Adapted from Dr Marohasy’s blog.
To give you an extreme example of what we have to expect to happen if Obama doesn’t go AGAINST the banks and Washington SOON………. and develop extreme conviction about letting banks crash, developing a reserve asset ratio and various other technical monetary matters…….
…. Here is Zimbabwe. People just go crazy with monetary inflation. Everyone goes mad. They lie all the time. All good sense gets crowded out.
Zimbabwaen top brass are well-educated. A lot of them have gone to British universities and the like. So how could this happen one might ask? What happens is that the better connected can borrow earlier and then have their debts erased. So this sort of thing becomes a habit. Now in the states the better connected, that is to say the bankers themselves, have in the past been able to benefit from a number of things that you and I cannot benefit from. But in the last couple of months they have managed to get away with a whole lot of other, shall we say, SPECIAL PRIVILEGES. “Sometimes I use understatement for effect.”
So lets look at all these past and present ACCOMODATIONS the banks have made for themselves:
1. Outright public stealing in broad daylight 2. Flagrant open bribery. 3. Their position has bee augmented by interest rate subsidies (they get their interest at wholesale rates. Lately below wholesale) 4. Augmented also by their ability to create new money (not so applicable just lately but clearly in the works.) 5. augmented by policies that will cause inflation down the track.
This is the banking system writ large taking control for their own benefit and not that of the US citizen. The opposite of what happened under Volcker. Who let maybe 5000 banks go down the sink, saw maybe 100 billion in bankers debt disappear as a result, saw the American savings rate get up to 15% or more (all this dimly remembered) and put forward the conditions for one of the greatest small business explosions and technological leaps any country has ever seen.
Don’t expect this to happen this time around.
So whilst there is still time to establish a reserve asset ratio and deregulate in nearly all other respects, and so take measures to avoid future inflation…..
… Since we know that the banks are working for their benefit and not for the US citizens benefit, we ought not expect them to do so. What we ought to expect them to do rather is start monopolizing on gold and silver.
Now another thing. These INSANE stimulus packages that are rolling out every few months. The ones that Paulson has launched, and that idiot-Marxist Obama will continue…………. these insane policies are more than sane from the bankers point of view. Since what they will do is ensure that the government, including pretty much all public sector workers, are in the exact same boat as the bankers. Misery likes company. And the bankers are nursing grave debts. Hence the debt bonanza ALIGNS THEIR INTERESTS WITH THE GOVERNMENTS.
We can call this an institutional pull. Since I don’t pretend to know what goes on behind closed doors. And I don’t tend to emphasise the potential conspirational nature of a lot of these sorts of events. Although there is probably a bit of that too. The point being you don’t have to take Alex Jones’ angle on this sort of thing to be able to see that the cart is beginning to run downhill. And only a serious reserve asset ratio can stop it now.
All we can say is that if a reserve asset ratio isn’t established sometime soon then “all else follows with complete certainty, even in the midst of chaos.”
NOW THE GOOD NEWS.
There is an alternative paradigm that we can have in parallel to the above. And that paradigm would say that despite the nutball Keynesianism, and despite the rampant thieving….. that Bernanke and his coterie are still minding the store.
And the reason that this is possible is that stealing and debt aside monetary policy is pretty stable. The Austrian version of the money supply, according to Mark Thornton, didn’t really alter much between April and September.
So out of the three things they have to get right one of them so far is on track.