cobra2411 Posted July 29, 2014 Posted July 29, 2014 I've been looking at the last 30 years or so of financial history, specifically 1980, around which time we doubled down with fraud. Fraud that was supported and encouraged by the government. Look at how many times banks commit fraud vs how many times they get caught. And when they do, it's a slap on the risk with a fine that's a small percentage of what they've made. No one goes to jail, they aren't forced closed, they just merrily go along all while the media makes Joe Six Pack feel good by talking about the Massive, record setting fines being paid. For those that don't know, banks legally counterfeit money. This has been confirmed many times, including within a Federal Reserve document called Modern Money Mechanics. When you sign on the dotted line, be it a credit card slip, a promissory note or a mortgage, your promise to pay is now an asset on the balance sheet of the bank. They use that asset to justify creating money and since that money isn't going to be placed under a mattress they meet their reserve requirements ex-post-facto when that newly created money is deposited back into a bank. All the banks essentially function as one and for every loan that bank A gives where people deposit in bank B, bank B makes loans that go to bank A. In the event they're short, bank A can borrow from bank B to make things balance out and if all the banks are having trouble they just lower the reserve requirements or even eliminate them. The idea that banks take in deposits and loan those deposits out is an abject fraud. So... From 1980 to present the economy, expressed in GDP, has gone from $2.8 trillion to about $17 trillion. That's about a 6 fold increase in the economy over 34 years, pretty good right? Well the total debt outstanding has risen from about $5 billion to almost $60 Trillion. Or a 12 fold increase - double what the economy increased. If you back out the debt, since it has to be paid off with future productivity, you'll see that the economy has declined by 50% over the last 34 years. Stolen by intentional fraud by allowing the banks to legally counterfeit money. At the same time, due to computers, robotics and the like, worker productivity has increased by almost 70%. The only reason it doesn't feel like a third world country is that 1.) debt is freely available and 2.) worker productivity has increased tremendously. That worker productivity has been stolen however. In constant 1980 dollars, assuming in 1980 we could afford a $100,000 house, we should be able to buy a $170,000 house. It's not that the $100k house would appreciate in value, no, we should be able to afford 70% more house. However, due to the fraud, we can only afford a $50k house. The hidden tax of inflation and the constantly declining interest rates have made it so we don't understand that because everything has increased in price. What would cost $50k in 1980 would cost $140k today. People get confused because they could afford a $100k house in 1980 and now they can afford a $140k house and they think that's an improvement... In today's dollars someone who could afford a $100k house in 1980 should be able to buy a $475k house today when adjusted for worker productivity increases and inflation. That $100k house costs $280k today because of inflation and nothing else. Lets talk about the declining interest rates for a moment and how this all became a vicious feedback loop. It's 1980 and I borrow $1 million dollars at 15% interest. Simplified, my payments are $150k/yr. After some time the rates have dropped to 10% and that million dollars now costs $100k per year if I refinance it. But... Since I'm used to paying $150k a year I can take out another $500k. Now another 8-10 years goes by and rates are now at 5% and I can refinance my $1.5 million for half of what I'm paying. Or... I can borrow another $1.5 million and still pay just $150k per year. 10 years later rates are now 2.5% and once again my interest payments have fallen in half so I borrow another 3 million. I now have 6 million outstanding with the same payment I've had for 30+ years; $150k. I have paid ZERO toward principal and thus owe the entire 6 million. None of that money was ever depositor's money, it was created the moment I signed my name to promise to pay. Our government knows this and they've allowed what is essentially counterfeiting. By allowing all that counterfeiting they've diluted the purchasing power of everyone. It's nothing more than a hidden tax. And speaking of our government... Surely with worker productivity increasing by almost 70% they've had to make some efficiency improvements right? Ha! Government debt has gone from $660 billion to almost $13 Trillion. They've expanded by almost 20 times. I think we can call that a monstrous expansion... It's certainly not sustainable and it's what has been seen at the tail end of any large government institution. Stephan has said multiple times that at the end the looting is monstrous and collapses the system pretty hard. GDP Growth: +6x Debt Growth: +13x Real Growth: -50% Gov Growth: +19x Without government many things would have found their utility cost and would have decreased in response to increases in productivity. We wouldn't have to give over 75% of our productivity to the government and we would likely only have to work part time to enjoy a decent standard of living. Think of the wondrous things would could have accomplished if we didn't have to struggle to survive? Oh, and remember that government that's increased by almost 20 times? We can't get to the moon today. Less than 50 years ago with technology that's easily surpassed by a cell phone today and we can't do it. Progress? By who's definition...
Magnus Posted July 29, 2014 Posted July 29, 2014 I think about this sort of thing all the time. I've been planning to do more in-depth reading on the banking system, from the perspective of a libertarian/anarchist/voluntaryist, but the impediments to getting reliable information on the subject are incredibly high. The history of copyrights, property law, trade and merchants generally ... these things are more or less out in the open, but banking? It's buried in more layers of secrecy and bullshit than just about anything I've encountered. I sometimes daydream of a Western world where just a handful of the most important inventions were developed centuries earlier than they were. The most pressing concern of the early modern West was starvation -- a problem that was mostly solved by the invention of the Haber-Bosch process, which gives us modern fertilizers, and a vast increase in agricultural output. The other main development was knowledge of microorgansms -- something we all take for granted now, but is really very recent. It was not known until the late 1800s. Basic sanitation prevents most diseases, which once caused an infant mortality rate of 25-30%. Together -- food and sanitation -- they changed the world. What if they'd been developed in 1500? Or 1300? Or 1100? Or in Roman times? Before the central banks, when money was a commodity, not just ledger entries in the records of the cartel?
J. D. Stembal Posted July 29, 2014 Posted July 29, 2014 Magnus, I would suggest reading The Creature from Jekyll Island: A Second Look at the Federal Reserve by G. Edward Griffin. The history of banking, particularly in the United States, but also in Europe will be laid bare for you. (http://www.amazon.com/The-Creature-Jekyll-Island-Federal/dp/0912986212) I don't agree with your assessment of the Haber-Bosch process. If it were not for this artificial nitrogen fixing process, invented in 1909, we would not have had the populist politicians and their crony state scientists of the 1960-70s pushing for a system of industrial monoculture in order to feed the world. They called it an urgent humanitarian crisis. (Where have I heard that before?) Now, as a direct consequence, we have to endure the after effects, consisting of rampant cancer, diabetes, obesity, and heart disease. All of these diseases fall under the umbrella of metabolic syndrome, which is caused by consuming too much and developing an intolerance to corn, soy, wheat, and sugar. ACA provides a strong case for moral hazard with the certainty of obtaining health care insurance no matter how unhealthy you become. We averted an imaginary humanitarian crisis only to wind up in a real humanitarian crisis due to the short-sighted policies of the United States Federal Government. What you should actually be wondering is what the world would look like today without the involvement and corruption of governments to pervert or subvert scientific progress. The Federal Reserve, and central banking in general, has long been a catalyst for war, and much of our scientific progress of the last century has been state-funded and motivated by military application. I will cite nuclear power and space flight as two of the most obvious examples. The patriotic German Jewish chemist, Fritz Haber, once said, "During peace time a scientist belongs to the World, but during war time he belongs to his country." He led the military research that developed chlorine gas used in trench warfare during World War I, and his institute developed Zyklon A, predecessor to Zyklon B, both industrial pesticides, the latter being instrumental in the eradication of eleven million Jews, gypsies, and homosexuals. Carl Bosch was a co-founder of IG Farben, the fascistic conglomeration of six companies into a chemical production powerhouse, which colluded with the Nazi Party to produce enough of the Zyklon B gas to undertake Hitler's Final Solution. Also, don't forget that the most immediate use of the Haber-Bosch process was to produce ammonia for the manufacture of explosive, the most conventional weapon of war. Do you see how it is disingenuous to claim that the Haber-Bosch process is the most important discovery of the 20th century, as some historians are want to do? If we attempt to wrap your brain around the magnitude of the suffering that it has caused and is still causing today, albeit indirectly, we would have to be incredibly cynical to consider this scientific progress.
Magnus Posted July 29, 2014 Posted July 29, 2014 I've read Griffin's Jekyll Island book. It's a bit disjointed. I understand that the problems you describe are philosophical in origin, not technological. The disasters of the civilized world are organizational, not technological. My point is not to discount the importance of social-organization ideas in the development of Western civilization. But modes of social organization have changed radically over time. It so happens that knowledge of microbiology was developed during the Progressive era. (So was household electricity, actually.) That's why the two main functions of local government are "public" water and power -- they were collectivized, because "public works" theory was the predominant governmental idea at the time. The governmental take-over of these functions radically altered the daily way of life for all of America, after Anglo-American property law had already been eroded by Progressivism. One of the impediments I encounter out in the world is that when I mention that there are some vastly superior ideas about society and freedom and property to be found in the past -- going back to Justinian and the Romans, through what we now call "feudal" times, up to and including the Enlightenment. The major stumbling block is that, when we look back on those times, as they actually happened, we also see rampant starvation and disease. Progressives use that correlation to argue, "See, look how awful things were in the Bad Old Days! Infant mortality! 40 year-life spans! Starving children in the streets! It was the FDA that saved us!" Those problems could have been solved without unionism, socialism, fascism, Communism, etc. The last 3 generations of humans have solved the technological problems that plagued humanity for 3,000 years.
J. D. Stembal Posted July 29, 2014 Posted July 29, 2014 Right, I also find it a bit annoying when state supporters point out an instance of government solving a problem that was caused by government solving a previous problem. Libertarian, David Duley, author of I Can Fix America loves to echo this refrain in his and Robb Wolf's libertarian podcast - "Today's (government) solutions are tomorrow's problems." This is exactly the theme I was attempting to illustrate in my last post. State intervention, as a basis for fixing the world's perceived problems, generally invites even larger issues to arise decades later when the politicians and voters responsible are long dead. http://www.icanfixamerica.com/podcasts/ I'm sorry to hear that you didn't enjoy The Creature, Magus, I found it to be a real page turner, and very comprehensive. I read it in a week or two. There's another one I have been working on called The Ascent of Money by Niall Ferguson, but I can't tell if my problem with finishing it lies in not liking the writing or the fact that I only have the PDF, and not the paperback. I can't stand reading on my laptop and I don't have an e-book reader. http://www.amazon.com/The-Ascent-Money-Financial-History/dp/0143116177 Apparently, there is also a four hour PBS documentary based on the book. http://video.pbs.org/video/1170821435/ I'm not sure if this will add any more useful information of the history of banking in this world, but it might be work checking out.
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