[GJM] "Can the US 'print its way' out of the Unraveling?" [CITS Capital & Debt Wat

[W. Curtiss Priest]

Dear Terry,

I appreciated your well-thought note about currency
as a lubricant.

Indeed, the key to our financial ills does relate to the
quality of lubrication that money, and lent money, provides.

On the Global Justice Movement list, Kurland refers to
lent money with quality of lubrication as "pro-creative."

Others simply look to the ROI (return on investment) but
some loans are socially procreative.  For example,
had a certain pirate kind of banker not preyed upon a
strongly held value in the US, "home ownership," we would
have the socially procreative result of more home ownership
without the "sub-prime" component.

Also, who gets the ROI that exceeds the "cost of money?"

If those with money get those returns, then those without
money can't buy the supply of goods and services without
resorting to debt.

So, not only are there pirate lenders, but there are 
pirate producers.  These pirate producers, at present,
see nothing wrong.  But, they suffer along with the buyers
when the resulting imbalance causes a crash.

Surely an economic system that produces crashes must be
fixed.  We tolerate them because we have yet to figure
out how to prevent them.  And some who write about
"binary economics" and "social credit" are onto something.

And, some of those beliefs invite the idea of employee
ownership.  But this raises the question whether employee owned
firms can compete with others.  For, if there is truly
"ongoing wealth redistribution" in the employee owner
firms, then, by definition less money goes to the "true
capitalists."  And, since capitalism wins the day, we now
believe that to correct the imbalance, that the rules have
to be changed.

But, we look around and find that no politician wants to
go near this nightmare.  As crashes are often on "someone
else's dime" and as the time periods are large, there is
no current political process that will solve the problem.

Those with DJM, and I, and others are talking about how
this might be remedied.  I sincerely believe that with
over a decade of various Internet lists bouncing into
each other, that some progress has been made in all of
our thinkings.  Slowly, unorchestrated, but in the right
direction.

Sincerely,

Curtiss

tennbears at bellsouth.net wrote:
> 
> Curt & All
> 
> I appreciate your (and others) insight on this issue.  I have not read the
> Batra offering you reference, but it seems that the major culprits
> controlling the global economy...that elite group of ruthless robber barons
> known as the "central bankers"...are receiving little attention in all this.
> 
> Pardon my probable naiveté on this topic, but it seems to me that "as the
> currency exchange rates go, so goes the sub-economies dependent on those
> currencies".  The central bankers are either directly or indirectly
> "causing, tolerating, or (unconsciously) simply being oblivious to"
> situations such as we have in Zimbabwe today (and perhaps here at home
> tomorrow). I seriously doubt the latter of the two possibilities mentioned
> above, so it comes down to the same old elitist crowd playing greedy games
> with each other (and their big-business friends), with the rest of the world
> (including whole countries) existing as their monopoly board tokens.
> 
> As you know, I have been absent from the list for several years, and I'm
> sure there are many good things I've missed that might speak to the economic
> issues under discussion.  However, I suspect that since I have seen no
> visible changes to the controlling structure (since the first formal inning
> commenced in 1911 with the Federal Reserve Act), the "game" as played by the
> central bankers has had no impetus to change anything.  And I would dare
> say, that until the light of exposure focuses on the "game as played by the
> central banks" is very publicly turned on, we will see a continuation of the
> way things are.
> 
> I've always maintained a simplistic view of the global economic engine as
> follows:
> 
> - "value" is the fuel it runs on (but the value has to be "win-win" among
> exchangers) and
> - "currency" is its convenient lubrication.
> 
> Since leaving hi-tech for the farm, I see it concisely demonstrated. An
> economy without "lubrication" (currency) cannot grow too fast as natural
> friction (pace of value exchange) limits growth.  (If I want bacon and have
> beef but no swine, and my neighbor needs beef but has only swine, then the
> value exchange is win-win and slow (it'll take time to consume on both
> sides).  However, adding lubrication (currency) to the equation...especially
> lubrication that "affects" the value being exchanged based on who has the
> biggest gun or who owns the most stock in whom...allows it to run much
> faster.  Inflation (excess lubrication) can make an engine overheat (due to
> internal pressure) just as certainly as trying to run the engine too fast
> without it (due to heat and eventual breakdown of its parts).
> 
> As a first step towards creating an economic engine/environment that could
> respond to healthy refinements, designed to ensure "win-win" value
> exchanges, would be to eliminate the possibility of the "lubrication"
> affecting the value being exchanged.  This would, of course, mean that the
> gamesters referred to above would be ejected from the game as currency
> exchange rates would need to be "fixed" (relative to each other) based on
> the equitable exchange of "win-win" value.  Borrowing currency would simply
> be the equivalent of borrowing "value" to accommodate its exchange at the
> current pace of commerce.  And of course this should be worth something
> (interest) since accommodating the pace of commerce is a value to those in
> immediate need of certain kinds of value (e.g. milk, gasoline, toilet
> paper), but the interest paid on this debt should be based on the "fuel"
> (value), not the lubrication (currency), and would be fixed at the rate the
> market would bear based on the immediacy of the value needed.  (Maybe the
> economy would slow down on its own when interest gets too high, as it
> should.) Hence, perhaps the ejected gamesters would be replaced by banks
> willing to base interest rates on "win-win exchanged value" instead of
> pocket-lining tinkering of the "lubrication".
> 
> Call me old fashioned, even idealistically naïve, but Newton already
> explained that things will keep going as they are unless acted on by some
> force. In the case of the global economy game as currently played, I see no
> other "force" being effective other than (courageous) public outrage at the
> methodology governing the current "game".  But hey, I'm just a cattle
> rancher happy to have had the opportunity to exit the worst of the rat race
> to sit several rows back from the action.
> 
> Respectfully,
> Terry Wright
> 
> 
> We in the US currently have an Executive Branch that many don't
> trust.
> 
> For example, one purpose of waging war is to produce economic
> activity.
> 
> As I have never seen any country, at any time, pass a law stating
> that the central government "may not print money, except for the
> purposes of replacing worn money taken out of circulation," many
> countries at various times have resorted to printing money to
> escape financial problems, only to create hyper-inflation.
> 
> Less you think that such behaviors are "behind us," we need only
> look at Zimbabwe, today.  Yesterday the central bank "unveiled
> a new 200,000 Zimbabwe dollar note (see article below)."
> 
> While this practise occurs mainly in "third world countries" with
> massive debts to other countries, we must remember that Germany
> tried to print its way out of the world-wide Great Depression.
> Some of us can see in our mind's eye the political cartoonists showing
> buyers with a wheel barrel of money to buy groceries.  It was
> that era of economic pain that gave rise to nazism.
> 
> Batra, in "The Crash of the Millennium," reasoned that this crash
> will differ from the prior one by being inflationary.  Why?  The
> US has become a "third world country" because it owes massive debts
> to other countries.
> 
> At $2 billion dollars a day, we borrow from the rest of the world
> to feed our imaginary economy.
> 
> So, one way to avoid paying debts denominated in US dollars is
> to make those dollars worth much less.  If such a country
> correspondingly has employment where wages rise at the inflationary
> rate, buying power of consumers remains the same, at least for
> goods made within the "inflated system."  As Social Security is
> inflation adjusted, people receiving Social Security will retain
> the same buying power.  Tempting.
> 
> But the costs of hyper-inflation are huge.  All fixed pensions
> become, essentially, worthless.  All lending by foreign countries
> ceases.  That lending does not just decline, as it is now, with a
> slow "drop in the dollar" but plummets.  So, the entire imaginary
> part of the economy dependent on such borrowing simply disappears.
> 
> That disappearance jolts the economy, causing sudden cessation
> of buying which immediately appear as huge losses to US companies
> producing services and goods.  Many, already burdened with massive
> debt either incurred by poor business practise, or imposed by
> "leveraged buyouts" (think thieving financiers) lay off workers
> and many go bankrupt.  But, hyper-inflation helps them too as
> their outstanding debts can be paid by "cheaper money."  But
> any US lender is bilked and destroyed.
> 
> That countries still resort to printing money in such circumstances
> is a testament to some merit in the scheme.  But the disruption
> it causes is a great evil.  Business "as normal" is an impossibility
> with prices leaping every day.
> 
> No country that's gone into hyper-inflation produces any good
> news.  Food often becomes scarce.  Most people live lives of
> desperation.
> 
> **********************************************************************
> 
> Previous issues of the CITS DEBT WATCH:
>     http://groups.google.com/groups?q=cits+debt+watch&hl=en&scoring=d
> 
> The entries appear in reverse chronological order, with the
> most recent, first.
> 
> **********************************************************************
> 
> NOTICE: Contains copyrighted material, do not redistribute unless you
> abide to the copyright notice appearing at the end of this article.
> 
> As provided for under Section 107 of the 1976 Copyright Law, the
> following piece is being distributed for non-profit purposes and for
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> conveying information is to fully inform the reader, an entire entry
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> ****************************Advertisement*****************************
> Subscriptions to the Boston Globe are available at 617-929-2000 Boston
> Globe archives are available for a fee at www.bostonglobe.com
> ****************************Advertisement*****************************
> 
> In time of crisis, a 200,000 dollar bill
> 
> Zimbabwe battles runaway inflation
> 
> By Angus Shaw, Associated Press | August 1, 2007
> Boston Globe, p. A3
> 
> HARARE, Zimbabwe -- The central bank unveiled a new 200,000 Zimbabwe
> dollar note yesterday, double the face value of what had been the
> highest denomination bill in a country where bundles of notes are
> needed for the simplest transactions.
> 
> The Reserve Bank said in a statement that circulation of the new bill
> was for "convenience" in business and individual transactions.
> 
> The bill is worth $13 at the official exchange rate or $1 at the
> dominant illegal black market rate. With five bills a Zimbabwean
> millionaire can buy a handful of scarce food items.
> 
> Runaway inflation has led to bundles of bills being needed for routine
> purchases. Few businesses or even government departments, including
> the tax office, accept checks.
> 
> They demand cash or same-day bank-to-bank transfers, for fear the
> value of the currency will plummet even further before checks can
> clear.
> 
> Zimbabwe is in its worst economic crisis since independence from
> Britain in 1980, blamed largely on disruptions in the
> agriculture-based economy in the former regional breadbasket after the
> often violent seizures of thousands of white-owned commercial farms
> began in 2000.
> 
> Last August, the central bank slashed three zeros from the currency
> and issued new notes, saying the old cash had become unmanageable and
> computerized accounting and regular electronic calculators were unable
> to cope with the number of digits in routine transactions.
> 
> Since then, official inflation has trebled to 4,500 percent, the
> highest in the world.
> 
> Independent finance houses estimate real inflation closer to 9,000
> percent.
> 
> A government edict to slash all prices last month in a bid to curb
> inflation has left shelves across the country bare of cornmeal, meat,
> eggs, milk, and other staples.
> 
> Acute gasoline shortages have crippled transport and commuter
> services. The price of gas has been slashed to half the cost of
> importing it.
> 
> c Copyright 2007 Globe Newspaper Company.
> 
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> As provided for under Section 107 of the 1976 Copyright Law, the
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-- 


	   W. Curtiss Priest, Director, CITS
      Center for Information, Technology & Society
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