Posts Tagged ‘government deception’

How much more evidence is needed till we can say we are living under dictatorship?

October 16, 2010

This is becoming boring. How much more evidence do people need in order to realize what is happening?

As I pointed out in this prior post about Arar-vs-Ashcroft there comes a point when in order to insure its own survival, the state must willingly and deliberately trample the law.

Excerpts (emphasis added):

The Obama administration does not support a nationwide moratorium on foreclosures at this time, Federal Housing Administration Commissioner David Stevens said Sunday in an e-mail response to questions. “We believe freezing foreclosures for all banks in all states, whether we have reason to believe them to be in error or not, is simply not the prudent step to take in this fragile housing market,” he said.

Whether we believe them to be in error or not!!!

As in Arar-vs-Ashcroft where the state argued “[…] even if the government violated Arar’s Constitutional rights as well as statutes banning participation in torture, he still has no right to sue for what was done to him. ”

How much more clear can it be? The state is now above the law. Ergo, the rule of law has yet again been suspended.

We are now living in a dictatorship.

Dispute that if you can.

Something is not confirmed till government officially denies it

October 15, 2010

My favorite theme. Check out any of these prior posts…

Obviously having learned nothing from Almunia and his histrionics, today we have none other than the Prime Minister of Spain declaring:

Euro Debt Crisis is Over

Now, I can understand how politicians can never learn from their and other politicians’ mistakes past and present. Politics is inherently and by necessity expedient and manipulative in nature so politicians do and say what they do and say.

What I have a harder time understanding is how presumably “informed” media agents, media companies, professionals and, indeed, members of the public can so regularly not see political statements for what they are.

Once again. As I did with Almunia whom, incidentally, has disappeared from the public scene, I will gladly take the other side of this bet. Sovereign credit spreads as well as fiscal revenue trends say this is easy money. So easy in fact, it could qualify as hustling.



October 15, 2010

Talk of fraud is now going main stream. Even previously willfully blind media companies like CNBS are now at the very least mentioning the word. Spitzer, Ratigan, the NYT, and a handful of other media companies appear, at least momentarily, to be joining the chorus too.

The trigger this time is what is now known as Foreclosure Gate. But it could have easily been any of a plethora of other things that triggered the sudden realization that fraud is a deliberate tool of the authorities.

But Foreclosure Gate, or the deliberate choice to allow banks to disregard accounting compliance, or government giving public funds to select private companies or any of a list of other actions that are blatantly and factually illegal are only symptoms of a dynamic that is well known and that leads to a logical conclusion that, too, is known. We know why this is happening and we know how it ends.

How do we know?

Because it has happened before; several times in fact. And every time it ended the same way.

So, absolutely, let’s make a big deal of Foreclosure Gate. It is right we should and hopefully someone will get indicted.

But Foreclosure Gate is only a symptom. What we need is for someone with clout to take up the matter of the monetary system. The monetary system is THE ultimate cause of this all too predictable and politically mandated debacle.




Wall Street Pay: a record $144Billion

October 14, 2010

What is lost in the soul searching and hand-wringing (or hand rubbing depending on who you are), is that this is not a surprise. It is not and should not be a surprise.

In a debt based fiat monetary system, as the dynamic of debt based currency develops, the system must gradually but necessarily become more statist. The logic of debt based money must necessarily lead to the state becoming progressively more intrusive as it gradually and by necessity becomes the largest actor in the economy.

By implication, this means two things – first: at the outset, nominal and intrinsic value are closely related but as the fiat money dynamic develops nominal value decouples from intrinsic value at increasing speed (financial value decouples from intrinsic value) – second: as financial value runs away from intrinsic, profit gradually concentrates in fewer and fewer sectors till towards the end only the financial sector enjoys any profit. This is because the financial sector is first in line to make use of the currency thus it benefits most and, as the currency implodes, it benefits last too.

Excerpts and comments:

Profits, which were depressed by losses in the past two years, have bounced back from the 2008 crisis.

Profits have bounced back due to government direct and indirect intervention. Direct intervention took the form of the various support programs like TARP that gave public funds outright to banks and financial corporations. Indirect intervention takes the form of preferential and exclusive accounting treatment of financial institutions that are allowed to disregard losses. Indirect intervention is in fact much more insidious and destructive because as government allows banks to appear solvent, banks can attract institutional money from pension and insurance funds for example. Thus, the public is robbed twice. The first time it is done overtly if by coercion but the second time it is done by stealth without the express knowledge of the public.

The pay numbers show that firms, benefiting from low interest rates and strong international markets, continue to base their pay on economic and market conditions rather than the level of pressure coming from regulators in Washington and overseas.

Economic conditions!? Usage of food stamps is at an all time high and increasing, unemployment as counted by U6 is at an all time high and increasing, the currency markets are in disarray, there is gross industrial overcapacity and waning demand globally, Credit Default Swaps on sovereign debt are increasing … and bank bonuses reflect market conditions???? Can you imagine what bonuses would be like if the economy was actually doing well?

Goldman’s revenue is expected to decline by 13.5% this year to $39.1 billion from $45.2 billion in 2009. Compensation remains projected higher than last year, up 3.7% to $16.8 billion, from $16.2 billion in 2009, according to the Journal survey.

Compensation is taken out of total revenue. When government allows banks to appear solvent, banks can attract institutional money thus enhancing total revenue. Do you understand how the gig works?


Food stamps usage: where is the recovery?

October 6, 2010

July foodstamp has just climbed to a new all time high. […] Participation has set records for 20 straight months.

Social development, government legitimacy and the monetary system

October 5, 2010

I’ve been away for a few days traveling. During this time, I’ve also had the opportunity to drive through France from Bordeaux, to Paris and then on to Beaune. Everyone I came across laborer or entrepreneur they may have been, had a beef against the government; in some cases they had a serious beef.

I’ve come across two good posts in recent days. The first is an opinion piece in the New York Times which seems to be one more main stream publication that appears to be growing a pair. The second is a blog post that resonates deeply with me. Also, I’ve finally been able to get me a copy of Ellen Brown’s “Web of Debt” that I am reading presently.

Follow the dirty money –

Referring to “fines” imposed by regulators on blatant criminal behavior by the largest banks, the author comments:

“[…] The Barclays deal was just one in a long line of wrist slaps that big banks have recently received from the United States. Last May, when ABN Amro Bank (now largely part of the Royal Bank of Scotland) was caught funneling money for the benefit of Iran, Libya and Sudan, it was fined $500 million, and no one went to jail. Last December, Credit Suisse Group agreed to pay a $536 million fine for doing the same. In recent years, Union Bank of California, American Express Bank International, BankAtlantic and Wachovia have all been caught moving huge sums of drug money, but no one went to jail. The banks just admitted to criminal conduct and paid the government a cut of their profits. […]

This is all factual information of course. It is not opinion, speculation or conjecture but fact.

But despite the enormity not only of the sums involved but of the legal and moral implications of what is by now well documented criminal negligence by the governing elites, not many seem to be able to make the part of things.

Sure, people are angry. People are angry in the USA as they are mad in the UK, France, Spain, Greece, Latvia, Hungary and a host of other countries. But most are mad at what in fact are only the proximate causes of their misery. The usual refrain is that bankers are heartless thieves or that politicians are knavish duplicitous bastards or that government (or individual leaders).  All probably true and provable statements given a precise definition of the charge but, of course, nothing that hits home in the realm of the ultimate cause-to-effect dynamic.

Which leads us straight to:

Beyond the trust horizon by Stoneleigh

Excerpts with emphasis added:

Relationships of trust are the glue that holds societies together. Trust takes a long time to establish, and much less time to destroy, hence societies where trust is wide-spread, particularly for long periods of time, are relatively rare. In contrast, societies where trust does not extend beyond the family, or clan, level are very common in history.

The spread of trust is a characteristic of expansionary times, along with increasing inclusion, and a weakening of the ‘Us vs Them’ divide. Essentially, the trust horizon expands, both within and between societies. […] Within societies this leads to relatively stable and (at least temporarily) effective institutions, and bolsters the development of the rule of law. The rule of law means that law constrains the powerful (more than usual), and there is a reasonable degree of legal transparency and predictability, so that people are prepared to trust in the fairness and accessibility of justice. […] Within societies, trust also confers political legitimacy (ie a widespread buy-in as to the right of rulers to rule). Where there is legitimacy, there is relatively little need for surveillance and coercion. A high level of trust (all the way up to the level of national institutions) is thus a prerequisite for an open society. […] Between societies, an expansion of the trust horizon tends to lead to political accretion. Larger and more disparate groups feel comfortable with closer ties and greater inter-dependence, and are prepared to leave past conflicts behind. The European Union, where 25 countries with a very long history of conflicts have come together, is a prime example.

However, all expansions have a limited lifespan, as do the benefits they confer. They sow the seeds of their own destruction, especially when they morph into a final manic phase and begin to hollow out the substance of social structures. Institutions, whether public or private, retain the same outward form, but cease to operate as they once did. For a while it is possible to maintain the illusion of business as usual (or effectiveness and accountability as usual), but not indefinitely. Everything is subject to receding horizons eventually, and trust is no exception. […] Trust in existing organizational structures does not disappear overnight, but ebbs away as institutions decay or the extent of their corruption is revealed. The loss of trust from higher levels of organization undermines the fabric of a society now operating beyond the trust horizon. When trust contracts, socioeconomic contraction is just around the corner. […] Societies in this position lose a critical pillar of support – the collective acceptance of their people. Governing institutions lose legitimacy, at which point the cost of governance increases significantly, because where there is no trust, resource-intensive surveillance and coercion develop instead (Guido comments: note here the cost of the last G20/G8 meeting in Canada came to US$1Billion… Billion with a “B”… that’s twelve zeros of which, other than to feed lobster and caviar to our politicians, the largest chunk was devoted to security). […] On the way down, as on the way up, there are effects both within and between societies, as the ‘Us vs Them’ dynamic sharpens once again. ‘Us’ becomes ever more tightly defined, and ‘Them’ becomes an ever more pejorative term. The result is division between disparate groups of people within a society, for instance the unionized and non-unionized, the haves and the have-nots, or different religious or ethnic groups. When there is a paucity of trust, and not enough resources to go meet highly inflated expectations, the risk of conflict is very high. Previously formed political accretions are at a high risk of coming unglued as they will no be longer supported by trust. […] Between societies, where the existing range of divisive parameters is likely to be much larger, and where there may be a past history of conflict, the risk of conflict flaring up again rises significantly. This is especially likely if societies attempt to deflect blame for the situation they find themselves in towards other nationalities.

There is much more in the post that is well worth a read.

What remains for me to add is this. Organized society cannot but make use of a monetary system. Adopting a unit of measure and exchange is the one and first condition for the development of a society. Choices of systems are few and very well defined so that, at least in advanced open societies, debate of the choice should be a matter for civic institutions if not the public at large.

Yet, although the monetary system was hotly debated throughout the 1800s, today few understand the logic and ramifications of the choice of one system over another and this is true for professionals in the economic and finance industry too. In our life time, most “experts” and pundits of the dismal science evolve in intellectual environments that have been inculcated into their heads by an academic system that is evidently and deliberately geared to divide along dogmatic ideological  lines rather than relying on the empirical scientific method that has demonstrably served us well during the past four hundred years.

So it is that after a century during which some of the great figures of our modern history like Andrew Jackson and Abraham Lincoln fought a pitched war on behalf of the free world, the awesome power of the financial elite, despite having lost several major battles, eventually prevailed on 23 December 1913 and debt based money once again become the monetary system of what was then the nascent global hegemon; the USA.

The rest is history.

The few who understand the system will either be so interested in its profits or so dependent upon its favors that there will be no opposition from that class while, on the other hand, the great body of people, mentally incapable of comprehending…. will bear its burdens without complaint.” – (Private communication from a Rothschild investment house in London to an associate banking firm in New York dated June 25, 1863 – E. Brown Web of Debt page 91)

Curtailing public expenditure as catalyst for revolution

September 20, 2010

This is not a new theme in these pages. In this March 2009 post you can follow links and read comments to other blog entries on the logical progression brought about by the inability of government to induce expansion in the credit markets.

Today we have this report chronicling the lengths some towns, counties, municipalities and states are going to in order to fend off bankruptcy.

Sales of existing homes are at their lowest level in 15 years, and new home sales plummeted this summer to the lowest levels on record. Property and sales tax revenues have shrunk. And nowhere is this more apparent than at the local government level, where officials are being forced to roll back the everyday hallmarks of modern civilization.

Cincinnati, Ohio, is cutting back on trash collection and snow removal and filling fewer potholes.

The city of Dallas is not picking up litter in public parks. Flint, Mich., laid off 23 of 88 firefighters and closed two fire stations. In some places it’s almost literally the dark ages: the city of Shelton in Washington state decided to follow the example of numerous other localities and last week turned off 114 of its 860 street lights. Others have axed bus service and cut back on library hours. Class sizes are being increased and teachers are being laid off. School districts around the country are cutting the school day or the school week or the school year—effectively furloughing students. The National Association of Counties estimates that local governments will eliminate roughly half a million employees in the next fiscal year, with public safety, public works, public health, social services, and parks and recreation hardest hit by the cutbacks. A July survey by the association of counties, the National League of Cities, and the U.S. Conference of Mayors of 270 local governments found that 63 per cent of localities are cutting back on public safety and 60 per cent are cutting public works. […] America is moving “from the Jetsons to the Flintstones,” [Mrs. Huffington] argues. “The American dream was already based on the idea you could work hard and do well and your children will do better. Now we are confronted with downward mobility across the board. You have the phenomenon of unprecedented numbers of college grads who can’t get jobs.” The current public sector cutbacks in education and infrastructure will only make things worse, Huffington says. “You are both hurting people in the present, and basically undercutting your economic growth and prosperity in the future.”

And here is where most people are unable to reconcile what has been happening till 2006 and what is happening now. Pay attention.

But the problem isn’t simply a product of the current recession or the 2008 financial crisis. It is now well understood that for years Americans lived beyond their means on borrowed money.

Technically true. Americans like everyone else in the West too.

But that is not the problem. The problem is what caused people to live beyond their means. Has anyone asked the question and looked into the dynamics? People will say that capitalism, selfishness, greed or vanity are the causes of people living beyond their means. Though all true contributing factors, these are but the proximate causes.

I say it is the inevitability of the political process aided and abetted by the monetary system.

Politics is inherently and by necessity manipulative thus it can only result in expedient self serving policy. This is the one single reason why a restricted circle of banks were able to impose a fiat monetary system on the politicians in 1913. Fiat money guarantees profits to the banks whilst allowing politicians to manipulate social/economic reality. Predicated on inflation, the inflationary dynamic brought about by fiat money induces a rise in trade and asset values. At the outset of the dynamic, the difference in the rate of increase in nominal or intrinsic value is negligible. But as the dynamic progresses, the rate of increase in nominal value decouples from intrinsic value till the former runs away from the latter. Nominal value is associated with credit expansion.

Credit expansion is not a bad thing in and of itself. But credit expanding at rates that far outstrip the rate of expansion of GDP is not a good thing. So that in an environment where the progression of GDP is anemic if not stagnant the only way to induce a rise in nominal asset values is by manipulating interest rates ever lower. Eventually, when interest rate manipulation loses traction, financial gimmickry must take-up the slack (derivatives, off balance sheet investments, CDOs, CDSs, MBSs… ). When even derivatives hit the proverbial wall, government must step in with creative measures. Initially, preferential accounting treatment for select entities, then progressively outright interventions and preferential legal treatment for said favorite entities.

… have to run now… will finish later…

The keen observer will notice that a fiat monetary system is inherently and mathematically limited. That’s because despite what Monetarists and Keynesians may wish, inflation conforms to the law of diminishing returns so that at at some point, more inflation no longer has any effect on the expansion of GDP. Official data buttresses this.

The above is not conjecture. It is fact that cannot be disputed.

If politicians for whatever reason have opted for a fiat monetary system, what is also evident is that the success of the choice hinges on never allowing the public to debate the choice let alone ratify it. It follows that the success of imposing fiat money upon society rests on government successfully avoiding any study or debate of the system in academia or in economic discourse.

If the above is achieved successfully, economists, pundits and professionals will argue and debate any number of issues at any given time but few, if any, will ever question the choice of monetary system itself. In fact, things are even better.  Ignorance of the monetary system and of the laws that govern fiat money also insures that scholars in other human sciences fail to understand the basic dynamics that, for example, lead to over-consumption, the depletion of resources and the devastation of the environment – ramifications that are due in large part to the choice of monetary system.  Empirically then, it is clear that the debate must (should) center on the monetary system as the dynamic that is upstream of any and all human dynamics.

A fiat monetary system is necessarily predicated on high monetary velocity which means low savings and expanding credit. This is a mathematical truism that cannot be disputed.

Thus, if the authorities willingly discourage study and discussion of the system and, at the same time, lower interest rates and expand credit markets (as required by the logic of fiat money), the inescapable conclusion is that individuals must perforce go progressively from living a decent life on one salary, to needing two salaries, to depleting their savings, to going into debt initially for a little extra to splurge on some luxury until, finally, going into debt even for daily necessities.

So, absolutely, Americans and Europeans have lived beyond their means. But this was forced upon them by aberrant government policies that make it inevitable that people behave the way they did.

But where does that leave people like the good citizens of Ashtabula County, Ohio? How can they be safe from criminals without a fully staffed local police force, TV station WKYC asked a local judge in April. “Arm yourselves,” came the reply from Ashtabula County Common Pleas Judge Alfred Mackey. “Be very careful, be vigilant, get in touch with your neighbors, because we’re going to have to look after each other.”

And so they did. In July, a group of farmers removed the safeties from their shotgun triggers and surrounded a trailer in which a suspected house robber was hiding while they waited for the county’s last, lone squad car to arrive

Middle class running as fast as it can – Commentary: Another day older and deeper in debt

The temperature is rising…

September 14, 2010

Nothing new to readers of this blog…

And then we have this from the man that not only single-handedly made the fiscal situation worse but the very man that blackmailed congress by painting an outcome of fire and brimstone if they did not approve the $700Billion he was asking for…

And from my favorite fiat money piñata…

… and although in this article it is not him speaking, we know he endorses the idea set forth by “Mr Blanchard called for extra monetary stimulus as the first line of defence if “downside risks to growth materialise”, but said authorities should not rule out another fiscal boost, despite debt worries. “If fiscal stimulus helps avoid structural unemployment, it may actually pay for itself,” he said.

I know I keep going over the same ground over and over again. But that’s because main stream politicians and economists drone-on about the same thing over and over again. Everybody and their cousin wants stimulus of one variety or another.

As far as I am concerned, I just wonder why nobody that matters has noticed that this time around doing more of the same may actually be counterproductive. Every single field of human endeavor is subject to the study of efficiency. Whether in science or agriculture or engineering, efficiency is a key parameter that is sliced, diced, studied and evaluated at all levels. So why shouldn’t the same degree of scrutiny apply to the monetary system? Why is it that main stream politicians and economists cannot see that money too conforms to parameters of efficiency?

In 100 hundred years since a select number of banks imposed our modern monetary system, the efficiency of money has been steadily declining. Today, in the absence of new markets or new currencies that could be absorbed in the US$ monetary system, creating and spending more money no longer gets us the desired result. The metrics are there and are available for anyone that wants to see:

Graph: M1 Money Multiplier

At a time when just about every single sovereign nation has spent all the money they have plus all the money they don’t have and will not have for decades to come, simple arithmetic says that we should try another tack.

But of course. In a democracy, spending cuts are politically untenable. Particularly when governments have played fast and loose with public finances for decades so that today larcenous and criminal strategies are necessary just to maintain the appearance of normality:

Today, the US Treasury department disclosed that its August deficit was a slightly better than expected $90.5 billion, compared to $103.6 billion in the year prior. What received less fanfare was that the comparable increase in debt in the month of August 2010 was $212 billion, compared to $143.6 billion a year earlier. In other words, more than twice the the deficit had to be issued in the month of August.

So, what do you think our politicians will do this time around?

You know what I think: 2013/2015 latest…

Prepare accordingly.