Month: August 2011

First, the proposal.

I have only received feedback from one person on this proposal. He was a very successful financial advisor, and he told me I would cause a ten year global depression. Now, that’s not the outcome I’m going for, so I have continued to try to get more comments, and failed to this point. He would not give me further feedback. My best guess was he thought I failed to address the need for liquidity. I added liquidity. That is why this version is version two. I don’t think he read it, though.

Some things warrant emphasis, though. First, this is not a default. Everyone who we owe money gets paid. As an example, we write the Chinese $9 trillion in checks, and mark the bill paid. This money does not become worthless, because the plan is to revalue it. Once that happens, the Chinese still hold roughly $9 trillion equivalent in the new dollars, that they can use to invest in American industry, use as a reserve currency, or exchange with some other currency. Our government–and the American people whose interests that government supposedly represents–just doesn’t owe them that money any more.

Second, yes, it will be interesting trying to sell this. It is hard to predict market reactions once it is introduced. If sold correctly, in my view, it should be seen as positive by everyone who wants America to be strong economically. It may not seem as if this would be the case, but even the Chinese want us strong, since we are a HUGE export market for them. If we go broke, it will hurt them terribly, for the foreseeable future. And they are not losing their money. They can buy up American businesses, if they like, which capitalizes us for job creation. This is not a bad thing. We just, of course, have to watch the ones working on secret stuff.

Third, something like what I am proposing will be needed to end the Fed correctly. Anyone who studies the situation will grasp IMMEDIATELY that, at a rock bottom minimum, we need to return the control of the Fed to the Secretary of the Treasury, which is where it was before the Fed used the opportunity the Great Depression (which they caused, at least in large part) to get themselves fully independent of supervision and accountability.

More generally, though, the Fed does solve problems that the fractional reserve system creates, specifically the problem of cash flow. [It does also apparently serve as an intermediary for most credit card and, I think, bank transactions, as I understand it, but that can be sourced out to private companies.]

If banks lend out money they don’t have, they always run the risk of not being able to pay that money back out, if enough people ask. That is part of the reason the Fed exists.

Logically, then, if we are going to be thorough, we need to end the practice of fractional reserve banking at the same time as the Fed. My proposal not only does that, but funds it. No banks go bankrupt as a result of this process, although of course if nobody wants to borrow money later, they might. A superabundance of capital can only be called a good thing, even if the benefits of it don’t reach the banks. They have been in effect counterfeiting for centuries, so don’t try and cry me any rivers on their account. They can downsize, or change their business models.

I have not read every book on the Fed, but have read two, by Murray Rothbard and G. Edward Griffin. I plan to read Secrets of the Temple, The House of Morgan, and a couple on the IMF and World Bank, but I think I have the basics well in hand.

The two I mentioned, I did not care for, since they did not take the logic of the thing far enough. They provided useful facts, which I then operated on in a cloud of smoke until I reached understandings which I did find acceptable.

With regard to Griffin in particular, I am neither for nor against conspiracy theories, but simply see them as pointless when the things that are happening in plain sight are manifestly unacceptable; when, to be clear, the action needed is in broad stroke painfully obvious.

One prophecy I will make about the future is that I will keep putting these ideas out in public as often as I can, and as well as I can, until somebody provides me sufficient substantive feedback to further hone them. Then I will put the new ideas out in the same way. This is an important topic, and I will not let it go until this problem is solved.

Creating an idea, a plan, is like creating a work of art. My aim, like that of a good chef, is a balanced combination of aesthetic appeal, taste, and nutritive content. It must work, first and foremost, but as a craftsman I see no reason not to add personal touches here and there.

As I’ve said on a number of occasions, the term I like for myself is “thought worker”. I assemble invisible engines, that nonetheless may one day affect the world we see–in a positive way, if my job has been done correctly and with skill.

I am continuing my course on music, and we are up to the fugue. As I said a week or two ago, it seems to me that Versailles is a powerful and relevant symbol, but not for what one would normally assume.

The French rebelled against a King and God. They did not rebel against the order and harmony that Versailles represented. On the contrary, I think one must see in the Gallic mind as it exists to this very day an instinctive–and, as it were, atavistic–fondness for the “music of the spheres” conception of the universe that Versailles represented.

Everything and everyone in its place, “scientifically” ordered. Is this not what Socialism/Communism, with their overarching bureaucracies and purportedly rational controls represent? Did Marx himself not label Communism “scientific socialism”, a phrase later invoked by Barack Obama Sr. in his most famous published work?

If you look at the conception of the French banlieue, they represent a spatial organization that is meant to connote and imply order, planning, a smoothly flowing society. They don’t operate as such, of course, since our world in reality is chaotic in a formal sense, but that is the aesthetic conception.

Socialism, the fugue, and Versailles are all of a piece. “Plus ca change, plus c’est la meme chose”.

The Sun King still rules in spirit, n’est ce pas? All hail his magnificence, in the form of Marxist ideology.

I truly believe this is right. This is the cognitive counterpart to the fundamentally psychosocial outcomes of intellectual decadence I have labelled, depending on how far advanced it is, either Sybaritic Leftism or Cultural Sadeism.

I rarely watch action movies more than once. What is the point?

But there are a few I really enjoy. I added Battle: Los Angeles to that list tonight, having watched it a second time.

To my mind, to my instinctive dark part within me, persistence has an irresistable allure. I love people who fight when there is no hope, who carry on because they are BUILT THAT WAY.

A quote I have quoted several times is from the Kentucky Derby Museum, which quoted some Louisville personality, known for neat suits, good drinks, and great parties, who said that: “Mint juleps should never be made by novices, Yankees, or statisticians”.

Oh, we all need that nourishment in the dark, don’t we? We need that secret faith that things will either work out, or that we will die nobly. We don’t want to count the odds, but simply deal ourselves in and watch what happens.

Most of history has been made by ridiculous people, hasn’t it? How long did the reign of Julius Caesar last? A year? Something like that. But we all know his name. Alexander Hamilton never really got any of his proposals through, but we read about him, too. Caesar, of course, was his hero.

I look at we Americans and I still see courage. I still see sincere committment to principle. This is a beautiful thing.

What you persist in–and why–determines who you are. You can take that to the bank.

The primary claim of Liberalism is that governmental power is necessary, but that it should be distributed as widely as possible, in an interlocking series of checks and balances.

The primary claim of most of the people I have known who have called themselves Libertarians is that governmental power is NOT necessary, and that it should be as little as possible, and ideally something close to zero. This basic position could also be called Anarchism, where the idea is not a lack of order, but rather as many orders as there are individuals, and groups of individuals choosing to associate for a common purpose, for whatever length of time.

Philosophically, I have argued that Liberalism rests upon the idea that all ideas which do not cause harm to others are to be treated legally as equal. Morally, it stipulates no absolute principles other than the desirability of peace and order, as embodied in the principles of life, liberty, and property (and the pursuit of Eudaemonia, if we follow Jefferson).

Libertarians, on the contrary, DO posit an absolute principle, that governments have no claims on the freedom of individuals, and should not, in principle.

Practically, as an example, where a Liberal will see drug law as a matter for local custom, a Libertarian will view ALL laws restricting drug use as invalid morally. Where a Liberal would leave the matter up to the States, a Libertarian will seek to abolish all drug laws on a national basis.

These thoughts may be helpful for some.

I can’t resist adding that virtually every self-declared Libertarian I have ever met either smoked pot or read Ayn Rand with a devotion approaching religious adoration.

No telling if this will make it through, and I have no desire to try and remember to check. Response to this article.

Actually, I’m going to add a bit, so this won’t be quite the same.

Like the US, the EU owes way more money than it can ever hope to repay, if we apply normal economic methods to the problem. This is why I have invented new economic methods.

Please consider my proposal of using controlled hyperinflation (an apparent, but not real oxymoron) to recalibrate national economies: http://www.goodnessmovement.com/files/Download/Saving%20America–How%20to%20fix%20our%20financial%20system–version%20two.pdf

Governments get away with inflation because they do it gradually. Prices go up, and as Keynes pointed out, not one person in a thousand can tell you why. They just know milk costs twice this week what it did last week. This process is sneaky, so governments get away with it.

What no government in history has done, to my knowledge, is openly announce that is what they are doing, and do it all at once. This is chutzpah, but hell it’s better than bankruptcy.

To be clear, if the Weimar German government had announced, publicly, that the inflation the German people were seeing was being used to pay off government debts and industrial debts, there would have been a revolution, once the effects of that inflation hit.

Yet, the government was able to confiscate, secretly, the wealth of almost all Germans, and use it to get itself, the government, back in the black, as well as all large German firms who had wracked up debts in the War. Back in those days, most people were savers and not debtors. Inflation helps debtors and hurts creditors, unless those creditors are the ones creating the money, which is normally the case in the United States.

I ask again, and have received no good answer to this: why can’t we print our way out of trouble, but do it intentionally, openly, and QUICKLY? All private and public debt of all Americans erased, and the system capped so that future inflation is impossible. This will lead in short order to generalized wealth. I am convinced of it, even though no nation in history has ever done what I am proposing, either as a fix, or as an end condition (no money creation).

Feel free to answer here. Anonymous is enabled, and there is no filtering (although spam and blatantly inappropriate comments will of course be deleted.)

I found this article interesting, on a number of levels.

Ponder this phrase:

Switzerland, the nation that hasn’t gone to war with a foreign power since Napoleon, is reluctantly debating a generational taboo: ceding monetary independence to win a battle over its runaway currency.

“Runaway currency”? What has happened here? Switzerland has pursued a rational monetary policy, which to this day, in my understanding, includes gold backing. What has happened around them is OTHER countries have pursued insane, unaffordable spending, and paid for it by printing money.

The next paragraph reads:

Swiss National Bank Vice President Thomas Jordan said the central bank is assessing “a whole range of options” to prevent the franc, which reached a record against the euro this month, from making Swiss goods prohibitively expensive. Even a cup of coffee at Cafe St. Gotthard in Zurich costs $8.30, with one Swiss franc buying $1.2816 at today’s exchange rate.

Please understand this: coffee has not gotten more expensive IN FRANCS, which is what the Swiss use. It has gotten more expensive in DOLLARS, because–like the EU, but to a lesser extent–the US has also pursued stupid monetary policies. In our case, we can’t help it: we don’t control our money. Ben Bernanke and an elite group of bankers and large corporations do.

But you have to ask about the journalistic integrity of Bloomberg, in phrasing it like this. I sent an email to the author, but have not heard back. Several points needs to be made, though.

The most important is that this emphasis on export through devaluation is Keynesian. It is what the IMF and World Bank that he helped found always promote. It leads to short term gains, and long term losses. It leads to the erosion of national sovereignty, and indebtedness to global elites like the IMF.

The argument being made in favor of devaluing the franc–more on this in a second–is that it will promote exports, by making Swiss goods–chocolate, watches, pharmaceuticals–less expensive in foreign markets. Half of their income comes from exports, according to the article.

Logically, then, half of their income does NOT come from imports. What is being proposed is helping half the economy at the expense of the other half of the economy. As things stand, imports are cheaper, and domestic production and consumption is entirely unaffected by exchange rates.

Inflation erodes value. It makes savings less valuable. It erodes property values. It is a tax, or a property seizure.

We need to be clear about what the Swiss National Bank is proposing, in discussing a “target”. They are talking about consciously inflationary policy designed to erode the value of the money the Swiss people use. This will benefit some, and hurt others. It will benefit, presumably, those lobbying for this, and hurt those who do not understand what is being presented.

The Swiss National Bank is talking about printing money. Where does this money go? How is it distributed? In the United States, we very literally have NO way of knowing where the TRILLIONS of dollars that the Fed has printed have gone. But let’s consider some scenarios.

Let us say I am John Smith, and I run ABBA, which designs and builds Swedish supergroups. We are a publicly held company. I have a friend at the Swiss National Bank, and we spend a lot of time in the wild drinking schnapps and yodeling together. The SNB determines that inflation is needed. But how to put money into the economy? Well, why not buy up a whole bunch of my stock–which we will issue for the purpose–so we can fund a business expansion? This is a great deal for me. It doesn’t affect the SNB in the slightest. But it hurts, in the long run, the Swiss consumer, the value of whose money goes down, and he doesn’t know why. I got money for free, though, which is a very good price.

Or let’s add a level. Let’s say that the money is actually granted through the banking system. Let’s say that the SNB buys shares in WBBB, the We Be Bankin’ Bank. That bank now has more money to lend, and it lends it to me, at a very attractive rate of interest. The same thing has happened. Ostensibly the economy has been “stimulated”, which is not entirely inaccurate, but at the cost of transferring, over some period of time, some portion of the general wealth to the bank and to me.

Bloomberg is published and controlled by people with business interests. So are all other financial publications. In this particular case, given the language, and given the failure to explain what is actually being proposed, one can infer that the author had a vested interest, for whatever reason, in supporting a view of reality that to be generous was incomplete, and to be honest was likely openly, cynically misleading.

BANKERS UNDERSTAND THESE THINGS. The rest of us don’t. As Henry Ford said:

It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.

Hopefully I have done something to further that revolution by pointing out some of these normally hidden realities.

I will add, actually, that one title for the book I keep threatening to write that occurs to me is “A Capitalist Revolution”. For anyone new to this blog, the ideas are here: http://www.goodnessmovement.com/Page14.html

I’m a JJ Cale fan. Have been for many years. I was listening to an interview with him, where he was asked why he places relatively less emphasis on vocals than most other producers (he apparently produces his own music most of the time). His answer was that he didn’t like his voice, so he deemphasized it.

He was then asked how he gets this sound like he is backing himself up, like there are two of him. He replied that his singing is also pitchy, so he overdubs it (I think was the term), so the flats and sharps cancel out.

In trying to avoid the consequences of having an outstanding song-writing ability but poor voice, he achieved a style which is distinct, and which I (and many others) really enjoy.

So many stories in the world. Would that we could live long enough to hear more than a fraction of them. This is not a world of triangles. No one need fear that. What we need fear are the people who cannot live without them.

What did it mean? Was I drinking? Was that an attempt at humor? Was I trying to be mysterious by being vague and stupid?

There is an answer, but I would like to submit the actual answer doesn’t matter. Let us suppose that you grasp, fully and completely, every nuance of meaning I intended. So what? That is not generative. That is imitative. Don’t copy me. Any version of you is superior to an inferior version of me. How many people any more know how to sing in their own voices? How to be stupid and reckless and sanguine and loud?

I provide a sign in the wilderness. Walk up to it, then keep going. Or maybe in trying to follow my meaning you get lost. Figure out where you are, then explore. Surely there is something interesting there. Much of what I do might be seen as amounting effectively to spinning myself 9 times around, then walking until the night, taking care to see what I pass.

Does meaning inhere in statements, in the interpretive process, or in the creative synthesis of the two? Self evidently, I believe it is the last.

Be yourself. You can’t in any event be anyone else.

There was once a 10th Dan thinker who tripped over a; semicolon.

The End.

This may be obvious to more serious techie types, but if you choose to, you can add this blog to your RSS feed, where all the blogs you are following will pop up automatically, as I understand it; and you can get a daily email with whatever I wrote the day before. I change it sometimes, and I don’t know if the updates get sent out, but it’s not a bad feature.

I didn’t look at my stats until about six weeks ago, when someone was asking if I even had evidence anyone was reading this. I thought about it, and hints were few and far between, so I started looking, and now I check it almost every day. I think if you get the email or RSS your stats disappear, but that’s OK.

This blog is written largely out of my own psychological necessity, but it is good to know at least a few people read it. Thank you!!!!!

For my part, I have thoughts flowing through my head all the time, and they don’t leave me alone unless I note them somewhere. I used to note them privately–I probably have a thousand pages of unpublished random musings–but most I now just put here.