The Political Thread

[The Legendary Shark]

I fear you're right, Joe. It kind of reminds me of that Martin Niemoller quote:

"First they came for the communists, and I did not speak out because I was not a communist. Then they came for the socialists, and I did not speak out because I was not a socialist. Then they came for the trade unionists, and I did not speak out because I was not a trade unionist. Then they came for the Jews, and I did not speak out because I was not a Jew. Then they came for me and by that time there was no one left to speak out."

First they came for the family businesses...

[Roger Godpleton]

You are the first person to ever use that quote.

[The Legendary Shark]

Yaay!

What do I win?

[Old Tankie]

Of course there's waste in the private as well as the public sector.  But, surely, the difference is if a private sector company continues to waste money it will eventually go skint; the only victims being the employees of and the suppliers to that company.  But we are all victims of waste in the public sector, as we are paying for it in our taxes.  That is why waste in the public sector needs to be sorted.

[Richmond Clements]

But, surely, the difference is if a private sector company continues to waste money it will eventually go skint

Unless our government decides to spend billions of pounds of our money propping them up, of course!

[Old Tankie]

Well, yeah, that's true.  I should have put "excluding bankers"!!!

[The Legendary Shark]

Speaking of waste...

And keep in mind, due to the way the global economy works, that isn't existing money spent on the wars. About 99% of that money is being created out of nothing by private central banks and then lent to governments at interest so that taxpayers can pay it back. If it wasn't so evil it'd be beautiful. And that's just the money being created to fund two wars. By one country. Think of all the other things countries borrow this fake private money for. Think of all the countries borrowing it. All from the same handful of banking cartels like the IMF and World Bank, which are themselves owned and run by other banks like the Federal Reserve and Bank of England, which in turn are owned and/or run by private banks like Rothschilds and JP Morgan, where the fake money is born.

But if it's fake money, how can you buy fish and shoes with it? Because you believe you can. Essentially, a £5 note is worthless; you can't eat it, plant it or put in your fuel tank. It's just a symbol representing a portion of your country's wealth. A fiat currency. The only thing backing your £5 note is the faith you have in it. You don't really care whose face is on your £5 note as long as you can get £5 worth of fish or shoes with it. The same can be said for digital currencies which exist without being notes or coins. Because this currency is basically worthless, it's all too easy to create too much of it as the Cost of War counter so vividly demonstrates.

To divert for a moment, gold and silver coins make an excellent currency because, no matter how low your faith in the economy is, gold and silver are useful, real metals that hold their value. This is why you often hear people calling for a return to the gold standard (which allows countries to print only as much fiat currency as their gold and silver reserves can justify), but I am wary of this as he who controls the gold controls the standard. And you can bet your bottom dollar that the IMF and World Bank have most of that gold squirrelled away for a rainy day, so if we are silly enough to return to a gold standard the same old greedsquids will be calling the shots again.

Anyway, back to the topic. I want to focus for a moment on inflation. Snoozeville, I know. The Corporate/Political line is that economic growth is paramount and must be maintained at all costs. The reasons behind this seem muddled - to keep up with our massively increasing populations and rising living standards and costly wars and such. As the economy grows, resources become scarcer and this causes prices to rise to reflect that. This is basically okay so long as everything inflates at the same time; fuel costs, material costs, labour costs, earnings, public spending. As we can plainly see, however, this is not currently the case. This is because inflation is actually caused by interest.

Let's say I go to my local bank for a loan ( ) of £1,000. The high street branch I go to can't lend me all of that money because it simply hasn't got it. It can't lend me other people's deposited money because that's illegal, so the high street bank goes up the chain to its corporate parent bank which issues it with enough credit to cover the loan, say £950. (The corporate parent first has to get that credit from an even higher up private central bank such as the Fed or BoE where the credit is created from nothing.) If I want cash, the high street bank can then lend me the cash deposited by someone else as they now have credit from above to cover the missing money.

So, I've got my grand, what do I care? Off to buy that lock of Cameron Diaz's hair from Shady Sid down the pub... Sid spends his cash on whatever Sid gets up to in that horrid cottage of his and the grand dissipates into the economy, finally ending up at another bank backing another loan. I get to sniff Cameron's hair all night long. Strange how she smells like old Fishy Peg, the barmaid from The Realm.

I pay my grand back, plus interest. £1,100 for argument's sake. That breaks down as the £50 the high street bank could afford to loan me, the £950 it borrowed to loan me and £100 out of my own pocket for interest. Out of this, the high street branch pays off the corporate parent with interest and fees and the corporate parent pays off the central bank with interest and fees. That all seems very jolly, but let's just look at that £100 interest. If the banks didn't create that £100, where did it come from?

In order to pay the interest on the loan I had to not pay for other stuff. Maybe I skipped some meals or bought fewer books or whatever. £100 of resources have been channelled out of my life and up the food chain to the central banks. I borrowed £50 worth of real money and out of that the banks generated £1,050 worth of fake money. Only when I've converted enough of my own resources into money to pay that loan back does the £1,050 become "real".

But I'm not the only one bleeding resources this way. Most people pay interest on one thing or another. Most companies. Most councils. The government, too. This, then, is the cause of inflation. Credit is converted into money by sucking actual wealth from society. And given that it takes only £50 to create £1,050 of credit (and that's not taking into account that under the fractional reserve lending system once the loan has been paid back the £100 interest they made can be used as surety against the creation of over £900 more in credit) it takes more and more credit and cash to keep the whole thing running. It's like trying to fill a bucket that has a hole in it. The credit in the system gradually devalues the money and the interest syphons off tangible wealth so more borrowing is needed, leading to a vicious upward spiral that drags prices up after it. Thus there is less money in the system and we have to start doing without things like a Sunday drive or the odd night out or a new road or some hospitals. Have to start spending less on our food, our homes, our police forces, our teachers and their tea and biscuits.

All because of privately created credit.

And if that's not waste, I don't know what is.

[Robert Frazer]

The problem with that model though is that the behaviour of money in the economy is an ecology, not a food chain. You're assuming that once the interest reaches the top of the figurative chain it stays there, as if there's a great underground vault where the gold piles up. This isn't the case. For a start, credit does not come from 'nothing' - it's essentially a plan for the disposition of your future earnings, which is why we have different credit ratings depending on people's confidence in your ability to follow that plan. Furthermore, the interest is not being "removed" from society at all - it will be returned in another form, backing other ventures... and hey, even JP Morgan might like to buy a new pair of socks every now and again.

[The Legendary Shark]

The problem with that model though is that the behaviour of money in the economy is an ecology, not a food chain. You're assuming that once the interest reaches the top of the figurative chain it stays there, as if there's a great underground vault where the gold piles up. This isn't the case. For a start, credit does not come from 'nothing' - it's essentially a plan for the disposition of your future earnings, which is why we have different credit ratings depending on people's confidence in your ability to follow that plan. Furthermore, the interest is not being "removed" from society at all - it will be returned in another form, backing other ventures... and hey, even JP Morgan might like to buy a new pair of socks every now and again.

I've been trying to get my head around the "money is an ecology" similie and I'm afraid I'm just not seeing it. I can imagine the economy/society as the ecology and money as the water in it. In this case, high street banks do the job of river banks, directing the flow to where it's needed. The water turns the water-wheels and turbines of industry as well as providing drinking water and sewer water. Private savings would be represented by garden ponds or private lakes if you're rich. Large lakes and resevoirs would represent the role central banks should provide. (This model, of course, doesn't consider rain - but I'd equate rain to the creation of new money, in an idealized model the rainfall would also be regulated to prevent floods and droughts.) In this model, it can be seen that the larger banks and corporations build dams, hoarding water and diverting it to where they want it to go. Any life downstream of the dam is starved of water and must relocate or perish. It is these "Hoover dams" within our ecology that are killing us.

I have to disagree with your view on interest. It is created from nothing. The process you speak of is just a formula for working interest out based on stuff that hasn't happened yet. The plan you mention surely does exist, but the credit itself is created from nothing - a ghost sitting on an abstract extracted from the future.

I must also take issue with your contention that the interest is "returned in another form". A small fraction of it certainly is released back into the system, purely to keep the fractional reserve levels as stable as possible (which isn't very). If all the interest were returned to society, then we wouldn't need all these cuts and austerity because there'd be enough money in the system for everyone, low to high, to have a decent life.

But, why pay interest at all? The Koran doesn't like it, and neither does the Bible. The people who own the private Hoover dams at the moment control all the water behind those dams and kindly let governments (and us) use that water at a cost. For every bucket of water, we've got to pay back a full bucket of water plus a glass of water. That glass of water is the interest. When millions of people are handing over all those seemingly insignificant extra glasses of water as well as repaying their buckets full, you can see how soon water starts to become scarce (removing resources from society). Even the government can't help you by regulating the flow of water as it can only control so much water - however much the people who own the Hoover dams graciously agree to release. The released water is metered and the government has to pay it back, plus the extra glasses. These borrowings and costs are passed on to us in the form taxes.

The solution is simple - to put those Hoover dams under the direct control of the people, through government. This way the water can be released in a more measured way, ensuring society has enough water flowing through it to make it all work decently. Once the dams are publically owned, there would be no need for interest. A nominal flat fee on some loans and mortgages would be enough to pay for the upkeep and operation of the dam.

[vzzbux]

NOT SUITABLE FOR WORK.
You've been warned.
http://www.youtube.com/watch?v=wOg5GoFdTJ0




V

[House of Usher]

Gosh, is there still an appetite for this thread? I'm almost surprised.

Of course there's waste in the private as well as the public sector.  But, surely, the difference is if a private sector company continues to waste money it will eventually go skint; the only victims being the employees of and the suppliers to that company.  But we are all victims of waste in the public sector, as we are paying for it in our taxes.  That is why waste in the public sector needs to be sorted.

The difference is if a private company goes skint, the only victims are the employees of and the suppliers to (and the shareholders of) that company. If the public sector were to go skint, children wouldn't get schooled, crime wouldn't get policed, elderly people wouldn't get looked after, roads wouldn't get repaired and sick people would die for lack of treatment.

[The Legendary Shark]

It's getting increasingly difficult to decide whether some of the stuff I find should be posted here or in the "Truth?" thread.

Admittedly, I don't watch TV news much any more, but when I do catch it I don't hear any newsreadrers or commentators talking about how well Iceland seems to be doing since they rejected the Central Banks' plans. I guess that if the media isn't talking about it then the politicians aren't talking about it either.

Anyhoo, here's a nice little article I stumbled across that may be of particular interest to Greek and Irish Earthlets: Will Greece Pull an Iceland ... And Tell the Banks to Pound Sand?

[JOE SOAP]

Iceland aren't in the Euro, they're a relatively young country with a simple infrastructure that serves a tiny population of 318,000. They had little choice but to default and not the fear of an army of tanks waiting to roll in when they did.

With such a complex structure of old politics and interwoven currency/economies, for any country in Europe to be the one that pulls the trigger will be a brave move on their part fraught with international and national tension. That's why Papandreou -bluffing the best bailout deal in the poker game- is letting the Greek people decide which way to go instead of doing it himself.

[The Legendary Shark]

Yes, I don't deny that this is a fragile time. Things could go either way at the moment but I sense a great opportunity ahead.

That's why I post this stuff - I'm no expert, far from it, but I do think I see a few of those fundamental flaws and so I try and point them out. The time will come when we'll have to make a decision, as a planet or as a country or just as a person, whether to continue much as we are or to try something different. Therefore I say - there are alternatives to the austerity demanded of you by the rich. The Austerity Road, well, I reckon we can all guess where that leads - but the Alternative Road, I am convinced, may lead us all into a Second Renaissance.

But then, I always was a dreamer.

[JOE SOAP]

The time will come when we'll have to make a decision, as a planet or as a country or just as a person, whether to continue much as we are or to try something different.

I believe that decision will be made for us whether we like it or not.