Banking Bunkum

[Bizarro-Greenspan]

http://www.atimes.com/atimes/Global_Econom...y/DL21Dj01.html

 

It is an economic truism that low inflation for a large,complex

economy can only be acheived by driving certain sectors into

deflationary levels.Businesses in these unfortunate sectors

are held in a state of protracted,if not perpetual loss,to face

bankruptcy and liquidation.This detachment of profit from real

production and the dubious linkage of profit to financial

speculation and manipulation Greenspan accepts happily

as Schumpterian 'creative destruction'.Pockets of deflation

and bankruptcy are intregal parts of systemwide disinflation

that inevitably produces losers who allegedly made wrong bets.It turned out that these wrong bets were not against

market forces as much as they were against Fed policy bias.

The stable value of money is to be maintained at all cost,except for speculative growth,which is translated into

rising share prices,which,unlike rising wages,are not viewed

by the Fed as inflation,a rationale hard to understand"

 

Hmm,sounds like a case study of the gold mining industry and the teacher's pet,ABX.

 

A longish read on Mr.Gold and Economic Freedom and his

lifestyle altering cronies at the Fed.He also looks at GE,Bill

Gross and the debt swapping game.

[Jorma]

As always very interesting. An alternate monetary history so to speak. Just for fun let's say Mr. Liu is close to China's leadership. What would you think then?

 

There are some uncomfortable things here for gold bugs and the anti fiat money crowd. Without question the history of American Populism and it's demand for more money and more credit was the driving force in the estabilshment of the Fed and before that the cry to abandon the Cross of Gold. The history of gold backed money is a history of deflation and deflation as he says works to the advantage of the few. Inflation works to the advantage of the middle class. Be careful what you wish for if you wish for a gold standard because for all its flaws the current system at least has the potential to be democratic in it's policies. If the solution was imperfect is without question. Having the Fed owned by private banks was silly to say the least. Why anyone thinks any system is perfect or perfectable escapes me.

 

I am sure comments like those will open a can of worms but look where the drive for easy money came from. The areas which today are considered most 'conservative'. The west and south, particularly rural farmers were at one time the proponents of a radical populism which almost elected William Jennings Bryan president. Bryan was the closest thing to a socialist ever to gain power in America. Making that even stranger in todays light is that he was a Christian Fundamentalist. Now mostly remembered for his disgrace at the Scopes 'Monkey Trial', but forgetting his role as leader of the populist movement whose foundation was democratizing money itself. This populism moderated into Progressivism which railed too agaist the robber barrons, fought against ANY corporate involvment in politics and gave us such things as the estate tax. In politics and money there are no immutable laws.

 

The cries against Wall Street , politicians, and the financial elite have now existed thru the age of hard money and now the age of money at it's most ephemeral. Any system can be made to serve those who control it. Thus showing I think that there is no perfect system. As always it is what we make of a system which is the tell. Any calls to sacifice people to a system are wrong. Systems, as best as possible must be made to serve people.