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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 5/1/2011

Since 2008 governments have been trying to maintain the economic status quo and this has just made things worse.

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I wish I could locate a copy of Neil McInnes' serialized article in the AFR about 1972-3. He titled the article "What do we do with these worthless American dollars?" I had my own copy but it has gone astray.
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.
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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A great article, much of which I agree with as I do with the thoughtful comments submitted by other readers.

I would only add that so much of what is needed to revert to a balanced and worthwhile economy is reliant on political consistency and courage to make the right decisions. The majority of voters would not accept the pain and "lower standard of living" required to reach this end, so I feel it won't happen any time soon.

You only have to look at what is happening overseas to see the reaction of workers rioting and marching in the streets when governments try and administer some restraint on spending.

It is a kind of NIMBY attitude. No one will make the sacrifice, so I think we are in for some "interesting times" with more pain to come.
Everyone thinks that he/she is entitled and that someone else will pay. Most consider that the government should tax other people and that they should be the beneficiaries. Consequently it is political suicide to try and do the right thing. To a degree, Arnold Schwarzenegger tried in California and has failed with his popularity plummeting.
Posted by snake, Wednesday, 5 January 2011 2:49:26 PM
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People like Formersnag are in the doldrums, new world order. Everybody would come to different conclusions. All that rubbish on u tube has religious undertones and can be taken with a pinch of salt, maybe it would be more believable.
Like the spacemen never went to the moon theory.
Posted by 579, Wednesday, 5 January 2011 3:42:47 PM
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http://forum.onlineopinion.com.au/thread.asp?article=11436#194756

thinkabit, most economists don't argue from a left or right wing perspective. They pretend to.

The radical, extreme, loony left wing-nut, ruling elites, work with, the radical, extreme, raving right wing-nut, ruling elites, to steal "Robin Hood" style from the blue collar, working classes , the white collar middle classes, even the rich & give the loot to the worlds filthy, stinking, super rich, international banksters & aristocracy.

The Rothschild family owns 50% of the world's wealth, throw in some of the others like Bill Gates, the Saudi royal family & 1% of the population owns 99% of the worlds wealth, but that is not enough.

They want 100% of it ALL.

http://forum.onlineopinion.com.au/thread.asp?article=11436#194761

snake, i respectfully disagree that the NIMBY perception in the community is, that bad.

http://forum.onlineopinion.com.au/thread.asp?article=11436#194763

579, Poor fellow, i pity you, "religious undertones" & that is somehow worse than a Communist undertone, or the "Spinganda" from the Communist Spinster, Dillard.

Left wing politics is the yoke of the worker's, own, Oppression.

"Like the spacemen never went to the moon theory".

Much of that stuff on YouTube is like the Apollo missions & 9/11, live footage of a David De Rothschild public, forum, speech, or well publicised "in the media", historical quotes. If you don't believe what's on the Internet then check the referenced books at the library for yourself.

What part of, well documented, scientifically proven, facts & evidence don't you understand?

Try these, really easy, simple ones, again.

http://video.google.com/videoplay?docid=8630135369495797236#

http://www.crikey.com.au/2010/08/25/greensvoters/

http://en.wikipedia.org/wiki/Useful_idiot

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=zeMZGGQ0ERk&feature=player_embedded#!

http://www.youtube.com/watch?v=-RgeOIFG8KI&feature=related

http://www.youtube.com/watch?v=mtudNpL30BU&NR=1

If only the ETS, Economic Treason Scamers had access to a totalitarian, 1 party, world government, then they could force a "price on carbon", on all of us, in the middle, you know, 90% to 99% of the population, or don't you get, how unpopular Communism is, in Australia, either.
Posted by Formersnag, Thursday, 6 January 2011 3:05:39 PM
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Sorry chap but you only have one eye. A mix of both capitalism and communism is a good mix. When you only see one side you have nothing to compare. So we are not aloud to have guns, without special permit, is that communism, or just plain sense.
We elect govt; to govern, so hold your tongue till it is time to vote again.
Blokes like you would have a standing vote.
Posted by 579, Thursday, 6 January 2011 4:58:43 PM
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http://forum.onlineopinion.com.au/thread.asp?article=11436#194827

579, sorry chap, but i have been "viewing" the radical, extreme, loony left wing-nut, bias of news, current affairs & docos on the gaybc & sbs for years, then "reading" the radical, extreme, raving right wing-nut, bias of the Australian, which gave me & millions of others, the balanced, centrist, "view" that both sides have been telling deliberate, premeditated, lies, about almost everything for about half a century now.

This knowledge has also been balanced by talking to Russians who were in the USSR between 1917 & when Stalin took over, as well as research on the net, books, etc, a broad, both eyes, wide open view.

While you, are a stooge for the "Inter", National Socialists.

"A mix of both capitalism & communism is a good mix", in theory, you would be correct, but you also just gave a perfect description of the way the "Land of OZ" was, between 1945 & 1972, before Comrades Whitlam, Hawke & Keating from the Closet Communist GAYLP destroyed it.

Now we are a "Coca Cola, Communist" state, a radical, extreme, raving right wing-nut, free enterprise, globalised, free trade, quarry, exporting only raw materials to our new colonial masters in China, among others, while importing cheap trinkets for the consumers.

Do you think the CFMEU want casual, "guest workers" on the mines in far northern WA or NT? A "regional processing centre" in Timor would be less than, half the distance from Perth for "fly in, fly out", wouldn't it?

http://www.reuters.com/article/idUSTRE7023S220110103

Everywhere i have seen this article, it is accompanied by comments like, "NIIIICE".

http://www.youtube.com/watch?v=fTahZE4q90U&feature=player_embedded

http://www.youtube.com/watch?v=Ki4cqqMZ7JE&feature=player_embedded#!

Secular.

http://www.dailytelegraph.com.au/news/opinion/do-not-feel-afraid-gaia-is-with-us/story-e6frezz0-1225980594646

Religion.

http://www.youtube.com/watch?v=hwyjsJJrr2I&feature=player_embedded

http://news.ninemsn.com.au/world/8192780/weathergirl-admits-rape-story-was-a-lie

Truth.

Have you heard of "the friends of truth" BTW?

We elect "public servants" to "hear our grievances" between elections & solve our/the nation's problems, not create them.
Posted by Formersnag, Friday, 7 January 2011 12:36:33 PM
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Thanks for a well put together article.
An oil price of $100 seems certain now that OPEC has announced that
they consider $100 a fair price. Previously they said $70 was fair, hmmm.

Debt is undoubtable going to make the energy crunch much worse.
The US has until March to decide if they will increase their
borrowing or just stop.
Unfortunately it means that default on their repayments and interest
will be certain.
The Republicans seem to be determined to take the latter course.
If that happens put your money under the matteress. Or buy gold !
A default on US Treasury bonds will mean a world wide financial crash.
Lullabies;
The politicians in all countries have formed an unspoken
agreement not to mention peak oil publically.
Robert Hirsch (of Hirsch report fame) said just a few days ago in a
radio interview that after the US government reviewed his report said
that he was not to conduct further studies into the subject.
However he was a contractor not an employee.
The US Dept of Energy obeyed the government directive and did not
publicise the report, but did put it on their web site where it was
discovered by a Californian high school class.

An example is Martin Ferguson. He has spoken on the Peak Oil problem,
but since becoming minister has been totally silent.
The British Government has recently become twitchy on the subject and
has instituted a non public internal enquiry.

The politicians cannot see a problem before the next election so it
is a non event.
However the British government has five years to go so it will land
on them.

The real question some are trying to answer is will there be a gradual descent to a
lower standard of living or will, like other complex systems undergo rapid collapse ?
Posted by Bazz, Monday, 10 January 2011 1:01:37 PM
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