To leave the EU or not to leave the EU, that is the question? Pick any hour, and you will have an answer that is good until the next hour passes. While there have been cheers and encouragement for what the newly elected Syriza party has been telling the EU, that no more debt enslavement will work for Greek citizens, it could very well turn out that Greece’s Prime Minister Alexis Tsipras and his Minister of Finance Yanis Varoufakis are waiting for the best deal for themselves before ensuring that Greek citizens remain so enslaved. It is extremely difficult to fight the elite’s system and win.
While this is a rather cynical view, it appears that Greece’s new leaders are doing whatever they can to stay within the failed EU system instead of maintaining a hard-line by refusing to take on more debt and not pay the current debts owed to the EU. An ace up their sleeve, making a deal with Russia, that could possibly include China pitching in, whereby Russia would offer putting part of their natural gas pipeline through Greece and ensure billions of Rubles in income, [fewer and fewer countries want to use the fiat dollar as a trade basis anymore], is not actively being pursued. Instead, all of this back and forth with making an acceptable deal or not is what fills the headlines for this story that gives rise to our skepticism.
If the Tsipras/Varoufakis duo fold, it will not auger well for silver and gold, at least for a while longer. Greece opting to “cut a deal with the devil” will prove that however fragile the staying power of the European Union, the “dead-man-walking” EU still prevails. The message would then still be clear: people do not matter, only the viability of a [failed] banking system counts. and PMs remain pawns.
“To question money-printing as the one-size-fits-all solution to every economic problem is to question the power structure of the status quo.” – C H Smith
It is tiresomely obvious that we live in an era dominated by the idea that virtually all economic difficulties can be fixed by printing more money. There are various means of distributing the new money, but the dominant ideology is really very simple:whatever the problem might be, the solution is to print more money and/or issue more credit. If the problem persists, clearly, we didn’t print enough money/credit.
That such a simplistic formula might not work cannot be questioned, as money-printing is the source of all political and financial power. To question money-printing as the one-size-fits-all solution to every economic problem is to question the power structure of the status quo. And that, of course, is not allowed.
Today’s essay on money-printing and power was written by longtime contributor/ essayist Jeff W. Jeff titled his commentary How You Can Tell If You Are Living under the Rule of Money Printers.
Jeff W. ~ How You Can Tell If You Are Living under the Rule of Money Printers
“In most of human history, people have lived under the rule of taxing authorities. The way a taxation system works is easy for anyone to understand. Businesses and individuals pay taxes to the state, and the state spends that tax money on armies, road construction, police, courts and jails, education, propaganda, lavish lifestyles for the top dogs, etc.
“It is impossible for everyone to sell at the top before the implosion; the assets are owned by someone all the way down.” – C H Smith
The central bank/state plan for 2015 is a continuation of the same plan that’s been in play since 2009: drive everyone with any cash or capital into ruinously risky bets. The problem for the central bankers/states driving everyone into risk assets is the yields on these bets are entering the exhaustion zone of marginal returns.
In other words, what worked wonderfully for years no longer works at all.
Another way of saying the same thing is apparent stability gives way to instability and apparent predictability gives way to unpredictability. The hubris described yesterday (2015: A World Ruled by Hubris, Willful Blindness and Desperation) arises from the overweening confidence of central bankers that this same tired gambit of pushing assets higher by pushing capital and speculative money into risk assets can be played successfully with no limits.
But there are limits. A short list of limits might include:
1. Marginal borrowers/buyers: the game now is to lower interest rates and mortgages rates so ever-more marginal auto and house buyers can qualify for ever-less prudent loans.
This works until it doesn’t, as marginal borrowers/buyers are last on, first off: they default at the first lay-off, medical emergency, etc. Defaults tend to pyramid in recessions as lay-offs and financial stress spreads quickly through those living paycheck to paycheck. Continue reading →
“Our financial leaders, in conjunction with our political leaders, have continually re-created the web of money and credit that knits our economy together. But they have often taken only their own interests and those of the wealthiest citizens into account, not those of the general public. It is up to us to educate ourselves about money and banking, and to demand a system that is accountable to the people and serves our long-term interests.” E Brown
One thing to be said for the women now heading the Federal Reserve and the IMF: compared to some of their predecessors, they are refreshingly honest. The Wall Street Journal reported on July 2nd:
Two of the world’s most powerful women of finance sat down for a lengthy discussion Wednesday on the future of monetary policy in a post-crisis world: U.S. Federal Reserve Chairwoman Janet Yellen and International Monetary Fund Managing Director Christine Lagarde. Before a veritable who’s-who in international economics packing the IMF’s largest conference hall, the two covered all the hottest topics in debate among the world’s central bankers, financiers and economists.
Among those hot topics was the runaway shadow banking system, defined by Investopedia as “The financial intermediaries involved in facilitating the creation of credit across the global financial system, but whose members are not subject to regulatory oversight. The shadow banking system also refers to unregulated activities by regulated institutions.” Examples given include hedge funds, derivatives and credit default swaps.
Conventional banks also engage in “shadow banking.” One way is by using their cash cushion as collateral in the repo market, where they can borrow to invest in the stock market and other speculative ventures. As explained by Bill Frezza in a January 2013 Huffington Post article titled “Too-Big-To-Fail Banks Gamble With Bernanke Bucks”:
If you think [the cash cushion from excess deposits] makes the banks less vulnerable to shock, think again. Much of this balance sheet cash has been hypothecated in the repo market, laundered through the off-the-books shadow banking system. This allows the proprietary trading desks at these “banks” to use that cash as collateral to take out loans to gamble with. In a process called hyper-hypothecation this pledged collateral gets pyramided, creating a ticking time bomb ready to go kablooey when the next panic comes around.
Addressing the ticking time bomb of the shadow banking system, here is what two of the world’s most powerful women had to say: Continue reading →
“The stock market has been made the official metric of the nation’s economic health; too bad it’s a Ponzi scheme. Financial bubbles are what economist Robert Shiller calls “naturally occurring Ponzis” because the psychology of ever-rising prices and profits fuels an inflow of greater fools that sustains the bubble until all available greater fools have sunk their cash and credit into the bubble.” C H Smith All the conventional policy fixes proposed by Demopublican politicos, technocrats and the vast army of academic/think-tank apparatchiks are the equivalent of slapping a coat of paint on a fragile facade riddled with dryrot. All these fake-fixes share a few key characteristics:
1. They focus on effects and symptoms rather than address the underlying causes, i.e. the dryrot at the heart of our government, society and economy.
2. They maintain and protect the Status Quo Powers That Be–no vested interests, protected fiefdoms or Financial Elites ever lose power as a result of these policy tweaks.
3. They are politically expedient, meaning they assuage the demands of vested interests rather than tackle the rot undermining the nation.
4. They ignore the perverse incentives built into current systems and the incentives of complicity, i.e. to cheer another coat of paint on the dryrot rather than face the costs of real reform.
The financial underpinnings of the economy and society are rotting from within:finance, higher education, defense, healthcare, law, governance, you name it. Continue reading →
“The truth will set you free. But first, it will piss you off.” –Gloria Steinem
Are you tired of floating around in that pink goop of the Matrix? Are you ready to slough off the illusion like it was an old hat? Has the White Rabbit been too fast for you so far? If you are reading this article, you are here to wake up. Here are five ways to slow that white rabbit down so you can catch up.
1) Money is a hoax
“The Western worldview says, in essence, that technological progress is the highest value and that we were born to consume, to endlessly use and discard natural recourses, other species, gadgets, toys, and often, each other. The most highly prized freedom is the right to shop. It’s a world of commodities, not entities, and economic expansion is the primary measure of progress. Competition, taking, and hoarding are higher values than cooperation, sharing, and gifting. Profits are valued over people, money over meaning, entitlement over justice, “us” over “them.” This is the most dangerous addiction in the world, not only because of its impact on humanity but because it is rapidly undermining the natural systems that sustain the biosphere.” –Bill Plotkin
It is not the more evolved aspect of ourselves that tricks us into thinking that we need money to survive; it’s the less evolved aspect of ourselves that does the tricking. With our advanced technologies we imagine that we know the way the world works, when, for the most part, we have forgotten how everything is connected.
Until we can relearn “a language older than words,” and once again engage in a healthy dialogue with nature and the cosmos, we will continue to be tricked by the less evolved aspects of ourselves. The more awareness we bring to this extremely complicated cognitive dissonance, the more possible it will be to achieve an ecologically, economically, and socially sustainable world. Continue reading →
Former World Bank lawyer Karen Hudes says the global opinion of America is tarnished. Hudes contends, “Is the United States a credible super power? The answer to that is ‘we are neither.’ We’re not a super power and we are not credible.” Hudes goes on to warn, “The biggest game changer is something that people are just ignoring, and they ignore it at their peril, and that is the creation of a fourth credit rating agency. . . . If they do not get our act together, they will have no choice . . . We are losing our credit rating.”
Hudes, who is also a whistleblower, charges, “There is fraud and corruption from top to bottom in the financial system.” As far as global central banks are concerned (including the Fed), Hudes claims, “The central bankers have a scam going on. It’s a Ponzi scheme. The citizens of the world are paying interest on their currencies.