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Berlusconi Says Leaders May Close World's Markets

Friday, October 10, 2008, 12:15 PM

An interesting bit of news:

Quote:
Oct. 10 (Bloomberg) -- Italian Prime Minister Silvio Berlusconi said political leaders are discussing the idea of closing the world's financial markets while they ``rewrite the rules of international finance.''

``The idea of suspending the markets for the time it takes to rewrite the rules is being discussed,'' Berlusconi said today after a Cabinet meeting in Naples, Italy. A solution to the financial crisis ``can't just be for one country, or even just for Europe, but global.''

The really interesting part is here where he hints that a second aim is to revisit the Bretton Woods agreement.

Translation:  The US dollar's role as the world's reserve currency is up for debate.

Quote:
Berlusconi didn't give any details about what kind of rules leaders were looking to change, except to say that leaders are ``talking about a new Bretton Woods.''

The Bretton Woods Agreements were adopted to rebuild the international economic system after World War II in a hotel in Bretton Woods, New Hampshire. The aim of the agreements was to establish a monetary management system, initially by pegging currencies to gold. The IMF was set up later to help manage the international financial system.

Link (Bloomberg)

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50 Comments

barrt's picture
barrt
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what happens to the gold price if its made illegal to own?

 

what happens to the gold price if its made illegal to own it or buy it?

surely it cant go either up or down, can it?

I mean, if they go back to the Bretton Woods style of gold pegged currencies, they will have to outlaw trade and ownership of the stuff right?

I can imagine Belusconi getting his little ass kicked for letting that cat out of the bag early!!

wow, such interesting times we live in, i kinda wish it wasnt quite this interesting though!

Thanks Chris, we love you!!

gauntlett's picture
gauntlett
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Wow...

Has that ever happened before?

So, we finally have on the table:

Admission that the world is in complete panic

The reign of the dollar may be at an end

The US as we know it may be nearing an end

A banking holiday

ugh... what else?  Rising interest rates? 

 

What I'm amazed about is how quickly this all escalated.  However, going back to the crash course given exponential growth,  we are having exponential destruction.  

 

-T 

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Jeff Borsuk
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You're being called upon...

Hey Chris,

 

I just heard Tyler Mathison on CNBC call for business leaders to step forward and offer solutions to the current financial crisis. Your name was mentioned!!! He obviously doesn’t know you because he played it off as they should call Chris Mortenson, the quarterback, to speak as well.

 

Bottom line is this: your name is being circulated! I’m not sure if the folks on CNBC would be willing to swallow your solutions…given their bias towards the retail investor buy-n-hold strategy.

 

Hey, it’d be great to see you on CNBC…go for it!!!

 

Good luck!!

 Jeff Borsuk
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berluska

Hey, Berlusconi says something and its exact contrary every day, but also says things people told him not to say... so let's see what's the case.

No, I'm not communist...

Carlo.

 

barrt's picture
barrt
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id like to see Ron Paul as

id like to see Ron Paul as Pres and Chris Martenson heading up whatever replaces the Fed Res

lets start a campaign! Lets get teh good guys in charge for a change!

gauntlett's picture
gauntlett
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I'm in!
Sounds great to me!
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ajparrillo
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Re: id like to see Ron Paul as
Uh...Ron Paul's philosophies would create policies that would lead to this same scenario.  Without market safeguards, wealthy elites make the rules.  This is the lesson once again.  There need to be market safeguards that actually allow real competitive, local markets to exist and thrive.  These disappear in deregulation.  Of couse, this means an educated and civically active population that continually evaluates those policies and individuals entrusted to oversee those policies.  Real civic democracy would be great.
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Re: Berlusconi Says Leaders May Close World's Markets

Yes that's the ticket, Paul and Martenson.

 

 

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Re: Berlusconi Says Leaders May Close World's Markets

Such great advice here, but I'm not sure what if any of it applies to me?  I feel sort of paralyzed by everything.  I know all of the advice on this site and the reports from Chris are spot on.  I hope to use all of it to improve or protect my current financial standing.  But I am a novice and I am unsure of as to where I stand in relation to the others making recommendations on this site, therefore I'm not sure if they apply directly to me that would be great.  I know there is no such thing as one size fits all, but it seems like there should be a formula expressed somewhere on the site listing if these are your assests, this is your debt, this is how much you make, this is where your investments and assets should be.

 

Chris thank you for all of your hard work and don't mind the ads at all if it keeps bringing us this wonderful information. 

gauntlett's picture
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Perhaps But...

That may be so, but I think the underlying issue is Law.  A free market economy can work, and would reward those who innovate, and punish those who are lazy.  This would be the complete opposite of Socialism and take us back to what this country was founded upon... Free Enterprise!

I'm always amazed at how people criticize the free markets when we don't have free markets.   All the regulations, government interventions, the Federal Reserve, and so on distort the markets and exacerbate the issues.  I really don't care if there are super elite as long as they aren't treated any differently from you or I. At present elites and government officials are above the law creating two groups of people.  This is very inequitable.  We all HAVE to be governed by the same rules. The rule of law needs to be consistent and not continually changing to benefit one group or another.  When lawmakers consistently change the rules of the game nobody can plan ahead.  

Therefore I don't think we would be in the same mess again if Ron Paul were President.  I think we would see another resurgence of American entrepreneurs.   

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rlee
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... and yet the word from Washington is:

FDIC spokesman Andrew Gray noted in astatement:  "We believe that we havesignificant latitude, in consultation with Congress, under the systemic riskexception — which carries the threshold of approval of the Federal Reserve andTreasury Secretary in consultation with the president — to protect depositorsand adopt other measures to support the banking system."

 

Since I work in ‘Administrative Government’ I speak politico, so allow me to translate:

 

“We believe that we have successfully bamboozledthe congress and the American sheeple into believing that everything is undercontrol – blah, blah, blah – and we can do whatever we damn well please withyour money while protecting our own personal assets – blah, blah, blah – and we’vegot your back, so keep the faith and don’t get any of your own cash out beforewe get all of ours out!”

 

I hope that clarifies things for everybody!

 

Bob

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Re: Berlusconi Says Leaders May Close World's Markets

Berlusconi is not the only one who has been talking about rewriting Bretton Woods:

 

http://www.eurodad.org/whatsnew/articles.aspx?id=2988

 

But I have not heard of any specific proposals yet. 

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Re: what happens to the gold price if its made illegal to own?
http://www.larouchepac.com/files/asx/081001_webcast_en_384kb.asx
rlee's picture
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Bretton Wood:

My concern, and question, is this:  

It is painfully obvious that the world's faith in the almighty dollar has drifted off into the sunset, and they - the rest of the world's leaders -  are looking to seize this opportunity to take a significantly more active role in controlling the future of ALL money on the planet.

Given this, does the potential for reformulating monetary policies essentially pave the way for the Amero to come into being as this nations answer to the world markets?  It goes without saying that the dollar will be 'yesterdays news' at that point.

Bob 

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Wow is right!!

Wow!!!  I know we all have read and conversed about something like this happening eventually.  But to actually see it unfolding right before our eyes...it's incredible!!

-C

 

 

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Re: Perhaps But...

I am amazed by how many people who argue for "free markets" when they don't understand what this entails.  We have plenty of historic evidence of free market capitalism and the resulting polarlization of wealth.  READ Adam Smith's Wealth of Nations, the origins of current free market docterines.  This work was published in 1776 (important year?) and this growing philosophy greatly influenced the US Founding Fathers.  The sad thing is that this truly inspiring and great work gets perverted by selectivity.  This work must be understood in its historical context...as an economic revolution against feudalism and arbitrary laws of monarchies.  The growth of trade due to huge inputs of capital of colonization (at the expense of other peoples and their geographies) lead to the realization the markets and trade were bettering mankind than the feudal system (again, at the expense of colonies).  The enlightenment was a period of many intellectual and actual revolutions that lead to democratization throughout all structures of society (European, that is). 

The sad thing is that the only thing most even know about this is "the invisible hand of the market" which is mentioned only once which was not a comprehensive mechanism.  Most would be surprised that Smith identified the inherent problems with the emerging capitalism that leads to a wealthy elite with more influence in society.  It would be also surprising to most that Smith also argues for a PROGRESSIVE taxation system with "free trade" because of inherent flaws that would affect democratic structures (I am, of course paraphrasing).  Finally, most would be very surprised that Smith argues for a governmental 'welfare' system because this economic system would create some negative conditions for labor (AND NOT BECAUSE THEY ARE LAZY).  Specific policies are not suggested, but this recognition is amazing.  Many need to learn more about the ideoloies to which they prescribe.

Overall, you also must realized that capitalism and markets are completely seperate but related ideas (Capitalism utilizes markets).  Marx was absolutely correct in his critique of capitalism (this can be extended to stock markets in that they decrease actual competition over time) in that it leads to wealthy elites that then run roughshod over a democratic society.   The contemporary philosophy of free markets is absolutely counter to democracy.  Democracy is a SOCIALIST governmental system, which is does not coexist well in "free markets" and especially with unfettered Capitalism.  An economic system SHOULD NOT and CANNOT be the basis for a democratic system.  Govenance and economies should not be intertwined...as much as possible.  I know that "applying the same laws to all" (all men created equal) is central to democracy and seems like a great idea to apply to other societal structures like the economy.  However, economically all men are not created equal and entrenched wealth destroys democracy (unless you have comprehensive interventions to keep money from influencing the system...or gov regulations).  THIS IS A FACT.  SO, Ron Paul's philosophy (elimination of most gov institutions) would abosolutely lead to similar conditions, polarization of wealth and other developmental attibutes.

Many 'free market' wonks really don't understand the absolute consequences of your ideologies.  This is by no way an argument for some of the regulatory structures that exist today, especially central banks.  It is the recognition as an individual who IS ABSOLUTELY BELIEVES IN A FREE MARKET SYSTEM that there needs to be rules set that allow for real competition and maintains the integrity of a democratic system.

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Re: Berlusconi Says Leaders May Close World's Markets

The Bloomberg article has been updated.  They emphasize that the US has no plans to close markets.

"Less than an hour later, after the White House denied any plan to shutter Wall Street, Berlusconi reversed himself, saying he was just repeating something he heard on the radio." -Bloomberg

There are several ways to think of this.  The good Dr. has been spot on so far, so I would guess it means they want to stem the cash outflow until they can put together a comprehensive global closure plan?

Thoughts? 

I'm headed out to the bank...wish me luck!

 

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pinecarr
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I think you're right, bikemonkey

I think you are reading it right, bikemonkey.  Add to that the DOW only being down 128 by the end of today, after swinging down wildly earlier in the day.  Lets everyone head off jfor the long weekend feeling a liiiittle less worried than they would have been, a little less likely to panic and make a run to the bank....while they do their thing over the weekend.

-C

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Re: Berlusconi Says Leaders May Close World's Markets

If you read the whole article then you will see what kind of strange things come out of  Berlusconi's mouth: 

At a New York event sponsored by the New York Stock Exchange in 2003, he said people should invest in Italy because its women are pretty.

``We have beautiful ladies and beautiful women, so my suggestion from the bottom of my heart is to try to make investments in Italy,'' Berlusconi said. ``The secretaries are beautiful.''

Shortly after the Sept. 11, 2001, attacks on New York and Washington, Berlusconi said Islamic countries were uncivilized and that Western countries would need to ``conquer'' them in order to bring them into the modern world.

In 2006, during his election campaign against former Premier Romano Prodi, he said people who voted for his rival were ``coglioni,'' a vulgar term for testicles.

``My greatness is without question,'' Berlusconi said in March 2001. ``My human substance, my history, other people dream to have.''

 

 People are being given the opportunity of a lifetime in the stock market with the oversold conditions in the energy sector.  I would go shopping if I were you.

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Re: Berlusconi Says Leaders May Close World's Markets

Hello Barrt: 

I have done a lot of reading on what happened to gold when it was taken in 1933. Maybe this will answer your "what if gold was taken" question. 

This link http://www.wellsfargonevadagold.com/confiscation-order.pdf  is the Executive Order demanding that gold be turned in to a Federal Reserve Bank, branch or agency or to any member bank.Everyone who is thinking of gold or that has gold should look at this link.Seeing it in black and white...well you'll see what I mean.

Note the gold to beturned over then were gold coins, and gold bullion. There are exclusions as you canread on the second page. In fact I have a client who had me secure the name www.ProtectYourGold.com he is thinking of turning bullion to jewelry before this happens - good luck, bowling balls falling quickly to earth come to my mind. 

As Chris's videos show they then created money and gave everyone $20.65 an ounce for their gold, once they had it they set the price of it to $35.00. Some perverted idea of a kiss before maybe?

This link is by a Constitutional Law Professor who discusses the case of a lawyer who had gold and argued that the law wasn'tconstitutional. He won round one and then they re-issued the order and he lost round 2. Of course, his gold was in a banks safe deposit box, so I don't think he ever saw his gold after the bank siezed it on behalf of the order. So keep it home and get robbed or risk jail and a fine if you want to become a criminal, leave it in the bank and bah bye.

http://users.rcn.com/mgfree/Economics/goldHistory.html 

The other thing I learned is that when other countries would give US Dollars back for gold in exchange is this: The Fed would give them coins not coins siezed and melted into bars. Coins were like 96% pure, so on a million bucks they saved 4% by giving them coins since they gave coins at face value not melt weight.

What I can't understand, and I'm asking, I'm NOT unpatriotic and I think a gold standard would be better than the sham du jour: Isn't it unconstitutional to use anything BUT coin of gold and silver as tender, isn't that what our Constitution says??????? Last I knew, the Constitution only lists two crimes by name, Treason and Counterfeiting. Seems to me that a Fiat system is well... let me say that one day at band camp I had a Secret Service Agent on my plane, I put him in the jumpseat on the way to DC. He had a dog with him, the dog sniffed chemicals used to bleach one dollar bills so the counterfeiters could use the paper to print larger denominations. Why that comes to mind????

Seems to me this is why we are right here right now today. As an ex-airline captain I know what happens when you plan a journey on your chart and then you forget that chart in the crew room....Yah think Congress left our chart at some lobbyist's bar? And I may have missed it, but I didn't see that (Constitutional fact) mentioned in the article.

So, we'd likely see gold "purchased" (sounds a bit like a mugging to some I have explained this to) for what they deem to be an appropiate price, and issued in some likely new currency, and then, once they had it, we could expect that if history follows the last 100 years, gold would go up in value 75% after it left the investors hands. 

....Even muggers can't add that insult to the injury. 

Reading all this makes me realize that money (and or gold) may not be the only thing lost during a depression. 

Oh well, as an optimist I am hopeful that we will go back to a gold standard and put the boom to bust bubble cycle behind us along with ravaging the planet of her resources.

 

  

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PRESS RELEASE OUT OF G-7 MTING at 6 PM; HANK @ 6:45

CNBC anounced that there will be a press release out of the G-7 meeting at 6 PM.  Hank Paulson will make an announcement at 6:45!

-C

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Re: Berlusconi Says Leaders May Close World's Markets

Interesting read all at http://www.financialsense.com/fsu/editorials/dollardaze/2008/1010.html

I'd question a lot of it after reading the inflation rates, after watching Chris's videos I dug out receipts from 2001. WOW! 5.1% I wish!!! 

 

Estimating a Price for Gold

A troy ounce is 31.1 grams, thus the 161,000 tonnes of gold is equal to 5,176 million ounces of gold. Dividing the total amount of currency (US$3.8 trillion) by 5,176 million ounces gives us a figure of US$738 per ounce.

The chart below shows the composition by currency of such a comparison.

Breakdown of US$738 Gold by Currency

The next chart indicates the break-down in price for an ounce of gold by dividing the currency and demand deposits of the world ($18.4 trillion) by the estimated number of aboveground gold (5,176 million ounces).

Breakdown of US$3545 Gold by Currency and Demand Deposit Cash (M1)

Extrapolating the present inflation rates for both gold and paper currency produces an annual price increase of 5.2% (6.6% paper inflation - 1.4% gold inflation) for the price of gold.

Conclusions

These two analyses are meant to provide a measure of comparing the amount of gold in the world to the amount of paper money using published official sources. The two measures of money used are themselves quite limited in scope.

Currency as physical paper is the most restrictive form of measuring the money supply and the most straightforward method conceptually. It is generally accepted practice to also include demand deposits when discussing money supply, as this is a form of money available to the depositor upon demand. Savings accounts are sometimes considered as money, but not always, as it may be argued that the bank (in theory) may demand some time to acquire physical cash to redeem a withdrawal.

Obviously the inclusion of other broader forms of money (various instruments of savings deposits, money market deposit accounts, repurchase agreements, money mutual funds, etc) would further increase the price of gold in such a comparison.

Whether such comparisons are of value beyond that of curiousity, I leave to the discretion of the reader.

 

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Bretton Woods III, Sketched on a Cocktail Napkin

"Translation: The US dollar's role as the world's reserve currency is up for debate." -- Dr. M

Indeed. In fact, Bretton Woods III will just ratify the dollar's erosion of reserve currency status which has already occurred under Bretton Woods II (the unplanned and chaotic transition to free-floating fiat currencies which started with a bang when Nixon closed the gold window on 15 Aug 1971). Before that, the US dollar was THE reserve currency. Since foreign central banks could convert dollars to gold, the dollar was "as good as gold."

Given that statists prefer discretion over rules which hem them in, I doubt that fixed exchange rates (which prevailed during BW I) are on the menu. I doubt even more that gold and silver would be given ANY role, when the authorities are babbling about "unlimited liquidity." With a gold-backed currency, there's no such thing as "unlimited liquidity." And that's a good thing. Didn't those bankers learn in Econ 101 that scarcity is a fact of life, and nothing is available in "unlimited" quantities? Evidently not -- thus, the mess we're in today.

A global currency is what they really want. You can already hear the meme being spread -- "no country is big enough to face this on its own."

But a global currency is a pretty big step. And the IMF is way too small to help with a global bailout. A halfway solution might involve a global central bank, authorized to hold reserves in multiple existing currencies. This would move the present currency swap lines in-house, in such an integrated institution.

However, the main purpose of a global central bank is to create more fiat credit. Merely with the puny resources of our domestic Federal Reserve, Goofball Greenspan managed to Bubble most of the planet with his check-kiting schemes. It ought to be obvious that establishing a global central bank would simply repeat this appalling fraud on an even larger scale. But that won't stop them from trying. And it won't stop Greenspan from offering his services as Maestro of the Global Reserve Bank.

Bottom line, the Bubble blowers are plotting how to gin up Bubble III. This will require massive borrowing (already in the pipeline) to create the raw material (debt) to be magically transformed into new credit and currency. Yes, it will be inflationary. And inflation, in real terms, shrinks debt relative to GDP, by debasing the currency in which the debt is denominated. Sounds good to a politician: 3 years at 10% inflation, and 30% of our debt burden goes away, in real terms. Then we can borrow 30% more and PARTY! COOL!

Other than Dr. Martenson, do you hear ANY experts, anywhere, diagnosing our current predicament as monetary in origin? Me neither. Even the great Dr. Roubini steers clear of rejecting the fiat currency regime. The sad result is that the global monetary system is being radically redesigned, this weekend, by people who don't understand the fundamental problem, and therefore are using the wrong principles to fix it. Their objectives -- "unlimited liquidity" and "more fiat credit" -- are the source of the problem. DUH! WE BE DOOMED!

 

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Re: id like to see Ron Paul as

"Ron Paul's philosophies would create policies that would lead to this same scenario"

Respectfully - You couldn't be more WRONG.  Sure - the regulated economy models of Mussolini, Hitler & Lenin are the solution.

Many of the "wealthy elite" you describe, have profited exactly FROM the government-protected monopoly granted the Federal Reserve System Banks, and that is "regulation" turned AGAINST the citizens of the USA. 

What do you think inflation/devaluation of the fiat-currency results from, but the "regulation" you so propose???

 What Ron Paul has proposed (consistently), is exactly what the Founding Fathers proposed, which we are NOT following, which is the US CONSTITUTION, Article I Sec 8 & 10.

One only needs to read the warnings, and the passion behind them, which the Founding Fathers espoused, regarding the dangers of having a private-for-profit Central Bank issuing the currency of the USA, with that currency backed by NOTHING, and the danger that posed for all the citizens (sovereigns) of the USA, not just for the wealthy.

The Federal Reserve issuing the nation's currency is the source of the problem, and that is NOT CONSTITUTIONAL.

"wealthy elite make the rules"...

That was the reason for having a Bill of Rights and a Constitution - to prevent monopolistic protectionism and cronyism.  The fact is, if we were using "honest money", backed by gold & silver, the highly leveraged CDS market, et., etc., would collapse only to the detriment of those betting, and not pulling the rest of the economy into it. 

For the last 85 years, we have lived under a "regulated" economy, to the destruction of the middle class, and the empowerment of those "on the inside" of government power and banking.

Beyond the following, I suggest you actually read Ron Paul's writings on the subject.

Thomas Jefferson - "I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a moneyed aristocracy that has set the Government at defiance. The issuing power should be taken from the banks and restored to the people to whom it properly belongs."

Thomas Jefferson - "If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them (around the banks), will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered."

James Madison - "History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling the money and its issuance."

John Adams - "All the perplexities, confusion and distress in America arise not from defects in their Constitution or Confederation, nor from want of honor or virtue, so much as downright ignorance of the nature of coin, credit, and circulation."

Andrew Jackson - "Gentlemen, I have had men watching you for a long time and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves. I intend to rout you out, and by the grace of the Eternal God, will rout you out"

Andrew Jackson (His Tombsone) - "I Beat the Bank!"

Woodrow Wilson - "I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the civilized world. No longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men."

Franklin D Roosevelt - "The real truth of the matter is, as you and I know, that a financial element in the large centers has owned the government of the U.S. since the days of Andrew Jackson. History depicts Andrew Jackson as the last truly honorable and incorruptible American president."

 

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lyndon larouche

Now that's an interesting american political character.  First a marxist, then a proponent of SDI, now a perennial candidate for president as a Democrat (making Democrats quite uncomfortable).  He is constantly reinventing himself.

I'm not sure which part of the 3 hour video you were referring to, however, in relation to the question about what happens when gold is illegal to own. 

 

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Re: Berlusconi Says Leaders May Close World's Markets

 

I'd like to ask a question about this chart from Schwab & Co.below:

My question is this: What if we backed out the fuzzy math (GDP and Debt and Unemployment and CPI), how would the chart below look then in 2008 terms???

I just finished "I.O.U.S.A". From what I see our debt is not 10.3Trillion it is 53 Trillion.

Chris's video about GDP Fuzzy math I believe was circa 2003.

Do we have any numbers for this year's quarters. I seriously thinkit would make a great comparison to what the "experts" tell us. I'm soooo tired of reading them quote our health based on Enron math. Talk about riches to rags. 

These numbers just seem way to optimistic, money supply+3%? I don't think Ben does anything at just +3%.

I recall in early 2007 debt was "8.7" trillion and theGDP was 13.5 trillion so debt was 64% of GDP

So if we use Chris's 2003 40% off of GDP in 2007 then 

                                                      debt was "8.7"  trillion and the GDP to 8.1 trillion sodebt EXCEEDED GDP

and if we use the real debt of 53 trillion (8.7 + 7 for SS + 26for Medicare + 1 Misc)

debt 53 trillion and GDP of 8.1 trillion so our debt exceeded GDP by 640% ?

So when I hear our debt is only 64% of GDP I should be hearing weowe 640% more than we make? And not that debt is only 64% of GDP....

If so, then aren't we a subprime borrower? Shhhh don't tell China we mightloose the big house. And don't tell any investors or all the oil may come outof the engine.


 

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Re: Perhaps But...

Maybe I read this wrong but is it that you believe that under unregulated capitalism, the wealthy become so wealthy that they pervert Democracy?  So no regulation means total perversion of Democracy while partial regulation leads to partial perversion of Democracy? 

If so, then I think we need to get rid of Democracy so there is nothing to pervert.

I like that thought.  Give me anarchy any day.  The State is just chaos.  Who really needs that?

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Re: id like to see Ron Paul as (Federal Reserve)

There is a 'school of thought' that's very possibly also true, see www.professorfekete.com, that the Federal Reserve was first

instituted to rediscount 90 day commercial paper (bills of exchange), which were backed by real assets, as in consumer goods. In exchange for discounted paper the Federal Reserve would extend its credit (Federal Reserve Notes) which were more readily accepted  than commercial paper, thus greasing the wheels of commerce. These Fed notes were only backed 40% by gold.

When the 90 day bills matured the credit would be retired.The aim was to 'sustain the balance between production of marketable goods and the creation of currency'.

For the system to work effectively though, the Federal Reserve Notes had to be redeemable in gold, as did the commercial paper, which they were until 1933. The Federal Reserve was not supposed to monetize government debt, except under heavy tax penalty, but this clause was never enforced by the government. This is why the government defaulted on its domestic gold obligations in 1933.

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Re: GDon
[quote]Respectfully - You couldn't be more WRONG.  Sure - the regulated economy models of Mussolini, Hitler & Lenin are the solution.

Many of the "wealthy elite" you describe, have profited exactly FROM the government-protected monopoly granted the Federal Reserve System Banks, and that is "regulation" turned AGAINST the citizens of the USA. [/quote]

Uh, no.  There's a reason the wealthy elite are the biggest supporters of deregulation.   Further, none of these character have the slightest need of any of these systems.  They might give a slight leg up, but it is hardly relevant in the face of the extreme power of their already existent capital. 

The reality, GDon, is that we have had completely unregulated capitalism before,  just turn the pages back to the start of the industrial revolution.   Boom and bust cycles were so wild and extreme that Great Depression equivalent events happened every 20-40 or so years.   When unemployment struck women, children and men where thrown in the ditches to die.  Average life spans dropped in half.   Factory work was nothing short of slave labor, and if you so much as complained you'd be blacklisted -- your name circulated amongst other factory owners -- so that you could never hold a job again (a death sentence).

Indeed, the only reason anyone suffered it, was because it wasn't a whole lot worse then the fudelism system (which makes Lenin's communism look like utopia...).  The only thing preventing a repeat of those past horrors is not changes in human nature, humans remain precisely the same.  Instead, it is numerous good, and thoughtfully designed regulations and controls.

To put it simply, it is the nature of corporations and capitalism to lift itself up by pushing others down.   It arises from these fundamentals that the most "perfect" corporation does not view its employees as humans, as having rights, or even deserving of an income.

Hell, capitalism has little desire to even improve the quality of the nations in which it exists (being a parasite is a faster path to wealth).  It is again regulations and rules that direct capitalism to this task.

Capitalism is much like government.  Everyone should hate it.  It is never trustworthy, but we have to put up with it because the alternatives are worse.   Since we must have it, we have to take steps so that we remain the masters and they our servants.

[quote] What do you think inflation/devaluation of the fiat-currency results from, but the "regulation" you so propose???[/quote] 

You can't have an unregulated currency.  Even implying that such is possible makes shows a lack of thought and consideration.   All currencies are symbols of exchange and, as such, are only as good as their 'word'.   It is necessary that some entity makes sure that the currency remains intact.

This is true even if you use gold.   Or do you think that people wouldn't debase gold coinage in mass? If so, open a history book.

[quote] What Ron Paul has proposed (consistently), is exactly what the Founding Fathers proposed, which we are NOT following, which is the US CONSTITUTION, Article I Sec 8 & 10.[/quote]

Ron Paul is in error.  The problem isn't the Fed.  The problem is how the Fed is designed.   It needs to be built just like any other completely untrustworthy branch of government -- with oodles of checks and balances.

As a side I'll also point out that we abandoned the gold standard because we weren't, and never did, follow it.

[quote]One only needs to read the warnings, and the passion behind them, which the Founding Fathers espoused, regarding the dangers of having a private-for-profit Central Bank issuing the currency of the USA, with that currency backed by NOTHING, and the danger that posed for all the citizens (sovereigns) of the USA, not just for the wealthy.[/quote]

All currencies are backed by nothing.   Or do you not realize that gold is just another currency?   Currencies work because individuals agree to honor them.  Nothing more, nothing less.   The dollar could go away tomorrow if every vendor on Earth decided they'd rather use oak tree leaves instead.

Next, the Central bank is neither private nor for-profit.   Read the available wikipedia article for god's sake.  Instead, the Fed is a strange quasi-private-public hybrid.

Now, if you want to abolish and replace the regional Federal banks with a fully (or more) public variation, I'm all for it.  To be frank though, the Fed as it exists works pretty well.  Far from perfect, but it has proven itself better than nothing at all. 

I'm all for reviewing its design and trying to come up with a better idea though.

[quote] That was the reason for having a Bill of Rights and a Constitution - to prevent monopolistic protectionism and cronyism.  [/quote]

No, the bill of rights was to prevent government tyranny.  Protectionism and cronyism were considered undesirable but acceptable so long as tyranny didn't take hold.

[quote]The fact is, if we were using "honest money", backed by gold & silver, the highly leveraged CDS market, et., etc., would collapse only to the detriment of those betting, and not pulling the rest of the economy into it. [/quote]

Honest money has little to do with this mess.   This is a debt problem, a consumption problem, a deregulation problem, a weak regulation problem,  a bad regulation problem, and even a too much regulation problem... all at the same time.

(What we need isn't more or less regulations what we need is the right regulations.)

Or do you honestly think that unregulated banks wouldn't use leverage just because the currency was gold based?  Like, say, it was during the pre-Great Depression era?  Oh wait...  I guess they did use leverage back then too.

Further, the honesty of our currency hasn't even entered the equation yet.  When it does, you'll know because we'll have double or triple+ digit inflation

Further, even if there was no government interference in this mess, things would still fall onto the shoulders of the people.  They are the ones that get thrown onto the street after a foreclosure.  The banks, like any good corporation, are always on the lookout on how to shove off their mistakes onto someone else.  Given their greater wealth, the power of being the creditor, etc... they are more than likely to succeed.

Thankfully, we live in a democracy.  And while the government has been undermined, once the silent majority stops being silent, apathetic, and disengaged (cause, say, they don't have a job!).   Things will swing hard.  Just like they did during the Great Depression.

[quote]For the last 85 years, we have lived under a "regulated" economy, to the destruction of the middle class, and the empowerment of those "on the inside" of government power and banking.[/quote]

?

???

Open a history book.

Overall the middle class has strengthened dramatically over the last 85 years.   Just compare wealth distributions.  In fact, the most regulated economies in this world have the strongest middle class.   Visa versa, under periods of deregulation, say the current administration, we have seen a vast weakening (or, in better times, a relative weakening) of the middle class.  

The government has become empowered though.  But that has less to do with economics then with fear mongering to convince the complacent people to give up more power.   Beware the terrorists!  They murdered 3000 people in one years, which is... uh...  18% of the yearly murder rate! Fear! Fear!

(How much money did we spend on police forces here in the states?  I bet you a lot less than a trillion dollars!) 

[quote] Beyond the following, I suggest you actually read Ron Paul's writings on the subject.[/quote]

I've read enough.  Compared to most his vision is stronger.  However, he is struck, like most his age, by the cold-war anti-communist/socialist propaganda poisoning that has infected the intelligence of the US population.   The free market has its merits, but it isn't a divine gift handed down by heaven that can fix everything.

Socializing, and Privatizing are two different tools.  They each have their arenas of superior performance.

 

 

 

As a summation to all your quotes:  all the more reason to regulate banks!

--

Steve 

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thomas jefferson

please use citations when using quotes. many of them come off the net which is very unreliabe

i have not been able to find the thomas jefferson quote anywhere" if the american people ever allow private banks................"

if anyone can find that citation i would be most grateful. because right now it is bogus and we need to have a higher level of integrity on this amazing site .

thank you gdon

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Re: what happens to the gold price if its made illegal to own?

prohibition.......... outlaw bongs and only outlaws will have bongs

oh yes organized crime will have one more item in its catalog. prices will go thru the roof

and eliot ness will be exhumed

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Re: Berlusconi Says Leaders May Close World's Markets

I don't know Chris Martenson, personally, but I can probably make a sure bet that he is working longer than 10 hours a day maintaining information, emails, and the website.  With this site being so clean of advertising, I doubt he is getting the financial support he needs.  I don't want the website blipping with ads.  We should help Chris, by donating (if you can), so he can continue his AWESOME work and dedication!  I'm not sure if he even needs financial support but maybe he doesn't want to ask for it.  When/if you're able, I don't think it would hurt to throw him a few extra dollars his way.  It is a great blogging page for all of us to utilize.  I know I've enjoyed reading EVERYONE's commentaries!  Thank you for your time, and thank Chris for his time and efforts!

Caroline

p.s.  I don't know about you, but I felt guilty when I saw only two ads on his website.  I began to assume he made most of his money through donations alone.  If I'm wrong, please inform me of this!

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Now vs. Great Depression

This is an interesting table (thanks, Dave, post #27), but the numbers look flaky to me.

Several of the figures under "Great Depression" appear to pertain to a 3 or 4-year period from 1929 to 1932 or 1933:

-- GDP growth -27%; Industrial production -52%; U.S. exports -66%

To be compared with the annual (or annual average) figures in the "Today" column, these multi-year changes need to be annualized, making them much smaller (somewhere between a third and a fifth as large).

With the suggested corrections, the point holds that the US is not experiencing double-digit annual losses in industrial production and exports, as it did during 1929-1933 ... YET. Given that the authorities still haven't admitted that we're in recession (even as banks teeter and GM and Ford turn into penny stocks), this "GD vs. Today" comparison should be revisited in 2009.

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Re: Now vs. Great Depression

I'd also add that Unemployment figures in the USA, if calculated in the same terms they were in the Great Depression, would today be around 12-15%.   

--

Steve 

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Re: GDon

I cound not have written a better reply...seriously.

I still think folks are missing some central points...points highlighted in the Crash Course.  Libertarianism is very sexy and harkens back to the frontiersman's life.  Many of us would like to think we live up to this romanticized image, however the world is not a frontier, there are not limitless opportunities as pecieved during westward expansion.  ALL GROWTH has come at the expense of others, this was just hidden because these were sometime very distant populations.  Now this relationship has slapped us in the face with a 'free trade' economic system where wealthy cannibalize the wealth of the masses and ABSOLUTELY polarizes income and wealth distribution (having nothing to do with laziness).  This is because the system cannot achieve real growth, which is mandatory, as Chris points out in a lending/debt system.

As Steve indicates, it is some of the smart regulation that emerge from the great depression grew the middle class by allowing for greater participation in the economy and dispersed wealth.  It has been the commendeering of this gov and this system by wealthy interests that has steered this train from it's course.  Viet Nam built debt that began some deregulation and this was expanded by Reagan, then Bush I, then Clinton, then Bush II...all of them.  Clinton tinkered with taxes in order to create a surplus.  Everyone of these administrations along with most other representatives drank the same Milton Friedman 'free trade' koolaid.  'Free trade' / 'choice' and privatization are central to Neoliberalism....a concerted agenda by wealthy to create new economic conventional wisdom through the use of think tanks and to infiltrate and influence goverment (lobbyists, etc) to take the reigns of regulation as to entrench itself within the structure of society.  Ever notice that supposed repulicans who continue to preach "small, efficient gov" continue to grow gov and spending.  This is not accidental but a well organized movement to solidify a new economic society that creates a "responsible" class of men (or those most deserving of civic leadership).  Amazingly this is completely spelled out in the philosophies and mantras of the founders of this movement.  The movement of Neoliberalism is a growing area of scholarly research and it would be of interest to look this up....a good place to start is "A Brief History of Neoliberalism" by David Harvey.

Also, from a comment about Lenin and socialism, do you think this is what I am suggesting?  I don't.  Please don't conflate the Marxist critique of Capitalism with Lenin soicalism....socialism/communism are economic/political ideologies that draw from Marx.  What is important in this critique is labor.  Labor is the most important mechanism in an economy...it creates the wealth!  A Capitalist 'free trade' system that cannot grow due to a limited world and again end up cannibalizing the labor classes to achieved the expected growth (interest rate) ending is growing unemployment.  And since markets are reactionary, there tends to be a lack of investment for transitionary periods (economic downturns) where capital tends to hoarded which exaggerates these downturns.  The new regulatory policies after the GD (New Deal, etc.) has the specific agenda of keeping some directed investment (such as infrastructure) flowing and reducing unemployment.  That investment, while not the most efficient, always pays economic benefits in the future and keeps labor working, living, and supporting markets (hopefully local).

Further, Gdon, I do not disagree with many points about central banks, but this is not the end all and be all of issues.  I also never made any argument that our current regulatory system is desirable...it has been infliltrated!  The argument is really is about preserving economic competition AND democracy at the same time.  If this is the goal, then a separation of economy and government needs to be preserved....with a transparent, checked and balance gov representing the people making smart and basic rules that serve to preserve democracy while encouraging competition.  It is genarlly a simple concept, but is not one with absolutes (i.e. this system works for every situation and all citizens).  It requires diligence, continued input and oversight, and an intelligent and ACTIVE population.  All these components are currently absent.

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Marx was a quack

Free markets make a handy scapegoat for Marxist apologists. The boom and bust cycles with which we are familar is a product of bank credit expansion through central banking and fractional reserve banking, both products of government intervention. The Bank of England was the first to employ this system in 1694. Marx saw its ill effects and blamed capitalism. The economist who did get it right was Ludwig von Mises. Mises knew that savings and production were the means by which a nation became wealthy. The central banking system perverts that process by substituting debt for savings and consumption for production

Where the alchemists failed to produce gold from lead, the interventionists did one better; they turned paper into money. The excess production of money is the root cause of inflation. It's the favorite of statists because it allows them to spend beyond what they could through direct taxation.

The phases of inflationary cycles were described by Mises. In the early stage, small amounts of new money have a strong stimulating effect. As the cycle continues, the masses start to notice small increases in prices; consumption increases while savings decrease. This progesses to the speculative phase where the public borrows and spends to beat higher future prices. Speculation becomes rampant, the money is loose and living standards fall. At this stage, massive injections of money have no effect on keeping the boom going. It ends with a hyperinflationary blowoff when the currency collapses into nothingness.

Interventionists have been getting away with blaming laissez faire capitalism for decades. There is no free market; it is all regulated with regulations more complicated and detailed than the tax code. There was no deregulation in the free market sense. The regulations were written to legalize fraud and theft. There is no free trade; foreign trade agreements like NAFTA have tomes of regulations and a tribunal to arbitrate disputes. By contrast, free trade between the states is dictated by one paragraph in the Constitution.

Market economies are infinitely complex, too complex for manipulation without producing damaging consequences. No nation can become wealthy by the socialist nostrums of neighbor stealing from neighbor through the agency of government. The real ideologues are the ones who insist government knows best. It's a shame that so many blame free market capitalism for today's problems without knowing what free market capitalism if. If government was explicitly prohibited from intervening in the market and distorting prices, THEN we would be looking at a free market. But that would be impossible. Because in a free market there would be no central bank.

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Government is a socialist institution

ajparrillo said:

ALL GROWTH has come at the expense of others

Only in socialist economies - government steals from Peter to pay Paul.  In a real free market economy both buyer and seller benefit by trade.

What is important in this critique is labor.  Labor is the most important mechanism in an economy...it creates the wealth!  

Without savings and and the risk taking activity of entrepreneurs in the marketplace, labor has no productive outlet.The labor theory puts the cart before the horse.

A Capitalist 'free trade' system that cannot grow due to a limited world and again end up cannibalizing the labor classes to achieved the expected growth (interest rate) ending is growing unemployment. 

Market prices regulate finite resources with infinite human demand. It is the destruction of wealth by socialist means that idles labor. No human or committee of humans, no matter how educationed can replace rationing by the market pricing system.

It has been the commendeering of this gov and this system by wealthy interests that has steered this train from it's course.

It will remain that way as long as the poor and middle classes with their insignificant single vote think they can direct government to steer wealth in their direction. The distribution of wealth hasn't changed since Victorian times. For as long as the voters endorse this system of stealing, the wealthy have the edge.

Will they ever learn? Do they want to learn?

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Re: Berlusconi Says Leaders May Close World's Markets

This is fun.  Those involved in this debate, in ways, are arguing some of the same central points without recognition that this is occurring.  Considering the response of Hewittr, I guess I would be considered to be scapegoating free markets...this is wrong.  I scapegoat contemporary regulated markets that masquerade as 'free markets'.  I must stress again that markets are NOT synonymous with capitalism.  Once there is wealth and investment, markets begin to be regulated by the accumulaton of wealth to a smaller and smaller proportion of a population which begin to become those political elites.  My entire point is that there is no one systemic smart bomb that handles econonmic and political lifestyle.  I would propose that less numerous 'rules' are needed in smaller markets, but as a system becomes larger, where actors are anonymous with vastly varying geographies, then rules become necessary since there is less knowledge needed to make decisions and the community mechanism, important in local markets, ceases to exist. 

While I do not prescribe to one philosophy of political economic structure, I am weary to discard important observations because other points are distasteful to my worldview.  In other words, don't throw the baby out with the bathwater in terms of Marx....also one needs to understand the writings historical context.  Marx was observing and critiquing patterns and utilizing these observed patterns to predict the outcome; the central focus being class struggle (not important?).  I always find it interesting that Marx argues that the rise of communism would eventually result in socialistic dictatorship.  In the end, Marx was a theorist that inspired political and economic movements.  As long as these are not conflated, value can be extracted even if the central thesis may be distasteful to one's worldview.

As for von Mises...an originator of the contemporary Neoliberal philosophy...there was a disdain for populist democracy that maybe some others share.  There was a specific agenda for a politcally entrenched economic structure that allocated power to a small proportion of 'responsible men'.  How is one proven to be 'responsible'?  By being rich.  The central ideologies of the founders of the Neoliberal movement have been well researched and documented.  I guess if one is not a proponent of democracy, then Neoliberalism could be very tasty.

As fun of this debate is...I really think so.  I understand that I am not going to turn an individual away from a deeply held view of the world especially in a forum where we are all strangers.  DO take away that I appreciate the debate and we can all agree that this is what is missing in society...a hearty debate of fundamentals.  I HOPE we all agree at some central point that all men (used in classis sense) deserve opportunity to work and support offspring in as much 'liberty' as possible.  I quote 'liberty' only because the interpretive variation of what this means in interactive society...especially in the context of larger political and economic structures.  Good stuff all!

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Re: GDon

Steve - cogent points. I'm glad you're on this board.

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Re: Berlusconi Says Leaders May Close World's Markets
If you think that the wealthy get their wealth from the poor, I have one question. How is it possible to get wealth from a group that has no wealth? Bill Gates' wealth is greater than everyone who is considered 'poor' in this country. His wealth came from the production of software and it's sale around the globe, not from any imaginary group of deprived people. I have not seen the world's greatest proponent of capitalism even mentioned here so it is about time. Read Ayn Rand, especially her book of essays Capitalism the Unknown Ideal, and her novel which defines what capitalism is, Atlas Shrugged. Capitalism is based upon the production of goods and services, with production comes wealth, it is created. Available goods and services are what give gold its value, not the other way around. In a world without products gold is valueless. Gold is a medium of exchange, not a store of value. Gold has 'value' because of the expectation of being able to use it as a consistent medium of exchange, something you can store for future trade. Because of it's acceptability and because, unlike a fiat medium, it cannot be expanded exponentially, gold is the best medium of exchange.  A bank that serves its customers is capitalistic, one that serves speculators with it's customers' money is not. A bank that gambles with it's customers' money is not a bank, it is a casino. What kind of a bank do you have?
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Re: Berlusconi Says Leaders May Close World's Markets

If you think that the wealthy get their wealth from the poor, I have one question. How is it possible to get wealth from a group that has no wealth? Bill Gates' wealth is greater than everyone who is considered 'poor' in this country.

I will assume that this pertains to my comment since it seems to be directed at one specific line.  The first response is please don't extrapolate one sentence, one point, and make it the central thesis. Next, my comment was specific to the period when a capitalist system cannot grow to cover accumulated debt and finds other ways to do this.  This can involve downsizing of companies, layoffs, liquidation of real assests, corporate mergers (that usually include all of the former), or in extreme circumstances tax payer bailout packages where losses get transferred to the middle-class and future generations.  Of course there are periods of growth and when there is actual room for this growth (mostly at the expense of other places), things are good, but then the downturns comes and there must be contraction....this is the period of cannibalism (destruction capitalism).  Policies, like the New Deal, did not strive to eliminated Capitalism, only to safeguard against devastating downturns by spurring investment that would benefit future growth (jobs, technology, and infrastructure).  So, Capitalism is not evil, just a system with inherent flaws that need to be recognized.  In all, I never argue against capitalism whatsoever. 

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Re: "do you not realize that gold is just another currency?"

@srbarbour 

"All currencies are backed by nothing.   Or do you not realize that gold is just another currency?   Currencies work because individuals agree to honor them. "

 

Uhh, what? Gold is a precious, scarce metal, with inherent value.

If not used as a currency, it is still a barter good that fetches a high value as compared to its small weight. It is also durable, in that it is not prone to erosion or rust, so is ideal for storage.

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Re: thomas jefferson

 

Without a doubt, Chris has done an amazing job, and we're all for "integrity".  So while we can appreciate thesis-level citations, this is a BLOG....

Regardless, here is the citation, and you can find the same citation elsewhere.

http://www.quotationspage.com/quote/37700.html

 Thomas Jefferson - Letter to the Secretary of the Treasury Albert Gallatin (1802):

" I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."

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Re: GDon

Steve -

Suffice to say that while we may agree on some things, we have a very different opinion on what individual freedom means in the realm of economics, and apparently a different reference on how government "protection" was used to subvert it.

I disagree that we have ever had "unregulated capitalism", and this gives birth to your straw dog.

Free men, "each a sovereign", at the time of the Declaration of Independence, was a unique experiment in human history.  All prior politico-economic systems were variants of either monarchies (dictatorships) or tribalist (socialism, communism), whereby the rights of the individual were trumped by the royals, the dictator, or the tribe; and this has economic consequences.

If a man has individual rights, as defined in the DOI, he has a right to his actions.  Consequently, he must have a right to the products of his actions, or the latter cancels the former.  This makes all men "equals" in the pursuit of happiness (not the right of happiness - smart guys those Founding Fathers...)

On the other hand - The "Robber Barons" of the early industrial revolution (JP Morgan, Rockefellers, etc) profited from goverment regulation, as if issued to royals by the monarch.  The railroads as owned by the "Barons" were granted monopoly powers by the ICC, preventing true competition, and creating fortunes for those lucky enough to be cronies of the politicians granting their economic monopolies.

This period was NOT "unregulated capitalism", but rather, freedom and capitalism skewed and regulated politically, for the benefits of a few, at the expense of others.

Similar monopolistic fortunes were allowed for Standard Oil, Westinghouse and on, with the complicity of goverment regulation. 

Worst of all, last in 1913, these protected Barons were granted monopoly right to one of the few functions of government in the free rights of man (along with protection of the individual from foreign invaders or "national defense", and protection from internal criminals or "police and courts") and that is  issuance of a nations currency.

It is this protected cronyism, as a perverted definition of "capitalism" that you attack.  But, your solution IS consistent with a desire for regulation.   This only means Comrade, that you need to be on the "right side" of the regulation to prosper (i.e., a member of the Politburo, or a recipient of the ICC, or the DNR, or the FCC, etc., etc....)   Do you consider these to be "thoughtfully designed regulations and controls"?   Your distinction between "good regulations" and tyranny, are only a subjective matter of degree. 

Further - comparing Lenin's communism, to any sort of "utopia" - well... best to ask somebody who lived it. 

Further - in contrast to your statement that, "it is the nature of....capitalism to lift itself up by pushing others down" suffers further from your straw dog argument.   True capitalism, where individuals are free to their output, allows for one man, to trade his productive output, for what he senses as an increased value, from another man, free to do the same.  This make it a win-win for both, and this is the engine of human prosperity.   Unless protected by the government, hustlers and swindlers are weeded out and brought before justice.

The current Banking system is a government-controlled monopolistic system, and I certainly don't advocate more of the same.  

As for the gold standard - to argue that we weren't on it is just a lack of history knowledge.  One only needs to read Article I Section 8 & 10 of the US Constitution. 

As for "all currencies are backed by nothing" -  If you mean that all "mediums of exchange" are conceptual, you are right.  However, you obviously don't know the difference between money and currency.    Money represents tradeable value already paid for.  Gold has the historical distinction as the most accepted concept of money in human history.   If, walking in Italy, I find a gold coin dropped by a Roman soldier, it still has the "pre-paid" value associated with it from 2000 years ago, in terms of purchasing power.   Can governments and the human population decide tomorrow, that gold is not money?  Perhaps, but there has never been an equal in rarity (so no cheating), divisibility, durability, portability, etc.   As a "barbarous relic", odd that the Central Banks still hoard it...

Currency is a paper "bill" or "note", and can be issued "in arrears", as a debt, and claim on future labor.   Watch Chris' Crash Course again to see the difference.   

As for bank using (adverse?) leverage while on the gold standard - The gold standard is intended to prevent politicians and/or bankers from collusion, in devaluing the nation's currency, which causes inflation.  Unless there is money in gold, represented by "pre-paid" human effort, to which the currency is pegged, then you can't just expand the currency supply "by fiat" - i.e., no cheating by Politicians and Bankers to cause inflation, (to pay for war and entitlements).

Because gold (and silver to some extent) represents the best example of true money, an ounce still represents the same value, in terms of what goods and services it can be traded for.    While in 1930, an ounce was equaled by $26 (paper currency), that currency has been continuously devalued, by our government, on purpose, to "cheat" and buy war supplies and entitlements, such that $26 worth of essentially the same goods and services now requires $1000 of that currency.

For savers,inflation has, through intentional theft, taken 98% of the value of what that currency represented since 1930, and at the expense of the middle class.   That is WHY it now requires 2 people in a household to "make ends meet".

As for Ron Paul, and those professing a love of freedom (economic and political), the "free market", as the ideal of America's birth (and NOT the straw dog you are attacking), is considered a unique and highest embodiement of human achievement, in contrast to any "utopia" consisting of the same demeaning and worn tribalist systems (monarchies, socialism, collectivism, communism, etc) of the last 50,000 years.

So we have some differences, but hopefully we have the same desires for "the good".

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GDon
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Re: Berlusconi Says Leaders May Close World's Markets

ajparrillo -

What is your basis for assigning "Neoliberal philosophy" with Von Mises, and ascribing to him "a disdain for populist democracy"?

I would like to hear your basis for claiming that the ASE has any "disdain for populist democracy", unless you are defining "populist democracy" as advocating elimination of private property, or advocating government control over the decisions of individuals on their personal and subjective economic decisions and actions.

Where do you vind that Von Mises advocated "a specific agenda for apolitically entrenched economic structure that allocated power to a small proportion of 'responsible men'"?  This is just a crock.

What part of your misguided understanding of Von Mises, would conclude to you, that advocates of his theories and body of work would "not be a proponent of democracy"?  Again, this is absolutely contrary to the teachings of the Austrian School.

What they DO believe is that free individuals, unhindered by coercion of government "guns", will each determine individually, through their own processes, the "value" represented by "price", and that this creates the market "in aggregate".

What they DO believe, is that governments allowed to manipulate and control credit, markets and individual actions, will necessarily reduce the efficiency of the people to determine for themselves, the "value" in market offerings, AND that this interference, or what they refer to as government-manipulated malinvestment, is what produces "Dot.com" bubbles, "Housing" bubbles, recessions and depressions.

What they DO belive, is that governments generating purposeful debt, to keep fiat-currencies in circulation, create an overwhelming debt burden on the populus, which eventually leads to economic and political serfdom, controlled societies and human poverty, ultimately leading to excess entitlements and war.

The current world credit and debt collapse is an amazing endorsement and vindication (after the rise of Marxism, Keynesian economics, and 2 World Wars plus numererous smaller ones) of many of the sound fundamentals in the Austrian School, of which Von Mises was a primary founder.

Finally, I find it interesting that one can speak against the Austrian School (albiet without fully understanding it), when much of what Chris Martenson has presented fully illustrates Austrian principles (inflation=excess currency supply;  fiat-currency = debt currency;  government credit control = asset "bubbles",  etc., etc.)

If you feel Chris' teachings and theories are of interest, I suggest you investigate the economic theories of the Austrian School (Von Mises, Hayek, et al)  more thoroughly.

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ajparrillo
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Re: Berlusconi Says Leaders May Close World's Markets

GDon,

Talk about straw dogs!?  I think you are mis-perceiving my intentions of debating these topics on one hand and assume I am not knowledgable on some subjects on the other.  OK.

SO, please focus upon keeping a civil debate and resist the temptation of assuming you know more just because you ascribe to a specific philosophical perspective.  The Austrian School is philosophical and is not absolutely proven; THIS CAN BE SAID ABOUT ANY SYSTEM/IDEOLOGY.  Just because someone does not ascribe to your chosen philosophy/theoretical perspective, this does not mean they do not understand your position, nor does it mean they are incorrect.  With this aside, lets move on.

So, von Mises...The foundations of what is known as Neoliberalism is the Mont Pelerin Society (named for the Swiss spa of the orininal meeting in 1947) which included von Hayek, von Mises and Milton Friedman.  Von Hayek, the political philosopher and economist, had political philosophies that mirrored Walter Lippman's "responsible men."  These were also echoed in the political philosophies of Leo Strauss, the father of Neoconservativism, that was also associated with the overall Neoliberal movement.  Von Hayek, himself, proposed the founding of private "think tanks" as the long-term strategy as to change the conventional wisdom of society at large and to influence political structures.

It seems that you want to either seperate economic system/structure from political structure or indicate that economic structure satisfies the requisites political governance.  The former only occurs in theory, not in reality, and the latter depends upon your vision of governance.    Free market systems serve to entrech wealth over the long term as disparities develop, which will absolutely happen in a winner/loser system.  With disparities of wealth, all men are not created equal, especially those born into wealth.  Therefore, this wealth will create inequity in the PURSUIT of happiness from the outset; egalitarianism is deconstructed.  Therefore, societal equity and democracy suffers when this economic system is allowed to dominate society...which occurs in 'free markets'.  Further, the supposed natural law of markets is a fallacy.  Truly free markets only exist at very small scales; entrenched wealth creates new rules as the system increases in scale for many reasons, i.e. lack of perfect knowledge (a pivotal point that separated real world from theory), anonymous actors, etc.  Recognizing this is important.

In the end, nowhere do I argue for one absolute theoretical system/structure over the other; I do not prescribe to absolutes since these will never exist and will never work since these demand ubiquitous belief systems.  Nor do I argue that your beloved Austrian School is invalid; I am only critiquing aspects.  I not a proponent of central banking, nor specific regulations, especially those in existence today.  I personally prefer a regulatory system (societal agreement) that is as simple and streamlined as possible; the specifics being debatable.  My position is that we need to preserve not only economic competition, but also the tennets of a pluralist democracy.  For these to coexist, society must remain diligent, flexible and not overly reactive.  Part of this is not regulating outcome, but ensuring that rules apply to all and that citizens can still pursue some happiness (i.e. their rights are protected).  As a final thought, we have to think of this debate outside of the perfect theoretical landscape, but in terms of a limited world where there are already extreme wealth disparities due to force.  The former being one of the points of CM in the Crash Course.  I could go on with my idealized view of gov involvement, but I digress.

I don't know, but I would guess that we would agree on many things, but for many reasons have come to understand the world a bit differently.  That is fine...and good as indicated by the sharing of ideas and resulting debate.  Since I value democracy (a socialist system) as the best bet for governance, I tend to lean towards preserving civil liberties over perserving the pursuit of economic profit....if necessary to make a choice.  I think we have all said our peace on this issue and I really like debating these topics with you and others.  Society needs to be more like this, individual engaged in conversations about the foundations of our lifestyles, not last night's reality tv.

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ajparrillo
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Re: Berlusconi Says Leaders May Close World's Markets

DDon,

I am sorry...I meant to acknowledge that my phrase choice was emphasizing my own take on von Mises' political philosophies.  The words "disdain for populist democracy" is an extrapolation of the "responsible men" notion.

Lippmann’s name holds significance for the evolution of neoliberalism in the wake of the New Deal for one primary reason. His ideas inspired the convening of the Colloque Walter Lippmann in Paris in August of 1938. Two of the founders of neoliberal ideology from the original Austrian School of Economics, Ludwig von Mises and Friedrich von Hayek attended this colloquium and based many of their ideas for neoliberal tactics on Lippmann’s ideas on propaganda and the role of the “responsible men.” Immediately afterward, Hayek would attempt to assemble a group of responsible men, noted for their commitment to the principles of economic liberalism under the banner of the Society for the Renovation of Liberalism. Though World War II would stymie their efforts, Hayek would renew them in 1947 when he convened the first meeting of the Mont Pelerin Society. Lippmann also attended that meeting.

We should not underestimate the significance of Lippmann’s associations with Hayek and the Mont Pelerin Society. In 1944, Hayek published The Road to Serfdom, in which he appropriated and applied an pseudo-Darwinian argument to explain that social history reveals a pattern of “natural selection” very similar to that revealed in natural history. Hayek used this argument to contend that only the “fittest” institutions survived. Older and more primitive institutions, he argued, suffered from a “collectivist” or “communal” orientation that inhibited individual liberty. Ignoring the corporate power behind Italian and German fascism, Hayek equated this “collectivist” principle with both fascism and socialism. He used this rhetoric to attack the anti-liberal policies of John Maynard Keynes and Roosevelt’s New Deal, arguing that any form of state intervention or planning would lead society toward fascism. Returning to his theory of social evolution, Hayek contended that history had proven three institutions to be of greatest value to humanity: the family, the church, and the free market.

Gabbard and Atkinson, 2007

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GDon
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Re: Berlusconi Says Leaders May Close World's Markets

ajparrillo -

I didn't intend for a passionate response to be taken as arrogance - my apologies if it came across that way.

Certainly, I too appreciate the thoughtful debate, and it is through reasoned discourse, free from either government or populist restriction, that we will find the best solutions to obstacles and difficulties which await all of us.

Appreciate the discussion.

 BRgds

 

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ajparrillo
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Re: Berlusconi Says Leaders May Close World's Markets
GDon, Good stuff. I realized also that my reply sounded a bit accusatory in its intial tone...I think we are all passionate. Again, I think we would mostly agree on many issues. What I try to keep in mind that even though I may have some similar views with others, that we have probably come to these by very different routes that includes diverse sources of information...at least I hope so. I would hate to have a world where inportant information is scarce and narrowly defined. Again...good debate and keep fighting the good fight!

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