The Forum > Article Comments > Stupidity and the Global Financial Crisis Part Two > Comments
Stupidity and the Global Financial Crisis Part Two : Comments
By Cameron Leckie, published 5/1/2011Since 2008 governments have been trying to maintain the economic status quo and this has just made things worse.
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Posted by Foyle, Wednesday, 5 January 2011 8:39:35 AM
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If there is a silver lining to the clouds of the GFC, it is the growing widespread understanding that fractional reserve banking and fiat currencies are fraudulent. They are legalized by governments in cahoots with bankers so this priviligentisia can share in the loot obtained from Joe Public by their skimming operations in diluting the currency.
Only as Murrary Rothbard said, you can’t send the feds to arrest the counterfeiters – they are the feds! But to assert that the world’s economy would be more stable but poorer if we returned to honest money, is to assume the central falsehood of fractional reserve banking and fiat money – namely, that it creates net real wealth, that it makes society as a whole richer. It doesn’t because it can’t. Expanding the money supply is not a wealth-creating act, it is a wealth-transferring act that results in a total net loss to society as a whole, but a total net profit to the beneficiaries of monetary policy. The reason we have had economic growth during the currency of these policies because of the capital accumulation happening *despite*, not *because of* inflationary policies. The abolition of fiat money and one-size-fits-all FRB would not have the result of a general impoverishment or lower standard of living. In place of the boom and bust cycle, we would have a general compounding increase in productivity, which means least use of resources per unit of wealth produced, so it would be better for the environment as well as human beings, given that the purpose of economic activity is to satisfy human wants. The enormous capital that is now misallocated, and misappropriated, in the booms and liquidated at great loss in economic recessions, would accumulate, consequently productivity would steadily rise, prices would show a general tendency to fall instead of rise – your money would be worth more - we would not have the roller coaster ride of artificial booms followed by real depressions – and there would be much less Fed-financed war! What’s not to like about it? www.mises.org Posted by Peter Hume, Wednesday, 5 January 2011 9:06:56 AM
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Those who fall down and worship at the altar of the God of growth will have a lot of difficulty coming to grips with the realities of this article. This seems to include most governments and their masters the bankers and the industrialists who pull all the financial strings. The common man is not blameless either. Once upon a time, our forefathers were prepared to make do with what they had and were prepared to save for the things for which they craved. Because of "smart" operators such as Gerry Harvey and his mates, todays' generation live in a world of buy now, pay later, with no regard to the economic consequences if their circumstances change and they are no longer able to pay. Australia only escaped last time because of the strength of the resources sector and the reserves which had been built up by the previous government. Now that the current government has squandered those reserves we will just have to sit back and suffer the pain along with the rest of the world and reflect on the folly of going into debt to buy large houses we couldn't afford and all the gee gaws we didn't really need to put in them.
David Posted by VK3AUU, Wednesday, 5 January 2011 11:46:15 AM
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An excellent article & excellent comments so far by Foyle & Peter Hume.
http://forum.onlineopinion.com.au/thread.asp?article=11436#194728 http://forum.onlineopinion.com.au/thread.asp?article=11436#194730 But all 3 of you have missed the indisputable medical evidence, it is not possible for any human being on the planet, to be doing this stuff by genuine, honest, stupid, mistakes. Nobody is that dumb, especially not, high IQ, university educated, multiple degree, professors of anything. This has all been a Deliberate, Premeditated Plan, done by, "Closet Communists", sabotaging all Non Communist economies since 1917, working towards an Orwellian, 1984, Big Sista, NWO. http://video.google.com/videoplay?docid=8630135369495797236# http://www.henrymakow.com/australian_satanist_exposes_wo.html http://www.youtube.com/watch?v=B7Tz8l-t1o4&feature=related http://australiancontacts.ning.com/video/australian-new-world-order http://www.iamthewitness.com/DarylBradfordSmith_Rothschild.htm http://news.ninemsn.com.au/article.aspx?id=8096859 http://en.wikipedia.org/wiki/Inside_Job_(film) http://en.wikipedia.org/wiki/Useful_idiot http://www.savethemales.ca/160303.html http://www.archive.org/details/TheGreening_492 http://video.google.com/videoplay?docid=-1138597812890776821# http://www.angelfire.com/music2/fullcircle/mas2.html http://en.wikipedia.org/wiki/Adam_Weishaupt http://books.google.com.au/books?id=5vajlNhSzWYC&printsec=frontcover&dq=mark+aarons+the+family+file&source=bl&ots=_JqnT4mkHv&sig=23tiin36Jjg84b7-Ttuxxp7L3gI&hl=en&ei=jKD0TOiQD8fzcfH_mMcE&sa=X&oi=book_result&ct=result&resnum=8&ved=0CD0Q6AEwBw#v=onepage&q&f=false http://www.theaustralian.com.au/news/opinion/the-covert-comrades-in-the-alp/story-e6frg6zo-1225887087909 http://www.smh.com.au/opinion/politics/radical-roots-seep-through-at-the-heart-of-greens-20100726-10sj0.html?skin=text-only http://www.youtube.com/watch?v=NO24XmP1c5E http://www.youtube.com/watch?v=aLlrfEYtqFU http://www.youtube.com/watch?v=zeMZGGQ0ERk&feature=player_embedded#! http://www.prisonplanet.com/fox-admits-to-planting-political-brainwashing-in-popular-tv-shows.html http://www.youtube.com/watch?v=B7Tz8l-t1o4&feature=related http://www.youtube.com/watch?v=mtudNpL30BU&NR=1 There is no need to be depressed by any of this, "the truth will set you free". There is also no need for bloody, violent, revolution. There is mountains of evidence available to prosecute all members of the Radical, Extreme, Loony Left, Factions of the current, Red/green, getup, labour, Socialist Alliance of conspiring to commit, Economic Treason, together with, all past members of hard left parties over the last half century or so. How about it, Peter Hume? Care to Chair a royal commission on "Un Australian activities"? Posted by Formersnag, Wednesday, 5 January 2011 12:51:28 PM
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There seems to be a very widespread misunderstanding by many comment posters* about what economics is and what economists assume. There is also misunderstanding about what fractional banking is.
Firstly, no ecomonist, regardless that they argue from a "left" or "right" wing perpective believes that there is an infinite potential to make an infinite number and variety of goods. Indeed, they assume the *exact* oppostive- economics is the study of the real systems that have evolved across the world's various societies (as well as proposed hypothetical systems) to produce and distribute *scarse* goods. Economist are fully aware that production is not limitless! Secondly, under fractional reserve banking, the bank's don't just create money out of thin air. They create it in *exchange* for a promise by the lendee that they will pay it back in the future. The loan is *backed* by this promise. Because there is a risk to the bank to the loan might not be paid back they charge interest on it according to that risk (or deny the loan outright). Indeed, transactions that rely on promises happen every day in every industry- for example in about 2hrs time I'm about to go to work to unload a shipping container. I'm about to do this work in exchange for the promise that the boss's company will pay me in about a week's time. If the company had a bad record of not paying employees properly than I would ask for more money per hour or if they're really bad than I wouldn't do the work at all. However, governments on the other hand *do* create money from nothing. By changing their balance on the books they create money from nothing, because they don't formally make a promise to pay it back- it is not backed by anything. (* I'm referring not just responses to this artcile but many other other finance/economy related articles) Posted by thinkabit, Wednesday, 5 January 2011 1:19:25 PM
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I should clarify my previous comment a bit. When governments issue bonds, then they make a promise to pay it back. What I was referring to was specifically the "fire of the presses"* printing of money actions that they sometimes take (like what America is doing right now).
*I know that they don't actally print it, I know that they just fiddle electronic balances on computers. Posted by thinkabit, Wednesday, 5 January 2011 1:45:38 PM
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The world trade system for real goods and services should have shifted then (by the mid seventies) to Keynes' idea of a weighted basket type currency for such trade. An attempt was made using Special Drawing Rights but the real problem was that USA had to reduce overseas purchases and that would have required that Japan, Europe and China would have had to discontinue their policies of exporting their potential unemployment by using the USA consumers as the consumers of last resort.
Instead political leaders, many of whom, to me, sometimes do not seem to understand either economics or technology, continued to allow the USA to finance its requirements of fuel by "printing money" (actually creating balances in the USA accounts of foreign governments and Saudi princes etc.).
Treating those balances as having any real value led to the GFC as rogues developed ways to speculate with those funds and use them to bid up the prices of capital assets such as citizens' homes.
Those balances of fake value were sometimes converted to real assets when Australian icons such as Arnotts and Edgells were lost to overseas owners.