Since late 2016 we have entered the age of disclosures! Fasten your mental safety belt and enjoy the ride! Heretic

Thursday, September 24, 2015

It is the fettered capitalism that is the problem!


From Wiki

It is the "fettered" capitalism which sucks and taxes capital out of individuals and small businesses, taking from people who work and create wealth giving it to governments and corporate/banking oligarchs.

Pope calls unfettered capitalism 'the dung of the devil'

I disagree, I think the Pope is mistaken.   "Unfettered" capitalism, when it still existed, created the wealthiest country in the world by allowing the poor European peasant refugees who came here with nothing to keep the money they earned, to reinvest it to grow their own businesses.

No country in Europe including the part of Italy that was ruled by Vatican for long period of time,  allowed their poorest working class people to accumulate capital and become rich, they were always taxed out of their surplus income.   If that is the Pope's solution against poverty than no thanks.  I prefer the unfettered capitalism.  If I could only find one somewhere...



Sam said...

There's a simple explanation for, not all, but quite a lot of the deflationary collapse of the economies world wide. The debt is compounding faster than growth. Most all of the money supply worldwide is based on debt based money creation. This is in my opinion stupid. Any time you need more money you get more debt. Eventually no matter what you do the debt will compound to unsustainable levels. If we get rid of all our debt under the present system we would have no money. Inherently unstable. Of course for the people who own the central banks this is a feature. Eventually the compounding debt means they own everything.

A moments thought about the FED...we gave them the right to create all our money, charge interest on the created money supply and all our gold (largest supply on the planet) and they gave us...what?

Stan (Heretic) said...

Yes but there is more to that I think. Investment is balanced by an equal debt of course. It does lead to an unsustained accumulation of debt over wealth, as you wrote, but only if the investment was unproductive that is if the return on investment was less than 1+interest. It is about the return on investment ratio. Right now you are probably correct since the "managed economy" does not really invest very efficiently and the market feedback no longer works - that is, the companies that have badly invested and have mismanaged, are propped up by the banking system with more cheap loans. It will eventually crash.

The problem is also about the system allowing different rules for different economic entities and the law that permits the corporate entities to exist forever and to expand unlimitedly territorially (this and this), in contrast to us the people. This issue is more important that people realize and it has created a huge imbalance of power that may eventually destroy the Western democracies. If we won't reform it.

Sam said...

I agree with what you say on a superficial level but not on a level that understands the basics. The root. On the functioning of the system.

"...It stayed healthy because it is backed by time-limited assets (debt) which force it to re-define and renew itself periodically..."

A private corporation creates debt instruments from nothing which we pay them the principal and interest in order to have money. ALL money created must pay interest to this corporation to create money on which debt is added. This is unsustainable. The debt will compound no matter what the interest rate. No matter what the growth rate it can not be paid eventually. After all if you want to pay the debt you...create more debt to pay for it. If we pay all the debt...we have NO money. Now this is our system. You may think I'm a fool or lying because it can't possibly be this way but it is.

The reason it's this way is we are being ripped off by bankers. They did it on purpose and bribed our legislatures to do so. Anyone who's tried to do different have been killed for some reason. Lincoln-greenbacks, Kennedy-silver certificates, Kadaffi-gold standard. Whether planned or by accident people who want to do away with a debt based banking system have accidents.

The present system is just a hop, skip and a jump away from complete deflation at all times. Since all money creation is by debt and collapse of debt shrinks the money supply drastically. At the same time the debt NEVER gets paid off, as we would shrink the money supply. Therefore the debt increases forever eventually crowding OUT the available money supply.

They know this. What they are going to do about it is move to a Word money supply, the SDR, which of course will just start the process all over. Needless to say the same people who are ripping us off now will just do so on a larger scale. Two good sites about the SDR are,

The first more...econometricish.

The second a little more...NewWorldish. Both describing basically the same thing.

What's the alternative? No debt based money supply. It doesn't matter what you have for money as long as it's convertible and stable quantities based on economic growth. Pounded palm fronds, rocks, big bars of iron, gold (deflationary), whatever. To work well as currency it should be able to expand based on economic growth. Kilo-watt hours would be a great currency.

Let's say the US gov. instead of debt based currency just printed currency and used it for all it's spending. If it kept it within bounds it would do much more for economic growth than the present system. The common complaint about this system would be that the gov. would print too much and cause hyperinflation. That's a feature. Right now they use debt which is deferred to destroy the currency. If Inflation gets too high they just raise interest rates to scoop up some of the currency. You could do the same for none debt based currency and also all currency problems would be more immediate instead of piling debt on future generations. The problems would happen NOW and politicians would have to correct them before they became life threatening.

I personally like my Kilo-watt hours currency as energy use closely, not perfectly but closely, is related to economic growth. I call it my idea. I've never heard of anyone else using Kilo-watt hours for currency but it's such a basic idea someone must have come up with it also somewhere.

Pennsylvania had a currency based on land in the colonial period that worked very well. I think Ben Franklin had something to do with it. He did describe it to the English when he was ambassador and they promptly made it illegal which caused a huge recession in Pennsylvania. Maybe the revolution was more about banking than taxes.

Stan Bleszynski said...

Hi Sam,

Currencies based on tangible "things" like gold had their problems too, such as thesaurization leading to diminishing velocity of money requiring special measures to fix it, for example real bills, local alternative notes etc. Government printing money not backed by government bonds, that is not backed by debt? That has been tried many times before. I lived under such system in Poland. You may have experienced the same here in the N.America in the 1970-ties. A lot of good innovative companies were wiped out during that era. While it does lead initially to accelerated velocity of money and boost business, it is short lived and is followed by a period of inflationary stagnation and malinvestment while jacking up of the interest rates destroys property market and stock market.

The problem with the debt backed currency is not that the money is unstable but that the banking corporations that undersign the system are unstable! They are unstable because their corporate assets they hold are dodgy due to the lack of natural market feedback mechanism, partially because of the "managed economy" disease, partially because they were permitted an infinite lifespan and no limit on size. Any ecosystem that allows infinite entities is poised to crash like cancer, and then extinct. If one legislated a finite lifespan and size in all business incorporation papers, similar to human lifespan, and if one put the same rules (tax code) for corporations and individuals then the system would become self-correcting and stable, as stable as Nature.


Stan Bleszynski said...


I think the author does not have a good grasp on the situation, or just follows a theory of "interest rates must rise because they must" without thinking about it.

This is a big mistake!


"The strengthening dollar is now pushing down the price of gold, and the strength of the dollar is being supported by the increasing odds of the first Fed interest rate increase in a decade."

No, the dollar is strenghtening because the interests have not gone low enough (towards negative interest rate zone - yes it is possible!) so it becomes cheap to pile up any reserve capital into it, becoming the the safe heaven currency. It sucks all the surplus yuan, ruble, real etc out of their countries. The investment capital is fleeing their unstable overmanaged and overgoverned countries into a corrupt but relatively more trustworthy US dollar zone. For the time being.

I wrote a short essay about the likelyhood of Fed hiking the rate any tme soon, see here.



Stan Bleszynski said...

Oh, and I have to warn you against this:

I have a very bad "gut" feeling about his scheme. Be careful!