuke plants, which is apparently being shot down by the Obama administration.) But he doesn't even want to talk about that. It's just "if we don't pass cap and trade, the oceans will rise and the Earth is doomed." And if you don't agree with him, you are an evil "denier." It's not even a reasoned argument. Where am I supposed to go with that?
http://www.oftwominds.com/blog.html
Like you, I expect a train wreck at some point. Unlike you, I don't expect chaos. Instead, it will just be a hunker-down, "do something, anything!" government-orchestrated mess. More of the same, with increasing instability and poverty. I don't think that knowing how to grow veggies or collect rainwater will make any difference at all.
The thing to remember is that most of the third world has worse governance than we do, worse financial problems, fewer natural resources and a less educated population. Still, from Argentina to Poland to India, they just limp along. Anarchy does not break out. I see no reason for it to do so here either. It will just suck.
Thank you, Michael. Such clarity is a rarity these days.
Those of you who have slogged through my free eBook (shameless plug) Survival+: Structuring Prosperity for Yourself and the Nation will recall parallel descriptions of fantasy, disinterest and psychosis.
The entire structure of response and policy is what I term simulacrum, facsimiles of solutions, pseudo-solutions which as Michael points out, are being "sold" with the sort of half-heartedness of those who know full well they are props and facades and thus utterly illusory.
No nation can borrow 13% of its GDP without consequences, but rather than face our situation with what I term an adult understanding of triage and trade-offs--that you can't get everything you want right now, that priorities must be assessed and difficult trade-offs made--we as a nation have entered the delusion that we can just borrow the money to put off any hard choices.
Wars going badly? Borrow another trillion to "stay the course"--whatever that means. As Michael notes, the policy has always been incomprehensible, switching from finding WMDs to fostering democracy to stopping terrorism in Mosel before it gets to Miami to the ideological-flavor-of-the-month.
Sick-care unsustainable and broken? Borrow another trillion, write a 1,000 pages of gobblydigook to placate and pander to the special interests involved, solving nothing and doing nothing to actually cut costs, and then "declare victory": Mission accomplished!
It rings hollow because it is hollow: nothing of substance has been accomplished because as I put it, those with asymmetric stakes in the game are pouring every dime and every ounce of energy into the game to protect their share of the swag, while we citizens and "consumers" are expiring from death by a thousand cuts--none deep enough to spark concerted action.
While the government and corporate Elites protect their fiefdoms, the citizenry are distracted by trash-talk radio and TV, courtesy of a mass media owned lock, stock and barrel by six corporations.
Complacency and fatalism reign supreme, and the Elites are loving it because a confused, doped out, distracted, apathetic, complacent, fatalistic populace is easily duped and manipulated.
What Michael foresees as our future is what I term devolution. We differ on two points, which Michael already knows from our voluminous correspondence. So I want to be sure to note that I am not reading this into Michael's commentary--these are my thoughts.
I think we will devolve to "tipping points" or phase shifts where systems will break down. This won't necessarily lead to chaos but it will lead to something beyond complacency and fatalism. It could be negative or it could be positive; that choice is ours.
I believe that the loss of wealth, the extremes of income inequality and the credit/debt implosion are all phase shifts which have already occurred, but the status quo Power Elites and citizenry alike are in denial, hoping that some miracle of additional borrowing will re-set the clock back to the era of bogus "prosperity."
Those hopes will be proven futile because simulacrum is not reality and delusion is not a practical substitute for actual solutions.
I differ somewhat with Michael on solutions, as I think all solutions come from the margins. While I hope for technological solutions, I am skeptical because our consumerist mindset is fixated on the notion that "buying something new" will somehow solve all our problems.
Mo offense to Prius owners, but I suspect we've all been sold a bill of goods on its benefits. The entire cost of a vehicle, or any manufactured object, is called its lifecycle costs. This means calculating the cost in money, energy and resources of everything required to manufacture the vehicle--not just the steel, but the cost of pumping water to make the steel, mine the ore, etc.
Now a Prius has two components which simply do not exist in a stripped down ICE (internal combustion engine) vehicle: a large battery pack and extremely complex electronics for switching between electric and ICE drive.
Batteries require a stupendous amount of costly resources to manufacture. Until batteries are made of sand (silicon) or equivalent materials and do not require highly complex processes, they will remain costly. They are also toxic and therefore costly to recycle/ dismantle properly.
Thus I suspect that if you include the full lifecycle costs of manufacturing a Prius, the cost of maintenance and the fuel it burns (or the electricity used to recharge its batteries) and the disposal/recycling of its components, and weigh them against a high-mileage cheaper vehicle like a Honda Civic or subcompact Ford/GM, the Prius is probably less efficient and less environmentally sound than the cheap ICE vehicle.
"Buying something new" might not be the answer at all except at the margins--transformers that lose less energy, electronic power converters which are suddenly mandated to be efficient rather than energy hogs, etc. etc. Perhaps the Consumerist Gods will fail to be the "solution."
Just as technology changes at the margin, so too does behavior. I have to disagree with Michael about growing veggies, because as I have said before, "a garden and a homecooked meal are revolutionary acts." These simple acts are revolutionary because they upend the oppressive regime of agribusiness, packaged/fast food and the sick-care system--all parts in a seamless system of ill-health, derangement, torpor and chronic disease which can be treated with enormously expensive and mostly needless medications and procedures.
This is what I term an integrated understanding of the entire system of growing and consuming food and health. Agribusiness, fast food, high salt, high fat and high sugar processed "foods" (poisons is a more accurate term), chronic illness and various derangements, and an immensely profitable sick-care system are all one. There can be no "solutions" without an integrated understanding that simple behaviors are the heart of any and all real solutions. Buying something "new" is a simulacrum "solution" marketed to reap profits.
The solution to sick-care starts not with 1,000 pages of legislation, paid for with trillons of dollars of borrowed money but with an understanding of the causal connections between gardening, vegetables/food, cooking rather than consuming, self-reliance, goal-directed activity and responsibility for one's health.
The market will create the proper incentives to conservation and wise choices if it is given a chance. When gasoline is $10 a gallon (and it will be), then people will change their behaviors as common sense dictates. When peaches cost $10 a pound, then all the fruit that drops to the ground to rot now will be collected before it rots.
I read somewhere about a town in Alaska (I forget the source) which lost its electrical service and had to rely on costly generators for some time. The cost was passed onto consumers. As if by magic, electrical consumption dropped 40% overnight. No new devices were required; the Consumerist Gods were shedding tears and wailing mightily, for the "solution" was behavioral.
Yes, technology promises many innovations, but how we live offers much cheaper, easier and more environmentally sound solutions without waiting around for mechanical/electronic saviors promoted by the Consumerist Gods.
I would like to end with a mindful haiku from resident haiku poet Jed H.:
End of an Era
A Culture of Corruption
End of the Empire.
Here it is with Jed's notes:
END of an Era ( i.e., the Boom-times: 2000- 2007 a la 1920s )
A Culture of Corruption
END of the EMPIRE ! ( i.e., US of A is on its Downhill Slide, like Romans ! )
Thank you, Jed, for a poetic summation of "the end of an era."
Must reads ~ Why Iceland and Latvia Won't (and Can't) Pay / GoogleWiki to rule
Iceland promises to be merely the first sovereign nation to lead the pendulum swing away from an ostensibly “real economy” ideology of free markets to an awareness that in practice, this rhetoric turns out to be a junk economics favorable to banks and global creditors.
As far as I am aware, this agreement is the first since the Young Plan for Germany’s reparations debt to subordinate international debt obligations to the capacity-to-pay principle.
http://www.counterpunch.org/hudson08182009.html
Gary concours with my disintermediation of elites thesis...but goes a tad too far, like all libertarians......
Wikipedia and Google Will Bring Down Establishments All Over the World
Back in the early 1990's, I was told about a German economist with an American name: Paul C. Martin. He had written a book titled Paymaster Germany. Its thesis: Germany cannot send home its Turkish and other immigrants. They would break the German economy by pulling their money out of the country. Anyway, that's what my German contacts told me about the book. It has never been translated
Recently, I did a search for "Paul C. Martin." I got a page. The #2 entry was a Wikipedia article on him. It is in German. You can find the page here.
There is an option available on the Google entry: Translate this page. I clicked it. Within a few seconds, I had the article in English. Wiki knew I read English.
The article is readable. There are some minor grammatical errors, but I can easily get the gist of it. The author's books are listed in English.
Wiki is available in dozens of languages. It is replacing all other general encyclopedias. The division of labor is working.
If you find a Wiki entry with an error, you can correct it using the Edit feature. I do this from time to time. I don't get paid, but I want things right. This mentality is widespread among Wiki users. The articles keep getting better.
If readers of encyclopedias were evil-minded, they would deface the entries by adding lies. Yet this is not done often, and the errors are found and corrected rapidly.
Ideological wars do break out. Then the page is locked by a committee. You have to apply to update the entry. If there were many such disputes, it would be impossible to sort them out. There would not be enough volunteers to serve on the committees.
The Wiki system relies on volunteers. It works. It relies on honest intentions. This usually works. It relies on digital translation. This works well enough to allow the transmission of basic information – more than most readers can remember. Our minds are the weak links now, not the translation software.
The translation software will get better. In 20 years, it will probably rival the skills of a human translator who did not learn both languages as a bi-lingual child. It may take less time than 20 years.
This will increase the division of intellectual labor. It will vastly expand our horizons. Already, we can find out what other nationalities think about such topics as the origin of specific wars.
The way we learn about history will change for the better. Revisionist history will spread. The Establishments of all nations will suffer.
Wiki has dramatically increased the world's intellectual division of labor by providing software and open access posting. It is self-policed. This lets decentralization find a central location on the Web. Type in any topic and the type "Wiki." Click. You will find it on Google instantly.
Where did the creator of Wiki get this idea on the intellectual division of labor? From a dead economist, F. A. Hayek, who write a 1945 article on "The Use of Knowledge in Society," one of the most important articles in the history of economics. Who told him about Hayek? Mark Thornton, staff economist at the Mises Institute. What organization makes spectacular use of the Web through posting free books in PDF? The Mises Institute.
Neither Google nor Wikipedia existed a decade ago.
Then there is the sheer volume of local historical materials. Think of American Civil War history if every small-town newspaper were on-line. Researchers could compare accounts of battles. The same goes for archives of letters.
On the top floor of the library at Louisiana State University at Shreveport, there is an astounding collection of antiquarian books. It was assembled by an eccentric millionaire. There is a full-time curator. I have seen this collection. It is mind-boggling. There is a large section on Civil War memorial books written by specific army units. Yet almost no one knows of this collection. In effect, it is closed to the general public because of a lack of publicity.
Let me provide another example. A prominent university in the South has the largest collection of Ku Klux Klan material anywhere. I was informed by a far-left Ph.D. historian whose grandfather was the first professor of psychology at that university in 1918 that if you were not a Klan member, you were not hired to be on the faculty. This is hearsay. I happen to believe it. He told me about the KKK collection. Almost no one knows it is there, except for Klan members who are interested in historical scholarship. This is a limited audience. The library does not publicize its existence. Why not? Because questions might be raised about the origin of the collection. Political incorrectness affects libraries.
ON-LINE LIBRARIES
Collection by collection, Google will scan tens of millions of books and post them. Probably 80% of the world's pre-1923 books will be online in 50 years – maybe less. All it will take is manpower and cheap scanning machines, which keep getting cheaper.
It is possible to have a book scanned and converted to a Google-searchable PDF file for 16 cents a page if you allow the outfit to cut the spine of the book. It's 36 cents if you don't allow this. You can set up a website for $10 a year for domain name hosting, plus an extra $10 if you want your identity as the owner concealed from snoopers. Use Hostgator or Hostmonster to host an unlimited number of domains for $8 a month. You can post PDFs.
In every language these books will be online. They will eventually be translated digitally "on the fly."
Then will come archive collections of letters. They will take longer to convert to searchable typeset words. But that day will come.
The cost of writing history will fall. It is costly to do research in a major research library. You must pay for the plane fair, overnight housing, and a rental car. This can easily cost $300 a day – or three times that in cities like London or Berlin. Only a few people can afford this, and only for short visits.
If the library's pre-1923 books and archive materials were online, anyone could do it at home. The little guy would be able to compete.
Say that you want access to all academic journals. These are all on-line. It is expensive to access them. You must be an enrolled student or a faculty member to access them. Solution? Hire a student intern who has on-line access to the library. Then have the student look up the articles you want to read and send PDFs to you. Or just use his access code to do your own research. "That's cheating," says the librarian. But taxpayers pay for the library. I suffer little guilt.
Every time you find a Google link to a locked article on JSTOR, you contact your intern. Presto. Unlocked!
Some interns work for free to gain college credit. Do I have access to such an intern? To ask this question is to answer it.
Soon, brains and insight will rule, not bank accounts and official accreditation by state licensing bureaus. The Establishments will all be in defensive mode.
It is happening today. This is going to increase.
Truth will fragment. New paradigms will emerge from the competition. The quality of thought will improve when bank accounts are not major barriers to entry.
THE GATEKEEPERS' DILEMMA
The gatekeepers can no longer control the flow of information. This has never happened in man's history. Gatekeepers still control the gates. But the walls have holes in them. These holes are widening.
The gatekeepers control accreditation. They no longer control content except where it is very expensive to do primary research, such as nuclear physics. In the social sciences and humanities, it's just about over.
When I think "Establishment," my mind goes back to Rocky III. Mr. T's character tells Apollo Creed, "you're going down."
If you find something worth posting, post it. Call this "post-it notes." It beats armed revolution every time.
Make a free online YouTube or Blip.tv course out of your favorite controversial topic. Imitate Salman Khan: www.KhanAcademy.org. (Note: Khan graduated from MIT and the Harvard Business School.) He did it with these low-cost or free tools.
In short, if you find something evil that wobbles, push it.
August 18, 2009
Gary North [send him mail] is the author of Mises on Money. Visit http://www.garynorth.com. He is also the author of a free 20-volume series, An Economic Commentary on the Bible.
Copyright © 2009 Gary North
Back in the early 1990's, I was told about a German economist with an American name: Paul C. Martin. He had written a book titled Paymaster Germany. Its thesis: Germany cannot send home its Turkish and other immigrants. They would break the German economy by pulling their money out of the country. Anyway, that's what my German contacts told me about the book. It has never been translated
Recently, I did a search for "Paul C. Martin." I got a page. The #2 entry was a Wikipedia article on him. It is in German. You can find the page here.
There is an option available on the Google entry: Translate this page. I clicked it. Within a few seconds, I had the article in English. Wiki knew I read English.
The article is readable. There are some minor grammatical errors, but I can easily get the gist of it. The author's books are listed in English.
Wiki is available in dozens of languages. It is replacing all other general encyclopedias. The division of labor is working.
If you find a Wiki entry with an error, you can correct it using the Edit feature. I do this from time to time. I don't get paid, but I want things right. This mentality is widespread among Wiki users. The articles keep getting better.
If readers of encyclopedias were evil-minded, they would deface the entries by adding lies. Yet this is not done often, and the errors are found and corrected rapidly.
Ideological wars do break out. Then the page is locked by a committee. You have to apply to update the entry. If there were many such disputes, it would be impossible to sort them out. There would not be enough volunteers to serve on the committees.
The Wiki system relies on volunteers. It works. It relies on honest intentions. This usually works. It relies on digital translation. This works well enough to allow the transmission of basic information – more than most readers can remember. Our minds are the weak links now, not the translation software.
The translation software will get better. In 20 years, it will probably rival the skills of a human translator who did not learn both languages as a bi-lingual child. It may take less time than 20 years.
This will increase the division of intellectual labor. It will vastly expand our horizons. Already, we can find out what other nationalities think about such topics as the origin of specific wars.
The way we learn about history will change for the better. Revisionist history will spread. The Establishments of all nations will suffer.
Wiki has dramatically increased the world's intellectual division of labor by providing software and open access posting. It is self-policed. This lets decentralization find a central location on the Web. Type in any topic and the type "Wiki." Click. You will find it on Google instantly.
Where did the creator of Wiki get this idea on the intellectual division of labor? From a dead economist, F. A. Hayek, who write a 1945 article on "The Use of Knowledge in Society," one of the most important articles in the history of economics. Who told him about Hayek? Mark Thornton, staff economist at the Mises Institute. What organization makes spectacular use of the Web through posting free books in PDF? The Mises Institute.
Neither Google nor Wikipedia existed a decade ago.
Then there is the sheer volume of local historical materials. Think of American Civil War history if every small-town newspaper were on-line. Researchers could compare accounts of battles. The same goes for archives of letters.
On the top floor of the library at Louisiana State University at Shreveport, there is an astounding collection of antiquarian books. It was assembled by an eccentric millionaire. There is a full-time curator. I have seen this collection. It is mind-boggling. There is a large section on Civil War memorial books written by specific army units. Yet almost no one knows of this collection. In effect, it is closed to the general public because of a lack of publicity.
Let me provide another example. A prominent university in the South has the largest collection of Ku Klux Klan material anywhere. I was informed by a far-left Ph.D. historian whose grandfather was the first professor of psychology at that university in 1918 that if you were not a Klan member, you were not hired to be on the faculty. This is hearsay. I happen to believe it. He told me about the KKK collection. Almost no one knows it is there, except for Klan members who are interested in historical scholarship. This is a limited audience. The library does not publicize its existence. Why not? Because questions might be raised about the origin of the collection. Political incorrectness affects libraries.
ON-LINE LIBRARIES
Collection by collection, Google will scan tens of millions of books and post them. Probably 80% of the world's pre-1923 books will be online in 50 years – maybe less. All it will take is manpower and cheap scanning machines, which keep getting cheaper.
It is possible to have a book scanned and converted to a Google-searchable PDF file for 16 cents a page if you allow the outfit to cut the spine of the book. It's 36 cents if you don't allow this. You can set up a website for $10 a year for domain name hosting, plus an extra $10 if you want your identity as the owner concealed from snoopers. Use Hostgator or Hostmonster to host an unlimited number of domains for $8 a month. You can post PDFs.
In every language these books will be online. They will eventually be translated digitally "on the fly."
Then will come archive collections of letters. They will take longer to convert to searchable typeset words. But that day will come.
The cost of writing history will fall. It is costly to do research in a major research library. You must pay for the plane fair, overnight housing, and a rental car. This can easily cost $300 a day – or three times that in cities like London or Berlin. Only a few people can afford this, and only for short visits.
If the library's pre-1923 books and archive materials were online, anyone could do it at home. The little guy would be able to compete.
Say that you want access to all academic journals. These are all on-line. It is expensive to access them. You must be an enrolled student or a faculty member to access them. Solution? Hire a student intern who has on-line access to the library. Then have the student look up the articles you want to read and send PDFs to you. Or just use his access code to do your own research. "That's cheating," says the librarian. But taxpayers pay for the library. I suffer little guilt.
Every time you find a Google link to a locked article on JSTOR, you contact your intern. Presto. Unlocked!
Some interns work for free to gain college credit. Do I have access to such an intern? To ask this question is to answer it.
Soon, brains and insight will rule, not bank accounts and official accreditation by state licensing bureaus. The Establishments will all be in defensive mode.
It is happening today. This is going to increase.
Truth will fragment. New paradigms will emerge from the competition. The quality of thought will improve when bank accounts are not major barriers to entry.
THE GATEKEEPERS' DILEMMA
The gatekeepers can no longer control the flow of information. This has never happened in man's history. Gatekeepers still control the gates. But the walls have holes in them. These holes are widening.
The gatekeepers control accreditation. They no longer control content except where it is very expensive to do primary research, such as nuclear physics. In the social sciences and humanities, it's just about over.
When I think "Establishment," my mind goes back to Rocky III. Mr. T's character tells Apollo Creed, "you're going down."
If you find something worth posting, post it. Call this "post-it notes." It beats armed revolution every time.
Make a free online YouTube or Blip.tv course out of your favorite controversial topic. Imitate Salman Khan: www.KhanAcademy.org. (Note: Khan graduated from MIT and the Harvard Business School.) He did it with these low-cost or free tools.
In short, if you find something evil that wobbles, push it.
August 18, 2009
Gary North [send him mail] is the author of Mises on Money. Visit http://www.garynorth.com. He is also the author of a free 20-volume series, An Economic Commentary on the Bible.
Copyright © 2009 Gary North
As far as I am aware, this agreement is the first since the Young Plan for Germany’s reparations debt to subordinate international debt obligations to the capacity-to-pay principle.
http://www.counterpunch.org/hudson08182009.html
Gary concours with my disintermediation of elites thesis...but goes a tad too far, like all libertarians......
Wikipedia and Google Will Bring Down Establishments All Over the World
Back in the early 1990's, I was told about a German economist with an American name: Paul C. Martin. He had written a book titled Paymaster Germany. Its thesis: Germany cannot send home its Turkish and other immigrants. They would break the German economy by pulling their money out of the country. Anyway, that's what my German contacts told me about the book. It has never been translated
Recently, I did a search for "Paul C. Martin." I got a page. The #2 entry was a Wikipedia article on him. It is in German. You can find the page here.
There is an option available on the Google entry: Translate this page. I clicked it. Within a few seconds, I had the article in English. Wiki knew I read English.
The article is readable. There are some minor grammatical errors, but I can easily get the gist of it. The author's books are listed in English.
Wiki is available in dozens of languages. It is replacing all other general encyclopedias. The division of labor is working.
If you find a Wiki entry with an error, you can correct it using the Edit feature. I do this from time to time. I don't get paid, but I want things right. This mentality is widespread among Wiki users. The articles keep getting better.
If readers of encyclopedias were evil-minded, they would deface the entries by adding lies. Yet this is not done often, and the errors are found and corrected rapidly.
Ideological wars do break out. Then the page is locked by a committee. You have to apply to update the entry. If there were many such disputes, it would be impossible to sort them out. There would not be enough volunteers to serve on the committees.
The Wiki system relies on volunteers. It works. It relies on honest intentions. This usually works. It relies on digital translation. This works well enough to allow the transmission of basic information – more than most readers can remember. Our minds are the weak links now, not the translation software.
The translation software will get better. In 20 years, it will probably rival the skills of a human translator who did not learn both languages as a bi-lingual child. It may take less time than 20 years.
This will increase the division of intellectual labor. It will vastly expand our horizons. Already, we can find out what other nationalities think about such topics as the origin of specific wars.
The way we learn about history will change for the better. Revisionist history will spread. The Establishments of all nations will suffer.
Wiki has dramatically increased the world's intellectual division of labor by providing software and open access posting. It is self-policed. This lets decentralization find a central location on the Web. Type in any topic and the type "Wiki." Click. You will find it on Google instantly.
Where did the creator of Wiki get this idea on the intellectual division of labor? From a dead economist, F. A. Hayek, who write a 1945 article on "The Use of Knowledge in Society," one of the most important articles in the history of economics. Who told him about Hayek? Mark Thornton, staff economist at the Mises Institute. What organization makes spectacular use of the Web through posting free books in PDF? The Mises Institute.
Neither Google nor Wikipedia existed a decade ago.
Then there is the sheer volume of local historical materials. Think of American Civil War history if every small-town newspaper were on-line. Researchers could compare accounts of battles. The same goes for archives of letters.
On the top floor of the library at Louisiana State University at Shreveport, there is an astounding collection of antiquarian books. It was assembled by an eccentric millionaire. There is a full-time curator. I have seen this collection. It is mind-boggling. There is a large section on Civil War memorial books written by specific army units. Yet almost no one knows of this collection. In effect, it is closed to the general public because of a lack of publicity.
Let me provide another example. A prominent university in the South has the largest collection of Ku Klux Klan material anywhere. I was informed by a far-left Ph.D. historian whose grandfather was the first professor of psychology at that university in 1918 that if you were not a Klan member, you were not hired to be on the faculty. This is hearsay. I happen to believe it. He told me about the KKK collection. Almost no one knows it is there, except for Klan members who are interested in historical scholarship. This is a limited audience. The library does not publicize its existence. Why not? Because questions might be raised about the origin of the collection. Political incorrectness affects libraries.
ON-LINE LIBRARIES
Collection by collection, Google will scan tens of millions of books and post them. Probably 80% of the world's pre-1923 books will be online in 50 years – maybe less. All it will take is manpower and cheap scanning machines, which keep getting cheaper.
It is possible to have a book scanned and converted to a Google-searchable PDF file for 16 cents a page if you allow the outfit to cut the spine of the book. It's 36 cents if you don't allow this. You can set up a website for $10 a year for domain name hosting, plus an extra $10 if you want your identity as the owner concealed from snoopers. Use Hostgator or Hostmonster to host an unlimited number of domains for $8 a month. You can post PDFs.
In every language these books will be online. They will eventually be translated digitally "on the fly."
Then will come archive collections of letters. They will take longer to convert to searchable typeset words. But that day will come.
The cost of writing history will fall. It is costly to do research in a major research library. You must pay for the plane fair, overnight housing, and a rental car. This can easily cost $300 a day – or three times that in cities like London or Berlin. Only a few people can afford this, and only for short visits.
If the library's pre-1923 books and archive materials were online, anyone could do it at home. The little guy would be able to compete.
Say that you want access to all academic journals. These are all on-line. It is expensive to access them. You must be an enrolled student or a faculty member to access them. Solution? Hire a student intern who has on-line access to the library. Then have the student look up the articles you want to read and send PDFs to you. Or just use his access code to do your own research. "That's cheating," says the librarian. But taxpayers pay for the library. I suffer little guilt.
Every time you find a Google link to a locked article on JSTOR, you contact your intern. Presto. Unlocked!
Some interns work for free to gain college credit. Do I have access to such an intern? To ask this question is to answer it.
Soon, brains and insight will rule, not bank accounts and official accreditation by state licensing bureaus. The Establishments will all be in defensive mode.
It is happening today. This is going to increase.
Truth will fragment. New paradigms will emerge from the competition. The quality of thought will improve when bank accounts are not major barriers to entry.
THE GATEKEEPERS' DILEMMA
The gatekeepers can no longer control the flow of information. This has never happened in man's history. Gatekeepers still control the gates. But the walls have holes in them. These holes are widening.
The gatekeepers control accreditation. They no longer control content except where it is very expensive to do primary research, such as nuclear physics. In the social sciences and humanities, it's just about over.
When I think "Establishment," my mind goes back to Rocky III. Mr. T's character tells Apollo Creed, "you're going down."
If you find something worth posting, post it. Call this "post-it notes." It beats armed revolution every time.
Make a free online YouTube or Blip.tv course out of your favorite controversial topic. Imitate Salman Khan: www.KhanAcademy.org. (Note: Khan graduated from MIT and the Harvard Business School.) He did it with these low-cost or free tools.
In short, if you find something evil that wobbles, push it.
August 18, 2009
Gary North [send him mail] is the author of Mises on Money. Visit http://www.garynorth.com. He is also the author of a free 20-volume series, An Economic Commentary on the Bible.
Copyright © 2009 Gary North
Back in the early 1990's, I was told about a German economist with an American name: Paul C. Martin. He had written a book titled Paymaster Germany. Its thesis: Germany cannot send home its Turkish and other immigrants. They would break the German economy by pulling their money out of the country. Anyway, that's what my German contacts told me about the book. It has never been translated
Recently, I did a search for "Paul C. Martin." I got a page. The #2 entry was a Wikipedia article on him. It is in German. You can find the page here.
There is an option available on the Google entry: Translate this page. I clicked it. Within a few seconds, I had the article in English. Wiki knew I read English.
The article is readable. There are some minor grammatical errors, but I can easily get the gist of it. The author's books are listed in English.
Wiki is available in dozens of languages. It is replacing all other general encyclopedias. The division of labor is working.
If you find a Wiki entry with an error, you can correct it using the Edit feature. I do this from time to time. I don't get paid, but I want things right. This mentality is widespread among Wiki users. The articles keep getting better.
If readers of encyclopedias were evil-minded, they would deface the entries by adding lies. Yet this is not done often, and the errors are found and corrected rapidly.
Ideological wars do break out. Then the page is locked by a committee. You have to apply to update the entry. If there were many such disputes, it would be impossible to sort them out. There would not be enough volunteers to serve on the committees.
The Wiki system relies on volunteers. It works. It relies on honest intentions. This usually works. It relies on digital translation. This works well enough to allow the transmission of basic information – more than most readers can remember. Our minds are the weak links now, not the translation software.
The translation software will get better. In 20 years, it will probably rival the skills of a human translator who did not learn both languages as a bi-lingual child. It may take less time than 20 years.
This will increase the division of intellectual labor. It will vastly expand our horizons. Already, we can find out what other nationalities think about such topics as the origin of specific wars.
The way we learn about history will change for the better. Revisionist history will spread. The Establishments of all nations will suffer.
Wiki has dramatically increased the world's intellectual division of labor by providing software and open access posting. It is self-policed. This lets decentralization find a central location on the Web. Type in any topic and the type "Wiki." Click. You will find it on Google instantly.
Where did the creator of Wiki get this idea on the intellectual division of labor? From a dead economist, F. A. Hayek, who write a 1945 article on "The Use of Knowledge in Society," one of the most important articles in the history of economics. Who told him about Hayek? Mark Thornton, staff economist at the Mises Institute. What organization makes spectacular use of the Web through posting free books in PDF? The Mises Institute.
Neither Google nor Wikipedia existed a decade ago.
Then there is the sheer volume of local historical materials. Think of American Civil War history if every small-town newspaper were on-line. Researchers could compare accounts of battles. The same goes for archives of letters.
On the top floor of the library at Louisiana State University at Shreveport, there is an astounding collection of antiquarian books. It was assembled by an eccentric millionaire. There is a full-time curator. I have seen this collection. It is mind-boggling. There is a large section on Civil War memorial books written by specific army units. Yet almost no one knows of this collection. In effect, it is closed to the general public because of a lack of publicity.
Let me provide another example. A prominent university in the South has the largest collection of Ku Klux Klan material anywhere. I was informed by a far-left Ph.D. historian whose grandfather was the first professor of psychology at that university in 1918 that if you were not a Klan member, you were not hired to be on the faculty. This is hearsay. I happen to believe it. He told me about the KKK collection. Almost no one knows it is there, except for Klan members who are interested in historical scholarship. This is a limited audience. The library does not publicize its existence. Why not? Because questions might be raised about the origin of the collection. Political incorrectness affects libraries.
ON-LINE LIBRARIES
Collection by collection, Google will scan tens of millions of books and post them. Probably 80% of the world's pre-1923 books will be online in 50 years – maybe less. All it will take is manpower and cheap scanning machines, which keep getting cheaper.
It is possible to have a book scanned and converted to a Google-searchable PDF file for 16 cents a page if you allow the outfit to cut the spine of the book. It's 36 cents if you don't allow this. You can set up a website for $10 a year for domain name hosting, plus an extra $10 if you want your identity as the owner concealed from snoopers. Use Hostgator or Hostmonster to host an unlimited number of domains for $8 a month. You can post PDFs.
In every language these books will be online. They will eventually be translated digitally "on the fly."
Then will come archive collections of letters. They will take longer to convert to searchable typeset words. But that day will come.
The cost of writing history will fall. It is costly to do research in a major research library. You must pay for the plane fair, overnight housing, and a rental car. This can easily cost $300 a day – or three times that in cities like London or Berlin. Only a few people can afford this, and only for short visits.
If the library's pre-1923 books and archive materials were online, anyone could do it at home. The little guy would be able to compete.
Say that you want access to all academic journals. These are all on-line. It is expensive to access them. You must be an enrolled student or a faculty member to access them. Solution? Hire a student intern who has on-line access to the library. Then have the student look up the articles you want to read and send PDFs to you. Or just use his access code to do your own research. "That's cheating," says the librarian. But taxpayers pay for the library. I suffer little guilt.
Every time you find a Google link to a locked article on JSTOR, you contact your intern. Presto. Unlocked!
Some interns work for free to gain college credit. Do I have access to such an intern? To ask this question is to answer it.
Soon, brains and insight will rule, not bank accounts and official accreditation by state licensing bureaus. The Establishments will all be in defensive mode.
It is happening today. This is going to increase.
Truth will fragment. New paradigms will emerge from the competition. The quality of thought will improve when bank accounts are not major barriers to entry.
THE GATEKEEPERS' DILEMMA
The gatekeepers can no longer control the flow of information. This has never happened in man's history. Gatekeepers still control the gates. But the walls have holes in them. These holes are widening.
The gatekeepers control accreditation. They no longer control content except where it is very expensive to do primary research, such as nuclear physics. In the social sciences and humanities, it's just about over.
When I think "Establishment," my mind goes back to Rocky III. Mr. T's character tells Apollo Creed, "you're going down."
If you find something worth posting, post it. Call this "post-it notes." It beats armed revolution every time.
Make a free online YouTube or Blip.tv course out of your favorite controversial topic. Imitate Salman Khan: www.KhanAcademy.org. (Note: Khan graduated from MIT and the Harvard Business School.) He did it with these low-cost or free tools.
In short, if you find something evil that wobbles, push it.
August 18, 2009
Gary North [send him mail] is the author of Mises on Money. Visit http://www.garynorth.com. He is also the author of a free 20-volume series, An Economic Commentary on the Bible.
Copyright © 2009 Gary North
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