I was enjoying nodding my head to the general dilemmas of economic problems created by everybody's addictions 'to kicking the can down the road'...

It got a little more confusing with the need for capitalism not socialism - but without the banking component apparently.

But the second comment furrowed my brow.

If he is correct about everything else, why does Molyneux disagree with you that "The US Govt does not share in the profits of the Fed.It is a private banking cartel owned by numerous banking interests."

http://qz.com/42515/the-us-fed-made-a-greater-profit-than-apple-and-exxon-combined-last-year/

WM Trevor why does Molyneau insist that the Fed is a Govt body? It could well be that he does not want to stir up big Bro and suffer their wrath.He does attack the banking system for printing too much money.You don't attack a bull elephant head on with a spear.Perhaps he trying to come in through the back door and make real changes.

The US Fed has enormous power since they create all the money for the US Govt to function.They are the defacto Govt since they control the money and thus Congress.This reality also tells us that they must control the US Military.

With the sale of the Commonwealth Bank + 4 State banks our Govt is beholden to these international central banks for new money and will not critise them.No one has been charged for the looting our our super and the theft continues with the depreciation of our curencies.

Our RBA should at least be creating our money of 3% inflation since this is our wealth that is being created as debt by the private banking system.This could reduce our taxes by $36 billion pa + interest or improve our infrastructure without private tolls.

I'm with you, Arjay. And Belly, your first post makes sense too...:)

Tha labours of Sisyphus spring to mind, WmTrevor, when it comes to the task of educating Arjay about simple financial matters.

The significance of the fact that the Fed is obliged by law to remit its profits to the US Government seems to have passed completely over his head. Sad, really.

This was a bit off-putting:

>>Molyneux is rated amongst the the top ten most influential people on the alternate media<<

Not a particularly reassuring encomium, somehow.

But I absolutely agree that government bureaucracy is a fundamental drain on any developed country's productivity. On the other hand, I find this fascination with the consequences of debt to be all a little... well, morbid.

Belly sums up the emotion:

>>America, can not pay its debt in the lifetime of your grand childrens grand kids<<

What has become very, very clear over the course of the GFC is that it is not the amount of debt that is critical. If it were, then Japan would be a worse basket-case than Greece.

What is important is the ability to repay. I well remember taking on the mortgage for my first house. I was instantly in a position where my debt, expressed in relation to my "GDP", was substantially over 200%. This has never, at any stage in my life, through any number of changes in the security itself - I have moved house more than a dozen times - been a problem, as it has been my ability to service the debt on an annual basis that has been the critical factor.

And as we know, and have seen in the actions and reactions of various bodies such as the IMF, lenders will bend over backwards to retain that repayment stream, even to the extent of taking a "haircut" along the way.

The way some people view debt is almost Victorian-puritanical, something distasteful, to be avoided at all costs, or at least eliminated at the earliest possible moment.

Maybe it is time we grew out of this pointless panic, and took a realistic view of what debt is, and how it is managed.

Seems so, Pericles... "The labours of Sisyphus... " (Did you know he pioneered rock and roll?), not for the task of education but for the expectation of an apology for demonstrated untruths.

Perhaps the common courtesies could be encouraged if we adopted the philosphy of King David I of Scotland 'who knew how to entice a whole people, once rough and rustic (rudem et agrestem), to adopt manners which were civilized and domesticated (ad mores compositos et edomitos). According to William of Malmesbury, David used fiscal policy to that end, offering tax exemptions to all those Scots who were prepared to live in a more cultivated fashion, dress more elegantly and eat with more refinement’.

Yes, things are a'changing. No doubt about that.
Capitalism itself will have to change.
An economy, like Australia's is like any business, too much overhead
and the business is too busy looking after the trimmings instead of the
production of necessities.
Our future GDP will be very low or zero or negative.
This will force us to live within our means, as no one will want to
lend us money.
That was something interesting I read recently;
China is lending US dollars wherever they can so as to unload their
very big US$ holdings. They are hoping to get the Yuan to be part of
a basket of currencies to be the world reserve currency.

Just like the US cannot repay its debt, nor will we if we do not do it
very soon indeed.
A default, either by repudiation or inflation is inevitable for the US$.