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The Forum > Article Comments > The Global Financial Crisis: financial chancers, 1; American dreamers, 0! > Comments

The Global Financial Crisis: financial chancers, 1; American dreamers, 0! : Comments

By Greg Maybury, published 15/7/2014

Senator Warren, in attempting to seek and obtain a measure of justice on behalf of the hapless US citizens and taxpayers, is doing so against what are surely extraordinary - possibly insurmountable - odds.

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The author has stated the situation in the USA precisely. The problem for the world is the acceptance of the $US as the reserve currency and the currency of international trade. We have the proverbial "tiger by the tail".

The Economics Department at UMKC has been promoting the author's main points at neweconomicperspectives.com for some time. A/P William K Black has been particularly critical of the unwillingness of regulators to prosecute senior bankers and other Wall Street operators for criminal behaviour. Bill Clinton is nearly as responsible as The Gipper who at least had the excuse that he was suffering from Alzheimer's and believed in astrology.
Posted by Foyle, Tuesday, 15 July 2014 9:35:15 AM
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Now you are really telling it like it is. Unfortunately, from what I can see of the American psyche, it will take a few more crises to make them wake up to themselves. The same thing is starting to happen here with voters only electing candidates on the basis of "what is in it for me". Until we realise that we can no longer afford the current high standard of living, we are doomed to go down the same path of the once great US of A.

David
Posted by VK3AUU, Tuesday, 15 July 2014 9:41:15 AM
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Any account of the GFC that does not understand or recognise the role of the supply of money and credit - and therefore the Federal Reserve - is simply incompetent.

To look on a system of monopoly government control of the supply of money and credit, not understand this fact, and just blithely assume this has nothing to do with the problem and, without any explanation, to assume the problem is more of the same, as the author has just done, makes an embarrassing exhibition of basic economic ignorance.

Those who claim that the problem is not enough "regulation" never deal with the premises or consequences of their own theory. Firstly it assumes that their theory of causation is correct but, as we've just seen, why should we join them in assuming it is when the most obvious and basic distinction between public and private eludes them?

Secondly , if their theory is right and the government is some kind of benevolent selfless general-purpose machine for economising scarce resources to their most important ends, they can never explain, why not just put all productive activity in the hands of government? They can never explain the rational principle distinguishing the interventions they favour, from those they oppose. All we get is a farrago of generalisations that assume what is to be proved, as the author has just given.

Greg, if you want to write a book on the topic without sounding like an ignoramus, you really should read this essay by Rothbard:http://mises.org/document/2668/Economic-Depressions-Their-Cause-and-Cure, so you at least understand the issues.

For a clear, more comprehensive explanation of the basics that you obviously don't understand, read "The Mystery of Banking" by Rothbard.

Foyle has no answer to these arguments because he is only endlessly regurgitating the long-refuted Keynesian nonsense that's causing the problem in the first place.
Posted by Jardine K. Jardine, Tuesday, 15 July 2014 10:07:00 AM
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Jardine
It seems your own enthusiasm to be contrary is interfering with your ability to understand you own beliefs.

Is not warren questioning the role of the federal reserve and the unfettered expansion of debt? Is not this precisely the point?

And is not this something Mises a d Hayek themselves would approve? Ostensibly you understand Warrenis for regulation of the banking sector and being the neo-libertarian enthusiast,, your Reflex is to condemn eve. The mere mention of any regulatory intervention.

I suggest if you stop and think, and actually read and comprehend your own references, you will see quite clearly that atleast on this matter Hayek and warren are sitting at the same table.
Posted by YEBIGA, Wednesday, 16 July 2014 2:48:44 AM
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Great article Greg
If the articles in our daily newspapers were remotely as interesting the dailies would not be suffering from dwindling readership numbers and terminal decline.
Posted by YEBIGA, Wednesday, 16 July 2014 8:40:33 AM
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WHEN ARE YOU GOING TO SEE THE MEDIA IS A LIE
BANKING A CLEVER/TRICK..were baNKING A DOLLAR;with the fed
geTS ACCES TO CREDIT/TO LEND[CREDIT CREATED BY FRACTIONAL RESERVE MONEY CREATION

HERE A RARE TRUTH..SUPPREssed for 97 years
at least bother reading rEal news/of the daY;..AS IT HAPPEND
http://home.alphalink.com.au/~radnat/anstey%27s%20kingdom%20of%20shylock.html

ITS A SUPPRESSED BOOK FOR OVER A CENURAry..
[read it and see why]
[ITS STILL;A DAMMING EVIDENCE;Proof*]

IT LAys out the Base for todays problems/COMPOUNDED MANY FOLD
ignorance of histry is NO EXCUSE[WHAT THEY DID THEN..97 YEARS AGO;they do far more affective today,

http://home.alphalink.com.au/~radnat/anstey%27s%20kingdom%20of%20shylock.html

lest we forget/labour..began SEEING/these exreem measures..97 years ago.

the libs merely continued..it..[CHEST BEATING HOW THEY DIDNT DO it we did..just like the big guys like it

DIVIDE AND DIVIDE FURTHER
LIE TILL THEY DONT KNOW TRue from faulse
then print till you got the asset[they GOT A BROKEN PROMISE IN EMPTY VAults.]
Posted by one under god, Wednesday, 16 July 2014 9:04:42 AM
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Jardine K Jardine
re;
Foyle has no answer to these arguments because he is only endlessly regurgitating the long-refuted Keynesian nonsense that's causing the problem in the first place.

You obviously do not understand that private banks do not consider if they have adequate reserves before lending. Before they became too greedy for their own good they lent to people who met prudential tests. They knew that the cheques they wrote when creating loans would end up back in the banking system and that what each bank lost on the roundabout would be picked up on the swings. Creating a loan created the reserve.

I wish people would read and understand the work readily available from Professor Wray, Dr Kelton, A/P Black, and particularly J D Alt as published on the blog neweconomicperspectives.org

It is not hard to understand that;
1. for private financial wealth to increase, a sovereign government must run a deficit if the foreign (current) account is in balance. That is simply a truth from the rules of double entry accounting.
2. Any move toward austerity, either by the private sector or the sovereign government, reduces demand and increases unemployment.
3. That the budget outcome is a result, not an aim, and that if the community wealth (the common weal) has increased by more than the deficit in any accounting period the deficit increase has been a benefit.
Posted by Foyle, Wednesday, 16 July 2014 10:58:18 AM
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Foyle
So no private wealth ever increased before governments ran deficits?

Printing money creates real physical wealth, and socialism makes a society more physically productive?

We are back to wondering why you don't care that what you say is obviously untrue?

Yebiga
"Is not warren questioning the role of the federal reserve and the unfettered expansion of debt?"

No. Not according to the article at least. Did you read it? If she were questioning the role of the federal reserve, that would be good. But she isn't. Neither Warren nor Greg display any awareness of the role of the federal reserve. Warren is entirely concerned with subsidiary symptoms,and more of the monetary central planning that's causing it, and Greg is cheering her on.

"Is not this precisely the point?"
It is precisely the point, and one which Warren and Greg both missed.

"And is not this something Mises a d Hayek themselves would approve?"
No. You obviously haven't read and don't understand them.

"I suggest if you stop and think, and actually read and comprehend your own references, you will see quite clearly that at least on this matter Hayek and warren are sitting at the same table."

You are mistaken. It's you who don't understand the Austrian theory you refer to. Please cite where they support regulation of the downstream effects of inflating the supply of money substitutes.

It's no use advocating the benefits of regulation unless you're going to explain why all productive activity should not be undertaken by government. All you're doing is displaying ignorance of the fundamental clanger you've just dropped.
Posted by Jardine K. Jardine, Wednesday, 16 July 2014 11:36:52 AM
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Jardine
The article is supportive of senator Warren because she is challenging the concept of too big to fail and too big to jail.
She is wanting to restrict banks increasing the money supply with credit expansion based purely on asset speculation and prevent the repeat of the GFC and something even bigger.

Neither Misse or Hayek would argue with that would they? Tell me that Hayek would be supportive of the banks increasing speculative credit.

Sadly, you are so desperate to evangelising the libertarian ideology that in this and many other instances your really not comprehending what is actually going on.

So who made the Clanger?
Posted by YEBIGA, Wednesday, 16 July 2014 11:52:35 AM
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Jardine,
If your heroes are correct why do their austerity programs still have Europe stuck in a recession after nearly seven years of the same failed approach to the problems caused by inadequate demand?

Before repeating your errors please read J D Alt's article at; www.neweconomicperspectives.org/2013/08/mobilization-and-money.html
The first few sentences read;
"I’m nearly finished with a very long book that may well be the best illustration of the basic principles of Modern Money Theory available. The book is “A Call To Arms,” by Maury Klein. It is an historical account of the U.S. mobilization as it prepared for, and engaged in, war with Germany and Japan. The scale of the task was unprecedented in human history—and the accomplishment of it changed not just the structure of the American economy, but American society as well. What is striking about the story—and the monumental effort to quickly build, virtually from scratch, the largest and most sophisticated war machine ever to exist on the planet—is that there is nary a peep of concern or argument about how this enormous task would be paid for".

You obviously do not understand how corporations and the conservatives, in peace time, manage to hobble sovereign governments from providing a better community.
Posted by Foyle, Wednesday, 16 July 2014 8:10:48 PM
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Yebiga

If what you are saying was right, it would apply to other economic goods as well as money.

Think old Soviet Union. It’s like saying, the chaos caused by central planning can be solved by more regulations. That’s what you’re saying. End of discussion. You’re wrong. You and Warren have learnt nothing from the last hundred years of economic theory and practice.

Warren is essentially arguing that there’s nothing wrong with the *principle* of central planning of the supply of money and credit, it’s just that those greedy capitalist running dogs keep mucking up the Grand Plan of their betters the clever know-it-alls in the political class who just happen to have set up and presided over the monopolistic governmental system whose corruption they now blame on unregulated capitalism.

If you think that Hayek or Mises supported such interventionism in theory or practice, you are wrong as a matter of fact, which is why, when challenged, you can’t cite any authority for that proposition. The reason in theory is the ole ‘Fighting for peace is like having sex for virginity’ thing. Given the root of the problem is the Fed, Warren proposes as a solution leaving the entire corrupt system as it is, and adding a few more regulations!

‘For every thousand hacking at the branches, there is only one striking the root.’

Foyle
Your question assumes what is in issue, and assumes your theory of causation is correct. We have already established it’s not, by the fact you can’t defend your assumptions.

Repeating your belief that governments make society physically richer by printing squiggly pieces of paper, and by blowing up cities, doesn’t make it true. According to your theory, full socialism would be both more physically productive, and fairer. It’s nonsense.

It’s no use appealing to the absent authority of NEP while you can’t defend their premises. It's like advancing trigonometric jargon while getting Pythagoras’s theorem wrong. ‘Garbage in,garbage out’. According to your theory, if the government burnt down all our houses, we could be economically better off. It’s moral and intellectual gibberish.
Posted by Jardine K. Jardine, Wednesday, 16 July 2014 9:15:39 PM
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WARREN DOES NOT HAVE A GOD COMPLEX
Posted by YEBIGA, Wednesday, 16 July 2014 10:59:46 PM
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Yebiga

Can you see, if the total amount of money magically doubled over night, so that everyone had twice the money in their cash reserves than they had the day before, that there would be no increase in physical wealth, or in total utility?

Can you see that if the government digs holes and fills them in again, and pays for it with funds obtained either by inflating the money supply, that this does not make society as a whole richer?

Can you see how, if what Foyle is saying were true, we could abolish poverty just by running the printing presses?
Posted by Jardine K. Jardine, Thursday, 17 July 2014 8:08:41 PM
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All the theories about the GFC are correct, but no one ever asks, or
rather they never tumble to it, "What Triggered the Bomb !".
The detonator was housing.
The Housing detonator system was sitting there just waiting for the trigger pulse.
Bang !

Now here is the problem;
We were lucky, we got saved by by a once off occurrence.
Now that will run out of steam in a very few years and we have taken
that time to prime the bomb again.

Next time there is nothing in sight to save us when it goes off again.
Next time the result will be permanent.
Next time we will start a very long climb back to a very different economy.
Posted by Bazz, Sunday, 20 July 2014 10:56:45 PM
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Bazz, to the extent theories of the GFC are inconsistent, how can you say they're all correct?

The problem is that people who normally discipline themselves to think logically, indulge themselves in believing that they've hit a logic-free zone as soon as they discuss economics, and therefore policy. But they haven't. Reality and logic continue to exist, and to impose limitations on human action, regardless whether people think economics is just a set of arbitrary ideological postulates. It just means they're wrong.
Posted by Jardine K. Jardine, Monday, 21 July 2014 12:25:28 PM
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BRAZEN/NOTE....<<...no one ever asks, or
rather they never tumble to it,/.."What Triggered the Bomb !".>>..

THE TRIGGR WAS THE RATINGS AGENCIES MAKING AN INVESTMENT VEHICLE FOR SUPER ANNUATION.. with inbuilt growth mechanisms[such as LOW/OR NO INTREST..THEN MASSIVE [UNREASISTIC]..HIGH-intrest increases..

<<..The detonator was housing.>>

NO THE DETONATION WAS OUR BABY BOMER RETIREMENTS
THEN US LOOSING MASSIVE FUNDS IN RIPPOFFS SANCTIONED RIPPOFFS VIA BANKERS SELLING COMMISION PRODUCT

super anuation is a pyramid sceme
last in loose everyting[and we have a cuppoard of lossing betting slips in a rigged game
http://www.washingtonsblog.com/2014/05/enron-2-0-wall-street-wants-manipulate-state-energy-markets-just-like-manipulates-every-market.html

<.The Housing detonator system was sitting there just waiting for the trigger pulse.
Bang !>>

yes shortfall of a return
but so huge that the underwriters who underwrote the AAA
WERE ALL NEEDING TO GET CASH FAST[THE ELites living comfortably off our fears/who neded destractions with smoking /asbestos underwritting

well they all had to liquidate asets.fast
or ask the govt cash teat to save them /with money printing to buy up worthless bundled contract obligations defaulting and worthless

muxch like when bankers last went broke
http://home.alphalink.com.au/~radnat/anstey%27s%20kingdom%20of%20shylock.html<<..

Now here is the problem;
We were lucky, we got saved by by a once off occurrence.>>

us giving away our assets so the rich had asets to put the stolen cash bailout funds into?

then tripple the costs/of basic services[take our super to enslave us?

<<.Now that will run out of steam..continues
Posted by one under god, Monday, 21 July 2014 1:35:09 PM
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<<..in a very few years and we have taken
that time to prime the bomb again.>>

so know/its a money machine..yoU GIVE IT A DOLLar
it creates 50 dollars of debt*..[stop feeding the machine..money

money is debt*
THE ONLY CONSTITUTEd lawfull tender is coin[queens coin;silver gold coin/fiat is a bank reciept..one day they deflate your value away

<<.>>Next time there is nothing in sight to save us when it goes off again.

restore traditional value back into coin
govt mints its own coin/at two extra decimal points[add one or two zeros to the face of coin
\let one real copper cent=one paper dollar

<<..Next time the result will be permanent.>>

yes bankers wantiNG FEDERAL RSFVE NOTES
OR CASH COIN..I KNOW WHERE MY MONEY IS[IN COIN..IT AT LEAST IS WOR ITS CURENT FACE VALUES PLUS COLLECTABLE/RAREITY-VALUES.
<<..Next time we will start a very long climb back to a very different economy...>>

YES NEXT TIME I SEE LOCAL COUNCILS GETTING THEIR MINTING[BUDGET]..IN COIN..COIN WILL BE TAX FREE[ITS JUST ANCIENT TRADITION]..UNDER GOVT RIGHT OF SEIGNORAGEE/WE CAN DROP ALL INCOME TAX ON WAGES]..
Posted by one under god, Monday, 21 July 2014 1:35:41 PM
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Jardine; no doubt people will argue till kingdom come about the
economics side of the argument.
However when the price of petrol & diesel to the economy exceeded 4% of
GDP that was what set it off.
The average Joe Blow had a choice, buy petrol to go to work, buy food
for the kids or pay the mortgage.
That was the economics of it all. Bang !
The rest was history.
Posted by Bazz, Monday, 21 July 2014 2:41:30 PM
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OUG said;
THE TRIGGR WAS THE RATINGS AGENCIES MAKING AN INVESTMENT VEHICLE FOR SUPER

That itself was the detonator, the trigger pulse was the price of oil
and Joe Blow not paying his mortgage.
Posted by Bazz, Monday, 21 July 2014 2:46:15 PM
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