Posted by: graemebird | November 8, 2008

What Happens If The Americans Don’t Soon Establish A Reserve Asset Ratio?

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.”


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.



  1. Graeme
    download this podcast by Selgin on free banking and tell us what you think

  2. Mr Bird,

    You have lost face and must demand satisfaction. Either call his bluff or challenge him to a round of fisticuffs.

  3. Cuz

    Ignore these catallaxy faggots. You gotta work out how to steal his money in the night.

    And when hussein obama is disqualified, you gotta take the money from the last bet too

  4. I’ll go twenty to one odds that Hillary Clinton will be sworn in as President by the end of 2009.

    I’ll put up $100 against his $2000.

    The thing about the oil bet is that Z and Soon seem to think that me losing the oil bet proves that Barry Soetoro isn’t a marxist. Well I cannot really go along with the spreading of such insane epistemology.

  5. Mr Bird,

    Glad to you are coming around to my thesis that Barry Soetoro is the American Mugabe.

  6. If I had the money to spare its unlikely that the bet you are speaking of is the best odds I can get. The fantasy-world Zed, JC and Soon live in notwithstanding one does wish to get the best odds for bets of this nature.

    A bet on a specific month is simply a distraction from the idiocy of the fantasy-approach that these guys take to the oil problem.

    The mini-nukes can bring down the price of oil but that will be sometime after 2012. Deep sea oil can bring down the price but thats many years in the future.

    I would prefer to highlight the idiocy of Z, JC and Soon when it comes to oil rather than arbitrarily let Zed pick a specific month. What is the month of July in 2009 anyway? What would the price of oil in this month prove?

    It won’t make an idiots approach to oil less of an idiots approach to oil. All it would mean was that China and the US had decided to have tight money up until that date and it won’t mean any more than that.

    However I’d certainly take up the same bet for July 2010. Thats if Zed isn’t too sissy to take that one up.

  7. “Graeme
    download this podcast by Selgin on free banking and tell us what you think

    Its moronic. And ultimately it implies that he is accepting that banks can have special rules in their favour. Which means the only regulation he is really prejudiced against is the reserve asset ratio. Since he imagines that the Scottish banks had ponzi-money at 50-100 to one. The only way such a ludicrous and dangerous ratio could be maintained is if there were restrictions to any Joe putting out notes. If everyone were allowed to issue notes then the notes would become worthless or such a ratio couldn’t be maintained. Hence he is really taking a mystical approach to monetary theory. He has not escaped macromancy.

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