With the latest school shooting, all humane people are expected to jump up and do something to stop the next shooting. The most popular response among media pundits and national policymakers right now is an expansion of the various prohibitions now in place against guns.
For anyone familiar with the history of prohibitions on inanimate objects, however, these appeals to prohibition as a “common sense” solution are rather less convincing.
Americans and others have tried a wide variety of similar prohibitions before, and with mixed results at best. Nowadays, prohibitions on drugs are in decline as states continue to unravel prohibitions of the past and make the nature of prohibition less drastic and less punitive. And, of course, the prohibition of alcohol has been dead for decades.
The prohibitions of old have been deemed failures. But fortunately for prohibitionists, there’s a fashionable form of modern prohibition that won’t go away.
Why Not Ban Alcohol?
Now, I know what some of you are saying: “Hey, McMaken, you can’t compare alcohol prohibition to gun prohibition because alcohol mostly only hurts the drinker, while guns have many harmful side effects for the public at large.”
But the fact that anyone could think this shows just how well the anti-alcohol-prohibition rhetoric has worked. Since the repeal of prohibition in the 1930s, alcohol has taken on an image of fun and relaxation. Sure, some people use it irresponsibly, we are told, but for the most part, people should be allowed the freedom to use it. For those high risk behaviors linked to alcohol, such as drunk driving, we’ll regulate that, but the ownership of alcohol itself, of course, should be open to all adults.
And yet, in the face of this laissez-faire attitude toward drinking, we could offer a host of illustrations of how alcohol is in fact a public safety menace.
Indeed, prior to the 1920s, during the heyday of the temperance movement, alcohol’s image was as anything but a mere benign luxury among a sizable portion of the population.
While many people today assume that the prohibitionists argued along puritanical lines, and emphasized the dangers of moral ruin, the arguments against alcohol were really far more complex than that.
The prohibitionists argued — quite plausibly, mind you — that any number of social ills could be addressed through alcohol prohibition. Chief among these was the fact that many families, including children, were often rendered destitute by the drinking of the male head of the household who was unable to hold down a job due to his addiction. Moreover, cases of child abuse and spousal abuse were clearly connected to alcohol consumption, as were household accidents and accidents on the job.
When breadwinners were killed or injured on the job, or if a drunk spent half his income at a bar on payday, families often ended up on the local dole. Or worse.
And there was a connection to non-domestic violence too. Public drunkenness, bar fights, and the deadly and irresponsible use of guns were connected to drinking as well.
Ironically, back then though, it wasn’t the guns that were seen as the problem (although gun control advocates did exist). For many, the problem was that drunks were irresponsibly using guns and that the common-sense solution was to prevent them from getting drunk.
Guns are Less Deadly than Alcohol
Nowadays, 88,000 deaths per year are attributed to alcohol abuse, and thirty people per day in the United States die in alcohol-related auto accidents. Heavy drinkers are more prone to violence, suicide, and risky sexual behavior.
In fact, if we compare these statistics, we find that alcohol abuse is significantly more deadly and problematic than misuse of guns. There were 36,000 gun-related deaths (including suicides and accidents) in the US in 2013, and as a percentage of all causes of death, alcohol-related deaths are more than twice as common as gun deaths.
What’s more, one-third of gun deaths are alcohol related. Thus, according to prohibitionist logic, we could eliminate one-third of gun-related deaths overnight by prohibiting alcohol consumption. So why aren’t we doing it? If it could save one life, wouldn’t it be worth it?
Most have concluded that saving one life is not, in fact, worth it. In practice, alcohol-related deaths (including those inflicted against third-party victims) are treated very differently than gun-related deaths.
For example, it is clear that alcohol is a central component in the more than 10,000 drunk-driving deaths that occur each year. So, is the response to restrict certain types of alcohol or populations that can buy it? Are background checks instituted to prevent sales to incorrigible drunk drivers? No, the response is to ban how alcohol is used in certain cases.
On the other hand, in response to the 11,000 gun-related murders per year, the prescribed response is to restrict the guns themselves. But, if we were to apply the same logic behind drunk driving bans to gun violence, the only legislation we would be considering would be something along the lines of special penalties for carrying firearms when mentally impaired, on psychotropic drugs, when sight impaired, or in crowded areas where accidents are more likely to affect bystanders. The mere purchase or ownership of guns would not be restricted, just as the purchase or ownership of alcohol is not restricted in response to drunk driving.
Indeed, if we add to drunk driving all the cases of spousal abuse and child abuse and public cases of assault, bar fights, and more, it becomes clear that alcohol is in fact far more damaging to the social fabric than guns have ever been. Once we factor in the harm that alcohol does to the user himself, in terms of health problems, riskier sex, and suicides, the numbers look even worse for alcohol.
Does Prohibition Work?
Now, you might be thinking, “yes, but if gun prohibition works, shouldn’t we try it?” Unfortunately, there are few reasons to believe that it would work, or that the cure would not be worse than the disease.
Mark Thornton illustrated years ago that alcohol prohibition led to more alcohol consumption, and more consumption of harder distilled drinks versus more mild beer and wine beverages. In addition to the complete failure to end the behavior it targeted, Americans also became acquainted with numerous unpleasant side effects of prohibition including more organized crime and more government harassment of peaceful citizens.
Comparing the States
As far as gun prohibition goes, thanks to a diversity of gun laws among the American states, we can compare between gun ownership levels in the states and homicide rates.
And what we find is that there is no correlation between the level of restrictiveness in gun laws and the murder rate. Most recently, Eugene Volokh ran the numbers looking at homicide rates and the so-called Brady Score assigned to states by gun-control advocates. Volokh even provides the data so you can analyze it yourself. (Volokh explains why homicides and not “gun deaths” is the important metric here.)
We can also see that this is quite plausible by simply eyeballing the data if we look at gun restrictions by state and homicide rates. Gun-control advocates like to point to southern states that have both permissive gun laws and high murder rates, such as Alabama and Mississippi. But, even a cursory analysis beyond this cherry-picking shows that there are numerous states with permissive gun laws (such as Utah, Wyoming, Kansas, and others) where the murder rate is very low. And states with more restrictive laws, such as Illinois, New York, and California have higher murder rates than numerous states where it is easy to buy a gun.
So, while gun-control advocates press for “common-sense” restrictions, real common sense suggests that gun restrictions cannot explain the prevalence of murder in a state. This means that gun-control advocates are looking at the wrong social statistics to explain the violence.
Reasons Why They Want to Ban Guns and Not Alcohol
But none of this matters when gun violence is being exploited to drive for more state power and more regulation of private citizens. Many gun-control advocates really do believe that government regulation and management can solve every social ill. They ignore the realities behind failed experiments such as alcohol prohibition or the war on drugs, and instead move on to the latest sexy prohibitionist drive because they sense an opportunity to control one more aspect of daily life.
Most everyone accepts that prohibition creates unintended consequences that can be negative, and with alcohol prohibition, these consequences included organized crime and the criminalization of peaceful citizens. Gun-control advocates assert, however, that whatever the downsides of gun control may be, they are minimal compared to the many advantages.
As Murray Rothbard pointed out in For a New Liberty, whether or not you come face to face with those down sides ban depend a lot on your wealth and influence within society. For example, white, middle class people who live in safe suburbs, have influence over local police forces, and can even resort to private security (including alarm systems) see little down side to gun control. After all, they have little reason to fear police or common criminals when they can exercise their well-established political influence at the local level or purchase a home security system with the expectation that police will arrive quickly in case of emergency.
Powerless minorities, on the other hand, face much larger downsides to gun control. For them, police are an unreliable deterrent to local crime, and are little use in cases of social unrest. Many may remember how police in Ferguson, Missouri protected government buildings, but left the rest of the town on its own during the riots there. Local citizens paid for police protection, but got none. And then, of course, there are countless cases of the “proper” authorities using their legal guns against powerless populations, with no resource left to them other than private firearms. Just one example would be the Texas Ranger rampages that followed the so-called Plan de San Diego when the Rangers swept through southern Texas lynching Mexican-Americans who were deemed traitors.
Consequently, some principled leftists, most of whom are radicals, do not subscribe to the dominant gun-control position of the left. But certainly the mainline left, dominated by university intellectuals, government employees, and politicos with nice houses in safe neighborhoods, see few problems associated with centralizing coercive power in the hands of “official” law enforcement.
The downsides of restricting alcohol, however, are plentiful for those who spend many hours at cocktail parties and send their children to booze-soaked elite universities to be paired up with the appropriate social class.
So, until this changes, we ought not expect much of a change in the double standard applied to alcohol and guns in terms of violence, health, and safety. The people who make the laws are quite happy having plenty of booze around. But they can afford to pay someone else to handle the guns for them.
Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
At a 1999 conclave, executives of the nation’s biggest food companies walked out on a meeting that attempted to get them to share some of the responsibility for the then growing diabesity epidemic. [New York Times Feb 20, 2013] With sugarized bacon, ketchup, peanut butter, wrapped meats, salad dressings and processed foods dominating grocery store shelves, shockingly half the nation now is diabetic or pre-diabetic. [LA Times Sept 8, 2015; Journal American Medical Assn. Sept 8, 2015]
Pre-diabetes means that your blood sugar level is higher than normal but not high enough to be classified as adult-onset (type II) diabetes and you have not developed symptoms yet (eyes, kidneys, heart, pancreas). You are more likely to develop full-blown diabetes within 2 to 10 years. [Mayo Clinic]
Despite cinnamon’s largely favorable effect among diabetics, researchers are quick to warn physicians away from supplanting standard drug therapy with cinnamon. [Pharmacotherapy April 2007]
While studies involving cinnamon are confusing and do not presently define the effective dosage range, cinnamon should be considered a natural herbal remedy for diabetes and pre-diabetes. Apparently cinnamon oil would be equivalent to available anti-diabetic drugs. Cinnamon oil can be purchased economically. [Iherb.com]
Two East Indian herbal supplements: Boswellia serrata (frankincense) and Gymnema sylvestre.
Two East Indian herbals are frequently recommended for diabetes: Boswellia serrata (frankincense) and Gymnema sylvestre .
Boswellia has been found to be effective in humans at a dose as low as 400 mg were found to be effective. [Jundishapur Journal Natural Pharmaceutical Products 2012]
Boswellia (307 mg) can be obtained economically ($9.13 for 60 tablets). [Iherb.com]
An excellent review paper suggests Gymnema may be a “panacea” for the management of diabetes. Given that Gymnema has anti-inflammatory properties, restores beta cell function in the pancreas to produce insulin and helps with weight control, a reviewer said: “there is no single oral anti-diabetic drug that presently exerts such a diverse range of effects.” [Journal Alternative Complimentary Medicine Nov 2007] Truly, Gymnema at least partially restores insulin secretion. [Journal Ethnopharmacology Oct 1990]
A 400 mg dose of Gymnema was shown to reduce blood sugar readings and 5 of 22 subjects were able to discontinue their drugs. [Journal Ethnopharmacology Oct 1990] A 450 mg Gymnema tablet only costs $8.63 for 120 tablets. [Iherb.com]
Other dietary supplements
Given the many drawbacks of anti-diabetic drugs and the generally safe history of these herbals, it is tempting to advise diabetics to try them.
The list of dietary supplements presented in this report is certainly not inclusive of all of the beneficial nutrients for diabetics. For example, nutritional supplements containing zeaxanthin, lutein, lipoic acid, omega-3 fatty acids and other nutrients have been shown to reduce the risk of retinopathy in experimentally induced diabetes in animals. [Nutrition Metabolism Jan 30, 2014]
Lipoic acid helps overcome the adverse effects of dietary fructose consumption. [American Journal Physiology Regulation Integrated Comprehensive Physiology May 2010] Lipoic acid allays diabetic nerve pain (neuropathy) and kidney failure (nephropathy). [Diabetes Educator Jan 2007; Journal American Social Nephrology Jan 2001]
Diet Versus Supplements
The diet must be emphasized since diabetes is a diet-induced disease.
Recently published science points to high carbohydrate diets as the primary culprit in the onset of diabetes and pre-diabetes.
Low-fat diets fail to improve health risks and carbohydrate restriction (bread, rice, pasta, cereal) reliably reduces blood sugar (glucose) and reduces the need for medication. Coupled with the fact that current recommendations to control the diabesity epidemic have been met with failure, a re-direction is needed.
Even a modest reduction in carbohydrate intake (from 53% to 33%) has been shown to reduce weight and insulin levels. [Journal Diabetes ComplicationsSept 2015]
Carbohydrate reduction accounts for 71% of the reduction in glucose achieved by short-time fasting. [Metabolism Feb 2015]
Convincing supportive evidence for a carbohydrate restricted diet are as follows:
1.Dietary carbohydrate restriction has the single greatest effect on normalizing blood glucose levels.
2. Calorie increases have been almost entirely due to increased carbohyrates.
3. Carbohydrate restriction is not dependent upon weight loss
4. No dietary plan is superior to carbohydrate restriction for weight loss
5. Adherence to low carbohydrate diets among adult diabetics is at least as good as any other dietary intervention.
6. Replacement with protein in place of carbohydrate is generally beneficial.
7. Dietary saturated fat does not correlate with heart disease risk.
8. Carbohydrates control saturated fats levels in blood plasma more than fats.
9. Dietary carbohydrate restriction is the most effective approach to triglyceride reduction.
10. Carbohydrate restricted diets reduce or eliminate need for medication.
11. There are no side effects of carbohydrate restriction compared to problematic drugs.
The call is for dietary carbohydrate restriction to be the first approach in diabetic management. [Nutrition Jan 2015]
A Harvard-based expert says 90% of diabetes can be avoided by diet and other healthy lifestyle habits. [Harvard] A review of the published literature suggests a Mediterranean diet would reduce the probability of remission from metabolic syndrome by 49%. [British Medical Journal Aug 10, 2015]
The long-dreaded cholesterol-rich egg is not associated with an increase in the risk for adult-onset diabetes. [British Journal Nutrition Sept 2015]
Diet: Fat or Carbs?
The prevailing dietary advice from modern medicine over the past few decades has been to reduce fat intake and replace calories with carbohydrates without recognition that carbohydrates turn to sugar in the body.
It is indeed refreshing to hear that British physician David Unwin learned from an online forum that a group of diabetics who employed a diet with plentiful amounts of meat, milk, butter, cream and lard were more successful in overcoming metabolic syndrome than a low-fat diet dietitians and doctors commonly recommend.
Dr. Unwin broke from the advice to consume whole grain bread, pasta and rice. As he says it: “Bread should be recognized as a concentrated sugar with a higher glycemic index than sugar itself.”
Dr. Unwin began to advise newly diagnosed diabetics to adopt a high-fat diet. The results, published in the journal of Practical Diabetes, were called “astonishing” – with average weight loss of almost 20 lbs., a reduction in waist circumference of 6 inches and only 2 of 19 patients had an abnormal hemoglobin A1c, a measure of long-term blood sugar control. Simultaneously, blood pressure improved (systolic 148 to 133; and diastolic 91 to 83 mmHg). Elevated liver enzymes (gamma-glutamyltransferase) fell dramatically (75.2 to 40.6). Total cholesterol on average fell from 212 to 181. More remarkably, 7 of 19 patients no longer needed medication.
More recently, the British Medical Journal chose to publish a case report submitted by Dr. Unwin of a patient with adult-onset diabetes (Type II) who was able to come of all his medications (metformin, statin drug, aspirin and ACE inhibitor) with adoption of a low carbohydrate diet.
Disturbingly, most medical guidelines in the UK do not recommend the diet. Dr. Sarah Hallberg advises diabetics to ignore the guidelines and eat low-carb, high-fat foods. [Diabetes Blog UK] “Carbohydrate intake is the single biggest factor in blood sugar levels and therefore the need for medication,” says Dr. Hallberg. By following current dietary guidelines “we are essentially recommending that they eat exactly what’s causing their problem” she adds. [Diabetes Blog UK] Listen and watch Dr. Hallberg talk about low-carbohydrate diets. [TED Talk]
In a landmark study, researchers now report a low-carbohydrate diet is more effective for weight loss and cardiovascular risk reduction than a low-fat diet. [Annals Internal Medicine 2014]
Commenting in The Daily Mail, a UK-based publication, Dr Aseem Malhotra, consultant clinical associate to the Academy of Royal Colleges, challenges health authorities to explain why it continues to recommend “carbohydrates known to promote fat storage and hunger” to overweight adults with metabolic syndrome.
He said: ‘Given that type 2 diabetes is a condition related to an intolerance to metabolize carbohydrates, it is puzzling why Diabetes UK recommends as part of a ‘healthy balanced diet’ the consumption of plenty of starchy carbohydrates and modest amounts of sugary food and drinks including cakes and biscuits.”
The case of a patient in the UK with newly diagnosed diabetes who received no dietary advice whatsoever has been published. The patient comments that the nurse who administered his first insulin injection calculated the dose to include a sweet tart he usually ate with his evening meal in the calculation to determine how much insulin he needed. “That effectively meant that I had to eat it – or I risked having a hypo (when blood sugar becomes dangerously low). It was like hitting my head with a hammer and then taking painkillers for the pain.” [Daily Mail UK Sept 7, 2015]
It is clear that modern-day physicians treat diabetes as if it were a drug deficiency. There is obvious need to control a diet-induced disease with a diet plan and to utilize nutrients rather than synthetic drugs to control diabetes. If patients adhered to low-carbohydrate diets and took dietary supplements it is obvious they would require less doctoring and drugs.
It is total folly to take drugs or dietary supplements while ignoring the diet. The current approach of treating diabetes with drugs or supplements while ignoring diet is like lighting matches and continually needing to use fire extinguishers.
A diet with no added sugars and low in carbohydrates + dietary supplements should help reduce or entirely avert the need for problematic anti-diabetic drugs and slow or halt the progression from pre-diabetes to overt diabetes.
It is clear the doctor community is aware of the need for more medications with high carbohydrate diets. The Food & Drug Administration’s nutrition guidance committee that is re-evaluating dietary guidelines is now under criticism for disregard for the current science. Conflicts of interest by parties and organizations involved in the issuance of new guidelines suggests the physician community, often influenced by dollars from pharmaceutical companies, is gaming the U.S. population to be dependent upon drugs and doctoring. [British Medical Journal]
The fact this criticism comes from an overseas publication suggests additional collusion by U.S. medical and news publishers with the medical industry. Only after the British Medical Journal raised the alarm did U.S.-based news sources pursue this issue. The low-fat, high-carbohydrate diet archived into food policy in 1980 has spawned the diabesity epidemic. [Time Magazine]
The U.S. population is essentially being treated like a bunch of guinea pigs that are misdirected and even coerced by the prevalent availability of high-carbohydrate, low-fat foods in grocery stores to become dependent upon doctoring and synthetic drugs for survival. “Let them eat butter” rather than cake is the new cry for lean healthy bodies.
Added note: Think you don’t have diabetes or pre-diabetes? Think again. Dr. Joseph Kraft makes us aware the commonly used fasting glucose blood test does not accurately detect diabetes. Dr. Kraft found only 7% of adults with a normal fasting blood sugar reading had a normal insulin response. Therefore, about 93% of adults will experience a false sense of security because they have an undetected condition, high insulin levels / insulin resistance that is now linked to an umbrella of diseases (Alzheimer’s, macular degeneration, heart failure, kidney failure and diabetic problems in the eyes). The Kraft insulin assay detects diabetes 10 years prior to onset of disease symptoms or the pre-diabetes state. [Profgrant.com; Facebook.com; Townsend Letter for Doctors]
The plan by climate alarmists to have other scientists imprisoned for their ‘global warming’ skepticism is backfiring horribly, and the chief alarmist is now facing a House investigation into what has been called “the largest science scandal in US history.”
Rep. Lamar Smith (R-TX), Chairman of the House Committee on Space, Science and Technology, has written to Professor Jagadish Shukla of George Mason University, in Virginia, requesting that he release all relevant documents pertaining to his activities as head of a non-profit organization called the Institute of Global Environment And Society.
Smith has two main areas of concern.
First, the apparent engagement by the institute in “partisan political activity” – which, as a non-profit, it is forbidden by law from doing.
Second, what precisely has the IGES institute done with the $63 million in taxpayer grants which it has received since 2001 and which appears to have resulted in remarkably little published research?
For example, as Watts Up With That? notes, a $4.2 million grant from the National Science Foundation to one of the institute’s offshoots appears to have resulted in just one published paper.
But the amount which has gone into the pockets of Shukla and his cronies runs into the many hundreds of thousands of dollars. In 2013 and 2014, for example, Shukla and his wife enjoyed a combined income in excess of $800,000 a year.
Steve McIntyre, the investigator who shattered Michael Mann’s global-warming ‘Hockey Stick’ claim, has done a detailed breakdown of the sums involved. He calls it Shukla’s Gold.
Almost everyone has heard the story of King Midas, the legendary king who turned everything he touched to gold. But how much myth and how much reality is there around this character? Was there really a King Midas? If there was, what do we know about him?
The Myth of the Golden Touch
Midas is the protagonist of one of the best known myths of antiquity. It is a tale that has been evoked by countless writers and artists, however the Roman poet Ovid was the one who gave full shape to Midas in his play Metamorphoses. In the play, Ovid tells the story of Midas, king of Phrygia, son of Gordius and Cybele.
Statue of Ovid in Constanza, designed by Ettore Ferrari. In his “Metamorphosis” Ovid tells the story of King Midas (Public Domain)
According to one version of the legend, after the death of Orpheus, Dionysus left Thrace. His old teacher Silenus, drunk as usual, accompanied Dionysus but got lost along the way and was picked up by Phrygian farmers, who led him to Midas. The king, who had been initiated into the cult of Dionysus was surprised and immediately recognized the old man, following which he held a ten-course banquet in Silenus’ honor.
He then returned him to Dionysus. Happy to have his old teacher back at his side, the god wanted to thank the gesture and gave Midas a wish. Midas asked that everything he touched would turn into gold. The wish was fulfilled and, although at first it was delightful to turn roses, apples, etc. into gold, very soon King Midas was surrounded by such luxury and brightness that he had nothing to eat – whatever touched his lips turned into the precious metal. Even the wine, a gift of Dionysus, became liquid gold as he tried to quench his thirst.
Realizing that he was doomed to die of hunger and thirst, Midas begged Dionysus to free him from his golden touch. Dionysus ordered him to wash his hands in the Pactolus River - located in today’s Turkey – where, since then, gold has always been present.
Pan and Apollo Have a Musical Battle and Midas is a Donkey
Midas discovered that he did not need unlimited wealth and often spent his days outdoors and became a devoted follower of Pan, the god of nature. Pan had achieved such ability on the flute that he dared to challenge none other than the great god Apollo, to see who was the best player of the two. Tmolus, god of the mountain of the same name, would be the judge of the competition.
Midas was present at the contest and was wowed by Pan’s performance. But then Apollo played a masterful piece and Tmolus was convinced that he must declare him the winner. All agreed with the decision except for Midas, who even protested the decision. Apollo was so furious at Midas’ stupidity and ignorance, that he touched Midas on the head causing the ears of the king to turn into those of a donkey.
The US and world economies are drifting inexorably into the next recession owing to the deflationary collapse of commodities, capital spending and world trade. These are the inevitable “morning after” consequence of the 20-year global credit binge which has now reached its apogee.
The apparent global boom during that period was actually a central bank driven excursion into the false economics of household borrowing to inflate consumption in the DM economies; and frenzied, uneconomic investing to inflate GDP in China and the EM.
The common denominator was falsification of financial prices. By destroying honest price discovery in the financial markets, the world’s convoy of money-printing central banks led by the Fed elicited a huge excess of financialization relative to economic output.
The central manifestation of that was $185 trillion of debt growth during the past two decades——a stupendous explosion of credit which amounted to 3.7X the expansion of global GDP.
And even that ratio is an understatement. That’s because measured GDP has been artificially bloated by the monumental worldwide malinvestment and excess capacity arising from the credit bubble. That is, phony “growth” which under the laws of economics will be liquidated in due course.
Exhibit number one for that proposition is Bernanke’s self-justifying balderdash printed in today’s WSJ. The kindest thing you can say about it is that now that he is cashing in big time he ought to hire a better qualified intern to write his articles while he’s out flogging his book.
This gem is an embarrassing smattering of banality and bunkum. Above all else it does not give even a passing nod to the fact that the US operates in a tightly integrated global economy and financial system; that the very warp and woof of it have been bloated and distorted by central bank enabled leverage and speculation; and that the central banks of the world are now engaged in a desperate and self-evident scramble to keep the financial bubble they have inflated over two decades from collapsing upon itself.
Bubble vision was chattering endlessly yesterday, for example, about the sudden implosion of Du Pont and the expulsion of its CEO. Well, its crashing sales in Brazil were as much a part of the global bubble as the now abandoned ramshackle man-camps of North Dakota.
In the latter case, the Bernanke-Yellen lunacy of ZIRP drove desperate money managers into a scramble for yield that caused them to buy the debt of shale drillers and suppliers dependent upon stable $75 oil prices in radically volatile global commodity markets. In the former case, DuPont’s booming ag sales in Brazil ultimately were derived from a rampaging printing press in Beijing that caused China’s debt to soar by 56X in less than 20 years.
That’s right. Brazil’s massive export boom was indirectly funded by China’s hideous credit expansion under which outstanding debt soared from $500 billion in 1995 to $28 trillion at present, according to the cautious estimates of McKinsey and probably by far more if it could all be honestly reckoned.
Yet DuPont’s tumbling earnings came as a surprise not only to Wall Street analysts but apparently to its CEO as well. All had been drinking the central bank Kool-Aid that Bernanke was still dispensing in his WSJ blather.
To hear him tell it, the Fed’s policy has been a roaring success, having ended the financial crisis, pushed the US economy nearly back to its full potential at 5.1% unemployment and nudged inflation upwards at 1.5% or nearly to its 2.0% target.
Indeed, Bernanke took special pains to boast about the Fed’s success on the jobs front:
But there is no doubt that the jobs situation is today far healthier than it was a few years ago. That improvement (as measured by the unemployment rate) has been quicker than expected by most economists, both inside and outside the Fed.
Well, as Bill Clinton might have said it all depends on what a few years ago means. Never has the Bernank explained why the financial markets and the main street economy crashed in the fall of 2008. But counting job growth from the bottom of a bursting domestic housing and credit bubble that was self-evidently enabled by the Fed hardly counts as proof of anything.
Here’s a better take on the jobs front. The September jobs report showed the grand sum of 96,000 jobs gains for the entire US economy outside of the government financed Health, Education And Social Services sectors (HES Complex) since December 2007.
Needless to say, the Fed’s ZIRP and QE policies had absolutely noting to do with the hiring of more home health care workers, nurses and teachers aides. Yet outside of those fiscally-dependent domains all of Bernanke’s radical financial repression and $3.5 trillion monetization of the public debt barely got the jobs market back to where it started before the recession; and, actually, not much beyond where it stood in January 2001.
So lets see. The Fed’s balance sheet has grown from $500 billion to $4.5 trillion or 9X during that span, but job growth outside the HES Complex amounts to less than 2%. For crying out loud, that’s a 12,000 per month rounding error in an economy which has 250 million adults.
Virtually every job gained since December 2009 shown in the chart below was not a “new” job at all; it was just a “born-again” job that Greenspan had claimed credit for a few years earlier.Yet Bernanke has the nerve to boast about the Fed’s success on jobs and claim that the “labor market is close to normal”!
Then there was the claim that the higher rate of growth from the pre-crisis top in the US compared to Europe was further proof of the Fed’s wisdom.
Not exactly. Its just proof that if you pick the right time intervals you can prove anything you want. In this case, Europe had a bigger boom before the 2008 peak and has suffered a more prolonged payback for its excesses ever since. Between 1995 and 2008, for example, the Eurozone’s real per capita GDP grew at 2.2% per year versus 2.0% for the US.
Indeed, Bernanke’s gratuitous attack on German Finance Minister Wolfgang Schauble for consistently rejecting the Keynesian playbook and being so honest as to refer to the launch of QE2 in November 2010 as “clueless” is especially grating.
Germany has actually achieved a balanced budget, and a slightly better real GDP growth rate (1.1% per annum) than the US (0.98%) since Greenspan’s phony housing boom peaked-out in 2006. Obviously, neither growth rate is anything to write home about, but these small differences certainly don’t prove that running up the national debt and running the central bank printing press at warp speed will bring about the Keynesian nirvana of full employment.
But that didn’t stop Bernanke’s flood of sophistry. He first assailed Europe for adherence to policy “orthodoxy” and then claimed resort to aggressive monetary and fiscal stimulus by Washington accounts for a material difference in macro performance after the Lehman crisis.
There are many differences between the U.S. and Europe, but a critical one is that Europe’s economic orthodoxy has until recently largely blocked the use of monetary or fiscal policy to aid recovery. Economic philosophy, not feasibility, is the constraint: Greece might have limited options, but Germany and several other countries don’t. And the European Central Bank has broader monetary powers than the Fed does……..Europe’s failure to employ monetary and fiscal policy aggressively after the financial crisis is a big reason that eurozone output is today about 0.8% below its precrisis peak. In contrast, the output of the U.S. economy is 8.9% above the earlier peak—an enormous difference in performance.
No it isn’t. As is evident above, Germany’s growth has not lagged, yet it was subject to the same allegedly retarded ECB monetary policy that ostensibly held back the rest of the eurozone. And to complete Bernanke’s Keynesian catechism, it dramatically tightened its fiscal management in the past few years. So Germany’s debt-to-GDP ratio has turned down, and is now sharply lower than that of the US.
The fact is, the eurozone stagnation since 2008 is due to a surfeit of monetary and fiscal stimulus in the peripheral countries before the crisis, not Germany’s reliance on unkeynesian “orthodoxy” in its aftermath.
Does the Bernank think that Spain’s housing boom and crash was not caused by easy money and vast public expenditures by Spanish governments prior to the PIIGS crisis; or that the unavoidable liquidation of these bubbles in Spain and the rest of the PIIGS is not what brought down eurozone growth rate to the stagnant averages he cites?
Nor was that the extent of the sophistry. Next we hear that the red hot bubble in London property and financial services is owing to the purportedly wise policies of the BOE:
Meanwhile, the United Kingdom is enjoying a solid recovery, in large part because the Bank of England pursued monetary policies similar to the Fed’s in both timing and relative magnitude.
C’mon! London (along with New York) is the epicenter of the global financial bubble. The economic boom there is due to the convergence of worldwide flight capital, represented by the Russian, Chinese, EM and petro-state bubble winnings that have sought refuge there.
Yes, the BOE has been right up there at the top of the money printing league tables with the Fed and BOJ, but here’s what Bernanke cannot remotely explain. Namely, that London real estate prices are up by 50% since the pre-crisis peak, while house prices in the rest of the UK have barely budged and are still at their pre-2008 level:
Presumably the BOE does not issue pounds sterling in London and non-London denominations. That is, there is one monetary policy for the whole country that cannot possibly alone explain these vast differences.
What can explain them is the chart below. The great financial bubble of the last two decades is global because all of the central banks have been doing the same thing. To wit, radically expanding their balance sheets, thereby systematically falsifying the cap rate for long-term investment and fueling a crack-up boom that is just now beginning to visibly fracture.
That London has heretofore disproportionately shared in that false prosperity is not owing to the fact that the UK hired a Goldman banker from the central bank farm team in Canada, who proceeded to out-Bernanke the Bernank.
Its due to the fact that London has good property laws; speaks English, has a large international airport; is a historical center of world trade and finance; adheres strictly to the rule of “don’t ask, don’t tell” when it comes to the immense international thievery which flows its way; and has a tolerable gulfstream climate, rich culture and improving food.
Stated differently, there is no such thing as monetary policy in one country.Bernanke’s drivel comes straight out of a Keynesian time warp. Indeed, its evident in his opening claim for what he believes the Fed was doing under his watch:
“….. by mitigating recessions, monetary policy can try to ensure that the economy makes full use of its resources, especially the workforce.”
Yes, and what was it that precipitated the Great Recession on a worldwide basis if it was not the mad-cap money printing policies and resulting $185 trillion global credit expansion shown above?
Bernanke didn’t explain, but his argument amounts to saying that first central banks cause bubbles, then crashes, then recessions. After that they rinse and repeat, denying that they had any accountability whatsoever for the economic slump at hand.
Yesterday’s trade report for August contained figures which crystalize Bernanke’s bubble blindness and Keynesian time warp in spades. Namely, that US exports of nearly all categories of goods and services are falling sharply after the temporary post-crisis surge that was caused by the world concert of money printing central bankers.
As the global deflation gathered force, the commodity sector was the first to manifest the reversal—— with prices down by 50% on average. Not surprisingly, US exports of industrial supplies and materials have dropped from their 2014 monthly peak by 20% thru August.
Likewise, overall goods exports were down 10% from the 2014 peak, and even export of travel services was down by 10%. That is, activity in domestic lodging and resorts was goosed by the global boom, and will soon be cooling owing to the global bust.
Needless to say, even as Bernanke was boasting about how he filled the domestic bathtub of GDP with that invisible ether called “aggregate demand” and thereby restored the nation’s economy to something “close to full employment”, he did let one absurdity slip that is surely dispositive.
Said the Bernank in behalf of the Fed’s long spell of zero interest rates,
Considering the economic risks posed by deflation, as well as the probability that interest rates will approach zero when inflation is very low, the Fed sets an inflation target of 2%, similar to that of most other central banks around the world…….by keeping inflation low and stable, the Fed can help the market-based system function better and make it easier for people to plan for the future.
Right. But don’t mention that to the tens of millions of main street savers and retirees who have been literally expropriated by the Fed.
And especially don’t mention that to the casino gamblers who are once again being led to the slaughter by the Fed’s adherence to Bernanke’s Keynesian gospel.
Alas, this is the third time this century. By now the gamblers are fully deserving of the just deserts which lie directly ahead.
Reprinted with permission from David Stockman’s Contra Corner.
Russia has certainly changed the storyline in the Middle East. Not differentiating rebel forces (rebels being all forces counter to Assad); Russia fights them all – including those “moderate” forces backed by the empire.
Russian cruise missiles launched from the Caspian. The empire’s response?
Four Russian cruise missiles fired at Syria from the Caspian Sea landed in Iran, unnamed US officials say.
Both Russia and Iran deny this. It matters little the truth behind this minor distraction; the story on the ground has changed. For example:
The Obama administration has ended the Pentagon’s $500 million program to train and equip Syrian rebels, administration officials said on Friday, in an acknowledgment that the beleaguered program had failed to produce any kind of ground combat forces capable of taking on the Islamic State in Syria.
At $100 million per successfully trained rebel, the empire didn’t secure much rebel bang for the buck. One more event further exposing the current puppets:We are the hollow men We are the stuffed men . Those who have crossed With direct eyes, to death’s other Kingdom Remember us-if at all-not as lost Violent souls, but only As the hollow men The stuffed men. .
A thread running through my narrative of world events is that the elite have grown afraid of the tool they have created; they have grown concerned regarding the risk. Having created the monster, they are witnessing the impossibility of controlling its awesome strength. They want to change direction.
There are times I feel I might be wrong on this – it is all wishful thinking. Yet, the general trend moves in this direction.
This is why at one time I felt Rand Paul was a favored candidate; at one time, he sounded the most anti-war. Of course, he couldn’t have followed a path more certain to lead to defeat – turning off both the libertarian base handed to him by his father as well as the neocons that he was never going to win over anyway.
Anti-war: I suggest this is one reason why Trump is now leading – and continues to lead despite numerous statements that would normally have ended all political aspirations.
A note, from Lew Rockwell:
“Trump Will Be President”
Says one of my respected political sages. “Of course, Trump will win the nomination. That has been clear for some time. But now I am saying he will be the next president. Hillary will be knocked out, and Biden will be the Democratic nominee. And does he have skeletons!”
“There is only one unalloyed happy note. Trump will rein in the empire. Even the power elite realize the empire has gotten out of hand. Under Trump, who is, after all, not a neocon, there will be fewer wars, maybe no US wars. Call his governing philosophy ‘antiwar fascism’.”
I wonder: if those in power really wanted Trump out, could they not have driven a stake through his heart by now? How much of his history – public and not-so-public – could easily be used against him? Maybe they are waiting for some reason. Or maybe they want him to win.
Trump has made the strongest statements of any candidate in either major party regarding ending the wars and empire. From Justin Raimondo:
And while Assad is “a bad guy,” Trump said, the US-backed rebels who want to overthrow him are an unknown quantity:
“We always give weapons, we give billions of dollars in weapons and then they turn them against us. We have no control. So we don’t know the other people that we’re supposed to be backing. We don’t even know who we are backing.”
To wit, his comments on the Syrian imbroglio on ABC’s “This Week”:
“I think what I want to do is I want to sit back — and this does not sound like me very much — but I want to sit back, and I want to see what happens. You know, Russia got bogged down, when it was the Soviet Union, in Afghanistan. Now they’re going into Syria. There are so many traps. There are so many problems. When I heard they were going in to fight ISIS, I said, ‘Great.’”
The 0.0001% fear nuclear holocaust as much as the rest of us.This is the way the world empire ends This is the way the world empire ends This is the way the world empire ends Not with a bang but a whimper. .
Reprinted with permission from Bionic Mosquito.
Autumn is here, so it’s time for everyone to start experiencing some seasonal pumpkin health benefits! If you haven’t spotted pumpkin-flavored products popping up in stores all over the place yet, just wait – the onslaught is coming.
If you’re craving the taste of this fall-favorite, skip the pumpkin-flavored coffee creamer. Most of those products are filled with sugar and trans fats (among other questionable ingredients). Instead, reach for the real thing, because real pumpkin tastes good – and is good for you!
Here are 5 pumpkin health benefits.
1. Crunch On Some Fiber
Earlier this week, we ran a two-parter on the US, Guatemala, corruption, the CIA, genocide, torture, and more. Reader interest was considerable.
We now invite you to watch this video of a presentation made by Jennifer Harbury, an American whose late Guatemalan husband, a Mayan indigenous activist, was “disappeared” by the military. After hunger strikes and investigations, she learned that Efraín Bámaca Velásquez had been tortured and then killed — and that the CIA knew all about it. Her story is a powerful one.
Have you gone down a rabbit hole lately? Did you, perhaps, happen upon this very post by going down an internet rabbit hole? Thanks to Lewis Carroll’s classic tale, Alice’s Adventures in Wonderland, you have the exact words you need to describe your world-wide-web wanderings.
As it turns out, his wildly popular story—celebrating its 150th anniversary this year—is the source of many other common cultural phrases. So common, in fact, that even if you haven’t read Alice, you probably quote it all the time. (Much like you probably quote Zoolander all the time, except with more accuracy.) Follow us on a long, strange etymological journey where all paths lead back to Wonderland.
1. DOWN THE RABBIT HOLE
Much as with our buddy the Mad Hatter, the Cheshire Cat has been ingrained in the membrane. The adjectival phrase is, once again, associated with a specific character. So whenever someone describes a person as grinning like a Cheshire cat, we can picture that huge, mischievous—and slightly unsettling—smile.
4. OFF WITH THEIR HEADS!
Sure, Shakespeare scribbled it first—but Carroll’s Queen of Hearts certainly popularized the imperative.
5. I’M LATE, I’M LATE, FOR A VERY IMPORTANT DATE
We feel you, White Rabbit. We have as much FOMO as you do.
A particular liking for bitter-tasting foods and drinks such as coffee and tonic water could mean you have psychopathic tendencies.
Psychologists have found that those with a preference for bitter tastes were more likely to exhibit signs of Machiavellianism, sadism, and narcissism.
That is, they were more prone to being duplicitous and self-serving, cold-hearted and lacking in empathy, vain and selfish, and more likely to derive pleasure from other people’s pain.
The findings of the study provide the ‘first empirical evidence that bitter taste preferences are linked to malevolent personality traits,’ said the researchers from Innsbruck University in Austria, who studied 1,000 people in two separate experiments.
‘The results suggest that how much people like bitter-tasting foods and drinks is stably tied to how dark their personality is.'
Modern dental hygiene would have been quite unnecessary for ancient Romans living in Pompeii, as research has revealed that they had impressively healthy teeth.
Scientists appointed by the Archaeological Superintendence of Pompeii have used CAT scans to examine 30 Pompeii inhabitants who were preserved in hardened ash after Mount Vesuvius erupted in AD 79. The group, headed by radiologist Giovanni Babino, released photos of their work on Sept. 29, and revealed in a press conference that the ancient Romans had perfect teeth and “no immediate discernible need for dentists,” according news agency Agenzia Giornalistica Italia.
Though Pompeii citizens never used toothbrushes or toothpaste, they had healthy teeth thanks to their low-sugar diet. Massimo Osanna, superintendent of the World Heritage-listed site, said their diet was “balanced and healthy, similar to what we now call the Mediterranean diet,” according to The Telegraph.
“The inhabitants of Pompeii ate a lot of fruit and vegetables but very little sugar,” said orthodontist Elisa Vanacore, who oversaw the examination of the teeth. “They ate better than we did and have really good teeth.”
Vanacore added that Pompeii citizens’ teeth would have benefitted from high levels of fluorine in the air and water near the volcano.
Studying teeth could help determine the age of the bodies examined and reveal more details about life in Pompeii. The scientists are hoping to analyze 86 plaster casts in total from Pompeii, and the research should ultimately uncover the age, sex, diet, diseases and social classes of the preserved Pompeii citizens.
The sequence of events leading up the French Revolution are likely unfamiliar to most. Yet money printing and a debauched French currency played no small part in those events. As a sequel to “Shorting the Federal Reserve”, 720 Global aims to provide an historical example of excessive money printing which lead to financial crisis, and ultimately the revolution of a major sovereign nation. More than a history lesson, this article effectively illustrates the road on which the U.S. and many other nations currently travel. The story relayed in this article is not a forecast for what may happen but a simple reminder of what has repeatedly happened in the past.
As you read, notice the story lines the French politicians used to persuade the opposition and justify money printing. Note the similarities to the rationales used by central bankers and neo‐ Keynesians today. Then, as now, it is promoted as a cure for economic ills with manageable consequences and where failure to generate a sustainable recovery are thought to be a failure of not having acted boldly enough.
Our gratitude to the late Andrew D. White, on whose work we relied heavily. The exquisite account of France circa the 1780‐1790’s was well documented in his paper entitled “Fiat Money Inflation in France” published in‐1896. Any unattributed quotes were taken from his paper.
Before The Presses Rolled
During the 1700’s France accumulated significant debts under the reigns of King Louis XV and King Louis XVI. The combination of wars, significant financial support of America in the Revolutionary War, and lavish government spending were key drivers of the deficit. Through the latter part of the century, numerous financial reforms were enacted to stem the problem, but none were successful. On a few occasions, politicians supporting fiscal austerity resigned or were fired because belt tightening was not popular and the King certainly didn’t want a revolution on his hands. For example, in 1776 newly anointed Finance Minister Jacques Necker believed France was much better off by taking large loans from other countries instead of increasing taxes as his recently fired predecessor argued. Necker was ultimately replaced 7 years later when it was discovered France had heavy debt loads, unsustainable deficits, and no means to pay it back.
By the late 1780’s, the gravity of France’s fiscal deficit was becoming severe. Widespread concerns helped the General Assembly introduce spending cuts and tax increases. They were somewhat effective but the deficit was very slow to decrease. The problem, however, was the citizens were tired of the economic stagnation that resulted from belt tightening. The medicine of austerity was working but the leaders didn’t have the patience to rule over a stagnant economy for much longer. The following quote from White sums up the situation well:
“Statesmanlike measures, careful watching and wise management would, doubtless, have ere long led to a return of confidence, a reappearance of money and a resumption of business; but these involved patience and self‐denial, and, thus far in human history, these are the rarest products of political wisdom. Few nations have ever been able to exercise these virtues; and France was not then one of these few”.
By 1789, commoners, politicians and royalty alike continuously voiced their impatience with the weak economy. This led to the notion that printing money could revive the economy. The idea gained popularity and was widely discussed in public meetings, informal clubs and even the National Assembly. In early 1790, detailed discussions within the Assembly on money printing became more frequent. Within a few short months, chatter and rumor of printing money snowballed into a plan. The quickly evolving proposal was to confiscate church land, which represented more than a quarter of France’s acreage to “back” newly printed Assignats (the word assignat is derived from the Latin word assignatum – something appointed or assigned). This was a stark departure from the silver and gold backed Livre, the currency of France at the time.
Assembly debate was lively, with strong opinions on both sides of the issue. Those against it understood that printing fiat money failed miserably many times in the past. In fact, the John Law/Mississippi bubble crisis of 1720 was caused by an over issue of paper money. That crisis caused, in White’s words, “the most frightful catastrophe France had then experienced”. History was on the side of those opposed to the new plan.
Those in favor looked beyond history and believed this time would be different. They believed the amount of money printed could be controlled and ultimately pulled back if necessary. It was also argued new money would encourage people to spend and economic activity would surely pick up. Another popular argument was France would benefit by selling the confiscated lands to its people and these funds would help pay off its debts. In addition, land ownership by the masses strengthened French patriotism.
The debate was won by those in favor of printing. As we have seen many times before and after this event, hope and greed won out over logic, common sense and most importantly, history. Per White‐ “But the current toward paper money had become irresistible. It was constantly urged, and with a great show of force, that if any nation could safely issue it, France was now that nation; that she was fully warned by her severe experience under John Law; that she was now a constitutional government, controlled by an enlightened, patriotic people,‐‐not, as in the days of the former issues of paper money, an absolute monarchy controlled by politicians and adventurers; that she was able to secure every livre of her paper money by a virtual mortgage on a landed domain vastly greater in value than the entire issue; that, with men like Bailly, Mirabeau and Necker at her head, she could not commit the financial mistakes and crimes from which France had suffered under John Law, the Regent Duke of Orleans and Cardinal Dubois”. This time was different in their collective minds!
The final decree was passed and 400 million Assignats, backed by confiscated church property, were issued. The notes were quickly put into circulation and “engraved in the best style of the art”, as shown below.
As one might suspect the church decried the action, but the large majority of French were in favor. The press and assemblymen extolled the virtues of this new money. They spoke and wrote of future prosperity and an end to the economic oppression. They thought they found a cure for their economic ills.
Upon the issuance of the new money, economic activity picked up almost immediately. As expected, the money allowed for a portion of the national debt to be paid off as well. Confidence and trade expanded. The summer of 1790 proved to be an economic boom time for France.
The good times were limited. By October, economic activity was back in decline and with it came a renewed call for more money printing. Per White‐ “The old remedy immediately and naturally recurred to the minds of men. Throughout the country began a cry for another issue of paper”. The deliberations regarding money printing were rekindled with many of the same arguments on both sides of the debate re‐hashed. A new argument for those in favor of printing was simply that the original 400 million Assignats was not enough.
While those favoring money printing acknowledged the dangers of their actions, they were also dismissive about them at the same time. These Assemblymen believed if a little medicine appeared to work with no side effects why not take more. Debate this time around was easier for the pro‐printing consortium. Of note was a well‐respected elder statesman of the Assembly and national hero named Gabriel Riqueti, Comte de Mirabeau (Mirabeau). During the first round of debates, Mirabeau was strongly against the issuance of the new currency. In fact he said the following: “A nursery of tyranny, corruption and delusion; a veritable debauch of authority in delirium” in regards to paper money. He even called the issuance of money “a loan to an armed robber”.
While Mirabeau clearly understood the effects of printing money, he was now swayed by the arguments of a stronger economy. He also appreciated the benefits of making a large class of landholders for the first time. Mirabeau reversed his opinion and joined the ranks of those believing France could control the inflationary side effects. He now argued for one more issue of Assignats. As a precautionary measure he insisted that as soon as paper became abundant, self‐governing laws of economics would ensure the money was retired. Mirabeau went as far as recommending the new amount of printed money should be enough to pay down the entire debt of France ‐ 2,400 million!
The naysayers warned of the ills of the proposed second printing. Of note was Necker. If you recall he was partially responsible for the debt buildup that led to France’s problems. Necker “predicted terrible evils” and offered other means to accomplish economic growth. His opinions were not popular and Necker was “spurned as a man of the past” by the Assembly and ultimately left France forever. A powerful pamphlet, written by Du Pont de Nemours was popular amongst the nays and was read to the Assembly. It declared that doubling the money supply would “simply increase prices, disturb values, alarm capital, diminish legitimate enterprise, and so decreases the demand for both products and for labor. The only persons to be helped by it are the rich who have large debts to pay”.
The arguments of Neckar and Du Pont de Nemours fell on deaf ears. Those in favor rebutted with comments that printing more money was “the only means to insure happiness, glory and liberty to the French nation”. They took the prior debate a step further and now theorized that the gold and silver Livres would be undesirable as Assignats would be the only currency people demanded.
On the 29th of September 1790, a bill authorizing the issuance of 800 million Assignats was passed. The bill also decreed that when Assignats were paid back to the government for land they should be burned. This added measure was thought of as a way to ensure the newly printed money was not inflationary.
White commented: “France was now fully committed to a policy of inflation; and, if there had been any question of this before, all doubts were removed” he went on discussing how “exceedingly difficult it is stopping a nation once in the full tide of a depreciating currency”.
It turns out the money returned to the government wasn’t burned but was re‐issued in smaller denominations. Within a short period 160 million was paid to the government for lands and was reissued “under the pleas of necessity”.
Nine months after the second issue of 800 million Assignats, and another cycle of good economic activity followed by bad, pressure grew for more money printing. With little fanfare or debate, a new issue of 600 million was issued. With it, once again came “solemn pledges to keep down the amount in circulation”.
This experience, like the previous two, was followed by a brief period of optimism that quickly faded. With each successive printing came currency depreciation and higher prices. Despite the beliefs of those in favor of printing, hoarding of gold and silver backed coins was occurring. The French people were watching their paper money lose value and becoming more interested in preserving their wealth. The coins were in limited supply while paper money was being printed with increasing frequency. In their minds, gold and silver offered the stability that paper money was rapidly losing.
“Still another troublesome fact began to now appear. Though paper money had increased in amount, prosperity had steadily diminished. In spite of all the paper issues, commercial activity grew more and more spasmodic. Enterprise was chilled and business became more and more stagnant”.
With each new issue came increased trade and a stronger economy. The problem was the activity wasn’t based on anything but new money. As such, it had very little staying power and the positive benefits quickly eroded. Businesses were handcuffed. They found it hard to make any decisions in fear the currency would continue to drop in value. Prices continued to rise. Speculation and hoarding were becoming the primary drivers of the economy. “Commerce was dead; betting took its place”. With higher prices, employees were laid off as merchants struggled to cover increasing costs.
The only ones truly benefiting were manufacturers producing goods for foreign countries and the stock brokers. The rapidly declining value of their currency attracted orders from other countries that were now able to purchase French goods very cheaply. Those businesses and consumers that relied on goods from outside the country were battered by higher prices. With the increased money supply and economic uncertainty the “ordinary motives for savings and care diminished”. Speculation increased significantly. While some stock investors in the urban regions were exploiting the condition, the onus fell on the working man. Inflation, weakening currency and lack of jobs was damaging to a large majority of Frenchmen.
The economic conditions also brought on more crime and increased instances of bribery of government officials. Conditions were described by White as “the decay of a true sense of national pride”.
A new issue of 300 million more Assignats was ordered to be printed. With that decree it was also ordered that a previous limit on the total amount to be printed be repudiated. By this point it was estimated the value of their currency was cut in half and inflation was rampant.
Another 600 million Assignats were printed. The presses rolled on and after a few more printings it was estimated a total of 3,500 million Assignats now existed. The issuances continued through 1792 and 1793.
“The consequences of these over issues now began to be more painfully evident to the people at large. Articles of common consumption became enormously dear and prices were constantly rising. Orators in the Legislative Assembly, clubs, local meetings and elsewhere now endeavored to enlighten people by assigning every reason for this depreciation save the true one. They declaimed against the corruption of the ministry, the want of patriotism among the Moderates, the intrigues of the emigrant nobles, the hard‐heartedness of the rich, the monopolizing spirit of the merchants, the perversity of the shopkeepers, ‐‐‐each and all of these as causes of the difficulty”.
Throughout 1792 and 1793 there were instances of mobs demanding basic necessities such as bread, sugar and coffee. Peaceful demonstrations turned violent and plundering of the local shops was commonplace. The French Revolution was born.
Money printing was not the sole cause of the revolution, but it certainly helped light the fuse. In all fairness, the French people were demanding the same liberties they helped America fight for. The idea of a Monarchy was fading and those supporting democratic principles were leading the charge. In hindsight, money printing was a last ditch effort to create prosperity and keep the Revolution at bay. Poverty and despair spread through France. Malnutrition and hunger due to lost employment and inflation fed the Revolution. In 1792 a republic was proclaimed and in the following year King Louis XVI was sent to the guillotines.
The story retold in this article echoes that of other nations before and after it. The language, promises, and ultimately the excuses used by the politicians are a familiar refrain. There is nothing new with money printing or “quantitative easing” as modern day central bankers call it. Despite the passing of over 200 years and substantial development in the world, plus ça change (the more that changes, the more it is the same thing).
As stressed in part 1 of this series “Shorting the Federal Reserve”, gold has a long history serving as a tool of wealth preservation. After numerous financial crises caused by the debasement of currencies have modern day economists and central bankers finally figured out how to print money with no consequences? Despite our wishes to the contrary, every action still has an equal and opposite reaction (consequence). The investment pundits who see nothing wrong with the actions of the world central banks regard holding gold as ridiculous. We consider an allocation to gold as a matter of prudence given what we have seen and expect to see from central bankers desperate to maintain status quo.
Hopefully after reading this and “Shorting the Federal Reserve” you will understand a little protection may go a long way in what may not be as clear cut an economic future as some would lead us to believe.
di Francesco Simoncelli
La mia rubrica Zombie Wars è nata in concomitanza con la voglia di dissezionare e sbugiardare le teorie bislacche di sciroccati monetari che, in nome del popolo, avanzano tesi assurde e truffaldine. In tutto il web ce ne sono a iosa e tendono a spuntare ad ogni ora del giorno. Su questo blog trovate materiale a sufficienza con cui destreggiarvi e annientare simili posizioni, ma ogni tanto scendo nella mischia anch'io e propongo un nuovo articolo in cui indirizzo la mia critica verso un particolare personaggio e una particolare tesi. Dipende, ovviamente, dalla situazione. Soprattutto dipende dal tipo di tesi proposta dallo sciroccato monetario e dal suo pubblico. Se la tesi è diffusa e il pubblico la riporta sovente, allora val la pena rimboccarsi le maniche e mettere mano alla tastiera. La mia rubrica è pingue di esempi simili, i quali hanno spaziato da tesi facenti riferimento alla MMT fino a quelle di Gesell passando per quelle "classiche" dei signoraggisti e dei keynesiani. Oggi vorrei riproporre su queste pagine una vecchia conoscenza che per molto tempo è stata protagonista della mia rubrica. Sto parlando di Ellen Brown.
Questo personaggio è un misto tra keynesismo e signoraggismo che molto spesso pretende d'avere la soluzione economica a tutti i malanni economici mondiali. La sua tesi di fondo è la seguente: nazionalizzazione della banca centrale. Cosa vuol dire? Fondamentalmente niente, visto che le banche centrali sono istituti a tutti gli effetti pubblici. In realtà, preferirebbe che la stampante monetaria fosse accesa giorno e notte affinché gli individui potessero godere di una manna presumibilmente infinita di "ricchezza".
Non ha la minima idea di cosa sia la ricchezza reale. Non ha la minima idea di cosa sia il denaro. Non ha il minimo rispetto per i diritti individuali degli individui. Agisce in base ad una tesi che non ha alcun fondamento empirico dal punto di vista funzionale; ne ha invece, se si parla di distruggere una valuta.
Per anni ha spacciato la favoletta di come la banca del North Dakota fosse un esempio bancario da seguire, salvo dimenticarsi che la prosperità caduta in quel particolare stato americano è stata dovuta agli investimenti in patch di scisto gonfiati dal credito facile abilitato dalla ZIRP della FED. La baldoria di speculazione nel settore obbligazionario societario scatenata da una fame di rendimenti decenti nel casinò di Wall Street, ha permesso ad aziende di dubbia qualità d'imbarcarsi in progetti faraonici presumendo che il prezzo del petrolio sarebbe rimasto perennemente a quota $100. Ora che l'offerta ha superato la domanda e i profitti di tali società stanno colando a picco a fronte di oneri finanziari soffocanti, la bolla dell'olio di scisto si sta sgonfiando andando ad intaccare i bilanci della famosa banca del North Dakota. Questo significa che presto si ritroverà una marea di crediti inesigibili che non potrà gestire senza un salvataggio. Questo significa che è condannata a fallire. Ellen Brown non ha mai parlato di ciò. Perché? Perché non ha uno straccio di teoria su cui basare le sue analisi. Solo tesi da sciroccati monetari.
Infatti dimostra per l'ennesima volta questo punto ritornando ad una vecchia nenia che per molto tempo ha spacciato sul web, ma che adesso sta riprendendo vigore. Nel caso specifico, il lancio di denaro dagli elicotteri per spingere le persone a spenderlo. Qui, signore e signori, siamo ben oltre Keynes. Almeno il matematico di Cambridge diceva di sotterrare bottiglie piene di soldi per far lavorare le persone, la Brown auspica proprio un lancio di denaro dai grattacieli bypassando il lavoro in toto. Forse è per questo che l'odierna è la cosiddetta "epoca del benessere". Ma vediamo nel dettaglio cosa suggerisce.
Jeremy Corbyn, il candidato sul ‘cavallo scuro’ attualmente in testa nei sondaggi per la leadership del Partito Laburista Britannico, ha incluso nella sua piattaforma un ‘Quantitave Easing per le persone’. Nella presentazione del 22 Luglio egli ha detto:
”Il 'riequilibrio' di cui sto parlando si riferisce a quello della finanza nei riguardi dei settori sostenibili e ad alta crescita del futuro. Com’è che possiamo fare? Una possibilità sarebbe quella di conferire alla Banca d'Inghilterra un nuovo mandato, quello di migliorare la nostra economia investendo massicciamente in nuove abitazioni, nell'energia, nei trasporti e nei progetti digitali. Un Quantitative Easing per le persone, quindi, invece che per le banche”.
Partiamo subito forte stavolta. Dopo che Goldman Sachs e Citibank hanno iniziato a ventilare la possibilità di far calare dal cielo il denaro come politica monetaria, adesso arrivano gli uomini di facciata che si fanno propugnatori della stessa politica. Non è un caso. Ciò che non capiscono questi sciroccati monetari è che il quantitative easing è un trucco monetario una tantum che funziona fin quando esistono bilanci puliti. Sin da quando Greenspan ha preso in ostaggio la stampante monetaria nel seminterrato dell'Eccles Building, sono stati saturati prima i bilanci di Main Street, il quale lo scorso 2008 ha raggiunto la condizione di "picco del debito", mentre ora si stanno sfruttando le spese in conto capitale delle grandi aziende per inondare i casinò di Wall Street con dividendi da favola e lauti bonus.
Questo perché i piani alti stanno usando i bilanci delle loro aziende per speculare nel casinò e guadagnare profitti inattesi grazie alla leva finanziaria e all'ingegneria finanziaria. Infatti il canale della trasmissione monetaria nei confronti di Main Street è rotto: le famiglie non stanno accendendo prestiti e stanno vivendo col reddito che riescono a guadagnare. Stanno affrontando il classico percorso di deleveraging che segue ogni periodo euforico artificiale. Intromettersi e perturbare questo processo non renderà un servizio alle famiglie, anzi renderà questo inevitabile processo ancor più doloroso in futuro. Solo gli attori di mercato sanno come direzionare al meglio il flusso di risparmi reali verso quegli investimenti che più daranno loro soddisfazione in futuro. Nessun pianificatore centrale è nella testa di ogni singola persona, quindi, nonostante si fregi della cosiddetta forward guidance, non conosce cosa vogliono i vari individui e perché.
Ciò che Corbyn sta chiedendo è l'inflazionismo di nuove bolle che possano dare uno stimolo a Main Street affinché torni a spendere come se non ci fosse un domani e si faccia prendere dall'ebbrezza dell'indebitamento senza fine. Nel mondo fatato dei keynesiani, deficit e debiti non contano. Ma nel mondo reale contano, e gli attori di mercato non stanno rispondendo ai pungolamenti delle banche centrali perché ligi al buon senso economico: i debiti vanno ripagati.
Il suo consigliere economico Richard Murphy ha ulteriormente spiegato:
"Il Quantitative Easing per la gente è un processo tramite il quale viene riacquistato il debito che era stato deliberatamente creato da una banca d’investimenti ‘verde’, o da un ente locale, o da un’azienda sanitaria o da altre agenzie, con lo scopo specifico di finanziare nuovi investimenti nell'economia – visto che i grandi mercati commerciali e finanziari non sono in grado di effettuarli nella quantità necessaria perché il Regno Unito funzioni di nuovo – e per ripristinare la nostra prosperità finanziaria".
Se fosse solamente necessario stampare denaro e darlo via così, saremmo stati tutti ricchi già da un bel pezzo. Pensate, ad esempio, al welfare state. Pensate alla propaganda che è stata utilizzata per imbastirlo e venderlo alle persone: ridistribuzione della ricchezza per migliorare la vita dei poveri. Siamo nel 2015 e la vita dei poveri non è affatto migliorata. Era solo l'ennesimo mezzo utilizzato dallo stato per sequestrare ricchezza reale dall'economia più ampia. Fate attenzione: quando notate un riformatore sociale bussare alla vostra porta ed affermare ch'egli viene da voi in nome del popolo, in realtà viene in nome dello stato per derubarvi mediante la retorica collettivista. Infatti l'idea di questo sciroccato monetario non è nuova, la Cina sta facendo qualcosa di simile rendendo ancora più esplosiva la sua economia. Ho spiegato il meccanismo nel preambolo di questo articolo: http://bit.ly/1LUcH48
Secondo il gruppo ‘Positive Money’:
”Idee similari sono state sostenute, o almeno suggerite, da economisti di rilievo, tra i quali JM Keynes, Milton Friedman, Ben Bernanke, William Buiter e Martin Wolf. Più di recente, anche Lord Adair Turner ne ha proposto di analoghe, evidenziando che 'non ci sono motivi tecnici per respingere quest’opzione'".
Capisco. Sciroccati monetari che cercano di giustificare le loro teorie citando altri sciroccati monetari, o travisandone le idee. Se pensiamo che Keynes ventilava l'idea d'assumere una catena di gente per riempire bottiglie di denaro e poi sotterrarle, oggi siamo passati davvero oltre con il quantitative easing che viene calato direttamente sulle teste delle persone senza che facciano nulla. Questo è keynesismo sotto steroidi.
Forse, ma gli scettici, invece, sostengono che c’è molto da criticare. Sul Telegraph Peter Spence ha detto che:
”Gli esperti sostengono che una vittoria di Jeremy Corbyn nelle prossime elezioni generali metterebbe la Gran Bretagna in rotta di collisione con Bruxelles e spingerebbe il Regno Unito verso una rovina in pieno ‘stile Zimbabwe’ ..… Tony Yates, ex economista della Banca Centrale ed ora professore presso l'Università di Birmingham, ha detto che: ‘questa strada conduce alla rovina della politica monetaria. E’ esattamente quello che ha fatto lo Zimbabwe, che ha smesso di pagare i suoi debiti stampando nuova moneta”.
Spence ha anche citato il Governatore della Banca d'Inghilterra, Mark Carney, che ha dichiarato:
”La ragione per cui non si dovrebbe nemmeno dar inizio a questa conversazione è che questa proposta, se attuata, porterebbe alla rimozione di qualsiasi disciplina in materia di politica fiscale”.
Questo mondo ha ancora un barlume di speranza, a quanto pare.
Avvertimenti riguardo un’iperinflazione in pieno ‘stile Zimbabwe’ sono stati continuamente mossi contro i Quantitative Easings [QE], fin da quando la Federal Reserve li ha avviati, nel 2008.
Quando la Banca Centrale Europea [BCE] ha annunciato, a Gennaio 2015, che si sarebbe anch’essa impegnata in un proprio QE – insieme agli Stati Uniti, al Regno Unito ed al Giappone – i commentatori, allarmati, hanno avvertito che ci sarebbero state guerre valutarie, svalutazioni competitive, politiche ‘beggar-thy-neighbour’ [riduci il vicino in miseria] ed iperinflazione. Ma i QE sono in corso fin dalla fine degli anni ‘90, e questa presunta iperinflazione non si è mai verificata.
Qui notiamo come la mancanza di una teoria solida a supporto delle proprie tesi non può far altro che condurre a conclusioni fallaci e sballate. Ludwig von Mises descrisse il fenomeno del crack-up boom come un processo formato da tre fasi in cui le scelte individuali delle persone finiscono per sostituire una valuta che perde completamente la sua funzione di denaro. Quest'ultimo ha due componenti fondamentali che lo rendono "utile" agli occhi delle persone: potere d'acquisto e calcolo economico. Se il potere d'acquisto di una determinata moneta viene diluito all'inverosimile a seguito di un'emissione eccessiva di offerta di denaro, gli individui si ritroveranno con carriole di cartastraccia con cui dover acquistare beni e servizi. La Repubblica di Weimar e lo Zimbabwe sono due esempi lampanti. L'abbandono di una valuta, poi, può essere raggiunto se gli attori di mercato non possono più usarla come mezzo attraverso il quale rendere il più attendibile possibile il calcolo economico. Questo aspetto è fondamentale affinché la società possa prosperare lungo le linee di una crescita sostenibile, in quanto vengono premiate quelle figure che meglio soddisfano i desideri degli attori di mercato.
Gli strumenti d'intervento di cui le banche centrali tanto si pavoneggiano, sono i responsabili del secondo tipo di disastro economico. La ZIRP è la causa principale per cui l'iperinflazione ha spostato la sua attenzione alla rendita del potere d'acquisto. Infatti l'attuale economia sta viaggiando su due binari apparentemente paralleli: il denaro creato dalle banche centrali ha inondato i canyon di Wall Street e lì è rimasto, mentre Main Street sta ancora arrancando a causa del deleveraging che sta affrontando sin dal 2008 e si sta sobbarcando anche il costo del salvataggio di quelle entità che hanno goduto della manna delle banche centrali. In questo modo sono spuntate bolle su bolle nel settore obbligazionario/sovrano/societario, nel settore azionario, nel settore immobiliare, nei prestiti per studenti, nei prestiti per automobili, ecc. L'ingegneria finanziaria scatenata dai tassi a zero ha permesso a tutti i clientelisti di banchettare con carry trade da favola e guadagni inattesi straordinari. Non solo, ma la fame di rendimenti provocata da questo turbinio di asset gonfiati e cartolarizzazione di debiti inesigibili, magicamente resi sani e appetibili, ha annientato un price discovery onesto nell'ambiente di mercato andando a sprecare crescentemente risorse scarse.
In breve, l'ingegneria finanziaria ha risucchiato lentamente risorse produttive a favore di quelle entità sopravvissute artificialmente a seguito del bust del 2008, perturbando esponenzialmente il calcolo economico di Main Street incapace di aggiungere ricchezza al bacino della ricchezza reale. Questo processo incrementerà il suo devastante risultato non appena la ZIRP si trasformerà in NIRP. A meno che la situazione non vada fuori controllo prima, come stava quasi per succedere quest'estate con la Grecia. È questa la reale debolezza dell'economia pianificata: all'aumentare delle sacche dell'ambiente di mercato controllate artificialmente, aumentano le probabilità che un evento "insignificante" mandi fuori controllo il tentativo di tenere a galla una barca che fa acqua da tutte le parti. Se la Grecia infatti non fosse stata salvata per l'ennesima volta, avrebbe innescato un domino preoccupante che avrebbe causato la caduta dei vari tasselli facenti parte dell'economia europea. Nel caso specifico, la Grecia era entrata nella seconda fase del crack-up boom, con i greci in fila ai bancomat per ritirare soldi e poi subito dal concessionario ad ingozzarsi di BMW.
Nel complesso, l'economia globale è ancora ferma alla prima fase del crack-up boom, dove gli attori di mercato tendono ad arroccarsi nei propri saldi di cassa e hanno un'alta preferenza per il denaro. Ma goccia a dopo goccia, il denaro nei canyon di Wall Street è permeato nell'economia più ampia. Voglio dire, anche i tipi in giacca e cravatta mangiano, si vestono e si presentano alle aste milionarie.
[...] Perché? Secondo la teoria economica convenzionale, conseguentemente all’aumento della massa monetaria una maggior quantità di denaro dovrebbe essere a caccia di un minor numero di beni, il che farebbe salire i prezzi. Perché allora non è successo, nonostante vari QE di dimensioni mondiali?
Invece è successo. Da come avete potuto vedere dal grafico qui sopra, è successo. Non c'è stata ancora inflazione di massa perché la maggior parte del denaro creato ex-novo dalle banche centrali è rimasto parcheggiato nelle riserve in eccesso. Per una spiegazione più articolata, cliccate su questo link: http://bit.ly/1VljkqD
La ‘teoria monetarista convenzionale’ era unanimemente accettata fino all’arrivo della Grande Depressione, quando John Maynard Keynes ed altri economisti notarono che i massicci fallimenti bancari avevano portato ad una sostanziale riduzione dell'offerta di moneta. Contraddicendo la teoria classica, la carenza di denaro stava incidendo sempre di più sui prezzi.
Questo fatto sembrava fosse direttamente collegato con la massiccia ondata di disoccupazione e con il fatto che le risorse restavano inutilizzate. I prodotti marcivano a terra, mentre la gente moriva di fame, perché non c'erano i soldi per pagare i lavoratori che li avrebbero dovuto raccogliere, o per i consumatori che li avrebbero potuto acquistare.
C'è una depressione che i keynesiani e i signoraggisti non menzionano mai nei loro scritti. Non la menzionano perché sovverte l'intero complesso pseudo-teorico di cui forgiano le loro pseudo-analisi. Durò solamente un anno. Perché? Perché la FED rimase ai margini e il libero mercato poté operare la sua azione di pulizia. Sto parlando della depressione dimenticata del 1920: http://bit.ly/1OHbuDy
La ‘teoria convenzionale’ ha poi lasciato strada alla teoria keynesiana. In un articolo del Marzo 2015 sul ‘The International New York Times’, intitolato ‘Keynes Versus the IMF’, l’economista Dr. Asad Zaman ha scritto che:
“La ‘teoria keynesiana’ si basa su un'idea molto semplice, ovvero che la conduzione delle attività ordinarie di un’economia richiede una certa quantità di denaro. Se la quantità di denaro è inferiore a quella necessaria, allora le imprese non possono funzionare – non possono fare acquisti [prodotti da rivendere, materie prime da lavorare etc.], pagare i lavoratori o affittare i negozi. E’ stata questa la causa fondamentale della Grande Depressione.
La soluzione era piuttosto semplice: aumentare l'offerta di moneta. Keynes suggerì che avremmo potuto stampare denaro e seppellirlo nelle miniere di carbone perché i lavoratori disoccupati potessero essere occupati a scavare. Se il denaro fosse stato disponibile in quantità sufficiente, le imprese avrebbero ripreso a vivere e gli operai disoccupati avrebbero trovato un lavoro. C’è un consenso quasi universale, ormai, su questa idea.
Persino Milton Friedman, leader della ‘Monetarist School of Economics’ ed acerrimo nemico delle idee keynesiane, ha convenuto che la riduzione dell'’offerta di moneta’ è stata la causa della Grande Depressione. Invece di seppellire i soldi nelle miniere, suggerì che il denaro avrebbe dovuto essere lanciato dagli elicotteri, per risolvere il problema della disoccupazione”.
Ho una domanda. Qual è la quantità sufficiente di denaro con cui l'economia può funzionare al meglio? Esiste un equilibrio grazie al quale possiamo affermare che ci troviamo in una condizione ottimale per i consumatori e gli imrepnditori? Cosa succede se tale quantità diminuisce e non succede nulla? Si prenda, ad esempio, il caso del Canada. Si prenda, come ulteriore esempio, il caso dell'Estonia. Per anni il settore dell'auto di Detroit è stato inondato da sussidi statali a pioggia, ciononostante è andato lo stesso in bancarotta. Quanto denaro era necessario per evitare la bancarotta? A detta dei keynesiani molto di più. Ma cosa avrebbe cambiato questo ulteriore denaro? Fondamentalmente niente. Siamo stati testimoni più e più volte di come il denaro gratis sia la ragione del lassismo imprenditoriale e dell'avversione alla concorrenza. Se si rimuove l'incentivo a produrre un calcolo economico adeguato con i segnali di mercato circostanti, gli imprenditori tenderanno ad adagiarsi sugli allori sfruttando la manna che arriva loro dalla ridistribuzione statale. Perché dovrebbero sforzarsi di produrre qualcosa di competitivo se posseggono un cuscinetto di salvezza da sfruttare? Questa domanda se la sono posta anche i protagonisti dell'industria dell'acciaio statunitense. Il denaro a pioggia non rafforza l'attività economica: http://bit.ly/1RgIDo4
Tale sistema, più che un rimedio, sembra proprio una delle cause di una crisi economica. Anche perché, se ci pensate bene, cos'è la ricchezza reale? Il denaro? Cosa produce il denaro di per sé? Niente. Esso è solamente un ingranaggio nell'intricato sistema di produzione che ha come fine ultimo la soddisfazione dei desideri degli attori di mercato. Come può il mezzo di scambio, un prodotto intermedio quindi, essere il fine ultimo della produzione? Non può. Il tessuto di mercato, infatti, è una struttura in cui gli attori di mercato s'incontrano per migliorare la propria condizione individuale. Come si può migliorare la propria condizione individuale? Offrendo all'attore di mercato ciò che vuole o desidera di più. Può un consumatore veder soddisfatti i propri desideri se si vede rimpinzato il suo portafoglio di denaro? Forse. Ma, ad esempio, cosa metterà nello stomaco se il produttore non ha fatto altro che stampare foglietti di carta colorata? Il consumatore all'inizio sarà felice, però poi, accorgendosi del grosso problema, dovrebbe prendere zappa e vanga e coltivare qualcosa. Questo per dire che aggiungere arbitrariamente ulteriore denaro all'offerta di moneta esistente non aggiunge nulla al bacino della ricchezza reale. La ridistribuisce solamente verso coloro che creano dal nulla il denaro di carta, spegnendo progressivamente gli incentivi di una produzione in accordo con i desideri degli attori di mercato.
Keynes non aveva alcuna intenzione di fornire una teoria economica solida e granitica per risolvere le crisi. Il suo compito era solamente quello di formalizzare le azioni fallimentari dello stato che fino al 1936 avevano inasprito il dolore della depressione economica. Doveva fornire una giustificazione alle politiche fallimentari dei pianificatori monetari centrali. Ci riuscì, poiché gli accademici dell'epoca rimasero quasi tutti in silenzio. Non fornirono una spiegazione adeguata sul perché del prolungamento della crisi. Ci provò Lionel Robbins nel 1934 con The Great Depression. Ma la casa editrice che lo pubblicò era piccola e non aveva ampia risonanza, di conseguenza venne ignorato. Addirittura la Macmillan, la stessa casa editrice che pubblicò la Teoria Generale, nel 1937 pubblicò Banking and the Business Cycle, un manoscritto che concludeva chiaramente come la Grande Depressione fosse stata causata fondamentalmente da un'espansione monetaria artificiale perseguita dalla banca centrale. Venne ignorato, poiché un anno prima Keynes aveva sbalordito tutti col suo tomo e, soprattutto, l'apparato statale aveva trovato quello di cui necessitava: l'approvazione del mondo accademico.
Una classe di giovani economisti avrebbe portato alla ribalta le teorie keynesiane, oscurando il resto delle voci contrarie che si dibattevano per evidenziare l'insostenibilità di lungo termine del modello keynesiano. Ci sarebbe voluta, all'epoca, una confutazione peculiare della Teoria Generale da parte degli economisti di libero mercato. F. A. Hayek ne ebbe l'occasione, ma anch'egli rimase silente. A questo errore fatale pose rimedio Hazlitt con The Failure of the "New Economics", ma arrivò semplicemente troppo tardi. Paul Samuelson aveva pubblicato da un decennio il vangelo di quella che sarebbe diventata la teoria dominante all'interno delle sale accademiche: Economics (1949). Milton Friedman, pubblicando A Monetary History of the United States (1963), non fece altro che confermare come l'establishment accademico veniva portato all'apice della popolarità grazie alla propaganda statale. Tutto quello che era funzionale all'espansione della sfera d'azione dello stato, otteneva grande pubblicità. Nel caso specifico, Friedman finì sotto i riflettori in due soli casi: quando promosse la ritenuta d'acconto e quando disse che l'errore della FED durante la Grande Depressione fu quello di non aver inflazionato abbastanza. Su tutto il resto venne ignorato.
I keynesiani di oggi pensano che la storia si stia ripetendo. Pensano che facendo le cheerleader dello stato e della banca centrale otterranno prestigio e fama agli occhi del mondo. I keynesiani sono confusi. Lo sono sempre stati: http://bit.ly/1QLIKHg
E questo è esattamente il luogo dove ora ci troviamo: nonostante i ripetuti cicli di QE c'è ancora troppo poco denaro a caccia di troppi beni. L'attuale forma dei QE equivale ad un asset-swap: dollari in cambio di assets finanziari – titoli federali o titoli garantiti da ipoteche – esistenti.
Quali beni? Non lo dice. Non ha idea del perché ci sia sovrabbondanza di alcuni beni mentre c'è carenza di altri. E invece d'approfondire il perché, passa direttamente alla presunta soluzione. Dice che il denaro è stato usato per speculare in borsa. Ma questo non spiega perché Main Street arranca. Anche prima dei vari quantitative easing la classe media è quasi sempre stata alla larga dal mercato azionario, scegliendo perlopiù investimenti a reddito fisso. Eppure allora nessuno invocava "denaro al popolo" in virtù del fatto che chi aveva denaro lo usava per speculare in borsa. Quello che sta accadendo oggi nell'economia globale non è una sorpresa per gli Austriaci; rappresenta le conseguenze della repressione monetaria per tirare giù artificialmente i tassi d'interesse. I progetti a lungo termine che sono stati intrapresi in mezzo a questa baldoria di credito facile, erano solo una mera illusione fuoriuscita dalla stampante monetaria e non da risparmi reali.
Ora ci si sta rendendo conto che, in realtà, quel capitale investito è stato invece sprecato e le bolle nate da questo processo si stanno lentamente sgonfiando. Chi può sta cercando di raggiungere le uscite, mentre i pianificatori centrali tentano di reprimere con la forza le possibilità di fuga. Negli ultimi cinque trimestri la Cina ha visto una fuga di capitali pari a $800 miliardi, e non accenna a fermarsi. Ciononostante si chiedono ulteriori interventi centrali per riportare "in equilibrio" il commercio mondiale, oltre a trattati fantasiosi di falso libero mercato. Le banche centrali continueranno a spronare il loro presunto "effetto ricchezza a cascata" attraverso condizioni finanziarie allentate, cercando disperatamente d'innescare una domanda che visibilmente non può essere innescata a causa del raggiungimento del picco del debito da parte delle famiglie della classe media.
Ci sono solo due modi in cui finirà: Grande Depressione 2 o Repubblica di Weimar 2.
I ricchi diventano sempre più ricchi, conseguentemente ai salvataggi bancari e ai ‘tassi d’interesse’ molto bassi, ma non ci sono soldi nell'economia reale, che resta priva dei fondi necessari per creare la domanda, che a sua volta creerebbe posti di lavoro.
Notate la schizofrenia economica? In precedenza s'è affermato, ad esempio, che la Grande Depressione è avvenuta perché le banche fallivano. Di conseguenza sono stati chiamati in causa Keynes, per sostenere la teoria dell'espansione artificiale dell'offerta di moneta per sventare la crisi, e Friedman, per sostenere un'espansione monetaria artificiale sempre crescente. Perché adesso questa sciroccata monetaria si lamenta? Con il programma di quantitative easing la FED ha salvato quegli istituti bancari che avrebbero potuto portare l'America sull'orlo del collasso. Se tale programma non ha funzionato per quelle entità responsabili (secondo gli sciroccati monetari) della crisi, perché dovrebbe funzionare se attuato in ampia misura per il popolo? Ne vogliono di più. Vogliono più della stessa cosa che ha fallito, sventolando il feticcio del popolo e dell'ineguaglianza. Davvero? Secondo questo articolo di Bloomberg il 5% delle famiglie americane possiede il 63% della ricchezza nazionale. Ora, ricorrendo al metodo paretiano di calcolo della ricchezza, sappiamo che il 20% della popolazione controlla l'80% della ricchezza. Di conseguenza possiamo affermare che il 4% (il 20% del 20%) possiede il 64% (l'80% dell'80%). Stando, quindi, alle attuali statistiche, gli USA si sono mossi verso una maggiore distribuzione della ricchezza nonostante Main Street sia stato escluso della manna monetaria della FED.
Poi afferma che il popolo manchi dei "fondi necessari per creare la domanda". È davvero così? Guardando la realtà delle cose, pare proprio il contrario: http://bit.ly/1j3RIW6
Gli imprenditori non hanno bisogno di fondi infiniti per portare a termine le loro opere. Hanno solamente bisogno d'essere lasciati in pace e condurre rapporti di scambio volontari. Hanno bisogno di una sola regola: "Facciamo un affare ad un determinato prezzo."
Gli sciroccati monetari zombie non sanno mai quello che stanno dicendo.
Per essere efficace, il denaro lanciato dall’elicottero dovrebbe cadere direttamente nel portafoglio dei consumatori. Lungi dall'essere ‘un’indisciplinata politica fiscale’, iniettare un certa quantità di denaro nell'economia reale è fondamentale per poterla mettere di nuovo in movimento.
Secondo la teoria del ‘Credito Sociale’, persino la creazione di nuovi posti di lavoro non risolve del tutto il problema del troppo poco denaro nelle tasche dei lavoratori, perché possano essere vuotati di conseguenza gli scaffali dei supermercati.
I venditori fissano i prezzi per coprire i loro costi, che comprendono molto di più del semplice salario dei lavoratori. In primo luogo, fra i costi non salariali, è l'interesse sul denaro preso in prestito per poter pagare la manodopera ed i materiali, prima ancora che ci sia un prodotto da vendere.
Cosa vuol dire " una certa quantità" di denaro nell'economia? Quanto è troppa? Quando è troppo poca? Non ne ha idea. Nessuno in realtà ce l'ha, proprio perché nessuno può avercela. Di conseguenza trincera la sua analisi dietro altri sciroccati monetari che per anni hanno cercato d'escogitare modi per derubare gli attori di mercato dei loro risparmi. Uno di questi fu Major Douglas con la sua folle idea del credito sociale. Nessuno prestò attenzione alle bislacche idee in ambito economico di questo strambo personaggio. Poi arrivò la Teoria Generale di Keynes e nel Capitolo 16 andava a resuscitare la tesi di Douglas: i risparmiatori sono una passività per l'economia poiché non consumano. Keynes conferì prestigio alle teorie criminali di Douglas aggiungedovi equazioni e gergo tecnico.
A tal proposito vorrei mettere al corrente i miei lettori che sto lavorando insieme a Gary North per presentare la versione tradotta in italiano di Christian Economics in One Lesson. È prevista l'uscita per il prossimo dicembre/gennaio. Questo libro andrà a confutare la maggior parte delle tesi degli sciroccati monetari, tra cui anche quella del credito sociale.
La stragrande maggioranza della ‘massa monetaria’ entra in circolazione sotto forma di prestiti bancari, come ha recentemente riconosciuto la stessa Banca d'Inghilterra. Le banche creano il capitale, ma non l'interesse necessario per rimborsare i prestiti che hanno concesso, lasciando un ‘eccesso di debito’ che richiede a sua volta la creazione di sempre più debito, nel tentativo di colmare il divario.
La Brown è confusa in merito alla relazione della BOE. Non mi sorprende. Ho provveduto a fornire un quadro più chiaro con un articolo apposito. Lo potete leggere qui: http://bit.ly/1P86Gq5
Inoltre, l'affermazione secondo cui non ci sarebbero interessi sufficienti per ripagare i debiti è falsa. Ho provveduto a fornire la spiegazione in questo articolo: http://bit.ly/1JHB6rW
Questo divario può essere chiuso in modo sostenibile solo con l’emissione di ‘soldi senza debiti’, ovvero di ‘soldi senza interessi’, da far scendere direttamente nel portafoglio dei consumatori. Sotto forma, idealmente, di un dividendo nazionale pagato direttamente dal Tesoro.
Gli sciroccati monetari zombie sono bravi venditori di fumo. Infatti la dicitura "denaro a debito" non vuol dire nulla. Peggio ancora quando afferma la possibilità che possa esistere qualcosa come "soldi senza interessi". Vorrebbe dire la morte delle preferenze temporali degli attori di mercato, impossibilitati a poter allocare secondo la loro percezione di presente/futuro i propri risparmi. In realtà, sono espressioni che introducono un prodotto civetta. Questi sciroccati monetari zombie vogliono mettere le mani sui vostri risparmi attraverso la stampante monetaria. Non dicono, o non se ne rendono conto, che "mettere soldi nel portafoglio dei consumatori" significa solamente muovere la soglia del punto zero. Di conseguenza avrei una contro-proposta. Sono disposto ad accettare tutte le fandonie fin qui proferite dalla Brown, ad una sola condizione: abolizione del corso legale. Che tutti siano liberi di scegliere la valuta che reputano più consona alle loro necessità. Ci sarà da divertirsi poi a vedere quanti sceglieranno il "credito sociale" sbandierato dalla Brown.
Come Keynes ha ben evidenziato, l'’inflazione dei prezzi’ si verifica solo quando l'economia raggiunge la sua piena capacità produttiva. Prima di allora, l'aumento della domanda richiede un aumento dell'offerta. Nel senso che, se un numero maggiore di lavoratori viene assunto per produrre quantità maggiori di ‘beni e servizi’, allora la domanda e l'offerta si alzeranno insieme.
Perché questa tesi venne accettata? Sette parole: seconda guerra mondiale e controllo dei prezzi. La Brown sta decantando le lodi di un'economia di comando. Poi conclude così la sua sequela di scempiaggini economiche:
[La] BCE ha già avviato un programma di QE per l'acquisto di Titoli di Stato. Cosa sono i Titoli di Stato, se non debito pubblico utilizzato per finanziare la spesa pubblica? Quella regola, quindi, è già stata piegata.
Perché, allora, non piegarla in modo che possa avvantaggiare anche l'economia, la gente e le infrastrutture della nazione? La proposta di Corbyn è necessaria, funzionerà … è finalmente rrivato il tempo di attuarla!
Ellen Brown è l'ennesimo esempio di zombie keynesiano-signoraggista che sta muovendo guerra, insieme alle banche centrali, ai risparmi degli attori di mercato. Invocando il cosiddetto "QE per il popolo" non fa altro che perpetrare una sciocca fallacia che nonostante sia empiricamente e teoricamente falsa, continua a trovare terreno fertile nelle menti dei lettori sprovveduti. Sebbene siano tesi apparentemente attraenti, sono essenzialmente vuote.
Quando leggete gli articoli di Ellen Brown, tenete a mente gli edifici vuoti in North Dakota. Sono il risultato del credito fiat concesso da una banca che lei stessa applaudiva. Sono il risultato d'investimenti improduttivi resi apparantemente percorribili dalla bolla dell'olio di scisto e dalla ZIRP della FED. Ora che la festa sta finendo, e i nodi vengono al pettine, ha accantonato l'argomento. Vi consiglio di fare lo stesso con le sue tesi: leggetele, fatevi un paio di risate e poi accantonatele.
I 5 Stelle scalpitano. Sentono di avere a portata di mano un'oppurtunità storica, per dimostrare al paese che loro sono profondamente, sostanzialmente ed effettivamente diversi da tutti gli altri: loro sono persone oneste. Ma non "oneste" nel senso che semplicemente non mangiano al ristorante a spese del cittadino, ma oneste in quanto concepiscono la politica come un servizio per il cittadino - il che di per sè esclude e combatte a priori qualunque tipo di corruzione, malaffare o ruberia che si possano immaginare.
E Roma è proprio la culla universale della corruzione, del malaffare e della ruberia. Roma, semplicemente, è la corruzione.
A Roma non c'è ente, ministero, associazione o corporazione che non sia corrotto. A Roma non ti muovi se non "conosci qualcuno". A Roma nulla accade senza il beneplacito trasversale di qualcuno. A Roma la legalità è un'optional, più spesso fastidioso che non benvenuto. Figuriamoci l'onestà, che della legalità fa la propria bandiera.
Andare a governare una città del genere implica automaticamente una scelta irrevocabile: [...]
WSJ’s John Carney has a report out on a very important story. The plan of the Germans to audit and physically inspect all their gold.
A German federal court has said that country’s central bank should conduct annual audits and physically inspect its gold reserves worldwide, including gold in the custody of the Federal Reserve Bank of New York. In addition to the FRBNY, Bundesbank gold is stored in London, Paris and Frankfurt.
For decades, the Bundesbank has relied on written confirmation of its gold holdings in London, Paris and New York. According to the report from the German audit court, the last time Bundesbank officials physically inspected the central banks gold holdings was, well, never.
This is big.
There has long been speculation that the New York Fed does not have anywhere near the gold in its vaults that it claims to hold for various countries. If other countries follow in Germany’s path and demand accounting of their gold, with physical inspection, this could cause a major problem for the Fed, if it does not hold the gold reserves it claims to hold.
A stalling by the Fed of foreign audits would be a warning signal to foreign countries that the gold alleged to be on hand at the Fed may not be there. The wise foreign country treasurer, upon seeing delaying tactics, would surely consider pulling his country’s gold out at that time, in the hope that he won’t be stuck as the last man with a Fed receipt with no gold to back it.
[I]f the gold isn’t there, well, calamity could follow as trust in the central bank gold depositories evaporated instantly.
But there is a question to be raised as to how thorough of an audit will actually be able to be conducted given the sloppy methods the Fed uses in recording actual gold ownership . Carney writes:
In any event, it looks like Bundesbank officials will soon be visiting the Fed’s vault, which is located 80 feet below street level and 50 feet below sea level. The vault is accessible only by elevators controlled by an operator in a remote location. I’ve been told by a source that the elevator operator is actually not in New York City at all, although I can’t confirm this and the Fed won’t discuss this sort of thing.
Down in the vault there are 122 compartments assigned to depositing countries and international organizations. Smaller gold depositing countries get shelves in shared library compartments.
The compartments do not have labels reading “Germany’s gold” and so on. They are instead numbered, and only a few people at the Fed know what numbers correspond to which country. The Fed says it does this to protect the privacy of the depositors. But this also makes actual inspection less reliable. There’s no way for Germany to know that the gold it is being shown is Germany’s, as opposed to some other depositor’s. In an extreme case—which I have no reason to believe is true—miscreants at the Fed could just show everyone who came to visit the same pile of gold.
But there is a long-term workaround to the US sloppy recording methods. The German auditorscould audit the gold and also mark the bars, say with “Property of the the Federal Republic of Germany” and a serial number for each bar. It is after all their gold!
This would make it much more difficult for the Fed to show this to other countries as gold belonging to them, instead of Germany. Especially, if auditors show up with short notice (as auditors are supposed to do!) and if this gold auditing catches on–as it should.
And speaking of gold audits. What about US gold held by the Treasury? I have long believed that an “Audit the Gold” campaign would be much more important than the “Audit the Fed” push.
Curiously, the gold of the United States of America has never been audited. And that leads to all kinds of speculation.Carney explains:
The gold of the United States government, which officials say is held in the United States Bullion Depository in Fort Knox, has been rumored—probably since the Depository’s founding in 1937—to have been looted and replaced with gold-painted tungsten, for instance. The government treats this as nonsense—which it most likely is—but nonetheless it does conduct regularly scheduled audits of the gold in Fort Knox, including doing purity tests on a small sample of the gold.
If Senator Rand Paul wanted to take a step toward getting back in the good graces of libertarians, his promoting an Audit the Gold bill in Congress would be an excellent step.
Reprinted with permission from Economic Policy Journal.
“And the little screaming fact that sounds through all history: repression works only to strengthen and knit the repressed.” – John Steinbeck, The Grapes of Wrath
Everyone has seen the pictures of the unemployed waiting in soup lines during the Great Depression. When you try to tell a propaganda believing, willfully ignorant, mainstream media watching, math challenged consumer we are in the midst of a Greater Depression, they act as if you’ve lost your mind. They will immediately bluster about the 5.1% unemployment rate, record corporate profits, and stock market near all-time highs. The cognitive dissonance of these people is only exceeded by their inability to understand basic mathematical concepts.
These facts reveal the utter falsity of the propaganda drenched duplicitous data dumped by the BLS on behalf of vested interests who have captured our government and have an agenda requiring the public to be kept in the dark regarding their own dire financial situation. No matter how you slice the data, it reveals an absolute parallel to the situation during the Great Depression. There are 251 million Americans of working age and only 149 million are employed, of which 20 million are part-time and 8 million are self employed. Only 59% of working age Americans actually work. The BLS has the cajones to declare that only 157 million of the 251 million working age Americans are actually in the labor force.
This outrageous assumption flies in the face of all reasonableness, facts, and truth. In 1937, even with women not working outside the home and very few people living past 65 years old, the participation rate was 75%. Today, with the majority of women capable and willing to work and older Americans working well into their 60s, the BLS actually expects a critical thinking person to believe the participation rate is only 62.4%, the lowest since 1977. It’s a pure and simple despicable lie. The true participation rate should exceed the rate in 1937, based on the facts. Using the 75% participation rate today, yields a true unemployment rate of 21%, not the preposterous 5.1% shoveled by the bullshit artists at the BLS. The 21% rate ties very closely to the figure arrived at by John Williams at Shadowstats. An unbiased assessment of the facts reveals unemployment numbers and people on government assistance numbers that match or exceed those of the Great Depression.