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Money Mad : Driven by Greed, Enslaved by Debt


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Money Mad : Driven by Greed, Enslaved by Debt

How private money fuels consumption & debt creation

==================================

 

This thread was inspired by a soundbite passed to me by Cuthbert Calculus:

"Less than 3% of the money in the British economy has been created by the government.

The remaining 97% has been created by the private banking system."

== ==

 

Easy profits from Providing Easy Money creation are fueling mass consumption.

Can we still afford this, as we slide into an Era of Peak Oil ??

 

Debt Creation has grown faster than the economy

IMG0004_340756421.PNG

 

...creating expectations of "easy" growth forever

p15b.gif

 

UNBRIDLED CONSUMPTION IS DANGEROUS

Out-of-control and rapidly growing consumption of Oil, has been paired with

Out-of-control and rapidly growing money creation

 

Al Gore is speaking even more urgently about the need for a Carbon Tax & political action

New Video: Al Gore: New thinking on the climate crisis

::

Like Carbon taxes...

Should we be thinking about Taxing and/or Controlling the Private banking system?

 

Money As Debt - 47 min

http://video.google.co.uk/videoplay?docid=...h&plindex=1

 

# # #

LINKS:

History of the Fed : http://uk.youtube.com/watch?v=iYZM58dulPE

Fed Zeitgest, no.1 : http://uk.youtube.com/watch?v=_dmPchuXIXQ&NR=1

 

Money reform : http://www.moneyreformparty.org.uk/

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"WE HAVE WORK TO DO!" says Al Gore, with urgency.

=================

 

As he shows slides showing the Arctic Ice Cap is melting, and will be gone in 5 years.

Antarctica is going fast too, and with it, disappears 75% of the US Fresh Water reserves !!

 

What's going on... We are Driving ourselves off the cliff at a rapid rate

 

As Gore says, the biggest difference between Earth and Venus: temperature-

Earth has trapped its carbon, and cooled the planet, while Venus has the Greenhouse effect.

And now, with our pattern of energy use, we are in a hurry to put our carbon back into

the atmosphere as fast as

 

"We have to stop this.... And we can"

 

What's the solution? :

A TAX ON CARBON, TO REPLACE THE TAX ON EMPLOYMENT

 

A good idea. Tax those who over-use fossil fuel (& pump carbon into the air),

not those who are just struggling to make a living.

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...so what's this have to do with money creation... ??

 

At the moment, we allow free and untaxed use of fuel

and we also allow free and untaxed creation of money

 

10238828.jpg

 

IT IS EASIER TO BORROW- fueling so much wasteful consumption and investment-

than it is to save.

 

We need to save energy and we need to save money.

 

Basically, we need to change our attitude towards consumption and borrowing.

 

STOP THE GROWTH in borrowing, and we will slow consumption.

So why not TAX money creation, and lending, and the same time as we will tax carbon?

 

And do away with the tax on earned income.

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Easy profits from Providing Easy Money creation are fueling mass consumption.

Can we still afford this, as we slide into an Era of Peak Oil ??

 

If you see too much money as a problem, you may not like this then:

 

FED DEVISES "WHAT IF" PLAN

Central bank looks at ways to maximise its lending power

 

The Federal reserve is consiudering contingency plans fro expanding its lending powers in the event that its recent steps to unfreeze the credit markets fail.

 

Among the options: having the Treasury borrow more money than it needs to fund the US government and leave the proceedson deposit at the Fed; issuing debt under the Fed's name rather than the Treasury's...

 

+ No moves are immanent, since the Fed now has adequate borrowing capacity on its own

+ The Fed had $790 billion of Traesury securities on its balance sheet - 87% of its assets- these could be sold,

.. and the Fed could then lend out the proceeds. it has already lent $300 billion

+ Traesury debt is now $453 billion below the congressional limit

+ British and Swiss banks are also considering contingency plans

 

 

WSJ ## http://www.pressdisplay.com/pressdisplay/viewer.aspx

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Paul Volcker talks about the need for:

Less spending, more leadership, and more sacrifice... in this interview:

 

Charlie Rose - Paul Volcker / Nandan Nilekani

http://www.youtube.com/watch?v=bTs2t8FJ5t4&NR=1

 

Added: August 26, 2007

Segment 1: Paul Volcker, former Chairman of the Federal Reserve discusses his new book,

"Good Intentions Corrupted: The Oil for Food Scandal and the Threat to the U.N."

 

 

 

 

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Easy profits from Providing Easy Money creation are fueling mass consumption.

Can we still afford this, as we slide into an Era of Peak Oil ??

 

We've been here before ...

THIS excerpt from a Business Week magazine of the 1990's was picked up on a HPC thread

 

Cover Story:

Financing the '90s

Too much debt. Too many bad loans. Too much unneeded real estate. The excesses of the 1980s have damaged many of our financial institutions and corporations. Now comes the clean-up - and with it, an era of weak demand, reluctance to lend, perhaps deflation. Ultimately, a revitalised financial system will emerge with more rational standards, values and goals. In this Special Report, Business Week examines the much-needed shift from speculation to sanity - and how it will affect nearly everyone.

 

###

What is different? Peak Oil.

A recession in the US, is unlikely to bring the price of oil down, because the fall in demand from the US

will not be enough the easy the squeeze on limited oil supplies, which is coming from global demand,

including that from China and India.

 

So the US can look forward to getting hit by RISING OIL PRICES, even as incomes are falling in a recession.

A real "double whammy" is coming, to hit American wealth.

 

##

 

VIDEO/ Noriel Roubini, testimony for the US Congress

"Massive problems- worst we've seen since the Great Depression"

Monetary policy and the state of the economy

 

(Roubini is a real economist, not a paid-to-spin apologist)

 

The Cause:

Fed policy, Greenspan, unbridled financial innovation,

Says Roubini:

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It seems to me as an amateur observer of the stock market that there has been a shift away from investing in businesses because they have fundamental value and growth potential, and a move towards betting on share price movements. Thus, in many instances, investment has given way to pure speculation. Am I correct in this observation and if so, what was the cause of this paradigm shift (was it to do with deregulation, for instance) and will it continue or could one hope for a return to investment based on real value?

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It seems to me as an amateur observer of the stock market that there has been a shift away from investing in businesses because they have fundamental value and growth potential, and a move towards betting on share price movements. Thus, in many instances, investment has given way to pure speculation.

 

True enough. Financial speculation has picked up.

Partly because it has become easier and cheaper to speculate.

Traditional businesses have become more diffucult, as paperwork, regulation, and taxes have increased.

 

I think this is a particularly big problem in the UK, where the trends I have mention have tended to push people

into property speculation

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True enough. Financial speculation has picked up.

Partly because it has become easier and cheapre to speculate.

Traditional businesses have become more diffucult, as paperwork, regulation, and taxes have increased.

 

I think this is a particularly big problem in the UK, where the trends I have mention have tended to push people

into property speculation

 

I have had the same view for a long time. Fifteen years ago, back in Oz, the gu'mint under the guise of "economic rationalism" embarked on a policy of "the level playing field".

 

In effect, that meant it was going to get a hellava lot tougher (un-viable for many industries) for manufacturers, and that's when I left manufacturing for good.

 

I believe there will be a time to go long on manufacturing again in anglo economies...perhaps... but not in my remaining productive years. I just wonder if the service economy has legs for the long run... I doubt it.

 

 

 

 

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True enough. Financial speculation has picked up.

Partly because it has become easier and cheapre to speculate.

Traditional businesses have become more diffucult, as paperwork, regulation, and taxes have increased.

 

I think this is a particularly big problem in the UK, where the trends I have mention have tended to push people

into property speculation

 

Spot on.

 

One of the reasons we gave up our small business 10 years ago was because of the increasing regulatory burden. Whereas I had previously managed the admin side of the business myself, it got to a point where H & S and VAT and other regulations, along with general admin, required a dedicated employee and the business just couldn't wear it - we were still trying to grow the business and establish a reputation. Ten years on, I dread to think what the regulatory burden is doing to small businesses.

 

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I believe there will be a time to go long on manufacturing again in anglo economies...perhaps... but not in my remaining productive years. I just wonder if the service economy has legs for the long run... I doubt it.

 

Interesting point. There seems to be a CYCLE at work

 

BUSINESS SECTOR FAVORED

1/ Manufacturing

2/ Retail & distribution

3/ Finance & Property speculation

4/ Commodity speculation

5/ Restructuring

 

The UK is moving from phase 3 to 4, about one year behind the US.

 

To get back to the manufacuring phase, both countries will need to move through hard times,

where their currnecies collapse, and foreign imports become expensive. Governments may then

realise the importance of manufacturing, and ease the regulatory burden

 

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Ten years on, I dread to think what the regulatory burden is doing to small businesses.

 

It is KILLING them.

Which is another reason people in the UK moved into BTL speculation.

 

Now, those who have sold out, or are preparing to do so, are scrathing around for the next big

opportunity. Very few will want to move back into manufacturing, and suffer the red tape.

 

= = =

 

NOTE:

This is an interesting TOPIC to pursue here.

So I have changed the title of the thread, to encourage more discussion

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It is KILLING them.

Which is another reason people in the UK moved into BTL speculation.

 

Now, those who have sold out, or are preparing to do so, are scrathing around for the next big

opportunity. Very few will want to move back into manufacturing, and suffer the red tape.

 

= = =

 

NOTE:

This is an interesting TOPIC to pursue here.

So I have changed the title of the thread, to encourage more discussion

 

It's not only manufacturing, either, it's retailing and catering and any other type of small business you care to mention. Things like covering for maternity leave, paying tax credits and deducting child support payments and all the other unpaid work the government has heaped on small businesses that is making it next to impossible to build a small business from scratch and grow it to a size where it can afford to employ people to do the government's work for them. It was bad enough being an unpaid VAT collector for the government; now it seems that businesses have to do a whole more tax collecting and refunds on behalf of the government. And maternity leave is iniquitous - it can kill a small business. Then there's all the anti ***ism rules - ageism, sexism, religonism, harrassment, etc etc - it's an impossible environment in which to start a business.

 

I suppose in some ways it's understandable why people went for btl; the mess the government made of pensions didn't help, either.

 

However, I still think there's has been a mental shift on the part of investors towards sheer speculation on the stock market as opposed to investing because of sound fundamentals. I think that may have been exacerbated by leveraged buyouts/private equity where it became profitable to bet on a share price movement as opposed to the actual value of the business in terms of trading profitability.

 

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It was bad enough being an unpaid VAT collector for the government; now it seems that businesses have to do a whole more tax collecting and refunds on behalf of the government. And maternity leave is iniquitous - it can kill a small business. Then there's all the anti ***ism rules - ageism, sexism, religonism, harrassment, etc etc - it's an impossible environment in which to start a business.

 

It is all sophisticated brainwashing- to turn us into happy slaves - just as Huxley Foresaw!

 

"Ending is better than mending... New things are better"

"Work, Earn, Buy."

 

BRAVE NEW WORLD/THE MOVIE PART 2

 

watch, learn + http://uk.youtube.com/watch?v=IMQZDMi5TJw

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It's not only manufacturing, either, it's retailing and catering and any other type of small business you care to mention. Things like covering for maternity leave, paying tax credits and deducting child support payments and all the other unpaid work the government has heaped on small businesses that is making it next to impossible to build a small business from scratch and grow it to a size where it can afford to employ people to do the government's work for them. It was bad enough being an unpaid VAT collector for the government; now it seems that businesses have to do a whole more tax collecting and refunds on behalf of the government. And maternity leave is iniquitous - it can kill a small business. Then there's all the anti ***ism rules - ageism, sexism, religonism, harrassment, etc etc - it's an impossible environment in which to start a business.

 

I suppose in some ways it's understandable why people went for btl; the mess the government made of pensions didn't help, either.

 

However, I still think there's has been a mental shift on the part of investors towards sheer speculation on the stock market as opposed to investing because of sound fundamentals. I think that may have been exacerbated by leveraged buyouts/private equity where it became profitable to bet on a share price movement as opposed to the actual value of the business in terms of trading profitability.

 

A thread on HPC has just been started debating this very point. I'm not too clued up about the subject but have read enough for it to be a cause for concern. Perhaps someone more knowledgeable could comment.

 

This is the HPC thread

 

 

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I believe there will be a time to go long on manufacturing again in anglo economies...perhaps... but not in my remaining productive years. I just wonder if the service economy has legs for the long run... I doubt it.

 

The UK government is doing it's best to increase taxes and regulation on small and especially service businesses. It started with the attempt to clobber the small tech contractors after the tech boom with equivalent tax rates of 50%+ to go with the burden and regulation of running a small business. It is now casting its net much wider to catch as many small businesses and again especially service business with new regulations. Corporation tax for small businesses is going up by 1% every year. This is incredible at a time when the UK economy is hugely dependent on the service industry, not healthy I realise, but why does the government insist on whacking its sole remaining profitable industries with higher taxes and regulations. Also see the windfall taxes imposed on oil companies extracting one of our last remaining natural resources in the North Sea.

 

It does seem that instead it is far more profitable to speculate - e.g. capital gains taxes have been lowered - than go out and work or start a business.

 

How long it will take though for the anglophone economies to restructure? Is there any will or desire to? Will it take a depression to make people and politicians face the reality that you have to become a productive economy with a balance of industries to really prosper. How will all those people on long-term benefits face up to the challenge when the government admits it can't afford to give them their weekly benefits?

 

 

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  • 1 year later...
Probably because Margaret Thatcher and Ronald Regan decided that free markets and Hayek and Milton Friedman were their guiding lights so that central banks can at least claim their powers to prevent the mess were removed.

 

Todays problems are not really to do with state money. They are to do with excessive leverage of a small amount of state money and a very much larger amount of private money.

 

Yes.

That and the widespread lack of discipline:

+ By home buyers, who borrowed too much (as a %, and to buy homes for speculation)

+ By banks, that lent too much (as a %, and lent to some borrowers who could not repay)

+ By consumers who thought they were rich, and bought more "stuff" (from China etc) than they should have

 

The Wealth was fictituous, and now its gone:

 

The Most Wealth Losses of All Time

 

Who is suffering the biggest and most pervasive losses? U.S. households and nonprofit organizations (page 105)!

 

The losses have been across the board — in real estate, stocks, mutual funds, family businesses, life insurance policies, and pension funds.

 

In U.S. households alone, the losses have been massive: $1.39 trillion in the third and fourth quarters of 2007 (not shown on page 105) … a gigantic $10.89 trillion in 2008 … $1.33 trillion in the first quarter of 2009 … $13.87 trillion in all, by far the worst of all time.

 

And these losses have equally massive consequences for 2009 and 2010:

 

Deep cutbacks in consumer spending ahead, plus a virtual disappearance of conspicuous consumption …

More massive sales declines at most of America’s giant manufacturers, retail firms, transportation companies, restaurants, and more, plus …

Big losses replacing profits at most U.S. corporations!

/source: http://www.moneyandmarkets.com/new-hard-ev...-collapse-34202

 

The sad thing is, if the banks has lent less aggressively, the wealth destruction would have been far smaller,

or maybe not occurred at all:

+ Malinvestment would have been less, or non-existent

+ Consumers would have spent far less on junk they did not need

+ The US economy would not have been geared so much towards consumption

 

Now the US economy will have to shrink back (from its peak spending extent) to something more sustainable.

 

The central bankers, and other bankers, who allowed these excesses to occur should be made jobless

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