Chapter 6
To understand a chart is one thing, to capsize a ship …and survive
another.
http://www.lilliput-information.com/engiodd/index.html
It suites so well
that most economic actions, states and results described in economics have both
a real economic and a financial side, and at the same time money, finances and
banking are not just theore-tical and intangible concepts. Nevertheless those
were the first that were used to form that cyberspace-reality that has
developed to such an extent that it is literaly impossible to describe.
--------------------------------------
January the 11th 2002 Allan Greenspan told us from San
Francisco that September 11th 2001 is the date of which everything
is turning. He talked about an unstabled stock market, the failing increase of
demand that prevents the growth of the economy worldwide.
”Deflation: Lasting general fall in prices. Deflation makes wages,
prices, incomes, production and employment fall more and more…the power of the
deflation in the world is stronger right now that anything else we have seen
since the Great Depression”, Grek Jensen, Bidgewater Associtates; Bar-rons,
announced 09/04/98.
“…somewhere the psycology turns to the ruling of “do not buy now”, becau-se it will be more
unex-pensive later on”, Barton Biggs, Strategist, Morgan Stanley, Barrons
06/29/98.
……
Since second quarter of 1998 we have been listening to the harangues of
the world’s dominating, but practical expressed ignorant commentators of the
media: ”Collapse, Deflation”, like an unevitable fate we have live through.
First Asia (Japan: ”Kakadu hakai”), then USA and Europe. A few among the
so-called enlightened individuals among the common people have perhaps, if not
before, then made it to a question of belief now, a little in the line of the
Ten Commandments or perhaps rather the Five Columns of Islam, if the questions
are asked at all.
This I shall not deny.
Since the midd
1980s questions on economic policy have been removed from the Danish TV. Things
are not in such a bad way anywhere else in the civilized world. In
addition we have not been allowed to learn on the subjects. If we have tried we
were indoctrinationated with John Maynard Keynes’ odd considerations right from
the youth. These considerations or his context among other things has lead us
to where we are, first of all the Keynesian was lead to work for his masters. John
Maynard Keynes Historical accuracy by the way
A centralization
or integration of the decisions as
those concerning a common European currency of unit Euro leads to further
centralization of the visible power. EURO EURO2
Why develop some
economic declines further? Simply because what has been done officially to turn
the tide is fundamental wrong too. If the objectives are the declared ones. So
simple is this.
Take the American economy, the decline is being
deepened all the time. At the end of October 2001 you could read from the
official accounts that the industrial production decreased with 5.8% in
September after a decrease of 4.6% in the month before. The yearly rate of
growth in retail sales decreased to 0.2% in September from 3.7% in August. The
rate of GDP-growth decreased to 0.3% yearly in Q2 from 1.3% in the quarter
before. In addition the employ-ment outside the agriculture was reduced by
200,000 in September 2001.
My proposal:
”Falling stars in August 2002 in Denmark”
One thing is worrying me: In October we find retailsales increasing 7.1%
and at the same time employ-ment and industrial production went down. A few
maintained that it was caused by reduction of stocks. It is certainly true, but
on the other hand cars and expensive luxurious products must be paid.
If you return to page1 of this article now, you will not doubt for a
second that it was here Greenspan entered the stage. He has for the 11th time overswimmed the market with
discount-credits, and that is the reason why the stocks are being emptied.
But what should
play a part is not the fact that stocks are being emptied or the comsumption is
increasing further.
As things look like, investment in production and production aught to
have first priority for a responsible President of Federal Reserve Board.
General falls in prices are not deflation, and general prices-falls in
one month or two or a quarter perhaps two certainly are not deflation.
The rulers possibly work for deflation, I can’t say, but the conclusion
is pure false, and the indicators here are not those of deflation.
Deflation is simply caused by a reduced amount of money, and not by
anything else. Here it is the opposite. Because two phenomenons or states
appear at the same time there do not have to be a cohe-rence between them just
for this reason, but to some people – especially TV-commentators - the
cohe-rences lights from everything happening or not happening at the same time.
Essential things and more vital coherences often appears the final result
several months later.
So, where were they gone? Into the lakes of course.
The commentators of the day will simply report about consumer-confidence and the comsumption. It means nothing. If the
consumers use more money, the commentators will report that this a sign of the
increasing employment and surely a sign of growth. It is not. If the
consumption declines, the public shall know how this has negative effects on
the employment and on growth. Nonsense.
“The viewer is
right, tell him this, and he will choose your channel to look at your spots and
buy your products”.
Consumption and confidence of the consumer has never been a problem, but
production, employment and debt are problems. Even this was already realized by
the classical economists. I have to mention that every important relation
especially on value, prices and costs were not clarified by the classical
economists.
Unfortunately the expansion of the amount of money reduces employment by
reducing the wagecosts relatively more than the value of the result of
production (inflation). What happens is: if the price on the work is 110 and
the value of the corresponding result of production is just 100, production
are not profitable, and therefore unemployment has to rise. Then you can
remove the too high price on work by increasing the amount of money, and then
(reason) let the price of product be 110 or more.
Nevertheless the commentators insist that concentrating on demand of the
consumers is decisive. Not even the classical economists, even if we (false)
include Karl Marx, were so bad enlightened. In 1930s a lot of these did argue
that expenditures of the consumers had to be increased to recover the economy.
A few others as for an example Stagg Lawrence underlined that the
consumption would be maintained, even though the producing industries had the
recession. This is exactly what has happened the last year.
To encourage the consumption by low-rate-loans directs the resources
away from investment, and to activities of consumption. In this way the savings
are being spent on consumption.
The jungle of public subsidies meaning
taxation-financed subsidies or transfers to productions that would not
succed with low or no margens of profit, has the same effect in the end.
Resources are transfered away from the natural order: Productions that would
have been profitable without the competitive public or fund-financed subsidy to
other productions are removed in favour of those productions that would not
make a positive result without the subsidy.
Every malinvestment that are being done in deficit-businesses as a bad
result of subsidies granted by the government or artificial low-rate-of-
interest-suppliers have to be removed again, before recovery is possible. Without
removing these delusions, the artificial economic life of dead investments will
prevent other profitable investments from creation.
Two days before
Christmas 1913 Congress with Woodrow Wilson as the American President passed
the Federal Reserve Act that privatized the money issuing in USA. The first act
of these private indi-viduals outside the circle of legaly elected were to
reduce the claim of reserve in the banks. Later on the claim of reserve was
reduced even further, so USA could go unfinanced into WW1 – people do not want
to finance a war they don’t want.
Easy-money-credit-creation
of first degree :
When an
individual deposit $100, and the claim of the reserve decided normally by
government is 10%, the bank will keep $10 but lend out $90. Perhaps those $90
end up in another bank. Now the same happens, $9 kept in reserve, but $81 are
lended out again a.s.o. The final result is that a deposite of $100 may lead to
a credit of $990.
After WW1
inflation was started with 40% more credit [or about $4 billions in the
beginning of the 1920s].
We will go
further into this, when we come to Europe below.
Investment in the
capital structure of about 6.4% a year got manufactory productivity per worker
increase with 43%. The prices remained rather stable, and more stable than
today. About 1929 USA actually produced as many cars as in 1953, the sales of
electrical products were tripled, sales of radios rised tremendously from $10.7
millions in 1920 to more than $411 millions in 1929. An extended boom of
building made it possible for millions of Americans to move into their first
house. Those that understood the background of an economic boom and saved, lost
their savings. That the period was marked by quickly growing consumption was
not discussed.
While we are
waiting for another crash on: http://www.geocites.com/evigdk/oklek.html
(will be translated from Danish)
Like in the 1890s
there was a drawback to this story of succes however.
In spite of the
increase in productivity a lot of workers found it difficult keep the
purchasing power of their income received by wages. There was a beginning
accession of women to the workingforce that further supported this fact. Even
though the 1920s are looked upon as the greatest boom-period in US-history, we
have to say that the period 1896-1903 clearly overtook it, in any case what
physical production concerns, but certainly not concerning financial
stupidities.
Speculation in
everything to capitalize and consume the future potential profit and other
purchaging power from everything, from stock marked shares to land.
The total amount of money (notes, coins and short credit) was $73b at
the end of 1928 and $73.26b at the end of June 1929.
To try to
stabilize the purchasingpower in monetary units blocks this process, because it
limits the rise in real income.
It is basicly the same that happens today, when you exclude the more
stable level of prices then, and the gold in the 1920s. Price-falls are
certainly not the problem. Look at England in the 1800s. Here you actually
find falling prices in the whole period 1817-1896. The reason is simply the
productivity that increased quicker than the amount of money – and it has
nothing to do with goldcoin or the later goldstandard as basics. Industrialism
was going quite well, and very well, indeed. The price on gold rose measured in
units of products. That stimulated the search for gold further. Such a
developement lead automatically to rising real incomes (nominal incomes
corrected for price changes). Larger profit-margens were created, larger than
what could be eaten by the amount of money.
The easy-credits created the so-called boom in the 1920s.
A more restrictive montary-policy would have prevented the Big Crash
that happened via the shares-prices on stock market. The easy-credits seduce
the investors to believe that a larger propensity to save has made more
resources avaible for investment. Now (2002) the press on the prices are
beginning to be shown, and profits fall. It is the question if the central bank
(FRB) will put the brakes on. Perhaps, but it is precisely the opposite what is
needed then, when it has happended (like in 1929 the wrong was done more of
less expected).
Until WW1 and until 1920 the policy of the goverments in Great Britain
and in USA was to let depressions exhaust themselves. The readjustment-period
where unsound investments in the total capital apparatus had to be liquida-ted
in order to make the sound economy go again.
To illustrate the amounts of the1910s and the1920s – in 1900 dkr100
mill. circulated in Denmark. In 1914 the circulation was dkr 140 mill. In 1919
it amounted to dkr 430 mill. So the government let money printed to get through
WW1 as convinient as possible (in the starting point just like FDR in USA). The
Danish Treasury misused that type of debt Professor Laurids V. Birck
maintained.
The advances in the central bank were paid in cash but exchanged with instruments
of debt. In the war the states of Europe drawed in this way on the banks.
Totally absurd in France and Midd Europe, but even in England these “advances, way, and means” reached about Pd strl
½ billion in 1919.
When WW1 created
a lack of products caused by the difficulties in foreign trade in the war, it
seemed totally wrong to print money to finance the war. What was bad enough
turned even worser. WW1 was driven by counter-feiting turned inside out into a
caricature with a mad dimension of state-debt.
In the European-American economics the state-debt rose from dkr.150
billions to dkr.1 trillion in 1918, to 1½ trillion in 1919 and to dkr. 2
trillions a little later.
State-debt and
losses that got too astronomical to count in some states is not included in
this account made by L.V. Birck.
Has this been tried before? The War of
(In-)dependence and the Civil War were financed in the same way. The Thirty
Year-War or Emperior’s War and the Napoleonic Wars the same.
It is not easy to get people to pay
for a war they don’t want. The worst what could happen is that the government
could fall.
This critic that can be directed against finance-policy in and
immediately after the war is mostly of an economic kind. He contracted debt
when the ability of taxpayers to pay was “fairly good”, and he chose to pay
back, when the ability was distinctly weak. Those loans were not supplied as
government bonds even though it was the only logic thing to do, when especially
this period shows money was easy. The dollar-loan had very pleasant conditions,
I have to add.
And as we have seen (above) the American banks just wanted to get rid of
the mountains of dollars.
Newer Danish
financial Scandales: http://www.geocities.com/evigdk/lek2.html#fs (will be translated from Danish)
The businesses do not invest if their expected margens
of profit do not match the condition to produce the production or produce a
changed production. The difference between the costs,
and the expected revenue (sold amount multiplied with the price), as these
costs demand produced unit by unit, is too small. If enough difference or magen
still can be made at a lower level of production, perhaps the production is
realized at this lower level, with the lower employment, if the best/most
profitable alternative is lower/humbler.
Businesses do not invest caused by some price margens, but caused by
enough profit-giving price/cost-margens. The problem is not one-dimensional but two-, and in reality often multi-dimensional.
Somebody had said that Keynes was not able to think in more than one dimension
at a time. If it is true, it should not surprise that the economic commentators
if they are anything are one-dimensional.
The economic reality is and will always be that it is the producers who
drive the economy forward, savings is the fuel in this process, Friedrich
Hayek, Ludwig von Mises and Laurids V. Birck would have maintained.
What the consumers give out does certainly not activate the economy, and
never will, but it keeps up the apparatus at best. Sometimes we hear
commentators report that the expenditues used on private consumption constitute
some percent of the total demand. To give the reader an impression that the
contrary should be of interest this:
At the end of the twenties the US-private-consumption was accounted to
about 8.5% of the producers’ expenditures on factors of prodution including
producer-products. This means that the consumption of capital-goods was 12
times larger than the private consumption.
The more savings
(see the next section), the more real capital is created and accumulated by
produc-tion, and the more can finally be consumed.
Lower and lower
interest rate with the results: Consumption is increased or precipitated,
savings are used on consumption, stocks are emptied and malinvestments
maintained. Falling prices do certainly not mean deflation. Falls in the prices
as an effect of increases in productivity benefits everybody.
Lasting
price-falls as an effect of monetary tightening is deflation starting
investments ending in con-sumption.
A fall in
consumption has never been a problem for employment or growth in production. The expen-ditures on factors of production is several
times larger than and much more demanding, than all the subsequent links
leading to final consumption. Falls in savings partly originate from the
monetary policy that stops the production from the first link in the capital-
production- and division of work and of production-process widely.
Real capital is the quinteessence of
each single good that in the economic business perform our means of consumption
and maintain itself. Capital as a function. The fixed real capital is tied for
a longer time in land, buildings, plants, eventually in stocks, the floating
(or working) real capital is tied in the consumption of factors within the
production process, while it runs and eventually in the stocks. The proces is
typically repited.
(Will be translated from Danish)
My neighbour does
what I did, when he looks at the subsidy-renews of my block of flats. “New deal”, “New economics” that filled the1930s
with subsidies, and the hasty speeding up of public initiatives, and nothing
else.
When the total
rent in blocks with flats in Copenhagen rised from 1914 to1926 by dkr 40 mill,
private capital of about dkr 500 mill. was created (the capitalization of 40
mill. a year for 12 years). And that happened without the community became
richer. Some of this capital was realised by sale. If you for a moment go back
to the total amount of money in Denmark a few sections above, you will find the
amount dkr 430 mill. in 1919. The amounts is counted on the 1925 prices-level.
Or four times the amount of money before WW1. Inactive capital. Some would call
this a crime. No, you can read about a much bigger crime at this time on: “The
Crash of the Agriculture Bank” with the link: http://www.lilliput-information.com/lek2.html#dok (will be translater from Danish)
Another example
The capital process is
being speeded up in a community, where ownership of capital is an increasing
condition for personal freedom and security in life.
Surplus-capitalization was going on under WW1 via
shares of stock, real estate bonds, government bonds, and bankloans. Dividend
was paid from those sources, dividend from too high valued stocks, plants
obvious justified. Just follow the history of our ship companies from 1912 til
1920. One compa-ny is killed, while the ships valued to dkr 1000 per ton was
being sold to new companies. The price multiplied by 10. What the new
stockholder paid was not transferred to trade and shipping that furthermore had
to yield a profit of this capital, while money went into the pockets of
stockholders, and many of these so-called new companies reached the limit of
insolvency very soon.
(Does the name Enron say anything)
An example: http://www.lilliput-information.com/kosan.htm
(will be translated to English)
The real capital
has not yet been destroyed by war, but by secret surplus-spending in the public
and fund sectors to an extent that the world’s highest taxes did not manage to
finance. The government issues bonds and reduces thereby the monetary amount of
M1 that should have been invested as real capital, but that is not enough. The
government bonds are also sold in foreign countries. Via this death route the governments
tries to get foreign currency in strong competition with other nations.
By bond-loans and by taxation the purchasingpower of the citizens is
transferred to the state that necessarily directs its demand for the products
and the services of the presence. War cannot be fought with guns of the future,
and soldiers cannot dress in the clotches of the future, and live on the
agricul-ture product of the future. The state uses the yield of taxes as well
as that of the loans to buy products of the presence. As the citizens in the case
of loans broadly keep to the purchasingpower, prices on goods have to rise
powerfully as the primery effect of the loans, and the inflation is put into
the profits and share-prices that nevertheless have to rise as long as people
believe in more rises – that is what going on again today. These profits and
share-price-earnings result in a wild surplus-consumption, and the lending
citizens do not know that the community has become poorer, because they have
among their assets a good obvious secure source of interest in the government
bonds (private capital). On the contrary, but he still believes when he
conclude from his own that the community has grown richer.
When there has not been earned or saved real purchasingpower in a period
of 5 years, no individual has deserved to increase his fortune in that period.
The balances of the banks of Copenhagen were dkr.1.1 billions before the WW1,
dkr.3.5 billions in 1922.
The middle class
was shortsighted, it would not save the system it was a part of itself by
getting this amount of paper out of the world, an amount that threatened to
destroy the economic system that bear the middle class. Today the same is
happening of an even wilder extent.
November 29th 1922 (the Danish) Financial Times wrote:
As early as 1913 the first bridge was built between Treasury and the
central bank (Danmarks Nationalbank), and in the following years when President
Heilbuth was placed in the board of directors of the Agriculture Bank the
building of the bridge was finished, what his excellency Glückstat later on
with the most complete mastery exploited.
After the war the choice stood between to go bankruct or to continue
this mortgaging and borrowing on the nation’s landvalues and the working
capacity that already had begun.
The debt of the Danish state was dkr.2.4 billions in 1923, when the debt
of the municipalities and of the harbours were included, and the price-level
was common. In 1900 the debt was about dkr.200 mill. That is 12 times more in
23 years. To the debt of the state should actually have been added the burden
of retirements capitalized to presence-value in 1923.
In the official
forum you then compared such an amount of debt with interest-bearing assets of
the state and municipalities (in the 1920s). They were accounted to dkr.1.8
billion in 1923.
When state-debt
finance the goods of the present, the burdens instantly effects the price-level. Then taxpayers pay
again, when the interest and the repayment of debt have to be paid. Here the
money or the purchanging-power is reduced again, this time via the taxes that
effect broad, and it is felt most among
people with smaller incomes.
The interest receiver from the government bonds look through the eyes of
the bank and will under-stand too late that it is not just the (real-) wages
that are reduced, but also the (real-) interest payment that is increased only
in nominal units. That is alone due to the inflation. The reduction of the
purchasing-power that enivitably follows, exceeds the rise of the
interest-payment. The result is that owners of the government bonds will pay,
if new postponed but more expensive-making swindles are not made.
Here the “dancing-mosquitoes” write and rehearse the
choreography.
Basic macro-economic reality: http://www.lilliput-information.com/infl.html
It was immorally that huge private fortunes could be created by war
and deceit of inflation, and it was uneconomic to allow the citizens a
consumption on the basic of a seeming fortune that did not related to the real
lack of real capital in Europe.
You capitalize the future opportunities of yield and for the wealthy you
have made it clear that war is a splendid business, something worth to repite.
The same is happening today, but until now without war here, but with
our young people in the frontline. And at the same time they build a new
Europe-State on a new currency, and upon indebted European states. As if we did
not know that currency and nation is one and the same.
The Keynesian wonder-medicine became a classic example under the still
running Japanese financial collapse officially beginning in 1995.
The commentors were on the spot, and could report both this and that,
and especially compare with the 1930s. Unfortunately it was the period
1920-1927, where Japan handled precisely the same problem just as uncorrect
then as it happended recently again. With a correct reference to the former
time period we/they would have been given the chance to learn from the
experience. History do not repite without further. But perhaps history repite
in the sense that, when the leaders adjust the same false way of thinking to
the same problem (perhaps against better knowledge), then the superstitious are
tempted to maintain that history repite, and totally wrong is it not, when you
ignore the blind fate of ignorance that must be classified in categories falling
under the former or the coming middle ages.
WW1 speeded the japanese economy up, and it got its fuel from the
easy-money-policy.
Wholesales-index more than tripled from 1913 til Mars 1920. This was an
unambiguous sign of a credit-policy far out of control. The so-called boom got
to an abrupt end. Already in April 1920 the deflation had pressed the
price-index down from 300 to 190. But not even this suddenness, and the very
substantial price-fall brought Japan on the competition-level with its trading-partners,
then their prices still were lower.
One thing that apparantly is not understood – especially not by the
leading top – is that booms are created by cheap, easy-to-get-credits, and they
always lead to a lot of bad investments that cannot performe the needed margens
of profit.
For an example it has been established that about 70% of all new
investments here in my country do not end up with succes. The easy-credits at
price far under the market-rate of interest started all kind of investments of
which most of them turned out not to be yielding profit. Another problem is
that the cheap credit cannot go on floating, exactly because there is not
enough real capital to factors and goods of production.
A lot of investments ended and still end in financial jammed lock when
they appeared not to cover the rising cost later on. The most fateful is that
governments typically hesitate to fight inflation. The other bad possebility is
that the unemployment rises and free capital (also the capital gains from the
stockmarket) is treated, as if it was the results of a changed ability of
saving among the consumers. The same result.
What happened in
Japan at this time is nearly what is happening today.
The government, the big banks and industry-gigant-trusts got together to
freeze the necessary adjustment process. And that is the worst that can happen.
By stopping the fall of the prices and thereby prevent the adjustment process
Japan was caught in a lot malinvestments fueled by the discount credits, and
that prevented the necessary capital from floating to the areas of real
expansion.
It is about letting the
malinvestments fall and clean the economy for surplus-capacity. It must be done
resolute and without hesitation, when the inflation is beginning.
Naturally it is
nonsense. You could have propose inflation as well to save the Japanese economy.
The idea lead the government to issue billions of
yen-notes/new credits, with which the bad loans of banks can be bought, the
assets is being overvalued etc. all most like under the Weimar-republic in
Germany.
Such an insane policy is
actually being performed, as they concentrate on negative rates of interest and
state-security for banks to get the prices to move up “by stimulating the
production so to speake” in the best Keynesian manner.
This corresponds to a
drug treatement based on herion or cocain.
To create profit-margens
in malinvestments correspond to solve the quadrature of the circle. But that
means nothing.
If the government is forced to put the monetary brakes
on – there is some-thing called state-debt-repayments, compare with Argentina –
the economy is just forced into still a deeper depression immediately instead
of later on.
To cure these so-called
fluctuations by monetary injections is like doing a pusher’s job. A pusher
normally works for the kingbolt, who has the money and who manage and maintain
the organized stealing and robbery that drugdealing really is.
Back to the US-economy
between flood tide and flood ebb
When the recovery goes
into selfdestruction the central bank (Federal Reserve) must go aside and let
malinvestments be liquidated as quickly as possible. The interference in this
process just deepening and make this pain remain for a longer time. An
unnecessary pain that unfortunately dured through all 1930s while the war was
prepared. The economy was on the other hand cleanced in the period 1920-1921.
The price freeze
introduced by the Hoover/Roosevelt-goverments later on prevented the necessary
readjustment to take place. The mistake is at best
a misunderstanding of
the concept purchasingpower. If the wages - that also
are prices (of an
working hour )) - exceeds the value of the produced result unemployment must
rise, and the free capacity must appear. The Hoover-government tried in the
best Keynesian style to keep the nominal wages up, when the other prices fell.
That meant the real wage increased, while the value of the working-result fell.
The profit-margens declined substantial, and the unemployment rose.
Almost Natural Law.
In 1930 Hoover rised the taxation and the public
expenditures. In 1931 the government was worried (it announced) of, and would
oppose against the deficit on the public finances. Then they rised the taxation
again in decem-ber. In 1932 the Revenue-Law that introduced a large number of
new increa-ses in the taxes was passed. But the economy did not recover. The
increa-ses in taxation actually lead to smaller tax-yield, because more
businesses closed and more income-sources
thereby simply vanished by the taxation. Then Roosevelt got into office and
rised the taxes even more in 1935.
The result was still
depression, and the public expenditures still continued to rise at the same
time.
“New deal” and “New
economics” they respectively were called in USA and Europe, invented by the
Englishman John Maynard Keynes. In the period 1929-1935 the deficit on the
public finances amounted in average 3.6% of GDP, and the unemployment 18.6% in
average.
That was pretty close to truth.
The European nations
also show about zero net savings, I have to remind.
All
the European nation (excluded Switzerland and Norway).The always lacking
information is who the debitor states owe the debt to. Even if you took all
debitor states and added the sum of their debt, you would not get it to match
with sum of what the creditor states totally expect them to pay back. Why?
Because
the states owe the debt to private banks with intangible accounts.
So,
what is this absorbing of foreign savings-business (a few sections above)?
A
little on Europe right now to understand what is going on:
Almost
all states owe because the inflation have been running. They have been trying
to decrease the primery amount of montary means, and at the same time increased
the amount of government bonds and new means (derivatives). Europe has a very
high rate of unemployment (even though you are not told true information of the
amount from the mainstream-media). Germany : Officially 3.9 mill (january
2002), but really close to10 mill. Denmark has officially 4-5% but
really 18-20% of the supply of on the labor market. Low interest rate
easy-money policy, and public employment-subsidies to get the malin-vestments
going still. Real capital is bad needed.
Private
capital and
earning, especially from outside the production or outside the legal
productions, has to settle down somewhere. So increased interest rate in USA
resulted in means running to USA. A private capital-float. Financial
investments, so to speake. Not a higher propensity to save in Europe. There has
been no reality in the expected expansive effect of the decreasing
EURO-exchange-rate. Speculation is dominating relatively compared with
real-production. Lack of real capital.
Back to USA to
understand the Euro-dollar-market:
In
1981 former US-President Ronald Reagan signed a law that reduced the income
taxation by 25%. But he did not reduced the public expenditures. That lead to
an enormous increase in the state-debt. How was this financed in a smart way?
USA maintained a high rate of interest. Result: especially private capital
floated – as always - to the most earning-giving markets. Low taxes, high rate
of interest: US-government bonds to finance the enormous public deficit, and
also the speculation on the stock market. To buy American shares and bond the
foreigners had to exchange their money to dollars. This demand for dollars
resulted in scarcity on dollars in the foreign countries, and therefore the
foreign states had to hold more dollars in reserve to take this exchange into
account.
Very
fine: Now the
foreign banks had to have these reserves of dollars, precisely as they have had
the gold in reserve. While the inflation still is going on, and the fiat-money
is used to buy imported products, something happens:
Federal Reserve
gets ride of much of the new-issued uncovered (uncovered by real purchasingpower).
That has contributed to a rather stable amount of money (M1) in USA. As long as
the foreigners do not use these dollars it is as if you deposite a chech.
Now the US-production has been fallen for the last 15
month (October 2001).
The commentators talked
about the Bush-recession. They maintain that this recession is due to some
tax-reductions passed in June 2001. But this production-reduction already
started in September 2000. That means nothing.
It actually started 3
month before Bill Clinton left office. We know this type of information – call
it one kind of disinformation – from Denmark, this fine way of accusing the new
government for something that the last government started, when it knew it was
over.
Perhaps they will refer
to 1993-tax-rises in USA. Apparantly these rises seemed to work, but just
caused by the totally uncontroled issuing of means made by the Federal Reserve
at the same time. In this way you camouflage, where power in reality is going,
because the citizens cannot distinguish between false and genuine means:
Since 1993 the share of
US-GDP being public expenditures has increased from 17.6% to 20.6 in 2000.
When we hear the
commentator (and some Senators) tell about the stock market, we are left with
the impression it is here you have your finger one the pulse of the economy,
and of almost human life in itself. This is a lie like almost everything else.
The share prices have
been blown artificial higher and higher in the 1990s just because
inflation that result from every false issuing of monetary means has been
deposited in the share prices. Especially the tertiary and perhaps the new
quaternary means – that is not meant to finances daily bread – is starting the speculation
in share prices.
Almost nothing of the
sum of means that accrue to the businesses as so-called investments in the own
capital, is anything but paper and unresponsible speculative activity, and the
speculators has no other engagement than quick earning of exchange-difference
based on buying and selling, eventually new issuing of share warrants that go
up at once without any productive change.
The markets of finances
has long ago been made tremendous free. This fact combined with the fact that
the bank lend out the same money and credit 8-10 times tells us where we are.
Those money orders are instruments of debt, with which the bank declares it owe
the bearer of the money order a certain amount of money. As the covering only
includes a small part of the written amount on the note, the banks are really
insolvent, and the money orders may as well be regarded as mainly false.
Just the apparatus of production, the employed,
the unemployed and the consumers - the rest of the community – have a need for
future production.
What cannot go on economical, but is expected to
meet the objectives on Capitol Hill will survive on public and fund-financed
subsidies.
Is certainly not what you was shown on the exibition “Scandinavia Today”.
As mentioned the citizens of Denmark are no longer informed on economic
questions concerning our nation, I repite.
A little detached
talk about this and that picked from the Keynesian mess. The level when you
find special publications is about the same as that of USA, but even more
influenced by centralistic throughts, experience-empty and pure theory-with-the
head-entirely-in the clouds.
Try : http://www.lilliput-information.com/engiodd/index.html
“Both internationally and in Denmark there has been a recession this
year (2001) with lower rates of growth. The Danish growth-decrease is not
entirely caused by impacts from outside, but it is also a natural result of
independent Danish relations among other things the economic policy that has
had the objective to avoid a superheating after the boom in the 1990s.”
[By this I understand there has been a boom in the 1990s that we cannot
ride further on. That means too much money was issued, and too much cheap
credit was contracted in the 1990s.]
In Japan the situation is especially critical, and here a fall in the
production is expected both this year and the next. Both the American, the
European and the Japanese central bank have reacted to growth-recession with
decreases in the rate of interest. Furthermore there was made an substantial
financial relaxation in form of tax-decreases and increased public expenditures
in USA. Then the economic policy is particular expansive for the moment.”
”The demand in the short run may be effected
negatively via fall in the consumer- and the investor-confidence. There is also
a risk that consumption and investments will postponed due to the increased uncertainty.
However it is expected that the substantial monetary and financial relaxations
can contribute to the secure confidence, and thereby ward off the negativ
recessive effects. From 2002 the domestic demand is expected to increase,
primery driven by the increase in the private consumption. Thereby the domestic
components of demand take the objective as machines of growth, even though the
net export constantly will contribute positively to growth of GDP.”
(unquote)
This correspond to:
When a household with both parents full time at work
has economic problems, they just hire a domestic help.
They simply do
not tell us why the business-investments are falling, and they maintain that
the demand will create growth…”even though the net export still will (be
allowed) contribute positively to growth in the GDP.”
We are simply not
allowed to know the cause of the booms and the recessions. Why the fall in the
industrial production and the business-investments continues, in both USA, EU
and Japan in spite of interest-reduction after.
In USA the public expenditues reached 20.6% of GDP in 2000.
In Denmark they reached 57.5% in 1996.
Does
the reader understand how the consumption rises, when production decreases in
USA, in Japan, and growth rate falls markedly in Europe?
The taxes and the public expenditures drain the purchasing-power out of
production, and the false means of inflation including stagflation filled in
the exchanges on stockmarket at last also removes the intiative, the production
, the employment and the future consumption.
You may use artificial snow, but at a moment you have to remove it
again, and it is troublesome the more snow there is. Natural snow disappear
without further. If it stays because it still falling, then you can take it
away in a wheel-barrow by running several times. You don’t have to remove the
snow you already have removed.
…”it is not a natural law that state-debt has to be repaid at all.
Naturally the state has to repay a loan, when it become due, but if it is found
appropriate
to reduce the
debt, the repayment can always be done by contracting a new loan……It holds good
for contracting of loans and repayments as well that the only thing that
matters is how it effects on the economic life or the welfare of the
community.There cannot rational be given reasons for repay state-debt, unless
the effects of the repayment are considered wanted. If at any moment the demand for labour is strong
under full employment, and the result then only can be an increase in wages
that will lead to increase in the prices, yes, then it is appropriate to
collect more taxes than necessary to finance the current public expenditures,
that means repayment of the debt, because thereby a restrain is put on the
demand for resources, before such a state has occurred or rather before you
want to reduce the demand and the income in the community or at least reduce
its increase no reduction of the state-debt can rational be argued …” (unquote)
Then and Now:
When the debt is a problem, you just contract more debt or find another
lender offering artificial low interest-rates, but you have to hold back the
payments of debt until nobody else want
to use the purchasingpower, I would express his throughts.
”…found appropriate”…what is meaning that - can I say the same with my
debt – can Argentina?
”…considered wanted”…its up to you, politicians, I don’t know.
”…if more taxes are collected than necessary to finance...”….
you only repay if you cannot
find anything else to spend the money on.
“…Such a state has occurred”…such a state never occures….that is the
real problem.
and it was1939 just before WW2 that might have influenced his wise
advice.
immigration in order consume more of social security.
The real estate is being taken over by others.
J.M. Keynes maintained:
”We all dead in the long run”
What a visionary truth to inspire our economic thinking for ages?
*)
The amount of monetary means is almost entirely decided by private
central banks, in USA by Federal
Reserve System.
The amount of monetary means is divided in groups arranged by the degree
of liquidity (the distance to the daily transactions). M1 is cash in form of
notes, coins and not at least short-term credits that can enter the circulation
at once. M2 and M3 are means of payment, medium and longer-term, bonds, shares
warrants and share certificates, and a lot of other means of credit, latest
derivatives.
When Allan Greenspan (President of the Federal Reserve Board) apparantly
experimented/junggled with the concept of money, and thereby with the easily
influenced reality (casino-play on the exchange-delopment is the last
instrument taken into action), especially the least liquid mean M3, or called
them M4, have been increased tremendously.
However no doubt that the amount of money totally still are increasing
(december 2001). The stated amounts above are as far as I could find out
exactly the total increase.
As you may understand there is free rein to privatize the issuing of
money further in top, when is taken into consideration that stock-market
exchange-rate-earnings and other earnings from speculation can be circulated as
real purchasingpower at once, and be use via a M1-deposite. Futher more a part
of the speculation markets almost pays for itself without the traditional means
involved.
With a fortune of $4 billion LTCM took potential the risks of $1.25
trillion by derivative-arrangements. The whole sum based on bankloan and/or
commitments of bank security. These commitments were recklessly given by the
American banktop without any possible risk-assessment of the debitors or their
actions. The theoretical risk of the total derivative-amount rises all the time
atmost extremely and apparantly without
any management at all. In 2001 to $7 trillions (not documentated). This
number can not be compared with anything. Federal Reserve reported that an
uncovering of the dipositions the of LTMC-fund could had brought a threat to
the whole world-economy. Therefore a riscuing package to the first
involved banks. The tax-payers pay higher prices as the final result.
We hear that
among a lot of other things e.g. Danish bonds are included in the possible, but
strongly unknown value-basic of the derivatives. Perhaps gold and silver.
There is
presumeably opened for a double-headed panic-market that may be used as an
insurance-instrument for the involvement of big banks, when the collapse is
made.
The power is placed by a
few men , L. V. Birck wrote in 1925; the report of the American Pujo-committee
(then) had investigated on the question, if a money trust existed. It shows
that a few men’s power over all the banks, insurance companies and leading
industries in the East-states already in 1912. It is organized by interlocking
directories.
In Denmark jurist Robert
Mikkelsen delivered Birck interesting reviews on Danish relations that totally
confirmed similar relations (1925 perhaps 1912) in Denmark.
Extracts from:
”The Rothschilds”, History of the House, by Ignaz Balla, and autorised
translated to Danish and Norwegian by Carl Behrens, published by V. Pio,
Copenhagen 1914.
“In the enormous exchange hall a movement like in an alarmed swam of
bees ruled. The usually very cool exchange gentlemen went nervous and alarmed
up and down, whispered short comments to each other, exchanged understanding
signs, and everyone of them trembled in his soul and body of something unknown.
The reports of selling and buying flew from one to another. With soft voices
they discussed Blücher’s defeat, and from one ear to another the information it
was whisled of how Napoleon’s heavy lifeguard has defeated Wellington’s army.
Already the unconfirmed rumours were enough in these worried moments to get
people entirely to loose their heads. And this sinister state reached its
culmination, when the visiters of the Exhange caught sight of Nathan
Rothschild. There he leaned like a hunted to death against a column, and seemed
in his miserable condition not to be able to stand on his feet – he, the cool
calm Caesar, who otherwise the most furious panic of the exchange was not able
to bring out of control”
”What you until
now had considered as unconfirmed talk, now it took shape of unrefuted truth,
Nathan Rothschild face talked for more severe than the around-whirring
indefinite rumours. All over the Exchange the panic fear blushed as an electric
spark that the most implacable, most passionated enemy was free again, and that
nobody would be able to stop him on his way, when as a scrouge from God would
overthrow Europe.”
The information took still more more certain shapes,
they grew like an avalance, and as they were shaping to true pictures of
horror, they filled the people with dismay. Wild panic croped up. The exchanges
fell from minute to minute, at last there was no bottom to find, and as you
noticed that not Rothschild alone, but also his agents supplied the papers for
sale in big blocks, yes really through them into the market, then there was
nothing that could stop the fall of the shares.
Like madness had moved the crowd, the most solid and
strongest bank-houses began to totter within a few minutes, and the exchanges
of the most secure papers turned sumersaults like idols, as believings that in
their disappointment has taken possession of revengefulness, fall down from
their pedestal and smashes.”
”However the deathly pale man at the column laughed in his beard. While
concerning soels were sorry for Nathan Rothschild which enormous firm that they
throught was gone down and ruined by enormous losses, he let without making any
notice his secret agents, who were not known in this trade, buy all supplied
papers.”
(Mine: Think for a moment of the agents on the derivative market)
The following day the information arrived that Blücher had won victory
at Ligny and Wellington at Waterloo. Rothschild himself gave the
information with a shining face at the
opening of the Exchange, the exchange rates rose rapid, and reached an until
then unknown high level. He has in one day earned about dkr. twenty millions.
At this time the winged word: The allied won the battle of Waterloo, but in
reality Rothschild was the one who won.”
(unquote)
http://www.lilliput-information.com/dkri.html
Money should be
both a product of a market, and at the same time a right.
That is simply
nonsense.
If money is a
right in completely contrast to a market product – everything is fine, if this
right is enforced utterly severe.
To read further on American and international relations I can recommend:
http://store.yahoo.com/realityzone/creature2.html
