1. "In the Roaring Twenties, the New York stock market, especially, was a bubble, fed by the fraudulent notion that permanent growth was assured,...As soon as the market turned, it came down hard. Forced sales of the pledged stocks accelerated and broadened the plunge.
a. Eventually, governments inflated the currencies by flooding the private sector with borrowed money.
b. ... increased demand... starts to push prices and wages higher, but in currency of deteriorating value. This practice has stalked and haunted the world ever since.
2. This is essentially the trade-off that our civilization has made: Destitution will be spared all but a few people, but savings, investment, and the quest for security will be an endless treadmill on which he who earns and tries to accumulate wealth is in a constant race with the deterioration in the buying power of the currency in which he measures his wealth.
3. Bubbles occur in almost every area and are corrected eventually. The great housing bubble of 2008 was created in part by the desire of the Clinton administration to promote family home ownership (and befriend the building-trades unions and the residential real-estate developers).
a. ...almost the entire banking sectors of the United States, the United Kingdom, and much of Western Europe and Australia was saved from bankruptcy only by government intervention.
4. The core of the conundrum is that capitalism is the only economic system that works, because it is the only one that is aligned to the almost universal human ambition for more. It is a myth that people really want to share (other than to a limited degree for charitable reasons; among close-knit groups such as families and some associations; or in over-arching emergencies such as serious wars and national disasters).
5. But it is in the nature of capitalism to incite people to foolhardy risks, causing economic calamity with broad collateral damage. And then only government can address the resulting crisis. This is not because governments have any aptitude to do so in general, politicians and government officials are even less competent than lions of finance and captains of industry. But the government has the power to legislate, enforce laws and control the money supply.
6. The federal government debt of the United States has increased by 70% in four years compared to what it was after the first 232 years of independence up to the installation of the current administration in 2009.
7. [Which brings us to] Cyprus, a haven for financial fugitives and scoundrels, has gone to the front of the line: a collapsed banking system that the government proposed to salvage by taxing bank deposits (an inordinate number of which belong to crooks from other countries). That is the deposits would vanish in taxes rather than to pay for the banks bad loans. The people revolted this week, and the government deserted its own measure, making the negative parliamentary vote on it unsuspensefully unanimous.
8. The Cypriot finance ministry adopted Plan B and went to Moscow to offer the banking system and natural resources of Cyprus to Putins gangster state...
9. This charade has gone on so long, and with such affected solemnity, that few seem to realize what volcano most countries are sitting on. Even relatively strong countries such as Germany have reached for the nearer cookie jars, like securitizing debt with pensions. Arizona has sold its state capitol, and is a tenant there. As a distinguished and witty economist (Herbert Stein) famously said, If something cant go on, it wont.
From the National Post
Under the Volcano: How the Charade of Cyprus Obscures Bigger Danger to Economy - The New York Sun
Debt and deficit meaningless?
Austerity a terrible idea?
Re-electing a failed administration?
Your savings and IRA are safe?
The Constitution will protect you?
In very, very short:
Just what do you think is going to happen here?
a. Eventually, governments inflated the currencies by flooding the private sector with borrowed money.
b. ... increased demand... starts to push prices and wages higher, but in currency of deteriorating value. This practice has stalked and haunted the world ever since.
2. This is essentially the trade-off that our civilization has made: Destitution will be spared all but a few people, but savings, investment, and the quest for security will be an endless treadmill on which he who earns and tries to accumulate wealth is in a constant race with the deterioration in the buying power of the currency in which he measures his wealth.
3. Bubbles occur in almost every area and are corrected eventually. The great housing bubble of 2008 was created in part by the desire of the Clinton administration to promote family home ownership (and befriend the building-trades unions and the residential real-estate developers).
a. ...almost the entire banking sectors of the United States, the United Kingdom, and much of Western Europe and Australia was saved from bankruptcy only by government intervention.
4. The core of the conundrum is that capitalism is the only economic system that works, because it is the only one that is aligned to the almost universal human ambition for more. It is a myth that people really want to share (other than to a limited degree for charitable reasons; among close-knit groups such as families and some associations; or in over-arching emergencies such as serious wars and national disasters).
5. But it is in the nature of capitalism to incite people to foolhardy risks, causing economic calamity with broad collateral damage. And then only government can address the resulting crisis. This is not because governments have any aptitude to do so in general, politicians and government officials are even less competent than lions of finance and captains of industry. But the government has the power to legislate, enforce laws and control the money supply.
6. The federal government debt of the United States has increased by 70% in four years compared to what it was after the first 232 years of independence up to the installation of the current administration in 2009.
7. [Which brings us to] Cyprus, a haven for financial fugitives and scoundrels, has gone to the front of the line: a collapsed banking system that the government proposed to salvage by taxing bank deposits (an inordinate number of which belong to crooks from other countries). That is the deposits would vanish in taxes rather than to pay for the banks bad loans. The people revolted this week, and the government deserted its own measure, making the negative parliamentary vote on it unsuspensefully unanimous.
8. The Cypriot finance ministry adopted Plan B and went to Moscow to offer the banking system and natural resources of Cyprus to Putins gangster state...
9. This charade has gone on so long, and with such affected solemnity, that few seem to realize what volcano most countries are sitting on. Even relatively strong countries such as Germany have reached for the nearer cookie jars, like securitizing debt with pensions. Arizona has sold its state capitol, and is a tenant there. As a distinguished and witty economist (Herbert Stein) famously said, If something cant go on, it wont.
From the National Post
Under the Volcano: How the Charade of Cyprus Obscures Bigger Danger to Economy - The New York Sun
Debt and deficit meaningless?
Austerity a terrible idea?
Re-electing a failed administration?
Your savings and IRA are safe?
The Constitution will protect you?
In very, very short:
Just what do you think is going to happen here?
