The Oldness of the Corrupt

The Oldness of the Corrupt
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The corrupt Deep State/Shadow Government is not new.  It got its legs with World War 1.  Business began to supply both the Brits and the Germans in 1914 finding war to be most lucrative.  Business did the same in the 1930s and again found WW2 great for the bottom line.  No wonder that led to the Cold War and resulting Korean and Vietnam Wars.  

 

The Deep State celebrating a victory with the murder of JFK went into overdrive under Johnson.  The Johnson years were probably some of the most corrupt years in our history.  However, what was the difference between the mid 1960s and today?  Why were so many Americans, particularly over the age of 30 so complacent and ignorant?

 

Two words, the economy.  In the mid 1960s nearly 70% of Americans were classified as Middle Class. That meant a nice home, a new car every few years, a couple of vacations per year, money in the bank, buying the latest new gadget or appliance, sending your kid to college.  As history shows when most of us are "fat and happy" when tend to ignore the world at large.

 

Both of my parents were born in the 1920s.  While they weren't totally naive about government they could have never imagined what we now know as the the Deep State.  They assumed the 1974 "energy crisis" was real. It wasn't.  It was the oil companies taking advantage of the oil embargo to scare Americans into thinking the world was quickly running out oil and that permanent higher price were justified.  They believed RR when he talked about less government but did nothing but accelerate and excel the Deep State as Johnson before him, and increase government spending.

 

However, they had two employers that looked out after them.  After my mother took off time to have children, when she was ready to go back to the hospital she had worked at before she was welcomed with open arms.  Ultimately they paid for her MBA and her PhD.  She rose from a shift nurse to Vice President of Nursing.  My father went to college on the GI Bill.  He rose through the engineering ranks at the local utility.  When he had a heart attack in the 70s it meant being out work for 90 days and working only a part time schedule for the following 90 days. His employer was more than obliging.  For them life was good even during more troubling times, well maybe except for the stress of trying to raise four boys into men.

 

Now Americans have always blamed or credited the President for bad or good times.  In the summer of 1974 Americans wanted Nixon's scalp due to soaring gasoline prices and gas lines.  In 1980 they sent Carter packing due to the then deepest recession (created by Fed Chairman Volcker) since the 1930s. RR got reelected in 1984 and Clinton got a pass for Monica in 1998 because the economy was on a roll. 

 

That being said, Americans until very recently presumed their government to be at least somewhat honest.  We didn't prop up puppet leaders just to take them out years later when they no longer served our purpose, never fixed other's elections, invaded innocent countries and caused social havoc, murdered people including some of our own, etc.  That may have been the old Soviet Union or some other wayward countries but that wasn't our government.

 

Then starting in the previous decade Americans suddenly were no longer fat and happy. They had become hungry and dissatisfied.  Suddenly their good job was gone and the ones available just plain sucked.  Paying the bills became a monthly difficulty.  Their children were not going to college unless they took out thousands in unpayable student loans and credit card borrowing.  The car had to now last 12 years.  The financial stress caused emotional disrepair within the family.  In short, life was no longer enjoyable.

 

Yet they saw the elites time and time again game the system.  The crooked Wall Street bankers made out like bandits.  Their financial pain was erased almost overnight.  Politicians kept talking about the good times coming but the good times have never come.  Obama kept talking about the best days lay ahead but the better days never materialized.

 

In conjunction with Americans feeling screwed, second was the free flow of information.  An Edward Snowden or a leak of what had been hush hush American wrong doing was suddenly in the public realm.  There were no weapons of mass destruction.  Most of the forces we were battling in the Middle East were put in power by the CIA years ago.  We had propped up multiple banana republics and corrupt leaders and now we weren't any better than those Mickey Mouse nations.  JFK and 9/11 started to be thought of as "inside jobs".  Suddenly we lost our "political and government cherry."

 

Every month brought a new Washington DC scandal.  We learned about fixing voter machines.  We heard about the gerrymandering of Congressional districts.  We heard tell about the games of the Federal Reserve, most Americans before 2010 probably thinking it was an official part of the Treasury Department.

 

Suddenly Americans became unhappy with their lives and very disillusioned about their government and leaders.  In 2012 we were presented two candidates.  One a member of the old plutocrat crowd, one that used the Office of President to join the plutocrat crowd.  We chose the latter as the best of the two bad options.  The 2016 election was even more dispiriting, two plutocrats battling it out and most Americans staying home shaking their head in disgust.  Today our government just gets more dysfunctional. 

 

The plutocrat/elite/shadow government/Deep State got greedy.  They began to take all of the pie for themselves. Suddenly an economically strong America no longer seemed necessary.  No need to keep Americans off guard by allowing them to be "a pig in slop."  Their stupidity might ultimately spell their demise, the jury is out on that for now.

 

 

Comments

Dino Manalis Added Aug 1, 2017 - 8:17am
The lack of pro-growth policies has led to chronic economic stagnation and dependence on quantitative easing for anemic growth.  Our foreign policy has to promote peace; stability; and prosperity in the world, not violence and chaos.
opher goodwin Added Aug 1, 2017 - 8:34am
It goes back further than that George.
In Britain the wealthy banded together to form a political party to look after their interests. The disparity of wealth was obscene. The Lords lived in huge Stately homes with myriads of servants and the majority lived in wattle and daub huts. That political party was the Tories. A breakaway group, with similar interests, was the Whigs.
A wealthy elite has ruled in Britain and America. They fight all reforms that would benefit the masses and give as little as they can get away with. Every beneficial change - antislavery, the vote, working conditions, unionisation, fair wage, shorter working hours ............. had to be fought for.
Foreign policy is all about looking after the interests of the elite. They like instability, war and conflict - they can prosper from it.
 
Thomas Sutrina Added Aug 1, 2017 - 8:42am
I can identify with the America you presented. Good job.  I am not sure of your analysis results.  It is a very possible results but it is only one of a few results since other analysis of the same information can lead to different results.  
 
So I suggest an analysis stream of thought that measures the people's happiness on the closeness or farness from the core of the Declaration of Independence, government that creates a minimal set of laws.  Government judiciary that determine if laws are correct by comparing them to natural law for example the Ten Commandments which are one statement of natural law but not the only one.   The Bill of Rights in the Constitution is another measurement point.  Live, Liberty, and the pursuit of Happiness which in the Virginia Bill of Right only a few months older is property.  Property is the physical result of one pursuing happiness, it is the effort man puts into life to provide for himself and others, thought, muscle, fortune, and any combination.   
 
My belief is the unhappiness you present George that is growing is the result of a deviation from John Locke, Marcus Tullius Cicero, Charles Montesquieu, Adam Smith, and Thomas Aquinas.  It is the result of stepping away from a government constructed like a pyramid that these societies built Moses, Saxons, Seven Indian Tribal Nation and even the early Romans instead of the Hobbe's Leviathan.
Rich Purtell Added Aug 1, 2017 - 8:43am
I'm ordering the book "Conscious of a Conservative" today, just written by Jeff Flake.
 
We have to chip away at this.  Many people are in denial about many problems you have enumerated upon George.
 
I think we have to try to educate people, even progressives, about the benefits of federalism, free trade, and just in general getting along better with other nations.  If we can take away power, perhaps then we can start to expose and limit corruption.
 
According to the promotion for this book, he's going after the troubling attitudes around racism, xenophobia, and protectionism which have surfaced now with Trump in power.
 
Conservatives should look way back to Calvin Coolidge if they want a president to emulate.  So long as Ronald Reagan is the supreme idol of the conservative movement, we can't expect a whole lot of movement in the right direction.
Minister Peaceful Poet Added Aug 1, 2017 - 9:19am
In the 60s we were so wealthy that we could buy the world.  Even poor people were more wealthy than some of the middle class today. We had real news back then and thats what ended the Vietnam war, none of of this is true anymore. 
Jeff Jackson Added Aug 1, 2017 - 9:25am
Nice explanation George, I hope a lot of people read it. Many of the folks out there need to understand the difference between capitalists and elites, a distinction not many are capable of making. The disparity of income is almost always a reason for people to leave a country, along with, of course, discrimination and oppression. We need a government of the people, not just a government of the rich.
Rich Purtell Added Aug 1, 2017 - 10:00am
George:  I'd like to share this article to social media.  I tried to do it here to Facebook but that didn't seem to work.  Any ideas?
Wick Burner Added Aug 1, 2017 - 10:06am
A great wrap-up of a century or so of American exceptionalist corruption.
There's something fishy about the fact that there's been no recent revolution in response to this.  Going from fed and happy, to badly-fed and working-poor, while the pigs clean out the trough, and no mass uprising?  Is that spirit dead, or was it a little bit of fiction all along...?
wsucram15 Added Aug 1, 2017 - 10:48am
This is well researched and a great article George, one of your best.
Peter Gillespie Added Aug 1, 2017 - 12:09pm
Nice post, George. Up to a point you could have been writing about my own parents and siblings and my view of the world. But only up to a point. I think we are all looking for that "shared story" that makes us uniquely American. Trump and the rejection of his superficiality is part of that process. But will it be enough? I think not. 
What will it take? Constitutional reform? Maybe. How will it happen? Who knows. As some of us might have said in the 1970s... Keep on truckin'.
Bill Kamps Added Aug 1, 2017 - 12:31pm
It the 1960s the US was responsible for 35% of world GDP, with 5% of the population.  Mostly this was do to the state of the rest of the world.  Many countries were either still recovering from the war, or not  yet industrialized.  This was an unsustainable situation, and yet we behaved as though not only was it sustainable, it was because we were "exceptional" and therefore something that would go on forever.
 
Today the US produces 24% of world GDP, with 5% of the population.  Not bad, but a huge difference from before.  This now compares with Canada, Germany and other industrialized, countries.  In sports we call this reverting to the mean.  No one in baseball hits .450 for longer than a month or so.
 
Because we thought immense prosperity was our right, we failed to make the investments necessary to sustain our advantage.   These days our  K-12 education ranks anywhere from 20-30th, depending on the measurement used.  Our infrastructure is crumbling, and people like George write daily rants about how tough the times are. 
 
We now feel poor, because we dont control more than a third of the world's production.  While things can certainly be better than they are, we aren't going to return to the  1960s, any more than the Celtics, or any other pro sports team will again win 11 championships in 13 years, there is too much competition.  If we want to improve our situation we need to start learning how to compete with the rest of the world, instead of just thinking we will  win by just  showing up.
George N Romey Added Aug 1, 2017 - 12:35pm
Thanks for all the comments.  One thing I want to stress is that government can't cure all ails. There needs to be something from the private sector.  There are organizations like Patriotic Millionaires but they seem to be in the minority,  At this point I'm lost for a solution other than an economic reset in which paper wealth will vanish.
 
Rich the only thing I can think to do is just copy and paste it.  The piece won't likely line up, you may need to do some editing.
George N Romey Added Aug 1, 2017 - 12:51pm
I know other writers get on me, and rightfully so about my lack of answers.  The truth is I wish I had concrete answers that were at least plausible in today's environment.  However, with both public and private apathy at resolving the destruction of our Middle and Upper Middle Class and real economy I just don't see fixes.  The government is just dysfunctional spoiled children and the captains of industry at least at this point have little motivation for change.  
 
Again, a total reset would ultimately be the answer but such an event would cause widespread misery beyond anything this country has ever experienced, including the Great Depression.  Not to mention the possibility of leading to global conflict.
Bill Kamps Added Aug 1, 2017 - 1:14pm
George, change can happen in this country.  For a long time it looks like it happens slowly but then when the tipping point is reached, things can move quickly.   In areas like civil and political rights, the country  has moved a long ways.  We now hear people like Orin Hatch saying that Trump's statements about transgenders in the military was dumb, who would have thought we would hear that ?
 
Hatch didnt change his mind so much as the voters changed his mind.
 
You can say there are forces aligned against economic change, but there were forces aligned against civil rights, against limiting pollution, against renewable power, etc.  While it is legal to build a new coal power plant in the US, the political reality is that it is very difficult to do.   As recently as 10 years ago, there were many of them planned in the US, now most are being cancelled.  This is not because of laws, this is because  the people wont allow it.  This has reached the tipping point.
 
People still live in this dreamland of exceptionalism,  and they dont understand why we arent as wealthy as we were in the 1960s.  Most dont even know we are involved in a competition.  If you dont play the game, you are doomed to lose. 
 
I dont think it requires a reset like a huge depression.  It  requires a change in thinking.  We have seen thinking change about the environment, about civil rights, and are seeing the change with regard to renewable power.  None of these things required a depression, they just required enough  people to change their mind.
George N Romey Added Aug 1, 2017 - 1:21pm
Yes Bill changes comes about but ultimately leadership is needed.  I'm sure gay people in the 1950s could not have imagined a country in which SSM was perfectly legal.  Or the person on street in 1967, 50 years ago knowing we all would hold mini computers in our hand.
 
The talent is there but the willpower and leaders seem to be lacking. And maybe while it doesn't feel like it maybe its already changing.  I don't see any evidence but I'd like to.
 
At least in Trumps's campaign even with the ugly moments he was finally speaking truth.  I really liked his Inaugural Speech, I thought it was on spot.  However, since then he has just floundered into a massive storm of tweets.
Bill Kamps Added Aug 1, 2017 - 1:35pm
Im not sure how much leadership it requires. In the perfect world of course it would be nice.
 
Politicians and laws are usually behind the curve.  The  SCOTUS ruled on gay rights because of pressure from the citizens, same with civil rights.  The laws came later.   People are using the courts, not leadership to stop the coal plants.  I think you would be surprised at how little leadership there is on many of these issues.  This is not to say there haven't been citizen leaders, but the  changes happen, when the population wakes up, and enough minds change. Then suddenly what used to be normal, becomes very difficult.
 
Saying the truth as Trump did is the start.  Politicians dont lead the fight, because  the fight is too political.   Just as I dont care for Al Gore, and his hypocrisy on fossil fuels, he did raise awareness.  At that point it has been up to the population to decide what is appropriate.  You saw no great outcry for dropping the Paris accords, but at the same time, try to get a new design for a coal plant approved. 
 
George N Romey Added Aug 1, 2017 - 2:43pm
Bill I agree but ultimately there must be a source to cull the masses. Think about the space program.  By the election of JFK we were behind the USSR and Kennedy challenged the country to make it to the moon by decade's end.  Through both public and private endeavors we made it, using arcane 1960s technology.  Remember also many Americans thought it a total waste of money.  As a nine year old kid I remember my mother complaining about the waste of money with so many "poor people."
 
Sadly while we made it to the moon and back several times the "so many poor people" remain.  
 
I credit Trump for speaking the truth and unlike the many Trump haters (including here on WB) I've never presumed to know what's in his heart.  I just think so far his administration seems to be one disaster after another and that he never gave much thought as to what he was going to actually do to fulfill his promises.
 
By the time the SOCTUS got around to sanctioning SSM a majority of Americans, particularly young Americans favored SSM. If it had been the other way I'm not so sure the SOCTUS would have ruled in favor.  And just like the Space Program some were in significant disagreement with this turn of national events.
Barath Nagarajan Added Aug 1, 2017 - 3:26pm
Conservatives have felt that the Great Society programs failed, and after the economic good times of the 50's and mid 60's, that by the 70's economic growth was sluggish, which was only corrected by Reagan's pro growth policies and tax cutting. But, tax cuts resulted in deficits because Reagan was not able to cut spending enough in part due to Democrat Tip O Neil's leadership in the House.
    In any case the economic stagnation that resulted from the welfare initiatives of the 60's is why conservatives in general  believe that you can't spend your way out of a recession.
Bill Kamps Added Aug 1, 2017 - 3:31pm
By the time the SOCTUS got around to sanctioning SSM a majority of Americans, particularly young Americans favored SSM. If it had been the other way I'm not so sure the SOCTUS would have ruled in favor.
 
This is kind of my point.  The people get out in front of the issue, the  courts are next, and then finally the laws get passed.  Congress is generally last to get on board, not first.  Whether they should or not the judges do listen to the people.  Yes, sometimes we get the benefit of leadership as in the space program, but other times the people just do it. 
 
I think my example on coal plants is relevant.  They are not illegal, but you cant put a new one on the drawing boards. Many of the ones that were planned have been canceled, depending a lot on how far they have progressed.  Regardless the issue really has been settled, there wont be any new ones planned.  Congress never had to act on the matter, and the lobbyists wouldnt have let them.
 
People have not  yet got fed up with K-12 education, or other problems that we have.  A lot of times this is because the entrenched interests are blowing a smoke screen like they do with education. Every school district can show how they are succeeding despite the evidence that the system as a whole is failing.  People are starting to take the schools to court, for giving out passing grades, while failing to teach.  It is a start.
 
What is interesting is that once an issue reaches the tipping point, how quickly the matter changes.  Whether it was gay marriage, or building coal plants, you could tell when the situation changed.
George N Romey Added Aug 1, 2017 - 3:48pm
Bill certainly with technology movements can evolve much faster and that keeps politicians weary.  One thing you can say about Trump is that is doesn't bother to read the political tea leaves.  That would be a refreshing change if he had the leadership and political know how.
 
In the 1960s Johnson wanted to fund too many things (for evil reasons)-the Great Society, the Vietnam War, the Space Program. Eventually Nixon took us off the partial gold standard so that unlimited printing of fiat currency could occur.  Of course in 1971 there was no problem, we were undisputed King of the Hill.
 
However, all that money printing mean't politicians could hand out unlimited favors and keep us at least through the late 90s "happy and fat."  This would include alleged small government RR himself.
Katharine Otto Added Aug 1, 2017 - 3:52pm
George,
I think Americans were idealistic in the 1950s, and the government was able to sustain the illusion of specialness, probably until 9/11.  But I agree with Opher that the elitist mentality goes back centuries and includes the monarchies of Europe, or even the Orient. The whole idea of property rights was brought over from Europe.  Native American, including South American, tribes did not have political lines in the sand and courthouses to back up ownership claims of squares of land, because respect for nature was so universal.
 
America's "greatness" came from expansionist policy from the get-go, through obliterating Natives, conquest around the world (the Spanish American war was one example of us invading "innocent countries," like the Philippines), and plundering natural resources for export and profit.
 
The Constitution and the American government was developed in secret, by an insider group of lawyers, businessmen, and other mercantilists who sold the idea of wealth to induce immigrant workers to resettle here.  The Constitution is an economic document that claims ownership of taxpayers and all economic narrows.  
 
That corruption is becoming evident to the masses is only the natural outgrowth of the real founding principles and purposes.  The Revolution merely changed one taxing authority for another.
 
Things are changing, but not as fast as people may hope.  People are waking up, albeit slowly.  Our policies need to change toward taking better care of our own.  We are far too concerned about the world stage, while our own stage is rotting out from under us.
 
Bill K.,
The coal fired power plants are not getting built because they are not economically feasible.  Demand for power is going down, not up, despite predictions.
 
 
 
George N Romey Added Aug 1, 2017 - 4:00pm
Katharine I agree we've had the corruption has gone back years but I think WW1 was the turning point in which forces of evil capitalism teamed up with evil forces of imperialism. The New Deal set back destructive capitalism but by the 1970s it was starting to come back. The 80s of deregulation, RR, supply side economics, globalism, etc. was the real geniuses.  We suffer and live with the results 30 years later.
 
By all means people are waking up. But waking up and revolting for change are two worlds apart.  By many measures we have little time. We live in a debt bubble surrounded by zombie banks, central bank gimmicks, low value businesses while losing productivity and value.  A ginned up system can only last so many years as 2008/2009 so proved.
 
As I said I see no solution in the short term and no one willing to bravely take the charge.  Even Sanders when confronted with the Democratic machine folded tent and took in with the enemy.
 
Barath Nagarajan Added Aug 1, 2017 - 4:04pm
JFK was probably the "coolest" President of all time. He really believed in being good(virtue), but even he had some faults conservatives would point out. 
    I still believe the Constitution was an idealistic document forged through the experience of war with an oppressive government and King.
Donald Swenson Added Aug 1, 2017 - 4:10pm
George: Look at the situation over in Venezuela today. Their goods economy has crashed and their consumer economy has collapsed...yet the Caracas General Stock Market is setting records daily. Why is this so? What most miss in all our history is this evolution to digital/cyber money and the trading gimmicks of our Central Banks. Today, we have Central Planning for the entire global economy. Central Planning is done mostly by our Central Banks as they have all the digits (called money). Think or the international institutions which emerged mostly after WWII. The IMF, the WB, the BIS, the WTO, the CFR, the ECB, the BofJ and the Peoples Bank of China. We now have a global economic market where USA is less than dominant. Our Fed works with the Bank for International Settlements to manage global finance. We have the Financial Stability Board which monitors and sets rules for the entire global financial system. What has evolved since the end of WWII is amazing. Our United Nations now has the Agenda 2030 to manage policies for our entire globe. All 193 nations bought into this global Socialistic Agenda. Even our Global Pope has blessed this globalization for the planet. The Deep State is part of the shadow political system which is working behind closed doors to further this globalization and global governance system. Trump is a puppet and his policies will not change this prior evolution to global governance. Your history was good, however, with the exception of the above evolution. D
Donald Swenson Added Aug 1, 2017 - 4:13pm
George: You can follow the global governance issues here: http://www.globalgovernance.eu/
George N Romey Added Aug 1, 2017 - 4:17pm
Barath JFK was a great but not perfect man.  Most of what he wanted to do angered the Deep State and he paid the ultimate price.  20 years ago a small minority of Americans believed that JFK was murdered by the Deep State/CIA/Johnson.  Today its the majority.
 
Donald in order for the global takeover to work they must fully impoverish the developed world. Poor people have no mechanisms to fight back.  The future indeed looks very dark for most of us.
Donald Swenson Added Aug 1, 2017 - 4:18pm
George: Also this site: https://mail.google.com/mail/u/0/?tab=wm#inbox/15d9f300a2d34ea4
Barath Nagarajan Added Aug 1, 2017 - 5:29pm
Deep State: IDK, Ted Kennedy wasn't perfect but he would have been President in 1972 if not for Chappaquidick.( He lost his 3 brothers, one in WWII, one a President and Congressional Medal of Honor winner, one a Senator and attorney General, all heroic).
People have compassion, he would have been unbeatable. Nixon, IDK there's no evidence. Ted Kennedy pleaded guilty to a misdemeanor and avoided a trial, never claimed he was set up(by the Deep State). 
    Killing a President isn't really forgiveable, it's why trying to take down a U.S. President like Trump, if they fail, they're in trouble.
George N Romey Added Aug 1, 2017 - 5:38pm
I don't think the Deep State could get away with killing Trump. At least from a perspective people would believe whatever conjured story made up.
Barath Nagarajan Added Aug 1, 2017 - 5:40pm
President Nixon then had to resign the Presidency in 1974. Related? IDK, no evidence, but strong motive, he wanted to be reelected, it became his obsession really.
James E. Unekis Added Aug 1, 2017 - 5:52pm
Profits over people.  Pure and simple.  The last to fall is healthcare.  My doctor swore 30 times over his plight in Corporate medicine.  I just understood having been replaced by cheaper Indian workers in the once promising field of IT.
 
We opened the American Dream to all and we all got shafted.
 
Good article, thanks,
 
Jim
 
Barath Nagarajan Added Aug 1, 2017 - 5:57pm
I (think lol.) the CIA invented the hacking the election story because Democrats won't accept they lost the election. Pride.
They want to try to get him out, to get him to resign like Nixon.
George N Romey Added Aug 1, 2017 - 6:02pm
Yes James the "jobs of the future" (the ones that we say young people should be getting degrees in) are being outsourced or given to HB1 visas.
 
Again, there is no private or public leadership for needed change.  Its political doublespeak and the C level getting richer and richer.  I only see the opportunity at the next meltdown and maybe a reset.  People are dying because they can no longer support themselves and their families.
John G Added Aug 1, 2017 - 6:07pm
BN In any case the economic stagnation that resulted from the welfare initiatives of the 60's is why conservatives in general  believe that you can't spend your way out of a recession.
a) the stagnation came from the oil price shock and the war against the people of Vietnam and b) spending is the ONLY way out of a recession. 
By definition a recession is a decline in spending.
Just shows how dumb 'conservatives' can be.
John G Added Aug 1, 2017 - 6:09pm
The oil embargo and the OPEC price rises may have been orchestrated. But they were very real.
They were the primary cause of the cost push inflation and subsequent profit squeeze that the elites used to usher in monetarism and its conjoined twin, neoliberalism.
James E. Unekis Added Aug 1, 2017 - 6:19pm
George " Again, there is no private or public leadership for needed change. "   America is through with the gridlock in Washington.  The snowflakes, who con't understand economics want free everything while those of us whose parents were born in the 1920's work harder than ever for less pay.  I say let's make everything free for the obstructionist snowflakes so they can live like the Venezuelans.
Barath Nagarajan Added Aug 1, 2017 - 6:24pm
You can't create more wealth by trying just to encourage consumption, or increasing money supply, you have to encourage investment, and innovation for job creation, unless it's just maladjustment of supply and demand.
John G Added Aug 1, 2017 - 6:31pm
Spending is made up of consumption and investment. Both contribute to aggregate demand which is the driver of employment.
The only way out of a recession by definition is to increase spending.
Barath Nagarajan Added Aug 1, 2017 - 6:46pm
Not by government spending, not by taxation and government spending, not by running high deficits, not when the federal government has 10.5 trillion in debt, and CBO projections were off by 11.8 trillion over 10 years. Private sector investment is preferable.
John G Added Aug 1, 2017 - 6:51pm
Recessions are caused by a lack of spending (either or both consumption or investment) in the private sector aka saving.
The GFC was largely a result of private debt levels reaching unsustainable levels.
You can't square your circle by making ideological assertions.
When the private sector is saving and the current account is in deficit, the Federal government has to step into the demand gap with deficit spending.
George N Romey Added Aug 1, 2017 - 7:20pm
I'm for a $5 trillion five year infrastructure programmed financed from a national credit bank and in part paid for by cuts in defense and some other areas.  WW2 while it wasn't the purpose functioned as a massive infrastructure program that finally ended the Great Depression.  
 
Businesses required to meet production quotas had no choice to hire what they had considered the undesirables-older workers, women and minorities.  And contrary to what had been popular opinion those "undesirables" produced. Afterwards the boom continued for years albeit there were other factors at play.
 
A massive infrastructure program would solve much of our systemic but unspoken unemployment and give people a chance to better utilize skills. It would begin to resolve a bigger problem of underemployment.
 
Unlike WW2 when there was rationing and no consumer goods being manufactured for sale, this time around the velocity of the dollar would bring huge tax revenues resulting from higher economic activity.  Ultimately the program would be a net positive, particularly given the benefit of modern infrastructure.
 
The program needs to be carried out in the private sector overseen by an impeccable Board of Regents (no "mooches" from GS). 
Barath Nagarajan Added Aug 1, 2017 - 7:26pm
When the private sector is saving banks are investing. When government taxes, businesses and individuals are not saving so the government spends it.
John G Added Aug 1, 2017 - 7:45pm
BN When the private sector is saving banks are investing.
Nonsense.
When government taxes, businesses and individuals are not saving so the government spends it.
No idea what that means.
The Burghal Hidage Added Aug 1, 2017 - 8:06pm
Actually George I suspect the troubles began the day we came down out of the trees :)
 
Seriously though, all very true.
There are reams of analysis on these matters from multiple perspectives. I think it is fairly safe to say that nearly all bear at least a kernel of truth at their roots. Nearly, not all. For all of the muddied tributaries that flow from this font there is one simple focal point.
 
Since the 08 crash we have been time and time again fed the idea of "too big to fail". This concept, like most born out of conventional wisdom, is ass backwards. The truth is that it has all become too big to succeed. The government, the institutions, corporations, the entire modern social construct is an illusion, a house of cards being propped up by a lot of lies and wishful thinking.
 
On my Wordpress site I have a short story posted, titled The Association. It describes how something as localized as a Home Owners Association can be co-opted by a few parties to their own benefit at the expense of the rest of the community. What we have in the US and elsewhere is the same thing, only on a much grander scale. The larger any institution grows the easier it is for a select few to manipulate and pervert the rules and regulations to their advantage and that of their cronies, be they in government, finance, industry or even education. And the larger the institution the more likely that parties will get away with it and continue to get away with. It has happened throughout history and always finds the same end: catastrophic collapse fueled by unbridled greed and hubris.
Donald Swenson Added Aug 1, 2017 - 8:06pm
Our problem is our money. We have global counterfeiting of currency units in the trillions. All these units are Virtual/imaginary. It's a house of cards. D
Donald Swenson Added Aug 1, 2017 - 8:08pm
Let the markets crash so we can start from scratch. D
George N Romey Added Aug 1, 2017 - 8:22pm
It can't succeed because its built on a foundation of nothing.  No real investment or savings.  Businesses that provide zero value to society and reflect that in the types of jobs they provide.  Central Bank propping up of zombie banks.  Negative interest rates and endless money printing to only aid the top financial elite.  Out of control C level pay.  A stock market goosed up by a nothing burger.  Millions of people working far, far below their skill level.  I could go on and on.
 
None of this can last even with the desperate moves of the shadow government which has benefited so greatly from this Ponzi scheme of an economy.  
Donald Swenson Added Aug 1, 2017 - 8:29pm
Well said. D
John G Added Aug 1, 2017 - 8:30pm
Endless money printing!!!!!!!
In reality there isn't enough government spending to utilise the idle capacity in the economy.
The loss of output, income, savings and capital formation dwarfs any debt or deficit figures. The costs in social terms are vast.
But do keep howling at the deficit. 
That's what the oligarchs want you to do.
George N Romey Added Aug 1, 2017 - 8:33pm
Unfortunately the crash to force future change will need to be something unthinkable.  People will die or at least live through a sheer hell.  Maybe on the other end we come up with a better system.
 
One thing for sure we will have a jubilee one way or another.  Credit card debt, student loans, subprime auto loans, corporate leverage buyouts, the federal debt.  None of this is remotely repayable.  
George N Romey Added Aug 1, 2017 - 8:36pm
BTW new report just out.  Percentage of millennials buying homes:
 
70%-China
46%-Mexico
35%-US
 
Congrats America, we've fallen below Mexico.  That Trump Wall might be to keep young Americans in the USA. 
John G Added Aug 1, 2017 - 8:37pm
The Federal debt is the people's savings.
You want to wipe out the people's savings?
John G Added Aug 1, 2017 - 9:07pm
The US government can not be bankrupted and there is no issue as to whether the government debt can be 'paid'. It just involves ledger transfer from a Treasury account to a reserve account.
 
 
Patrick Writes Added Aug 1, 2017 - 9:13pm
A big, federal infrastructure program would be good. But Obama attempted this. It failed because it was classic Obama, full of hope and high expectations but not follow through. The money for "shovel ready projects" was given to the states with little follow up and most states used the money to "save state worker jobs". That lasted about 2 years and the states let those "saved" jobs go (circa 2010 / 2011). 
 
The governor of Wisconsin was offered a federally paid high speed (Amtrak) rail service between Milwaukee and Madison and famously turned it down. Because he said it wouldn't be cost effective because not enough people use to, to pay for the cost of running it. 
 
The Amtrak line between Chicago and Milwaukee is one of the busiest in the country apparently. (Apparently people wanting to get to Chicago often fly into Milwaukee, the train will pick you up from the airport and take you straight to Grand Central Station in Chicago.)

I'm not sure if that's "high speed" or not. 
 
 
Patrick Writes Added Aug 1, 2017 - 9:23pm
There are structural problems I think because the model that's worked since WWII, isn't completely working anymore. This is most evident in health insurance (the employer-provided model). Many businesses don't offer health insurance anymore. 
 
Also, politicians win the votes of the poor by offering them more social programs and/or race bating, pit one demographic against another. (And once the votes are cast, forget about them.)
 
The solution to all problems is 'send more kids to university, education is the answer'. 
 
Predictions for the future don't look awesome either. The robot revolution and "growth of the rest" that will continue chipping away at the comparative advantage the U.S. once had. 
 
Some of what Trump is doing is good. Highlighting products that are 'Made in America'. Shaming companies who move production out of country. 
 
Subtly challenging the idea that a company's only purpose is to increase the share price for their (worldwide) investors. 

It's time for the people of today to put on their big boy pants and adjust the models we've lived under since the 1950's to a 21st century reality, I think. 
George N Romey Added Aug 1, 2017 - 9:31pm
Patrick I think people can handle a new paradigm, in fact I think they know its really needed.  However, we have leaders pumping out the same failed ideas like "everyone go to college!"  Obama totally mismanaged the woefully weak stimulus he had.  Clearly the man has no management skills.  
Mircea Negres Added Aug 1, 2017 - 11:58pm
Into the darkness from which there's no coming back, they march like lemmings scared by the sound of fake flak. For things to change two things are necessary- a government accountable to the people and people willing to hold the government to account instead of being awed by "the latest iShit" like Stone-Eater calls it. Well, things ain't changing because people find it easier to be awed by distracting bullshit than to focus on the less than awesome task of making sure their country functions properly. I don't know what the statistics are on first-time home buyers in South Africa, but given the ridiculous entry level real estate prices, I'd say it's even worse than in the U.S. because houses which used to cost R125.000 are priced these days at minimum R850.000. Seeing how we're not prospering because we tell the truth to the masses (or at least what we think is true), perhaps we ought to do like others and find something distracting to sell them. Hell, I can write a pretty good story when I set my mind to it, maybe it's time for a foray in the "fake news" business... Nice post, buddy.
Donald Swenson Added Aug 2, 2017 - 1:02am
John says: The US government can not be bankrupted and there is no issue as to whether the government debt can be 'paid'. It just involves ledger transfer from a Treasury account to a reserve account.
 
What John continues to miss in his theory of economics is that our behavior as a nation reflects on other nations and their behavior. His idea of just transferring imaginary digits on a ledger is logical if we had no international trade with other countries. If we had no international trade with counterparties, then we could assume that virtual digits on a ledger in Washington is all that is needed. Faith money on a ledger, however, is not what counterparties to trade view as sound economics. Trade involves 'value for value' transactions. What is 'value' if we just create imaginary digits and transfer these digits merely on a ledger (whether paper or digital)? Does China view this as sound money? Does Russia view this as sound money? Do Europeans view this as sound economics? Do any of our foreign counterparties view mere digits transferred within a digital or paper ledger as sound monetary policy??? This seems absurd...as then every nation will desire a similar policy. Just transfer digits (created from the mind) on a ledger and forget any 'value for value' transactions. Has John read the history of money and value? Does his logic transfer to thinkers in other foreign countries? My sense is that John's logic is meant for John and not for a global system of international trade. What do you think?
John G Added Aug 2, 2017 - 1:27am
You mean you think that in the 46 years since Nixon closed the gold window those dumb furriners haven't noticed?
YOU haven't read the history of money.
What I stated isn't theory. It is empirical reality.
You really are ignorant and rude. A truly ugly American.
John G Added Aug 2, 2017 - 1:29am
The $US is NOT the only sovereign, fiat, floating exchange rate, non-convertible currency on earth you blind, deaf, ignorant, old goat.
Barath Nagarajan Added Aug 2, 2017 - 3:52am
The CBO has said the U.S. Government's carrying capacity is 24$trillion. So let's say the Treasury owes the Fed 2.4 trillion, which it took out of Social Security. It's one thing to say the Treasury can just pay them in more Treasuries, but if I'm a Social Security recipient I have to be paid in cash.
It's the same for bond holders. The reason foreign investors and (e.g. Central)banks buy treasuries is not because they love us, but because U.S. treasuries are zero risk. As bonds reach maturity, and as the U.S. Government reaches carrying capacity the chance of default goes up resulting in higher interest rates.
   Higher interest rates mean higher borrowing costs. When U.S. Treasuries become less appealing, reducing demand, it also results in upward pressure on interest as risk increases.
    The minute U.S. treasuries are no longer zero risk the economic system is thrown into panic and investment capital leaves the U.S. and goes to other countries.
John G Added Aug 2, 2017 - 4:16am
The reason foreign investors and (e.g. Central)banks buy treasuries is not because they love us, but because U.S. treasuries are zero risk.
Nope. The reason is that they've accumulated $US through trade and they get better interest on T-bills than they do by leaving them as reserves in commercial banks.
There is no 'carrying capacity'. That's just nonsense.
The Treasury sets the coupon rates on its debt issues in line with hitting its target rate/s. The 'market' has zero power.
 
John G Added Aug 2, 2017 - 4:24am
The US Government DOES NOT borrow $US in order to spend.
It issues $US.
What is difficult to understand about this?
Nor does it raise taxes to spend.
It issues $US.
What is difficult to understand about this?
Barath Nagarajan Added Aug 2, 2017 - 4:30am
They don't get better interest on treasuries, they would get better interest on a higher risk bond. Furthermore, even as an individual U.S. investor I can get better yield on a higher risk bond(such as corporate, State or municipal bond, but typically U.S. treasuries were not taxed (or taxed at a lower rate by the federal government) and are not taxed by the State government.
John G Added Aug 2, 2017 - 4:42am
They get better interest on Treasuries than they do as leaving them as reserves.
What is difficult to understand about this?
Rich Purtell Added Aug 2, 2017 - 9:00am
John G says:
"The US Government DOES NOT borrow $US in order to spend.
It issues $US."
 
First of all, this is incorrect and you know it.  The Federal Reserve does a lot more to influence the economy than to merely print new notes or burn old ones.  The M-1 money supply is just one part of their effort.
 
Secondly, governments who have hyper-inflated their fiat currency money supply have created extreme price escalation rates for goods, and the US is not immune to this.
 
Lastly, it does matter how much of our debt is held by foreign countries, and this impacts our sovereignty as a nation.  From February of this year:

"According to the Treasury, the largest foreign holder of U.S. debt is China, which owns more than $1.24 trillion in bills, notes, and bonds or about 30% of the over $4 trillion in Treasury bills, notes, and bonds held by foreign countries. In total, China owns about 10% of publicly held U.S. debt."
 
So a sudden, large increase of M-1 would likely cause the price of goods to increase in near proportion to the money supply - no net economic gain.  We also have to be cautious about our foreign liabilities, as Donald discussed.
 
Keynesian theory doesn't work very well in reality.  Government is good at expanding, not so good at contracting.  Then look at the mal-investment economy.  The Fed has signaled investors to not bother with high risk innovative products or services, just play around with derivatives and all of the other new fangled investment manipulation schemes.  So we have a stock market which looks great, but the GDP growth, not so good.
 
I'd argue that since going off the gold standard, this has concentrated wealth and is a key component of income inequality.  The Fed "controls" price inflation, but really of late is the Fed is PREVENTING price deflation, at least for some things.  Price deflation not only improves the purchasing power of money, but also encourages savings.  Banks don't want this.  They want consumers to borrow and pay high % rates on credit cards and other debt.  Buy today because tomorrow the thing you want will cost more.  That is the mindset which the banks want Americans to have.
George N Romey Added Aug 2, 2017 - 9:07am
The truth is that the banking sector is just as addicted to unproductive debt as the American people.  Its nothing more than drug dealers and drug addicts.  Moreover, credit is being used by around at least half of Americans for daily living expenses.
 
None of this is sustainable.  At some point there will be a crash.  We are living in a world of (real) GDP of less than 1% but yet we live as though GDP is soaring at plus 5%.
Rich Purtell Added Aug 2, 2017 - 9:11am
"None of this is sustainable.  At some point there will be a crash.  We are living in a world of (real) GDP of less than 1% but yet we live as though GDP is soaring at plus 5%."
 
Agree.  Cock-eyed optimism.
Bill Kamps Added Aug 2, 2017 - 9:45am
Rich is true to a point, and John is true to a point.
 
If the Fed creates so many dollars that inflation takes off, then we have a problem.  At this point in time, inflation is very low, and until recent years the risk was more of deflation.  For the time being the risk of runaway inflation is low, and certainly much lower than it was in the late 1970s, which the country survived.
 
Second, if other countries stop buying US bonds, then interest rates will rise, and this potentially could be a problem.  However, right now there is no sign that other countries dont want our bonds, quite  the contrary.  Other countries lend to us, and the lowest interest rates of any bonds in the world.  So again, for the time being, things are fine.
 
Might things change in the future, well of course.  But it is a lot of nonsense to think that the Chinese Yuan or Russian Ruble will become a standard of exchange in the world any time soon, meaning within decades.  For one thing, both countries make our banking system look solid as a rock.  China has created cities where no one lives, as an "investment".  Right now the only places you can exchange these currencies, is in those countries.  That is miles from being a reserve currency.
 
The Euro is a reserve currency, however the countries like Greece cant create more Euros on their own.  This is a weakness of the Euro arrangement.  Countries gave up this sovereign right.  The dollar is the world's currency, and while that is the case, we can create more dollars with relatively little risk. 
 
While our systems are far from perfect, the accounting, banking the stock systems in the US are the most transparent, and the most regulated. 
 
I have been quite a few countries, where people gladly took the US dollar in cash payment for things.  For large payments they preferred the dollar to their own currency.  Try doing that with anything else but maybe the  Euro, and you will get laughed at.
Leroy Added Aug 2, 2017 - 9:56am
What give me hope is that we are near the top of the swirl as the world economy goes down the toilet.  Asia and Europe will go before us.  Let's hope the US economy turns out to be the turd that just won't flush.  We can hope.
Stone-Eater Friedli Added Aug 2, 2017 - 10:00am
George
 
Your article is a lesson for OUTSIDERS to understand what the US has become. Man, this is your masterpiece. May I share it on other boards ?
Rich Purtell Added Aug 2, 2017 - 10:10am
Good points Bill. But this reminds me of the points George made about the US having an inherit production advantage for decades after WWII.  Right now many other major countries have monetary systems which are more corrupt and screwed up than ours. What happens if they get their act together, and we don't?
 
Let's not forget our war policies which seem to be always against countries which have gold backed currency.  I don't think this is a coincidence.
 
If Iran, China, and Russia can get their act together, any one of them really, with their banking systems, the US Dollar could see a real threat.  So long as we keep buying so much from China, they have an interest in a good relation with us.  But Russian relations have taken a huge step back in the last two weeks.  If the partnership between Russia and Syria expands to include Iran, and the three of them can organize good banking systems, this could pose a problem for us.  I think this process of repair could occur in 5-10 years, not decades.
 
As with our production advantages in the 50s and 60s, our banking advantage is not something we should take for granted.  Repairing a banking system could take less time than to rebuild an entire society.
 
I also should mention intellectual property laws.  Those are mangled into this problem of trade and banking.  These have become too protectionist in nature and are stifling innovation as well as jacking up prices for some goods (especially medicine).  As with banking, if Russia, China, etc. can come up with an IP system which is better than ours, this could threaten our leadership in technology.
Bill Kamps Added Aug 2, 2017 - 10:32am
Rich, granted.  I am not saying the situation is permanent.  Im also not saying that we shouldnt clean up our act while we have the time.  I am saying that disaster, or implosion or some reset on debt is not nearly imminent, and people should not be expecting this.
 
There are great problems with the banking systems in Russia, China, much less Iran.  The simple answer is that no one trusts what they say, and transparency is not what any of those governments want.  Organizing a transparent banking system would mean that Putin, and other leaders would have to give up personal control of the system, something they are not want to do.  They may pretend it is transparent, as the Chinese currently do, but it isnt, and everyone knows it isnt.   So it isnt so much  a matter of if they could  do it, if they wanted to, its almost impossible to believe they will really want to. 
 
The banking system even goes to their constitution, and the fact that they can easily be changed.  So you run the  risk of the rules suddenly changing.  This is not to say that the US system is perfect, but the rules that we follow dont even pretend to exist in those other countries. 
 
Another thing to realize that is that the Russian economy is smaller than the economy of Italy.  So how could an economy that small, even if properly run and transparent, be a reserve currency for the world ?  China at least has the size to be a player, and is the greater threat long term.
 
So when you talk about these countries changing their systems, changing their rules on IP, sure this could be done.  However, these changes would go to the heart of the  kind of countries these are, and that makes it unlikely the rest of the wold will trust them.
Katharine Otto Added Aug 2, 2017 - 10:46am
George and Donald.
You both seem to have a better handle on the big picture than I do, but I'm living at the ground level, where regular people are homeless, and violent crime has become the norm.  The police are corrupt, the system is corrupt, and nobody thinks about how the "global economy" is creating these problems on the ground.  
 
The "revolution" you mention, George, is already occurring, but not in the form you imagine.  The revolution consists of those who have dropped out, given up, retired, joined the black market and drug culture, or otherwise have thrown up their hands and quit contributing to the wealth of the predators who take more than they give and call it "democracy," or "capitalism" or other feel-good terms that people are beginning to realize are platitudes and lies.  The plutocracy, the Deep State, or "global economy," is desperate for the human foundation that has crumbled under their penthouses, and the penthouses have the farthest to fall.
 
That's why I say the US needs to get over this idea of being a world leader and start taking care of its own, because the throwaway people in our own country are the basis for success or failure.  I'm not suggesting more social "programs," which are more ruses for over-inflated government to steal more money from the future.  I'm talking about bringing troops home and putting them to work at the same salaries, for instance, to repair our decrepit infrastructure.  There's lots of work that needs to be done, but all the levels of government and bureaucracy insure turf battles over funding and nothing useful that benefits all equally gets done.
 
Katharine Otto Added Aug 2, 2017 - 10:52am
Burghal,
 
As always, I appreciate your perspective.  I agree that centralized power is more vulnerable, such as a terrorist attack on the electrical grid, for instance, that could stall all the elevators and stop all the air-conditioners in Manhattan.  So much for penthouse life.
 
To that end, I'm a big supporter of abandoning Wall Street for Main Street, or using savings to pay debt down or off.  If more IRA or 401k owners had the courage to do that, it would hit the central bankers, government, money churners and asset plunderers where it really hurts.  Maybe they would realize who owns them, rather than the other way around.
Rich Purtell Added Aug 2, 2017 - 11:17am
Have a look at this table:
 
http://statisticstimes.com/economy/countries-by-projected-gdp.php
 
No data is listed for Syria, at the very bottom of the table.
 
Iran is listed as "Islamic Republic of Iran". 
 
Japan + UK + Germany + France would combine for a higher GDP than China.  We haven't mentioned Japan, which has many problems with protectionism.  If Japan could get its act together and join up with the EU, there is a combined power which would exceed China.
 
But the protectionism in Japan is quite entrenched and not likely to change.
 
None of us has a crystal ball, but we are very fortunate for the US to have 5% of the world population yet 25% of the total GDP output.
 
Russia is a large country with a lot of natural resources and 40% of the population of the US.  So the potential is there for them to be an economic power if they could get their act together.  Iran is over half the population of Russia, I don't think most Americans appreciate that Iran is a relatively large country, about the same population as California, Texas, and Florida combined
Leroy Added Aug 2, 2017 - 11:18am
"BTW new report just out.  Percentage of millennials buying homes:
 
70%-China
46%-Mexico
35%-US"
 
I don't doubt the report.  I know little about Mexico, but I can speak some about China.  Imagine that you are an engineer working in Shanghai.  You might earn as much as $1,500 a month, probably a lot less.  First, you are likely to buy an apartment, not a home.  You could buy a "villa" with an adjoining neighbor, but it is going to cost about 4 times as much.  Most likely, you are going to buy a 1,000 sq ft apartment.  A decent apartment an hour or more by metro outside the city center will cost you at least $600,000, more if you want to be close to the metro.  Many inherited an apartment.  Once you have an apartment, you are golden.  If a developer takes your apartment, you will be given a better one as high rise apartments replace low rise ones.  If not they have two sets of parents plus themselves putting their savings together to buy an apartment.  Even at that, they might end up with a mortgage that consumes 75% of their salary.  Housing prices relative to salaries are insane.  If you come from a rural area to the big city, you likely start with nothing.  Your chances of owning a home are slim.  Most apartments are owned by investors.  There is the belief that housing prices will never come down, much like in the US prior to 2008.  In this environment, buying a home is a no brainer.  It just keeps increasing in value.
 
The Chinese do have one big advantage: taxes are low.  There are no property taxes for individuals--yet.  You can buy an apartment and sit on it.  The job market has been great.  You never know who comes back after the Chinese New Year.  Many decide to quit work and enjoy life until they need money again, then get another job.  My wife's father typically takes off a couple of months.  He'll do small jobs for a while.  Eventually, he returns to the big city for work.
 
A housing bust coupled with low employment will eventually cripple China.  Many do own their own homes and will be ok, but investors will be crushed.  Mortgage holders will be crushed.  Rents will skyrocket.  Today, investors depend on appreciation to make money.  Rent is relatively low.  Once the appreciation stops, rents must go up.  There is a lot of grumbling about first time apartment buyers.  It is not as rosy as it might appear.
Bill Kamps Added Aug 2, 2017 - 11:29am
Europe already has the Euro, and that is struggling because countries cant adjust their currency value independently.  They arent going to fracture the Euro, and then team up with Japan. 
 
Sure we can assume a lot of things, and there is always a way to paint a doomsday for the US.  The worlds economy exists on faith and trust, and that can always be ruined.  Also, we forget that a lot of this is self correcting, we cant just extrapolate trends linearly. 
 
Russia has been trying to get its act together for a century, and it hasn't happened yet.  The problem is that economies struggle under centralized authoritarian rule.  They lack consistent rule of law, they lack real property rights, they lack transparency.  They have a very long way to go before the rest of the world trusts them.  They dont know any other system.
 
The US economy was in far worse shape in the late 1970s, when inflation was 15%, and long term interest rates on the US bond were also near 15%.  Now both inflation and interest rates are low.
Stone-Eater Friedli Added Aug 2, 2017 - 12:18pm
Leroy
 
Switzerland: about 10%.
 
We're simply too small to offer enough space. We're over 8 million on a surface of about 30'000 km2 (taken off the mountains).
 
In Africa the average is well over 70%. Why ? Because they have family homes, and once you bought a house, it's yours. Cash. No mortgages which will kill you once.
George N Romey Added Aug 2, 2017 - 12:32pm
First and foremost, you guys are leaving mind blowing comments.  This discussion is on par with some of the best I've read or listened to.  SEF please do share it.  The more people hear the more they are willing to reject the false paradigm presented by the mainstream press.
 
Bill the big difference between the 1970s and today is the amount of debt and the rise of the unproductive economy.  Interest rates may have been 15% in 1979 but Americans were not laden with debt, people had good jobs building real stuff and far less people were dependent upon the government dole to make ends meet.  Ultimately those high rates were a result of Volcker trying to smash inflation and were being normalized by the 1983 timeframe.  Our problems today are very deep rooted and can't be easily solved despite slogans to the contrary.
 
Also add into the mix the interconnection of financial systems, the massive amount of derivatives, artificially ginned up equities markets, central bank manipulation of markets and growing income inequality in the developed world and we are sitting on a powder keg of financial crap.
Leroy Added Aug 2, 2017 - 12:33pm
No excuse, Stoney.  Shanghai is much smaller and has over 24 million people.  You just have to build up, up, and up.
 
In the US, you can't afford to keep and empty house.  Taxes and expenses will kill you.  In China, they can leave for the big city and keep their house rural areas, returning once a year or so.  There use to be no mortgages, but since the acceleration of property prices, people just can't keep up--unless they started with an apartment.
Stone-Eater Friedli Added Aug 2, 2017 - 12:36pm
In China, they can leave for the big city and keep their house rural areas, returning once a year or so. 
 
Same still in Africa. Tribe property, so to say. But in the West I never heard of any system which allowed people to actually BUY their homes and properties.
 
Keep 'em enslaved !
Leroy Added Aug 2, 2017 - 12:38pm
Actually, in China, you can never own property.  You can only lease it from the government.  At the end of the lease, you can typically pay a bunch of taxes and keep it for another period of time.  At least they are honest about it.  We, at least, have the illusion of owning property.
George N Romey Added Aug 2, 2017 - 12:51pm
Also remember most Chinese have learned to live frugally.  I know that China has typically suffered huge income inequality but at least on the surface Jingping wants to build more broad based prosperity.  But as the US has shown getting the upper crust to share some of the riches, even if it would benefit them in the long term isn't an easy thing to do.  For now China is extreme wealth for the very few and piss poor for just about everyone else.
Thomas Sutrina Added Aug 2, 2017 - 1:06pm
Communism by its nature creates a class society.  The ideals of socialism of communism is a fantasy.  the real goal of the Chinese government is to create enough wealth in the population to prevent a revolution that will displace them and open them up to criminal prosecution. 
Leroy Added Aug 2, 2017 - 1:19pm
"Also remember most Chinese have learned to live frugally."
 
My wife calls me a stingy bustard.  It's a myth that the Chinese live frugally.  It is one of the cultural differences I have with my wife.  The Chinese can be very generous when entertaining.  There is no concern for saving energy (saving money).  My wife's family lived with us for a while in China to take care of my wife.  In the winter, her sister especially would walk outside to make a call in privacy.  Because the door would lock automatically, she left the door open.  The waste of energy pisses me off (aside from freezing).  My wife refused to say anything because she would lose face for being too concerned about money.  The same for running hot water for baths.  Typically, in Shanghai, everyone has tankless water heaters.  The family would turn the hot water on to let it warm up before showering.  I'm talking about 45 minutes.  Again, I couldn't say anything without losing face for being cheap.  When we moved north, we had a tank heater.  I made damn sure to take a shower before her mother.  They had no sense of economy other than saving to buy an apartment and a car.  Other than that, they don't plan for the future.  To plan for a disaster means that you want it to happen. 
 
 
Stone-Eater Friedli Added Aug 2, 2017 - 1:21pm
Thomas
 
Communism by its nature creates a class society
 
Capitalism does was well.
 
Why ?
 
Because it's human nature. IQ is not equally distributed. Forget that -ism shit once and for all.....
Leroy Added Aug 2, 2017 - 1:21pm
"the real goal of the Chinese government is to create enough wealth in the population to prevent a revolution that will displace them and open them up to criminal prosecution."
 
That's exactly right, Thomas.  It is about staying in power.  It cherishes stability above all.  It will yield to the people if it reduces instability.
George N Romey Added Aug 2, 2017 - 1:35pm
Leroy I get the feeling that the Chinese government fears an unstable uprising people.  Lets face it the Chinese people look around on the Internet and see how the developed world lives and want to live better.  Now as I've said before the US took nearly 50 years to create a widespread Middle Class with a 12 year Depression in the middle. 
 
Interesting today on RT was a report from the Financial Times (no mecca of financial conspiracy) that a lot of the new securitized bonds (auto loans, credit cards, etc.) going bad were rated AAA and the article believes we are now back to 2008. 
 
 
Barath Nagarajan Added Aug 2, 2017 - 1:38pm
That's the point John, try to have an honest discussion without being an arrogant jerk. I suppose you don't believe in ethics at all. I suppose your solution is have the Treasury print up a lot of $$ and put it out and that will make the people wealthy. Why didn't everyone think of that before?
George N Romey Added Aug 2, 2017 - 3:57pm
The Fed did helicopter money for the big banks.  They would have accomplished a whole lot more if that $10 trillion to $12 trillion or so printed had just been divided among all adults in this country. Helicopter money for the banks solved nothing.  Furthermore, there was no real economy to lend it to even if the banks had been set on doing some good for society by the largess of the Fed.
 
Now an infrastructure program is something that is worthwhile. People are at all levels and all functions are put to work doing productive things, not just getting a bump from the Treasury Department in their checking account.  It not only provides the basis for economic rival (as WW2 did) it provides us with a country fully ready to out compete anyone else.
 
However, I doubt it will ever see the life of day.  We will get another pissing round of QE, loan guarantees and no strings attached bailouts and be told by the same numnuts it will allow the banks to lend to the "real" economy.
Thomas Sutrina Added Aug 2, 2017 - 4:20pm
Stone, there is a huge difference it the nature of class  between communism, monarchs, Islam, etc. and capitalism.   Class is based on religion, political affiliation, race, heritage, language, parents, and wealth.  Obviously all but wealth can be passed down from generation to generation.  Government creates barriers between classes so once a member your family is always a member.  
 
Stone wealth is a different matter.  It to can be controlled by barriers.   If it is not then studies of the wealthy in societies show that the generation that created the wealth when passed down to the following generation loose that wealth by the fourth generation without barriers to prevent that from occurring.  That means that the wealthy class changes over time as people leave and enter it without barriers, government intervention.  Many doors are open because wealth has many doors
 
All tyrannical societies have high barriers, including communist countries.  Only by serving the state can one move up in class.  Service to the state is thus a form of wealth.   Thus if the state determines that raising the standard of living is a value to the state.  Those that achieve this objective move up.  China is an example.  Those that protest the picking of their pocket by government move down in class and my get murdered.  Example Russia. 
Stone-Eater Friedli Added Aug 2, 2017 - 4:36pm
Thomas
 
Those that protest the picking of their pocket by government move down in class and my get murdered. Example Russia.
 
You know any Russians personally ? I know.  And what about the US ? C'm on. Who don't comply with the official US (war) doctrine gets killed. Be it Gadhafi, Saddam - or JFK.....
 
John G Added Aug 2, 2017 - 5:04pm
Purtell. First of all, this is incorrect and you know it. 
Then you tell me where you imagine those $US come from.
China runs a trade surplus with the USA, of course it accumulates $. So what?
So a sudden, large increase of M-1 would likely cause the price of goods to increase in near proportion to the money supply - no net economic gain. 
Why? Quantity of Money Theory was debunked in the 1930s. Any study of post GFC monetary flows will show the fallacy of the theory.
Inflation is about spending.
Keynesian theory doesn't work very well in reality.
The watered down Keynesian demand management we had in the Bretton Woods era actually worked very well.
 
John G Added Aug 2, 2017 - 5:09pm
Kamps. Second, if other countries stop buying US bonds, then interest rates will rise, and this potentially could be a problem. 
US Treasuries can only be bought with $US from reserve accounts. They are issued in the amount of the Federal government liabilities in line with the Treasury's target rate.
The market cannot drive up the coupon and the (excess) reserve $ are always there in the payments system.
Doug Plumb Added Aug 2, 2017 - 5:50pm
Our belts were undone and our trousers were at our knees and we were bent over for the Crown the very instant the Federal Reserve Act and others around the world were signed in 1913. It just took time for people to hear that banging from behind them.
  Turn off the taps, mopping the floor only works until the taps flow faster than we can sweep it all up. And the flow has to increase continuously to finance the debt that exists, as it grows.
   I don't see how anyone could argue that the powers of money creation should have a Keynesian system that works for their benefit instead of ours.
John G Added Aug 2, 2017 - 5:55pm
What in the real world is a "Keynesian system"?
John G Added Aug 2, 2017 - 5:59pm
What were the economic conditions before there was a centralised banking system?
Oh that's right. Disaster after disaster after disaster.
Barath Nagarajan Added Aug 3, 2017 - 1:40am
 Last time I checked(it was 18$trillion) over 6trillion$ of the U.S. Debt was owned by foreign investors, the Fed owns a large portion of it over 40%. Japan, the U.K., China all own portions of it.
In any case as securities reach maturity in the time when the U.S. reaches its borrowing limit the chance of default goes up so interest rates rise. 
     The United States did momentarily default on its debt once when Carter was President momentarily, due to a computer glitch, and it sent interest rates up precipitously.
   The U. S. Government will likely continue to run deficits for some time, and need to continue to borrow. Interest payments on the debt will continue to rise in the near term, and consume a larger portion of non discretionary spending.
Barath Nagarajan Added Aug 3, 2017 - 1:49am
Why all the anger and angst John? If you can't be civilized then get out of the fucking country and go back wherever it is you come from.We don't want you here.
John G Added Aug 3, 2017 - 2:26am
I'm not in your country, you retard.
John G Added Aug 3, 2017 - 2:28am
And given your aggressive comments and childish tantrums, you're in no position to chastise others. Hypocritical religious nut job.
Saint George Added Aug 3, 2017 - 2:34am
Takes an aggressive commenter to know one.
Takes a thrower of childish tantrums to know another one.
 
For whom do you shill, John G? The Russians?
Curious minds want to know.
Barath Nagarajan Added Aug 3, 2017 - 4:22am
I chastize evil arrogant men like you John. You know nothing about God.  The people in this country like honest good and decent people you proud aggressive jerks are not welcome here anymore, by a lot of people who believe in being Good. We want our country to be a place for decent people.
   A lot of Americans are religious, John no one is a nut job but you and your angry, dishonest, proud and arrogant Supremacists.
   I'm in every position to chastize you, I don't think you believe in being good nor do you know what it means to be good, or even try to be fair.
Barath Nagarajan Added Aug 3, 2017 - 4:31am
By the way John what you know is trivial bullshit and your an ill tempered boor, inconquestial nobody. You're a worthless jerk and always will be.
Barath Nagarajan Added Aug 3, 2017 - 4:34am
Study something important, economics is too easy, and it's all really bullshit that your slinging.
John G Added Aug 3, 2017 - 4:37am
Barry Negatron. You know nothing about God.
True that. I have no idea of what it must be like to believe in fairies.
economics is too easy
And yet it's beyond you.
Barath Nagarajan Added Aug 3, 2017 - 4:44am
John your God is the Devil, that enough for me to know, you religious sociopathic jerk weed. Go worship a dead naked fuckir on a cross. You and your God with 3 creators. Worship an image of death, or laws that are not God, write a thousand laws and worship them as God. I don't care. You only want to worship your God, not a good one.
Barath Nagarajan Added Aug 3, 2017 - 4:50am
John you're the one who doesn't understand it because you're a moral zero, a valueless peace of slime that crawled out of the ocean.
John G Added Aug 3, 2017 - 5:04am
I don't believe in a god, you cretinous wank stain.
Barath Nagarajan Added Aug 3, 2017 - 5:08am
I don't like atheists.
John G Added Aug 3, 2017 - 5:15am
No kidding, skid mark.
Doug Plumb Added Aug 3, 2017 - 6:35am
@Barath: re "John your God is the Devil, that enough for me to know, you religious sociopathic jerk weed. Go worship a dead naked fuckir on a cross. You and your God with 3 creators. Worship an image of death, or laws that are not God, write a thousand laws and worship them as God. I don't care. You only want to worship your God, not a good one. "
 
Your description of Christianity is childish and totally wrong, especially the Trinity. I explain Christianity in my movie "Dialectic".
 
Doug Plumb Added Aug 3, 2017 - 6:37am
re "What in the real world is a "Keynesian system"?  " One based on Keynesian economics, "governments" control currency in circulation to manage the economy is Keynesian.
Barath Nagarajan Added Aug 3, 2017 - 8:01am
John thinks he's pure like milk. You're not milk. I like milk, milk is good. I even like butter. Maybe you're like Nivea.
John G Added Aug 3, 2017 - 4:00pm
"governments" control currency in circulation
That doesn't really mean anything. It is over 40 years since we had Keynesian demand management. The results of the neoliberal dogma that you are promoting have been dismal.
Barath Nagarajan Added Aug 5, 2017 - 12:39pm
On the back of the U.S. dollar it says," In God We Trust". If the U..S.Government defaults on its debt even for a moment it has broken it's promise and there is no reason to support or trust it.  Other Governments don't necessarily see any reason to support U.S. interests over their own if U.S. Government can't be trusted.
Barath Nagarajan Added Aug 5, 2017 - 12:42pm
Banks and foreign investors buy U.S. Treasuries because there is supposed to zero risk of default.