National Bankers And Treasurers Unite!!!!! — To Destroy The Wealth Of The People

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So, I’ve had this article for about a week, now.  And, I’m still not sure how to frame this.

Our friend, copernicus34 alerted us to this article. 

Ex-U.S. Treasury chief Summers welcomes BOJ’s yield curve, inflation targets

If you read the article, you’ll see some of the stupidest comments …… until you realize it isn’t stupidity, but, rather an entirely different set of goals.

Now, it’s just me, maybe, but, the whole point of having people such as a US Treasurer, and a national bankers, are to ensure a robust and generally growing economy to increase the wealth of the people.  Indeed, it is the general wealth of the general people which defines an economy.  Since the advent of economic thought, people have attempted to put various metrics to help define economic health, but, I believe the emboldened definition is what is proper.  But, again, it may be just me.

Again, I really don’t know how to approach this madness, so, we’ll just take a look at some of what Mr. Summers had to say …….  But, before we do that, I’ll quote the bonafides of Mr. Summers . ….

Lawrence HenryLarrySummers (born November 30, 1954) is an American economist who is President Emeritus and Charles W. Eliot University Professor of Harvard University.[2]

Born in New Haven, Connecticut, Summers became a professor of economics at Harvard University in 1983. He left Harvard in 1991, working as the Chief Economist at the World Bank from 1991 to 1993. In 1993, Summers was appointed Undersecretary for International Affairs of the United States Department of the Treasury under the Clinton Administration. In 1995, he was promoted to Deputy Secretary of the Treasury under his long-time political mentor Robert Rubin. In 1999, he succeeded Rubin as Secretary of the Treasury.

Well, he’s a really, really, smart guy for this important event and important positions, right?  Let’s start at the start ……

The Bank of Japan’s decision to target the yield curve and allow consumer prices to overshoot its 2 percent goal are welcome steps in Japan’s long battle to encourage inflation, former U.S. Treasury Secretary Lawrence Summers said.

Targeting the yield curve will keep interest rates low enough to encourage government borrowing, which is needed to help support the economy, Summers told reporters at a seminar hosted by the Japanese central bank.

Uuffff!!!!!  There’s too much in these two paragraphs!  I could write for days on this, alone!!!!  These morons are still stuck in stupid!!!  They believe inflation drives things, rather than inflation being symptomatic of an economy!  Inflation is a by-product of an economy, not a driver!  As an economy heats up, inflation goes up.  That’s because there’s more jobs, higher paying jobs, and more consumerism.  <—– That’s what typically creates inflation.  A moderate amount of inflation is typically seen as a reflection of a growing economy.  However, inflation, in and of itself doesn’t cause an economy to grow.  This has been demonstrated time and time, again.  The term “stagflation” came about precisely because people had inflation while their economy stagnated. 

Government borrowing??????!!!!!!  LMAO!!!!!!  OMG!!!!!!  WTF??????!!!!???!!!???  Especially in reference to Japan!!!!!  I’m speechless!!! …….. The over-borrowing by Japan has exacerbated the economic downturn in Japan.  Last I looked their debt-to-GDP was over 200%.  Government borrowing doesn’t help support an economy, it supports a government which has over-spent. 

And, this is the crux of the problem with these pinheads.  They believe a government drives an economy, rather than understanding government, any government detracts from an economy.  Now, don’t get me wrong, a healthy national economy requires a national government;  Rules and standards, national defense, border integrity ….. these and much more are under the purview of a national government.  You have to have these things to have a growing and robust economy.  So, you have to have a national government.  But, the simple fact that an economy must support a national government allows us to know a national government detracts from said economy. 

Again, the borrowing Japan is doing isn’t for the economy of Japan, but, rather, to keep the government of Japan from collapsing.  They’ve become so reliant upon spending money they don’t have, they can’t stop.  But, the more they borrow, the more they have to pay back.  And, that brings us to the funny part of this.  They painted themselves into a corner.  If by some magical manner the economy starts to grow and inflation starts to move up, then they must borrow even more money because the value of their currency will be less.  Again, I could go on, but, I’ll move on, instead ……

“I salute BOJ Governor Haruhiko Kuroda and his colleagues on the BOJ board for their clear signal of an intention to approach 2 percent inflation from above rather than below,” Summers said.

“The commitment to yield curve targeting was potentially constructive.”

The BOJ overhauled its policy framework last week to focus on controlling interest rates after more than three years of aggressive money printing failed to ignite inflation.

The BOJ announced a target for the 10-year government bond yield of around zero. In future the central bank will use its existing minus 0.1 percent interest rate, and the 10-year yield target, to control the shape of the yield curve.

Yeh, that ought to work!!!!  This is fascinating!!!!!  It states the BOJ has an existing yield of –0.1%.  That is to say, if you buy Japanese bonds, you’ll get a –0.1% yield if you hold the note to maturity.  It is the bonds sold which is the money borrowed that supports the government.  A bargain at any price, amirite?  Oh-oh!!!!!!!  Let me let the Japanese hold my money for 10 years and then they can pay me back nothing in return!!!!! 

Let me clarify, for a moment ……  The notion of keeping the bonds interests rates at zero or below is to encourage borrowing.  As the bond return rate is low, so too, is the borrowing rate, but, just a bit higher.  Although, I have to say, this doesn’t encourage lending.  As a private bank, when the rate of return is too low, you make sure the people you’re lending to will be able to pay back the money.  It’s not worth the risk, otherwise.  But, then, interest rates, like the inflation rate, don’t drive an economy.  Interest rates should be reflective of the economic condition.  When wealth is created and being created, and risks are low, then interest rates should be low, when the risks are higher, then, interest rates should be higher.  And, this is the dilemma Japan is in.  Higher interest rates discourage spending.  But, there’s nothing in Japan which would encourage investment.  It doesn’t matter how low the interest rates are, there’s nothing to invest in.  Were I them, I would take a page from the Dutch, and invest in dykes.  That’s the only way Japan finds more economic development. 

Before we move on, let me focus on this ……

The BOJ overhauled its policy framework last week to focus on controlling interest rates after more than three years of aggressive money printing failed to ignite inflation.

What??????  They say that printing money failed?????  Say it isn’t so!!!!! 

I wish I had cataloged all my posts.  But, I’ve literally written thousands of them, nearing 10,000.  The printing of money (QE) would have worked to ignite inflation had the money ever actually went to the people.  It would have been horrid for the people, but, less horrid than what actually happened.  The money from the QE idiocy didn’t ever get to the people of Japan, so, it could never cause inflation.  The money went to the big businesses of Japan, which, directly invested the money in foreign ventures.  Places like China, Indonesia, and Vietnam saw the money.  Inflation didn’t happen because it didn’t create any churn.  The people of Japan didn’t have any of the money printed, so, they couldn’t spend it, they couldn’t invest it, they couldn’t build with it.  Not that a higher inflation rate would have caused anything positive, it wouldn’t have.  There’s nothing to invest in, in Japan.  There’s nothing to build in Japan.  It’s an overpopulated group of islands, with little natural resources, whose people demand a relative high standard of living while producing less than what they consume.  Weird how that works.  For those of us who correctly saw that happening, we can all take a bow! 

Lastly, I wish to discuss this …..

Summers’ comments came after the BOJ seminar speech, which partly focused on “secular stagnation” and how policymakers should respond.

Summers revived the concept in 2013 to describe weak demand, low growth and low employment in the U.S. after the global financial crisis.

On Friday, Summers said the natural rate of interest, or the short-term real rate consistent with full employment, had fallen too far in advanced economies for conventional monetary policy to bring rates low enough to create full employment.

Higher savings rates, slower population growth and efficiency gains from technology are driving the natural rate lower, Summers said in his speech.

Government spending will help raise it by lifting inflation expectations, and central banks must commit to keeping rates low enough to make it easy for governments to borrow, he said.

This is so far beyond Keynes that it makes Keynes look like an Austrian economist.  Summers embodies the globalist/socialist notion which seems to be guiding the central banks and treasuries of the various nations in Western civilization. 

Money, or the value of money, is simply the reflection of the value of what people do ….. do….. do!!!!!  I cannot emphasize this enough.  It’s what we’re doing which gives or takes value.  There is no value in doing nothing.  There is value in extracting wealth from the many various resources God has granted us.  There is value in refining or improving upon the gifts we are granted and have taken. 

To move an economy forward, the people, in general, must create more value than consumed.  It is, simply, as simple as that. 

You can print all the money you can ever desire, you can play with interest rates all you wish.  You can, as a government, borrow and spend all the money you wish.  None of this will move an economy forward.  You must create more value than consumed to move an economy forward.  As soon as you consume more than the value created, the economy regresses. 

PS …..  I’ll save a rant about the Luddite idiocy Summers blathered re “efficiency gains” for another day.  But, efficiency gains are always good for an economy.  Always.

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40 Responses to National Bankers And Treasurers Unite!!!!! — To Destroy The Wealth Of The People

  1. leftinflagstaff says:

    You’ll never get it stuck in that old-timey Reality. Join us in the new one, where the disease is the cure. Tonight we’re making S’mores! From bovine dung!

  2. philjourdan says:

    There have been some good discussions over at Chiefio’s blog on the subject of Government and Economies. So the revelations here are not surprising. It is the insanity of government – doing the same thing over and over and expecting different results. These pinheads are bureaucrats first. And anything else second. As such, they feel a need, or even a mandate, to control everything. That is the nature of government. So they are merely borrowing Mussolini’s “3rd way” socialism. 3rd way socialism is merely government owning not all the businesses, but the management of all the businesses. It is basically what China is at this point.

    The critical flaw in the thinking (besides the fact that it does not work) is that it is one thing to hire people with competency to guide companies. That is what companies do in the private market. But government, lacking the profit incentive, has no reason to hire or fire people based upon competency. So even if it starts out well (it can), it never ends well. Because the incompetents, and cronies (Crony capitalism anyone?) wind up doing the job for which they are totally unqualified for and for which they can never be fired from. And we know how that works.

    Summers is not a smart man. He is a good test taker. But he is an incompetent economist and money man. But he is well connected. Those are the types that wind up setting the direction for the private companies (See Chevy Volt) that cause the companies to become totally dependent upon government authority and money in order to stay in business.

    The “3rd way”, a very fascist concept, is not only embraced by the left, it is being pushed actively by the left (again, see GM). And it is bound to failure.

    I said there was one way in which it could work. And that is seen in China in the past. When transitioning from a totally Socialistic economy to a free market one, there is only one way – up. So even bad decisions are covered by the fact that the economy is finally growing, and growing well. But it does not work from the other direction (Free market economy to Socialistic control), and only has a limited life in the first instance (as China now sees). Mistakes when an economy is just starting to feel freedom are masked by the fact that they are a small part of the growth. But when the economy is already mature, or has matured (in the case of China), the mistakes steal valuable resources from other products, and you get the inevitable shortages and overages and stagnation and decay.

    These idiots think the 3rd way is something new. It is not. It is the transition of a socialistic/Monarchistic economy to a free market one. The problem is that government is a tar baby. Once it has a control, it never relinquishes it. And thus the downfall.

    So the next time some idiot on the left calls you a fascist, ask them about the 3rd way and who is pushing it. They are probably clueless about it, because they have no clue on the meaning of the words they write.

    • philjourdan says:

      FYI – I have been having a great deal of fun asking pinheads on the left what exactly is being denied by those they call deniers. SO far, not a single one has been able to give an answer. But then they have no clue what they are talking about in the first place.

      • DirkH says:

        I did ask one – who called the AfD fascist – for the definition of fascism. Deer in headlights look. I told him. He said “I never heard THAT definition!”. Always fun.

        I told a communist on another occasion that Mussolini started his career at the socialists. That was quite the surprise for that guy.

      • suyts says:

        The ignorance of the leftists is unfathomable.

    • suyts says:

      Nice comment, Phil!

  3. DirkH says:

    ” It’s an overpopulated group of islands, with little natural resources, whose people demand a relative high standard of living while producing less than what they consume. ”

    Well they just print Yen and it works: The more they print the more valuable the Yen gets relative to the USD. 20% in one year. They learned from the Americans. Their trade deficit only exists since Fukushima.
    https://www.comdirect.de/inf/waehrungen/detail/uebersicht.html?SEARCH_REDIRECT=true&REFERER=search.general&REDIRECT_TYPE=ONLYONE&ID_NOTATION=1363989&SEARCH_VALUE=JPYUSD
    Simple: When your currency rises, print more of it. When it drops, well make goods and sell’em.
    Why this works? Beats me.

    BTW. I continue to hoard paper Euros and I continue to get freshly printed ones from the bank. Everyone in Germany stashes away paper Euros it seems. Constant bank run. No capital controls – YET.

    • suyts says:

      The problem arises when you cannot make enough goods to sell. Then, it doesn’t work.

      • DirkH says:

        As soon as they Yen drops their products become cheaper, problem solved. If the Yen stays high in spite of being printed like crazy, well then just export printed paper like the Yankees do.

        I am at a loss how USA, Japan and EU currencies still are accepted as payment by other nations. I guess they just fear being bombed to rubble. Though that fear might subside. See Philippines Duterte.

        • philjourdan says:

          It is a loose knit sweater Dirk. if they pull one thread, it will unravel. They accept it because if they do not, then others do not accept it or theirs and the whole scheme unravels. They have no choice. When it does unravel, the “new world order” will unravel with it.

      • suyts says:

        Well, I think we’re seeing a changing dynamic. It doesn’t matter how much the Yen drops, it won’t drop lower than developing countries who want the jobs Japan used to have.

  4. cdquarles says:

    Nope, I must disagree, conditionally. A booming economy does not create inflation. It takes governmental manipulation of money and credit to do that.

    Imagine a truly fixed amount of physical money that cannot be created or destroyed; yet is ‘infinitely’ divisible [NB this is not the case in the actual world of human existence, but is useful to make some predictions of conditionally true outcomes, just like the Ideal Gas Law is a limit derived from assumptions of how the actual gas particles potentially work]. Money, credit, goods and services do their thing. Price signals move money from the least desirable things to the most desirable things, yet as the population grows, any one person (no matter how much they hold) will have less money buying, or capable of buying more things. Thus all prices fall and wages are prices, too. THIS is a GOOD thing. Now add in that money today is more valuable than money either yesterday or tomorrow … this is where interest gets created. To make someone holding money, today, to ‘lend’ it to another, that other must be willing and able to pay the lender back his principal and the time value of money he no longer holds, plus the risk of default premium.

    • suyts says:

      Well, okay, sort of. It doesn’t take government manipulation (it can), but, only fractional banking. Yes, I was referencing ‘real world’, rather than theoretical. The problem one runs into with the theoretical application of the thought you expressed is that money is not, and can never be “infinitely divisible”. I’d work for a penny a day if a penny was worth today’s equivalent to $500 (or less), but, then, how would I spend it?

      Wealth creation demands money creation, as does population increase, even if one wishes to keep the value of money exactly the same as it was before the wealth creation and population increases.

      • DirkH says:

        “Wealth creation demands money creation”

        That’s the argument of the Fiat currency printers. They hold that if the economy grows 2 percent the number of currency units must grow by 2 percent for prices to stay stable. But. It is not necessary for society. It is only necessary for the indebted welfare state to prevent deflation – which means an increase in the VALUE of the debt of the state (even while it might stay nominally the same)

        Think about value as the number of eggs you can buy. You have 10k bucks buying you 50k eggs today. Productivity increase SHOULD mean those 10k bucks buy you 60k eggs in 10 years from now. But the currency printers – using your argument – would print just enough currency units so that you will still only buy 50k eggs in 10 years from now.

        Where did the productivity increase go? It was creamed off by the government. Another tax. In other words: They demand all productivity increase goes to them. It is in fact the entire true purpose of the state.

        That’s why the Western regimes will fall: It became too visible.

        • suyts says:

          I don’t disagree with what you’ve stated, but, look at it in the opposite manner. Let’s say $10 buys 10 eggs. Let’s say, over time, population increases two fold. Then, if production of eggs remain the same, the demand for eggs should be double, thus causing the eggs to cost $20. But, we all know increase demand for such would cause an increase in production to fulfill the demand, which, would cause the price of eggs to remain constant. Yet, we’ve doubled the exchanges. So, we either increase the money available, or, the price doubles because of the constraint of capital in circulation. Or, the cost of eggs becomes 1/2 of the prior price of the money. There are only so many times you can halve it before you have to invent more money to accommodate the halving. Perhaps this wouldn’t be all that bad, except, as our US penny demonstrates, it costs more to coin our penny, now, than it is worth ……… which is beyond stupid. Perhaps paper currency which is 1/16th of a penny?

        • DirkH says:

          “But, we all know increase demand for such would cause an increase in production to fulfill the demand, which, would cause the price of eggs to remain constant. Yet, we’ve doubled the exchanges. So, we either increase the money available, or, the price doubles because of the constraint of capital in circulation. ”

          You made a mathematical error. The population doubled, the egg production doubled – the money supply stayed the same. A perfect deflation scenario. LESS money chases MORE goods. (Price inflation is usually stated as MORE money chasing LESS goods)

          Money is scarce, eggs are plentiful. The price of which good goes up? The price of the SCARCE good. Or, measured in that money, the price of the PLENTIGUL good – here the eggs – goes DOWN.

        • DirkH says:

          “There are only so many times you can halve it before you have to invent more money to accommodate the halving.”

          That’s of course how it WOULD be done. We only ever see the opposite, e.g. when the Peruvian Inti got supplanted by the new Inti also called the Inti-million. They stroke 6 zeros off the bills.

        • DirkH says:

          I mean, you would create new units. Or, a New Dollar, where 1 Old Dollar exchanges for 1 million New Dollar or whatever; the opposite of the hyperinflation type currency reform.

        • suyts says:

          But, isn’t that simply printing more money? And, wouldn’t this be a case of the tail wagging the dog? That’s simply an artificial way to inflate the value of the currency. Which would then create hyperinflation because of consumerism. The prices would automatically inflate to adjust for the currency available. The demand for the product wouldn’t increase or decrease simply because someone is manipulating the value of the currency. So, the cost of the product would float up to the demand of the current value of the currency.

        • Lars P. says:

          Where did the productivity increase go? It was creamed off by the government.

          Nope. It is not the government that printed the money.

        • DirkH says:

          suyts says:
          October 10, 2016 at 4:42 pm
          “But, isn’t that simply printing more money?”

          No. The existing units are subdivided.

          ” And, wouldn’t this be a case of the tail wagging the dog? That’s simply an artificial way to inflate the value of the currency.”

          It inflates the VALUE of the currency , meaning it DEFLATES the amount of currency units you pay for a given good.

          Inflating the currency SUPPLY does the exact opposite.

        • suyts says:

          Dirk, perhaps you’re missing my point. What difference does it make if we make my current dollar worth $1,000,000 or we invent smaller units worth $1/1,000,000? That doesn’t change my purchasing power one iota. How does deflating the amount of currency units to pay for a given good make any thing better? Don’t get me wrong, I understand the diminishing of purchasing power through the increase of currency supply. But, I don’t believe simply inventing smaller currency units would solve any problems.

        • DirkH says:

          Lars P. says:
          October 10, 2016 at 1:33 pm
          “”Where did the productivity increase go? It was creamed off by the government.”
          Nope. It is not the government that printed the money.”

          Nominally the Fed is owned by a dozen banks. They get paid a token dividend. The surplus the Fed makes, if any, after paying those dividends goes to the US treasury.
          Nearly all other central banks are even nominally owned by their respective state.

          In other words: The central bank is as independent from the government as judges are. They are part of the state. So I should have said, it is creamed off by the state.

          Even in those cases where the central bank is a publically traded company, the Swiss central bank is; the value gets creamed off by the state because in a debt money system the welfare state is the primary debtor and therefore the primary entity that profits from devaluation of the currency.

          The creaming off does not work by sending the state a cheque in this case: It happens through shrinking the value of the nominal debt.

          You COULD try to partake in this by becoming a debtor yourself – only you don’t get the same conditions. And in the case of a currency reform you will find out that the debt of the state will be wiped out but private debt remains. So, it’s risky.

        • DirkH says:

          “But, I don’t believe simply inventing smaller currency units would solve any problems.”

          You came up with the idea that it’s a problem that you can’t subdivide a cent – when money becomes MORE valuable over time. I’m just telling you how to solve that technicality.

          Given that with constant money supply, and productivity growth of 2% a year, it would take maybe 30 years for one doubling of buying power, it’s a rather moot point anyway. You’d pay 2 bucks for a cup of coffee now and 1 buck in 30 years.

        • suyts says:

          And make 1/2 the pay. ……. but, this line of thought has the makings for a good thought provoking post!

        • Lars P. says:

          Dirk says: “In other words: The central bank is as independent from the government as judges are. “
          OK Dirk. I wonder what proportion of the money in circulation has been:
          – created directly by the government as paper money & e-money
          – created by the central banks as e-money
          – created by other banks as debt
          ?

        • DirkH says:

          The printed paper, the base money supply, is irrelevant. It’s only 2% or so of the total money supply.
          The amount to which commercial banks can multiply the electronic money issued by the central bank is dependent on:
          a) Reserve requirement regulations
          b) Interest rates set by the Fed
          c) The amount of reserves -that fulfill a)- they can gather. Central Bank-issued electronic money is a reserve.

          So the money+credit creation by the commercial banks is controlled by the state and the central bank.

          QE had the entire purpose of re-inflating a collapsing sum of money+credit: Commercial credit collapsed as people defaulted on their loans or payed them down where they could. To pump up again this deflating aggregate, the only trick available to state+Fed was to issue Fed money – QE.

          Why didn’t they let if deflate? Because deflation is lethal to the over-indebted welfare state.

        • DirkH says:

          …and, I continue to observe that my ATM continues to give me brand new printed Euro notes. In 2014, the Western nations decided that deposits in the bank are a non-secured credit to the bank. Since that time, we get our money out of the banks. They constantly bleed deposits. This must also be replenished with funding made available by the central bank.

          So there is actual money PRINTING going on caused by our hoarding.

        • Lars P. says:

          Dirk says: “So the money+credit creation by the commercial banks is controlled by the state and the central bank”

          Yes, but controlled does not mean created. So how much money is created by the one or the other?
          The point was : “Where did the productivity increase go?”

        • DirkH says:

          “Yes, but controlled does not mean created. So how much money is created by the one or the other?
          The point was : “Where did the productivity increase go?””

          You still don’t understand. It is an indirect transfer.
          When the commercial bank creates money+credit the sum always adds up to zero. The bank does not skim off money. The bank HOPES that the debtor will repay the loan, and hopes to make a profit via the interest payments. All of this is not what I call “skimming off the surplus”.

          No, what I mean is that through the inflation of the money+credit aggregat, the VALUE of money and debt FALLS in relation to real goods (meaning, real goods get more expensive in nominal terms.) THAT is the skimming-off: Because the primary debtor, the welfare state, needs this VALUE transfer to stay solvent.

          As I said, you can try to partake in this game by going into debt yourself. See Trump, see Kirozakis (“Rich Dad Poor Dad”); they use loans on properties to buy more properties. It works out as long as you find enough renters. Also, as long as the inflation of money+credit continues, the price of their properties goes up.

          That’s what Trump meant when he caled himself the master of debt, and what Kirozakis means when he says, there’s bad debt and good debt. Good debt is when it buys you an income stream; a property to rent out.

        • Lars P. says:

          You still don’t understand. It is an indirect transfer.
          When the commercial bank creates money+credit the sum always adds up to zero.

          As you say the money created by the bank should cancel itself through the payment in the long run once the credit is paid. This is very clear so far.
          1) That money is in circulation. There is no marker to it as a best before date. That money is being used + interest is being paid on it.
          Lets consider I could create money as a bank does. I have 100$, I give you then 1000$, you pay interest 5% or 50$ per year to me + 100$ payment so that you pay your debt in 10 years. Even if in 3 years you go bankrupt, I will have got 100+50+100+45+100+40=435$ from you, so 135$+ to my 100$, more then doubled my money in 3 years and own your house or whatever you possessed as guarantee for your debt. Is that now sweet? Of course I will have some 700$ debt in my portfolio if we subtract your payments, but maybe I can park that in a bad bank and see to cash on your assets for that… How many do go bankrupt in 3 years? Not so many, most do pay their debt.
          What did I do for that 135$ from you + your assets negating your remaining debt? I typed 4*2 numbers in my computer once with + once with -. Oh, and I ‘risked’ my 100$.
          2) You still dodge the question about how much money in circulation is made by banks. Why?
          3) Banks increase their portfolio from year to year. There is new debt issued to pay the interest of the old debt.
          As I said, you can try to partake in this game by going into debt yourself.
          Can I borrow you 1000$ based on my 100 as above? No, I cannot, this is not the same, no matter how one tries to twist it.

        • DirkH says:

          “You still dodge the question about how much money in circulation is made by banks. Why?”

          Because It’s not that interesting. I’ve seen charts at zerohedge but didn’t bookmark them. Reserach the difference between the various money supply aggregates if you’re interested.
          https://en.wikipedia.org/wiki/Money_supply#Empirical_measures_in_the_United_States_Federal_Reserve_System
          What’s all important is whether the total aggregate inflates or collapses.

          “3) Banks increase their portfolio from year to year. There is new debt issued to pay the interest of the old debt.”

          They increase it as long as no collapse happens. Old debt is payed down by the debtors over time. Banks try to issue new credit – but, they need to find new solvent customers for that.

          [Me]: “As I said, you can try to partake in this game by going into debt yourself.”
          “Can I borrow you 1000$ based on my 100 as above? No, I cannot, this is not the same, no matter how one tries to twist it.”

          Don’t confuse things. I said, you can try to play the same game as the welfare state and become a big debtor, hoping to pay less VALUE back because value of a currency unit drops fast enough for you to profit from the borrowed money.

          What you mean is, playing the same game as the banks. Yes you cannot do that; that’s right; commercial banks are the only enterprises that are allowed to create money+debt out of thin air.

          But; is it currently really such a great idea to be a commercial bank? Last I checked they’re teetering on the edge of collapse. NIRP actually kills them. (Constant slow bank run as people withdraw their money, stripping the banks of the reserves they need. Not enough money to earn from loaning it out. Not enough demand for loans.)

          And, the entire money creation business sounds like great fun until you got a gazillion non-performing loans on your books. That’s what happened in 2008. Because the contraction of the money+credit aggregate leads to all these people losing their jobs, failing on their mortgage.

        • Lars P. says:

          DirkH says: “Because It’s not that interesting. ”

          Well that is about 90% of the money in circulation. To me 90% is relevant not 10%. The conversation started above: Nope. It is not the government that printed that money.

        • DirkH says:

          “The conversation started above: Nope. It is not the government that printed that money.”

          But that’s irrelevant. The creaming off of the surplus by the government is an effect of the money creation. It does not matter WHO gets tasked by the government with debasing the currency. For the government it only matters that the currency gets debased.

          So, your answer ” Nope. It is not the government that printed that money” misses the point of my statement.

      • cdquarles says:

        Fractional reserve banking, particularly where the banks are nationalized (as ours are), is the Fascist way for the government to manipulate money and credit. Per von Mises, the government does it because the government benefits the most from doing it, until it can’t and hits the wall. We are about to hit the wall. Deflations are inherently self-correcting when left alone. Inflations, though, aren’t; because governments create and maintain inflation.

  5. copernicus34 says:

    Slow clap on the post and comments thread. So, I have another doozy. Most of you all are well read, so perhaps you ran across this.
    http://www.reuters.com/article/us-imf-g20-debt-idUSKCN1252HK?il=0

    Just unbelievable nonsense.

    • cdquarles says:

      That guy and conventional wisdom are absolutely crazy. They have it backwards. Private debt is inherently self-limiting and *cannot* cause a general economic failure. To have that, it takes *governments* and their dumb (as they harm the people and the economy that is the result of private action) policies. Government debts are the riskiest of all!

  6. DirkH says:

    HRC “champion napper”; “sleeps all the time”; is “always exhausted”, has beds on her plane. For years.

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