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Chapter 6




Most honest individuals prefer reality, theories on the other hand are base on a sum of simple/reality-fitting/often cunning selected assumptions from which you deduce often blind logical, ending up with still a thought reality. That is the reason why theories always match the whole setup, but never match reality. A figment of imagination can serve as a tool  for capture and for fail.


To understand a chart is one thing, to capsize a ship …and survive another.

The economic science could very early have been approximated much more to natural science thanks to Friedrich von Hayek, Milton Friedman, Ludwig von Mises and Laurids V. Birck among other who have collected and created knowledge on economics.

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.

Reality suites payments, credit balances, interest, debt , capital very well. When it comes to moneta-ry subjects, amount of money, and interest rate is included here reality obvious does not fit the voluminous thoughts and models containing even the smallest throught detail in mathematical ana-lytical expressions…..expressing everything but reality.

By adding a monetary, financial and capital interpretation, we are at best able to understand, and then perhaps forecast measures of balance and of period using numbers and amounts describing the consequences of the economic actions. My ambition limits to this. I shall explain precisely where the dangers are when you decide to go further (in chapter 11)

[Just the first few sections are rather dominated by numbers and amounts]


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.

December 12th the Federal Reserve lowered the interest rate with 0.25% to 1.75%. That was the 11th lowering of the interest rate in 2001 and the lowest in 40 years. The Danish TV: “Even though the employment has not reacted the housing market and the car sales are effected.”

[Our spontaneous reaction: employment effected by investments does certainly not react like your jack-in-a-box at home, little girl. It even does not react, as we soon shall see]   

“Important quotations to the public”:

”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.

“Everytime the comsumption decreases, the revenue cannot cover the payments on debt. Therefore the burden of debt gets worser and worser”, John Rocca, Land of the Rising Sun, February 1999.



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 problem obvious remains a question of priority higher in the decision-hierarchy”.

This I shall not deny.

The explanation is clear as the day.

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

Let me remove every doubt at once and straightforward: Deflation must be created in the world of today. The responsibles know more or less how to prevent it. It is not an inevitable fate. I shall not reject that there might be interests concerning creation of stagflation, stagnation, deflation, perhaps war, and then more centralization of power as the final result.

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.  

The economy-commentators are not sure now, if that points to a further weakening in the coming months (they surely listened to Allan Greenspan January the 11th 2002). You should not be surprised. Did the commentators catch some random numbers and amounts from some random months or did they concentrate on collecting the relevant information to show “naturalistic painting” of reality ?

Does the numbers and amounts tell anything important, it must be clear to anybody that Allan Greenspan’s easy-money-policy or discount-monetary-policy has gone totally wrong, if we maintain the expressed/expected objective. 11 times he has lowered the rate of interest in a year. And it did not work? Perhaps it turns out to have worsen things.

NAPM’s (National Association of Purchasing Mannagement) latest report (11/26/01) shows that the economic activity in the production sector decreased (in index) from 50.3% to 40.9% in October, and a decrease for the last 15 consecutive month. That is presented with a yearly GDP still increasing, and NAPM-sales-index falling from 47% in September to 39.8% in October. The index of employment of the NAPM-organization fell 6.1 points to 35.1 in the same period. Not one of the 20 industries in the manufacturing sector reported growth in October. Mr. Ore, the NAPM-organization (and latest mr. Greenspan 01/11/02) reported that September 11th was to blame for this.     

“Perhaps they will be talking about the new backward-bending-effect later on.”  

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. 

The index of consumer-prices rose 0.3% in October 2001 while the index of producer-prices droped about 1.6%. Deflation, was shouted in chorus. The mistake sticks out a mile.

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.   

When I add that the amount of money has been increased with $800 billions for the last 12 months in advance, and the amount was increased by $240 billions entirely in October and November, every talk of deflation for the time is nonsence. *)


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.

Few hundred years ago people of my country maintained that the swallows lived under water in lakes during the winter. Every year they had seen them flying close to the surfaces of lakes catching insects for the last time in the late summer. And suddenly one morning they were gone.

So, where were they gone? Into the lakes of course.

Now you could ask why the low-rate of interest offered by Fedral Reserve does not work or why it works in the wrong way.

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”.

It means nothing that economists 180 years ago stamped out the rumour, in the 1930s John Maynard Keynes rediscovered the beast with a special potent brew very good inoculated with such a mutual inconsistent bogus couched that it appeared as an orginal profound thinking.

It was nothing. His mistakes among other much more serious things have brought us into this ridiculous situation with growth and savings dealt with like the hen-egg-question. Some people still maintain, and try to argue that, saving is dangerous for the economy.  

Let us state clearly that consumption does not make growth begin. Absolutely not, in spite fact that something might have been filtered from the universities, and perhaps has partly been taken in by the daily indoctrinators of the time, or other shallow good people. 

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.

The so-called prosperities, booms or recoveries also origine from one of the Keynesian myths saying that “the total aggregated demand has to be pumped, in the typical cases by extending the monetary amount”.

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.   

Factory production has been falling (11/01/2001) for the last 12 months.

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.

If this ”school of consumption” – of which we could call Allan Greenspan some kind of a senior teacher – was right, the contrary would have happened to the economic recession.


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 dollar that is directed towards consumption is a dollar lesser to spend on production in the future.

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.

The essence or the perspective is centralism and slavery, as far as I can judge.


Nothing new under the sun

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].

This meant  “A new epoch”, “a new era”, they declared, like now. I those days people thought the party never ended. The bank supplied more credit than the businesses were able to invest, so the banks was requested to lend out to the devastated Europe too. Until then it had been nearly impossible to get dollars for the Europeans caused by the fact that dollars had to be exchanged for exported European products. But the import-tariffs of USA strongly prevented this exchange by trade.  

We will go further into this, when we come to Europe below.

Back to “the new era” in real terms in the 1920s:

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: (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.

The accounts show that nearly the half of the increase in productivity in the 1920s refers to the period 1921-1923. Apart from the agriculture, the average real-wage increased 6% from 1921 to 1929. To secure the price-stability the consumption was destorted like now, and unbalance in production was created. The quick increase in productivity should have resulted in moderate price-falls. But the Federal Reserve allowed a massive expansion of credit by choosing an artificial low rate of interest (like now).

The amount of money-notes and coins was considerable stable, $3.68b in 1920 and $3.64b in 1929, but credit increased from $45.3b in June 1921 to $73b in Juli 1929, an increase of 61%.

Speculation in everything to capitalize and consume the future potential profit and other purchaging power from everything, from stock marked shares to land.

But at the end of 1928 inflation stopped. Federal Reserve changed from buying government bonds to supply them instead. That meant the amount of money was reduced considerably and quickly. At this time 63% of all government bonds in the deposite of Federal Reserve were sold, and the economy still seemed perfectly going. The explanation is that the banks still had the resposibility to rediscount or sell their loans to Federal Reserve.

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. 

Late in August 1929 Federal Reserve increased the rate of rediscount from 5 to 6%. Because money always follow the highest rate of return, a stream of gold from England began to enter USA - here we have to remember that the gold still bore the basic value. That meant share prices on the stock market rised further on a totally false basic.

At this time J. M. Keynes himself intended to speculate in that market. He did so even though he was adviced not to do it. His answer was: ”...there will be no collapse in our lifetime” nearly like one of his countrymen expressed quite another but still related perspective 9 years later: Richard Chamberlain: “Peace in our time” having been going around in Berlin and Munich by night searching for Adolf Hitler (who he really still admired) to get his signiture on a piece of paper – after the closing of the Munich Aggreement 1938.

September 23th 1929 England increased the rate of interest by 62%. Within 48 hours Austia, Denmark, Norway, Ireland and Sweeden did the same caused by their debt. Now the gold floated back as quickly as it got to USA. The artificial high share prices had to go down now, and the banks had to recall the many loans to shareprice-speculators in millions. There remained just one way to pay back the loans, by selling the shares. Then the prices fell further, which resulted in more recalls of loan ect.   

Where the Federal Reserve should have limit the credits it increased them, and where the amount of money were pretty stable it should have increased the amount of money instead, now the first false disposition had been made.

To make it crystal clear: Price fall that originate from increase of productivity - not from money-amount-expansion  - is a benefit to everybody. It is simply the result of increasing investment, often in new technic that can reduce the variable cost per unit drastic, and thereby increase the margens that exactly make the profit in mass production.

To try to stabilize the purchasingpower in monetary units blocks this process, because it limits the rise in real income.

The credit-expansion was perhaps more or less an ignorance-price-stabilization-experiment, you could maintain. It was the prices on the market of shares that tripled in 7 years that broad the depression, but the actual cause was quite another, as explained. At last you could buy shares on the stock market via a hire-purchase system. Nobody would listen to the warnings, not even the English economist J.  M. Keynes.


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).

Another sign is the speculation in share-price earnings that are beginning to go in and finance unecono-mical unions of corporations. The same happened in 1899, 1902, 1924 and in 1929. The paper mill the Dane professor Laurids V. Birck called this practice.   


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.  

Danish experience with financing of war, state-debt, and one the way to bankruptcy

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.     

Later on we shall see state-debt totally loose its meaning, when we get to J. M. Keynes and the Dane Joergen Pedersen from the midd 1930s.


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 the government or the central bank print money and/or let the credit expand in a quicker speed than the growth of real production, it will end in disaster. The prices then rises, Milton Friedman proved. He was very much in line of L. V. Birck, as we shall see below. Too much money corresponds to a rise in prices. The money are then lesser worth accounted in units of products, what really is demanded.  


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.

Denmark near bankruptcy (like now)

The most peculiar rule of finance by Edvard Brandes can be divided into three period: 1) The first two years of the war with Dr. Brandes’ sinister policy of borrowing (dollars – see above) 2) the last three years of war, and 3) the phasing out years 1919-1923, the two last years under a so-called good market and trade conditions, but with a fatal financial result.

Denmark at the edge of bankruptcy in 1923.

The debt increased 50% in the period 1919-1922, and it rose 100% the next year 1922-1923. To judge Dr. Brandes’ rule of finance of which the impacts reached from 1914-1921, we have to look at his deficit on the actual public finances in the 7 years – 237 mill. (notice quite other units caused by the problem that this article actually is dealing with) – money that he ought to have collected by taxation already in the first three years of war, when the amount of money was not reduced respectively in any other way – actually he did the contrary.    

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.

The end of the Danish financial history of the first half of the 1920s follows in the section on capital and capital-process below, because the subject perfectly illustrates what happened, and happends again in 1990s in Denmark, and will continue in EU henceforward, if you listen to the visible rulers.

Newer Danish financial Scandales:   (will be translated from Danish)

Monetary means are primery notes, coins and credits (especially smart cards). Money on the other hand is the right to buy that is corresponding a yield to equalize. That is the reason why it is easy to deprave the means, and thereby the money and the right.

The international high finance’s words after WW1: “The national currency as close as possible to par (the price on gold counted in the currency) and state-debt unchanged as much as possible, certainly not instalment once and for all, but a slow amortization born by the ordinary taxes. You will gradually change the empty space of the state-debt to real capital.”

They actually knew then that real capital was the problem.   


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 production-process consists of a vast number of complex states. It follows directly on this that the total combined expenditures on all these states/levels must exceed the expenditures of private consumption considerably. As an illustration you may imagine the total fixed apparatus of capital gradually performed to end consumption. This will have to happen in a period of several years (here 12). What is given out on consumption originate from the production, while the production originate from capital (inclusive the factors of production) that in the first link originate from the savings. That is the reason why:

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.

Capitalisation and state-debt

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.  

Private capital on the other hand is characterized by the sum of legal rights that allow earnings from unearned income so to say (often as interest or share-price-earnings e.g. from the stockmarked), where you could not point out any connection to productive performance. If I via public subsidies that are meant to effect unemployment and renew some buildings have the possibility to get my buildings rebuilt and after this are able to increase the rent in the flats by 15-20% at the same time that I find out that the prices of my buildings have risen – alone caused by the public subsidy - I cannot maintain that the community has grown richer or more productive. Perhaps I will get richer (accounted in means of money), when I sell the buildings in good time, but what more should it do, when we for a moment forget that it also removed life-capital from the real production. The tax- or easy-money-based subsidy draw the money to another site. Activity then increases for a short period, and the suppliers of factors expect more revenue too. Do the subsidies continue, the economy of command, the state of officials grow, and the twisted economy away from the natural order increases too. If the subsidies stop the malinvestments begin to disappear with a drastic fall in employment, and unemployment grow fast (the supply of labor market helt fixed), and even to a higher level than before the subsidy. In the end the natural order is regained. “Patience” is then the word, but this word has not a lot of a meaning in the so-called democratic representation. Capital Concepts:  

(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.


Examples from Copenhagen in the 1920s (refered to above)

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:  (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)

Today we have asset-stripping and in Denmark also public credit to ship-companies that have continued, while the authorities looked upon it, and perhaps has, without any intentions to do so, participated wearing different hats. When you think of the manoeuvres under which that capitalization and the surplus-capitalization take place, and the mountain of papermoney, and especially credits that are being created, and they then want the community amortize this amount, you understand that no community are not able to live with it.

The Crash of Agriculture Bank (only in Danish till now) in 1923 shows how sick a community may develop, when fine gentlemen in public and private high places participate or just close their eyes, ears and mouths.

I can add that we have several cases of business-strippings from the 1980s of which both persons as well as companies have suffered, and that we are able to give a full documentation from primery sources.    

An example: (will be translated to English)

A third example 

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.  

Keynesians untrue talk of the future that bear some of burdens created in the presence, and they talk of deficits on the public finances that will speed up the economy. Both is completely uncorrect and invented for the objective that remains the hidden secrets of “the dancing mosquitos”. It could be called RD cheques on our children and grandchildren.

If the first had been correctly the moral legitimacy would have been more than doubtful, but is not right. It is a lie.  


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.

They also hear this lie every day on TV (today)  

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.

A great deal of the those means that the bank got into their dispositions had not been used on just to drive the prices up, but much more to drive up our values of capital, stock-shares and real estate. Also the powerful shift of the capital away from real activity into inactive earnings-giving acquisition in form of private capital (as explained above)    


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.  

At this time you could read chief-editor in the Danish newspaper Jyllands-Posten H. Hansen’s considerations on Zahle’s intelligense (the Prime Minister). On the other hand Edvard Brandes (Minister of Finances) and Ove Rode (also in the government) appeared to have good heads to destroy the finances, H. Hansen wrote.

Today nobody writes anything

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.

Debt of the state should officially be considered as quite the contrary from the midd 1930s, thanks to John Maynard Keynes and his masters.

Now (2002) it seems as if state debt is of some importants again. It is a little difficult to find out the meaning of this. “It is a little difficult to find out the meaning of this.” They even speake of it on TV, when it concerns other countries. Perhaps the sun will begin to rise in the West as yet another sign of a new era (remember the Black Sun).  

Rising prices reduce the real income of the ordinary people, when the issuing of money, the credits and the wages are held at same level, if they are not, it turns worser until the false economcy has recovered.

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.

And it goes on and on time after time, if this little smart trick just is not being used too obvious too many times in a lifetime.

To John Maynard Keynes’ other uncorrect claim on the role of state is just to remark that by selling of government bonds you remove means of money from one area, where the private enterprise is ruling, and let the state make its dipositions instead. Then the natural order of the economy - based entirely on needs and honest earned purchasing power – and the ordinary people is given the burdens from both the price-rises that comes appears instantly, and later on also from the increased taxes to finance the interest- and repayments from the loan contracted by the state.

The state is then taking over the initiative without being able to do so, and the citizens pay twice to get more ruled.

The active (or real) capital is being weaked by maintaining the false passiv capital (the private capital).

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:

Under inflation the prices were allowed to rise many times over. At same time huge fortunes were collected in private hands, and the state just through binding government bonds out to the citizens. If the government had use a fortune-taxation once and for all to pay back the debt of the war, it would not had left the citizens with the absurd impression to believe that war cost nothing.

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 collapse of Japan-economy

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.

The commentators reported under the last part of the Japanese boom that the deciding difference between European-economy and Japanese-economy especially was the propensity to invest saved means from the purchasing-power (13% of it). The investments in Europe on the other hand were all most entirely based on loans. That was partly right; but it was not enough.

For 7 years Japan held higher prices with its policy than the prices on the world market. In 1927 it ended caused by internal contradictions of this policy  It was the hardest crisis in the history of Japan. Bank-systems industry-trusts disappeared. If they had followed the example of USA from 1920-1921 the misfortunes would not have been so tremendous.

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.

Comparing with the 1980-boom in Japan with the corresponding after WW1 in the 1920s, we may learn of what went wrong.

The Keynesians are still trying to explain the so-called ”liquidity-trap”. And it is nonsense. Liquidity has never, and shall never be a problem. They maintain the Japanese rate of interest was fallen to such a low level that the demand for cash increased so wild that it was hoarding instead of letting the cash enter to the cover need for liquidity.    

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. 

And the solution is also both provisional and false, remember this when it is told in the media next time. The next recession will be still deeper and of longer duration. Perhaps there will be no next time.

 “Inflated solutions” have always operated with a so-called stimulation of the the consumption. But unfortunenately such a policy does not remove the malinvestments that was the problem.

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.

If they had let the cost including the nominal (or money-) wages readjust as in the period 1920-1921, the capacity would not have been kept, but more real purchasingpower would have been created, and the recession would not have been locked in depression right until WW2.


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.

You could have followed this fact: Government expenditures included the hastened ones do not stimulate the economy. They all drain the economy regardless, if you find these expenditures just. 

Juli 25th 2001 former chairman of the Federal Reserve Paul Volcker reported to the Senate’s Bank Committee on the theme “risk by increasing deficit of balance of payments”: “We are a debitor nation with zero personal savings, and we absorb an substantial amount of the saving from foreign countries. These enormous and increasing deficits related to foreign countries is a sign of unbalance in the economy of the country, and the economy of the world cannot be helt up with this.”

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.

In this way the Americans got our products near a price zero. By importing products that they actually do not pay for, the standard of living of the Americans is rising.

This rising of the standard of living, and at the same time the export of monetary means get the dollar to stay at a higher level, than it really should. This last phenomenon is transformed to lower prices for the Americans, or you could express the same in another way: The American purse don’t sense the prices in the same way, as the same prices hurt for example the purses of the European tourists visiting America.

Because American dollars have become an international mean of payment it was for a long time typically that foreign governments and central banks helt 60% of their reserves in dollars. These reserves is certainly not dollar deposites but American government bonds. Those are bought instead of American products.

The whole world has been lending  – and it still does – American governments larger and larger amounts of money. Every dollar outside USA is a loan to USA that waits to be paid back. It finally happens, when we can afford or we can earn profit-margens by buying more of your products and factors of production.


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.

Even if the production-fall had just taken place since Marts 2001, it is still impossible to refer to tax-reductions passed in June, and to say that those reductions should have an effect on production in April and June the same year. It could also be interesting to get these ignorant people – that unfortu-nately fill up the media with nonsense – to explain why tax-reductions suddenly can create recession. Is there not something about tax-reductions exactely increases the consumption just like cheap-loans? Have you ever experienced tax-reductions that tightened the economy? Even a Keynesian would maintain the contrary. So.


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.

Finally then this entirely loose and mad monetary policy began to close the factories caused by the inflation, and with this the obligate falling of the profit-margens as always it was necessary to rise taxes further to maintain the growing of the tax-financed sector. Just like in the 1930s.   

The objective: To centralize power further

Now they have found a new gospel: “Politics After the Attack”. Those are part of a new strategy-manual. Nothing included of patriotisme, more resposibility, integrity or anything of that kind. 

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.

Share prices have to fall again, and that is reason why somebody is most secure to distribute the losses from shares as much as possible for those who has a lot loose – without loosing the possible real influence. When all lines of businesses are facing real recession, it is totally imposible to continue with the same or an increasing level of stock indexes.

The exchange-rate on the stock market then have to fall, even though the ongoing malinvestments continues by “artificial respiration”. That is one of reason for the cheap-credits, and the reason for the experiment to rise consumption as the last link in the existing apparatus of production. Apparently no throughts of cleansing out the malinvestments of the 1980s and the 1990s. As time goes by it gets worser and worser.

When it comes to issuing of money it has to be underlined that this activity it not monopolized, and certainly not managed by the central bank anymore.

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.  

Real net savings have actually come to an end, because the banks do not need the reserved purchasingpower for future consumption.


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.


Denmark today

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 :

The (Danish) Economic Council (with the so-called economic wisemen) publishes reports that deal with nearly everything, but the necessary. The environment policy included ”sustainability” and ”biological diversity” – not further defined or selected until now – have been taken in as a exceptional part of the creeds of which most of it obviously is dealing.

That Svend Auken (former minister of environment) and Hans Zeuthen (President of board of the central bank) apparantly have left their marks among those Aarhus-professors, who have dominated this council for years, is just a smaller part of the explanation. I must have explained the rest in this newsletter. What they write has been wraped in peculiar unnecessary circumlocutions, and I have to say that it must be signal-value meant for the internal actors/agents and politicians who assumingly are meant to read it with devoutness of which it all matters.You get the impression that the council makes votings on what to write in the reports. This tells us that we are in quite a (unnecessary) distance to exact science.  

I don’t expect metaphors and passing remarks in a number as you soon have experienced in this reading, certainly not.


“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.]

[The Keynesian prefer the booms that give him his own employment. No interest of from where the booms originate, or what we really can do about them.]   

”The recession was obvious already in the spring (2001), where for example production of the industry and the business-investments fell makedly in USA. Also in Euroland the growth fell makedly in 2001 that was due to falls in the business-investments, and the decreasing growth in export like in USA.

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.”

[You could conform to the following fact: government expenditures do not stimulate but drain the economy. This is true regardless if you find these expenditure just or you do not. A Danish example for illustration: ]


”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.”



We know the fall in the USA-production has lasted for more than 17 month  (december 2001). The same have happened all over Western Europe for more than a year. We also know that this has noting to do with tax-decrease in USA (the Danish experts do not maintain that, I have to say). The growth in the American public expenditures is expected to be primery war-expenditures and law-enforcement-consumption-expenditures, but it does not matter.   

That the demand can be effected by a fall in the consumer- and investor confidence is simply nonsense, it is meaningless. That lowering the interest rate will get the consumption to rise, and that more consumption increases the business-investments is also nonsense. The machines of growth is certainly not domestic consumption.


This correspond to:

When a household with both parents full time at work has economic problems, they just hire a domestic help.

 Now you expect more false notes issued and more foreign tax-relaxations to cushion the negative effects of the whole wretched business that started because too many means of money were issued and too much cheap-credit was accepted earlier. Or let me expresse myself in another way: You hopefully solve a problem by making the problem larger.

The increases of the consumer-prices are moderate, low growth in the domestic demand, and it is the same recessions all the way round. Denmark has been put on the back burner. Or as it is expressed: The utilization of the capacity is close to the limit. In reality Denmark has 18-20% unemployment.

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.

This is the Keynesian in training. Hot air. He prefer rising taxes, and a still growing amount of means what so ever. Result: His sector grows easy and gentle, without too much attension of the citizens. Still growing public expenditures both absolute and relatively, that is his way to go.  


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?

Precisely as I have reporting: The stocks are being emptied and malinvestments are helt, until there are nothing else. That is what is going on. Somebody would call it centralism.

It is still written in the statutes of the Economic Counsel that it has to deal with long run too. It would be utmost convenient, if they would tell us, where tax-increases, still growing amount of money, and still more cheap credits lead us, when they apparently cannot think of any other instruments against the evil.


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.

One of the funny ones by professor Joergen Pedersen who was a faithful Keynesian servant wrote in “Topical Questions”, 1939: 

…”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.

In addition the extra taxes are almost consumed by the public sector everytime lead to further disturbance of investment and production, and this can certainly not be called repayment.

To this could be added that Professor L. V. Birck had not by accident seized on the question about the balance account of the community  without any foundation (classsical economics), including insolvence, even though this balance is not very easy constructed, and put into an useful formula.


When the state-debt rises quicker than GDP, then the direction is the same as the direction of the

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.       

The amount of money, the rate of interest and the taxation- and expenditure-policy of the government are deciding all together the so-called booms, the recessions and the recoveries of the economy.    

By letting the market of shares turn into poor speculation after a long period of inflation, and even though this same inflation is the reason for the bad figures in almost any business line,  the inflation actually has been partly removed from the product-prices. On the other hand ordinary people, and among others the pension-savers and other institutional savers participate in the hot-air-play. Last year Danish pensioners lost dkr. 300 billions on this market.


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.

From Juli 1994 to October 1997 M1 fell by 7,7% in return. Right now it looks as if M1 is being increased a little again, but it not easy to get reliable figures.

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.

Besides Long Term Capital Management Fund (LTCM) that even was able to threaten any market in the Western world. There are 4,000 of those unregulated funds in USA. With less than 100 investors in such a fund, it can remain unregulated by US-law. There is a general suspicion of a lot of other funds also having or getting problems similar to those of LTCM, so the banks that lend out to those will perhaps suffer enormous losses.  

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.


A little inspiration from history to the understanding

Not much has altered in the mind of the human being since Plato wrote his cave parable 2350 years ago.

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.  

These extracts are hereby retranslated to English of what I ask for an excuse. I did not have and could not find the English original anywhere: 

[We are in London just after the Battle of Waterloo that Nathan Rothschild himself secretely had followed more closely, and knew the true outcome of]


“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.”   

”Like a destroying cyclone the fear possessed City.  

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.”


More extracts from the quotations (until now in Danish) on:

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.

If money is a market product in completely contrast to a right – everything is fine, if nobody have the possibility to interfere in any issuing of means on any market.


To read further on American and international relations I can recommend:

We have not dealt with foreign trade and exchange rates of currency. This is dealt with on: http://www.lilliput-information. com/intmo.html and in Appendix 2


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