Banking/Monetary Reform

[Owledge]

Quite obvious what he says there, nothing eye-opening.

I'd comment though that 'the capitalist system' is not dependent on those crises. Capitalism is one thing, a monetary scam is another. The banking system is fraudulent, and through corruption this crime syndicate has become too powerful to just eliminate it. A bit like the mafia in Italy maybe.

[joeblast]

yeah, cant point at a divergence from capitalism and call it a failure of capitalism. more like the success of capitolism. too large of a government + preposterously large businesses = regulatory capture. roots of systemic failure grow.

[Enishi]

http://mises.org/daily/6350/The-Flipside-of-the-Trillion-Dollar-Coin?fb_action_ids=4595822567999&fb_action_types=og.likes&fb_ref=.UQifIMuC7-o.like&fb_source=aggregation&fb_aggregation_id=288381481237582

As outlandish as the idea of the $1 trillion platinum coin at first appears, it gives us a glimpse of a monetary arrangement that, although far from ideal, is superior to the current system. Now that the Obama Treasury has definitely ruled out the scheme to mint the coin to circumvent the gimmicky debt ceiling, it is instructive to take a closer look at the reason why it did so and to articulate the lessons that can be learned from the episode.

 

To begin with, the scheme has ramifications far beyond a one-off political trick to avoid the debt ceiling. Indeed, it presented an implicit challenge to the much vaunted and sacrosanct "independence" of the Fed. That is why, from the very beginning, Fed worshippers in the establishment media—left, right and center—mercilessly mocked the idea and denigrated its supporters as grossly ignorant or irresponsible, although they dared not spell out its full policy implications.

 

No doubt the Fed was acutely aware of the threat posed to its independence by the coin gimmick. As a senior administration official revealed, had the Treasury minted and tried to deposit the coin, the Fed would have refused to credit the Treasury's account for the $1 trillion. This indicates the overweening arrogance of the Fed—as well as its great power—because the Fed was in effect threatening a president and a member of his cabinet with an illegal action. For even though they are not intended for circulation, US commemorative coins, which the platinum coin would have been, are legal tender at their face value.[1]

 

One of the few commentators to fully articulate the anti-Fed implication of the trillion-dollar coin was Michael Sandler, a left-wing populist blogger and self-described "Political Economist, Climate Change Professional, and Sustainability Advocate." Although his article is mostly nonsense on stilts, Sandler does recognize that the coin scheme provided an entrée to wresting control of the money supply away from the unelected bureaucrats at the Fed and returning it to Congress and the Treasury. Sandler promotes a monetary reform program based on the template developed by the anti-Fed American Monetary Institute. He welcomes the minting of the trillion-dollar coin as a step toward implementing a central element of this program:

Repeal the congressional mandate for the Treasury to issue debt when it deficit spends. Instead, the Treasury could be allowed to spend money into circulation directly, or use debt-free instruments (of which the coin is one example) in its money creation process (with or without the Federal Reserve).

A common objection to such a proposal is that if money were under the control of the Treasury, monetary policy would become a political football, inflation would be rampant, the United States would founder in a sea of red ink, the dollar would tank on foreign exchange markets, blah, blah, blah. But how much more inflationary would monetary policy become than it is right now? The unelected and unaccountable bureaucrats at the Fed have fastened on the US economy a regime of zero interest rates, indefinite quantitative easing, and the insane targeting of a real variable (the unemployment rate) using nominal variables (i.e., the money supply, nominal interest rates). This is a reversion to stone age Keynesianism. Indeed, current Fed policy has enabled a fiscal policy of high deficits and rapidly mounting national debt, anyway.

 

But let us grant for the sake of argument that congressional control of monetary policy alters the mix of financing government spending toward less taxation and more deficits paid for by money creation. From the point of view of Austrian public finance theory, the method of governmental "revenue extraction" does not matter nearly as much as the total amount extracted. For all government spending, including transfer payments, drains resources from productive uses in the private economy and squanders them on the wasteful spending of politicians and bureaucrats. Government spending is either consumption spending that directly satisfies the preferences of members of the political establishment and their special interest constituencies, or it is investment in waste assets because it is not based on the profit and capital-value calculations that guide the decisions of private entrepreneurs and capitalists. It is in effect a redistribution of income and resources from the productive to the unproductive, from the “taxpayers” to the “tax-consumers.”

 

The total amount of government spending is therefore what Murray Rothbard called (p. 339) "government depredation on the private product." For Austrians, then, the method of financing government depredation—whether it be taxation, borrowing from the public, or money creation—is of secondary importance. Thus, at a given level of government spending, siphoning off resources from the private economy via deficits financed by money creation is no worse than extracting them through taxation. Indeed inflationary finance may even be preferable to taxation because the threat of physical coercion implicit in taxation has a detrimental effect on the direct utility of private individuals that goes beyond the expropriation of their income. As Rothbard (pp. 10-11) put it,

>>>>>>

[W]hy should anyone believe that a tax is better than a higher price? It is true that inflation is a form of taxation, in which the government and other early receivers of the new money are able to expropriate the members of the public whose income rises later in the process of inflation. But at least with inflation people are still reaping some of the benefits of exchange. If bread rises to $10 a loaf, this is unfortunate but at least you can still eat the bread. But if taxes go up, your money is expropriated for the benefit of politicians and bureaucrats, and you are left with no service or benefit.

Needless to say, from the point of view of consumer welfare and economic efficiency, Austrian economists unquestionably prefer a smaller government budget financed by deficits and money creation to a larger budget that is in balance. For example, if confronted with a choice between an annual U.S. government budget of $2 trillion financed wholly by money creation and a balanced budget of $4 trillion, Austrians would without hesitation choose the former as less disruptive of the market process and less injurious to the welfare of individuals who earn their income through peaceful production and voluntary exchange. It is thus the total level of depredation on private producers and consumers, as reflected in government spending, that matters most for the Austrian economist; deficits and debt are at best of secondary importance and at worst a diversion from the true fiscal burden of government.

 

Obviously, congressional control of the fiat money supply is far from the ideal monetary system, which involves the complete separation of government and money through the establishment of a commodity money, such as gold, the supply of which is determined exclusively by market forces. Nonetheless, there is much merit in replacing the opaque and pseudo-scientific control of "the money supply process" by the entrenched bureaucrats of the Fed with overtly political control of money by elected officials and partisan Administration appointees.[2] There are a number of benefits of stripping the Fed of its quasi-independent status and transforming it into a handmaiden of the Treasury, in the mode of the trillion-dollar coin idea.

 

First, money would be created in a transparent manner that is understandable to the public at large. The Treasury would simply send an administrative order to the Fed to credit its checking account with the sum of money needed to pay the government’s bills that are not covered by tax revenues. Now, formally, this order would be called a “Treasury bond,” but it would not be a bond in the economic sense because it would not be exchanged in financial markets. Nor would the “interest” that the Treasury may pay on these pseudo-bonds really be interest because it would not be determined by supply and demand on financial markets. Rather it would be a payment to reimburse the administrative costs of the Fed and its amount would be completely controlled by the Treasury. It thus becomes pellucidly clear to the public that every single increase in the money supply engineered by the Treasury is not to “stabilize the economy” or “prevent a financial meltdown,” but to benefit the specific individuals and firms receiving the government checks. The new money is being created from nothing to purchase military aircraft from Boeing, to subsidize agribusiness giant Archer Daniels Midland, to bail out General Motors, etc.

 

This contrasts with the arcane process by which money is now created, which involves the Treasury issuing debt that is purchased by private entities, mainly banks and other financial institutions, and then eventually repurchased by the Fed via open market operations. In this way the Fed circuitously “monetizes the debt” and expands the money supply while pretending to control interest rates. Invisible to the lay person is the fact that twenty or so privileged Wall Street banks and financial institutions—so-called “primary dealers”—that sell bonds to the Fed profit immensely from the money creation process. Also benefitting are the fractional-reserve banks that get hold of the newly created reserves and their business clients who borrow the money at reduced interest rates and spend it to appropriate extra resources before prices have begun to rise.

 

Giving the Treasury control over the money supply by drawing checks on deposit balances that it “borrows” from the Fed yields another benefit. It not only shuts the Fed out of financial markets and renders the money creation process transparent, it also completely cuts out the fractional-reserve bank cartel from a central role in the money-creation process. This would mitigate that process’s tendency to create business cycles. When new money is injected into the economy via open market operations, as it is today, it expands bank reserves. The lending out of these created reserves by fractional-reserve banks artificially reduces the interest rate below the natural level determined by the voluntary saving of private income-earners. The distorted interest rate falsifies the profit and wealth calculations of entrepreneurs and households causing malinvestment and over-consumption and precipitating the boom-bust cycle that usually culminates in run-away asset bubbles and a financial crisis. In contrast, when the Treasury creates money it does so by writing checks for bureaucrats’ salaries, for entitlement payments, and to pay vendors for government purchases. This mode of money creation causes what Ludwig von Mises called “simple inflation,” which does not generally perturb financial markets and systematically distort interest rates. As Mises (p. 570) explained, financing Treasury borrowing directly from the central bank is no different from a government simply issuing fiat money to finance its spending:

Political and institutional convenience sometimes makes it expedient for a government to take advantage of the facilities of banking as a substitute for issuing government fiat money. The treasury borrows from the bank, and the bank provides the funds needed by issuing additional banknotes or crediting the government on a deposit account. Legally the bank becomes the treasury’s creditor. In fact the whole transaction amounts to fiat money inflation. The additional fiduciary media [i.e. unbacked notes and deposits] enter the market by way of the treasury as payment for various items of government expenditure. It is this additional government demand that incites business to expand its activities.

Furthermore, Mises argued (p. 570), this kind of simple inflation is not likely to produce financial conditions that lead to a business cycle:

The issuance of these newly created fiat money sums does not directly interfere with the gross [i.e., nominal] market rate of interest, whatever the rate of interest may be which the government pays to the bank. They affect the loan market and the gross market rate of interest, apart from the emergence of a positive price [i.e., inflation] premium, only if a part of them reaches the loan market at a time at which their effects upon commodity prices and wage rates have not yet been consummated.

In other words, the (non-bank) recipients of government checks would tend to allocate the new money between consumption and saving roughly in the same ratio as the rest of their income. Thus the prices of consumer goods and investment goods would rise in roughly equal proportion and the market interest rate would not be systematically displaced from its natural or equilibrium level. The result would be inflation, but no business cycle.

 

Last but not least, as an adjunct of the Treasury, the Fed would no longer function as bailer-outer of last resort, a role that is held in unquestioned importance by almost all contemporary economists, but which infects the entire financial system with pandemic moral hazard. No longer would the Fed be able to surreptitiously, arbitrarily, and without democratic oversight or accountability bail out all manner of financial institutions not only in the United States but in foreign countries. A partisan Treasury under the watchful eye of the congressional opposition and in full view of the public will have to make these decisions. I daresay that with the Fed neutered and unable to leap to their rescue at the first sign of distress and with their requests for bailouts subject to full scrutiny by a skeptical Congress and public, fractional-reserve banks would run their affairs much more prudently.

 

Let me be clear: my intention is not to deny that the trillion-dollar coin is a ludicrous and dangerous idea; it is rather to point out that the Fed is a more ludicrous and dangerous idea.

Edited February 2, 2013 by Enishi

[joeblast]

I dont see any good arguments for renewing the fed's charter, its been 100 years since the usurpation, now give the ball back. What's the status of that anyway? Implicit renewal from congress with no vote?

[Green Tiger]

I dont see any good arguments for renewing the fed's charter, its been 100 years since the usurpation, now give the ball back. What's the status of that anyway? Implicit renewal from congress with no vote?

 

Fear not, Joe! If my Facebook feed is to be believed, pretty soon a small army of high school dropouts armed with AR-15s is going to overthrow Obama and set right all that's wrong with America!

 

 

*edit* Subject-verb agreement.

Edited February 7, 2013 by Green Tiger

[Owledge]

Fear not, Joe! If my Facebook feed is to be believed, pretty soon a small army of high school dropouts armed with AR-15s is going to overthrow Obama and set right all that's wrong with America!

They'll have to face Obama's own army of loyal child soldiers then.

[Enishi]

While it might work better in the short term than giving money to the banksters, I doubt something like this proposal would work for very long without creating instability down the road. Many would end up spending the money on things like booze and entertainment, rather than anything useful. New productive industries are going to be needed to move the world out of the gutter, rather than just services.

 

If the government does decide to give the banksters the boot and print debt-free money, it would be better if it was spent on infrastructure projects and scientific research, areas where the US is currently lagging.

 

 

Consider the U.S. Federal Reserve. At present the Fed prints $85 billion of new money monthly and distributes it to banks and Wall Street investors by buying government bonds. And the Fed has promised to continue this monthly “quantitative easing” until such time as unemployment drops and is clearly and sustainably declining to more normal levels. Now suppose instead that the Fed divided its $85 billion monthly money production into 300 million checks of $283 each and sent these to every man, woman and child in America. Suppose, moreover, that the Fed promised to keep sending out these checks, worth more than $1,000 a month for a four-person household, until the United States reached its unemployment target – and the Fed chairman added that he would increase the checks to $1,500 or $2,000 a month for that household if $1,000 monthly proved insufficient. There can be little doubt that this deluge of free money would stimulate consumer spending and revive employment – and no doubt that it would be infinitely more effective than distributing money to bond investors and banks through QE.

 

 

 

http://blogs.reuters.com/anatole-kaletsky/2013/02/07/a-breakthrough-speech-on-monetary-policy/

Edited February 10, 2013 by Enishi

[joeblast]

of course it would "work better"...

 

but it wouldnt line the pockets of those connected, so why bother doing it? when the connected make the choices, they choose to enrich themselves at the expense of everyone else - and its double worse when its done under the guise of being "a champion of the poor."

[Vanir Thunder Dojo Tan]

because "we" allow it...

[Enishi]

http://www.monetary.org/the-federal-budget-through-the-looking-glass/2011/03

 

On February 13^th Speaker of the House John Boehner addressed a letter to President Obama touting tax cuts, deregulation, and reduced government spending as solutions to reinvigorate the economy. To it he attached a statement signed by 150 economists denouncing conventional use of fiscal policy during a recession, “To support real economic growth and support the creation of private-sector jobs, immediate action is needed to rein in federal spending.” If federal spending creates both public-sector and private-sector jobs, how can federal austerity augment job creation?

It can’t.

John Boehner’s House plan for the federal budget includes spending cuts on low-income education and nutrition programs, food inspection services, clean energy development, Social Security disability payments, environmental protection, municipal fire department grants, Amtrak, the Clean Water Revolving Fund, the National Park Service, and the Corporation for Public Broadcasting. According to the Economic Policy Institute, this budget would reduce the federal deficit by 4% at the price of 700,000 American jobs. Boehner’s response to these employment projections was, “So be it.”

 

Americans’ misunderstanding of the nature of the Federal Reserve leads to confusion over the arguments for federal austerity wielded in the debate over the 2012 federal budget. If the federal government originates money, what keeps it from printing the money to pay off the national debt rather than strangle governmental spending? Our government is limited to creating a minimal portion of our money supply as coinage. It would be highly impractical to mint $14 trillion in coinage to pay off the national debt. The rest of the money supply is loaned into existence by the privately controlled Federal Reserve and the private banking system. As long as money originates as debt there will never be enough specie to pay off public and private debts. This is the economic system economists have accepted without question; they have not produced any credible solutions for paying off the national debt. Yet despite the economists’ confusion a credible solution has been proposed in Congress.

America is blessed to have a member of Congress championing a sound solution to the budget crisis in Washington. Representative Dennis Kucinich (D-OH) introduced HR 6550, the National Employment Emergency Defense (NEED) Act last December. The bill will do the following:

1. Nationalize the Federal Reserve.
2. Create all new money through a democratic process. The fractional reserve requirement for banks will be raised to 100%, eliminating their ability to create money.
3. Spend new money into existence through a national infrastructure program. By spending money on real items including roads, schools, and hospitals, we can reach full employment without suffering from inflation.

These important reforms will align the mechanics of the monetary system with the public’s understanding of it. The Federal Reserve will become a public agency, the government will create money, and banks will keep our money in their vaults. Our inflationary credit-created money will be replaced by a sound currency. The federal debt will be paid off as it comes due. It is change we can believe in.

Edited February 24, 2013 by Enishi

[Enishi]

I dont see any good arguments for renewing the fed's charter, its been 100 years since the usurpation, now give the ball back. What's the status of that anyway? Implicit renewal from congress with no vote?

 

Although ideas on what to replace it with may differ, it's quite amazing that understanding of the tremendously harmful nature of the Fed has spread so quickly, a decade ago almost no one was talking about it. That at least IS encouraging.

Edited February 24, 2013 by Enishi

[joeblast]

how now, cyprus?

 

how next, greece, spain, portugal, italy...france....england...USA...

 

hedge accordingly, its gone from subtle theft to not at all subtle theft...

[joeblast]

 

Paddy McCoy, a hardworking Irish farmer, received a visit from an inspector of the Department for Works and Pensions.

 

“Tell me about your staff,” he asked of Paddy.

 

“Well,” said Paddy, “there are the farmhands. I pay them 240 a week and they have use of a free cottage.”

 

“That’s good,” said the inspector.

 

“Then there’s the housekeeper. She gets 190 a week, along with free board and lodging.”

 

“That sounds fine,” said the inspector.

 

Paddy went on to tell of the rest of his staff, all to the pleasant reception of the inspector. And then he said, “Now, there’s also the half-wit. He bears all the risk of this business, works a 16-hour day, nets about 25 a week when all is said and done, but takes down a bottle of whiskey and, as a special treat, occasionally gets to sleep with my wife.”

 

“That’s disgraceful, Paddy,” said the inspector. “I need to interview the half-wit.”

 

“Well,” said Paddy, “you’re lookin’ at him.”

 

http://www.testosteronepit.com/home/2013/3/17/the-feds-token-voice-of-reason-megabanks-undermine-americans.html

 

 

McCoy “represented the plight of the hardworking souls” trying to feed their employees and family, Fisher said. All they wanted was “a level playing field and fair treatment.” And that was all that Main Street banks wanted.

 

Twelve megabanks—0.2% of all banks—control 70% of the US banking assets, he said. Because they’re considered “too big to fail,” they’re “treated differently from the other 99.8% and differently from other businesses.” Government policy has exempted them from the “processes of bankruptcy and creative destruction.” Freed from fear of failure, they and their counterparties have taken outsized risks that posed a threat to the stability of the financial system, and thus to the economy.

 

“Practitioners of crony capitalism,” he called them. Their “privileged status” placed them “above the rule of law” and gave them a “sense of immunity from the law.” Due to the implicit government guarantees, the cost of capital for these megabanks was lower, amounting to a “significant” subsidy that encouraged these banks and their nonbank subsidiaries to get ever “larger and riskier.” It was “patently unfair,” he said. The playing field was tilted “to the advantage of Wall Street against Main Street—as the banks exacted “an unfair tax upon the American people” and undermined their “faith in the rule of law and representative democracy.”

So Fisher offered a three-step solution:

 

Only commercial banks would have access to deposit insurance and the Federal Reserve’s discount window; all nonbank entities would be excluded.

 

Customers, creditors, and counterparties of all nonbank entities, and holders of bank deposits beyond the FDIC protection limit, would sign a legally binding disclosure acknowledging that there is no government guarantee on their investment.

 

And megabanks would be restructured so that each entity would be “subject to a speedy bankruptcy process.” The banking entities would be small enough to feel “a credible threat of failure,” like the other 99.8%. And they’d be allowed to fail—”closed on Friday and reopened on Monday under new ownership and management,” administered by the FDIC. All banks would be under the same regulatory oversight and exposed to the full force of market discipline.

 

If implemented a decade ago, this setup would have stopped “the insidious behaviors that contributed to the crisis, avoiding the bailouts and their aftermath, the cost of which our nation’s citizens will bear for years to come,” he said. A fiasco that undermined the “belief in the fairness and justice of the economic system” and “perpetuated a sense that powerful banking mandarins operate above the law and prosper at the expense of the thrifty and hardworking citizenry.”

 

Fisher, the token voice of reason at the Fed. He’s allowed to speak out at the margins but is politely ignored at the Fed or by Congress. Even among the thousands of Republicans at CPAC, only two dozen bothered to listen to him—and those were less than enthusiastic. Because in our crazy times of endless free money for megabanks that are above the law, there is still no political will to fix the situation once and for all.

 

So megabanks and their bankers have been able to dodge serious punishment for crimes they’d been committing for years because they’re now officially too-big-too-jail. But there’s a deeper problem..... The Self-Emasculated Regulators Of Megabanks.

thanks dodd-frank et al

[joeblast]

[joeblast]

turns out the EU's ploy to grab at russian mafia money in cyprus backfired, seems that most of the big russian money disappeared from the cypriot banking system during the bank holiday!?! of course, select branches open in very few select places. cypriot people lose, after the legislators rejected the notion of calling it a tax and taking people's money, they pulled an obamacare and simply took the money by some other means that wasnt calling it a tax, but the theft of cypriot's money is done nonetheless.

 

its disgusting that these sleight of hand mechanisms exist.

 

(and I've never thought the eu was a good idea, it was a setup for this just like the creation of the federal reserve and its "voting into law" leading to the inflating away of the not-rich's money.)

[eye_of_the_storm]

Banks, Mafia, Government... what is the difference?

[voidisyinyang]

http://www.youtube.com/watch?v=JYJPmXjZBmU&feature=youtu.be

 

Keynes is back.

[eye_of_the_storm]

Usury...

damn those money changers... 2013 years later...

[voidisyinyang]

 

The ultimate "money changing" documentary on Tax Free Havens and how they operate.

[joeblast]

Ultimately this issue is twofold:

 

On one hand, a favorable tax structure provides incentive for people to do business. Conversely a confiscatory tax structure discourages business and when bad enough, actually incentivizes businesses to seek other avenues for their revenue stream.

 

On the other, crony capitolism shapes the landscape via lobbying and buying politicians. The big business heads and government heads arent always in collusion - but when they are, loopholes get inserted into an otherwise confiscatory scheme - so you either have ins and "know how to play the game," or, you get penalized, sometimes at the cost of pretty much your entire bottom line, as we're seeing with Obamacare and all of the government burden placed on us in the last 15, 20 years. Of course it can go back much further than that.

 

 

This system is set up to help those who play the game and punish those who want to do things "properly."

 

 

 

If the US government (and let's not forget the local governments who also institute confiscatory tax schemes) really wanted businesses to thrive then they wouldnt be penalizing the bottom lines of all businesses and they'd shore up loopholes that allow companies like GE or Apple to get a tax refund bonus while paying a tenth of what they "should" be in taxes.

 

The problem with this video is it assumes that governments are free to charge whatever the hell they want to in taxes and the people (and businesses) should just cough it up - but really only those of a certain size (and lobbying strength) wind up making the cut to really get past the coefficient of friction of a confiscatory tax scheme, everyone else is penalized - including the poor, who probably get the most hit as usual because "its no longer worth it for Bob to collect a 1% profit on his widget factory."

 

 

Ergo, those who "obey the law" and "the little people" get screwed in such a setup.

 

 

 

Same with the offshoring of businesses - you think that's cheap to do?!? Not - it only winds up being cheap in the face of a punishing tax structure where all of the money spent offshoring actually winds up "saving" the company money - because the government has cut into their bottom line *that much* already. (Kinda like its been shown that money spent lobbying actually returns a huge percentage!)

 

 

These "tax havens" are not so much the issue as Governments Gone Wild™ - an ever expanding state winds up needing ever expanding resources, and ever expanding authority means carve-outs for the politically connected so that the state may "keep its finger on the pulse" of the nation's resources. Its the same with the states, businesses are running away from places like CA, NY, IL, CT, Detroit, because of the confiscatory tax rates - so then those localities turn around and offer large businesses "incentives" to come and do business there. People seem to forget that if the government wasnt in the midst of power bloodlust and needing more tax revenue like a crack junkie, if it worked within its means instead of dipping into people's pockets every time they hit their budget wall, they wouldnt have to contort themselves (and the law) so badly just to attract a business to their locale.

 

When bankers damn near own a government, we get things like the EU, the IMF, the tragic rolling takeover of the US government. Rule of law is spat upon, and we're told its our fault for some idiotic straw man reason.

[joeblast]

Great April fools day joke

 

http://charleshughsmith.blogspot.com/2013/03/bernanke-breaks-down-this-whole-thing.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+google%2FRzFQ+%28oftwominds%29

 

 

 

Our April Fool's wish: someone in the inner circle of power would finally tell the truth.

In an unprecedented abandonment of his carefully scripted responses to Congressional questions, Federal Reserve Chairman Ben Bernanke unleashed what appeared to be a heart-felt and spontaneous disavowal of the financial and political systems of the United States.

Asked a question about the wealth effect, Bernanke paused and said, "The wealth effect. Ah, right." He then smiled faintly and shook his head. "You want to know about the wealth effect? Well, I'll be candid with you. This whole thing is a kleptocracy--the financial system, the political system, it's one big kleptocracy. That's the real wealth effect."

Seeming to find his footing, Bernanke continued with a passion that startled the audience. "You know, I told myself to just repeat the party line for another year so I could step down quietly and let Yellen or another of the toadies take over, but I realized that I can no longer stomach the lies, the obfuscation and the plundering."

"Yes, I have a plum position lined up at Goldman Sachs after my retirement. You know, give a few speeches and pocket a couple of million dollars, but I am tired of the dirtiness of all this money."

Leaning into the microphone, Bernanke asked, "Aren't you tired of the dirtiness of all the money you take? Aren't you tired of the lies we're all living?"

"I am supposed to be an expert in economics. So I'll tell you how the system works in very simple terms. It's no different from the late Roman Empire, actually. The trick is to get close to the seat of Imperial power, which in our country is the Federal government. You bribe those on the make--there's always an abundance of them--to grant you special privileges, subsidies, contracts or a monopoly. You skim a great fortune off this proximity to political and financial power, and then you take this fortune and buy a rentier income--you know, thousands of rental homes, farmland, buildings in Manhattan, tax-free municipal bonds, and so on."


"This is how we ended up with cartels running everything: national defense, healthcare, higher education, the financial sector. You--the elected nobility--enable this vast skimming operation in the name of democracy and capitalism. But we all know those are facades. Democracy is a fraud at the national level, but we're all too cowardly to confess it."

Taking a sip of water, Bernanke said, "Let me tell you a little secret about all our policies based on Keynesian principles. Paul Krugman and I put on witch doctor masks and we dance around a campfire waving dead chickens and chanting nonsense. That's Keynesianism."

"It's hopelessly flawed, a disaster, for one simple reason: the Keynesians think all investment is productive, when the truth is most investment is unproductive and has to be written off. But that isn't allowed to happen any more, because those close to power would lose."

"As a result, everything we do and say here in Washington and in New York is a travesty of a mockery of a sham, an endless parade of lies, half-truths and spin. President Bush, in his own homespun way, spoke the truth when he said, 'This sucker's going down.' He meant the kleptocracy, the whole fraud we're living to enrich ourselves and keep power. I have had enough, ladies and gentleman, and this is my last public appearance as an employee of the Federal Reserve."

Fed officials explained the chairman's spontaneous comments as "the unfortunate result of a mix-up in the chairman's medication," triggering speculation that Mr. Bernanke had stopped taking Ibogaine. Sudden bursts of truth-telling are one side-effect of withdrawal, according to those familiar with the psychotropic medication.

According to sources within the Federal Reserve and Treasury, those supporting Janet Yellen as the new chair of the Fed are battling another faction who believe it would better serve the interests of the economy to install a high-frequency trading machine at the helm of the Fed. "There is a growing sense that it's time to cut out the middleman, so to speak, and just let the HFT computers openly trade the Fed's accounts," said one unnamed source.

Alas, April Fools. Sadly, no one in power has the courage to tell the truth.

 

[Vanir Thunder Dojo Tan]

http://www.salon.com/2013/03/25/defeating_useless_rich_people/

In two previous columns, I argued that left and right alike are confused by a failure to distinguish productive businesses that sell innovative goods and services from “rentier” interests — landlords, lenders, copyright holders and others — which use their natural or artificial monopoly power to extract excessive tolls, fees and other recurrent payments from the rest of society, including productive businesses. The fees or rents extracted by these interests constitute a kind of “private taxation” which — rather than public taxation — is the greatest threat facing America’s productive economy.

 

Today America’s powerful rentier interests, particularly those in the FIRE (finance, insurance and real estate) sector, are mobilizing campaign contributions and paid propaganda to promote what I called the Rentier Agenda: low taxes on those whose income is derived from capital gains; the privatization of public infrastructure and the deregulation of regulated private utilities, to generate windfall profits for investors in privatized or deregulated agencies; and a macroeconomic policy that serves the interests of creditors, at the expense of slow growth and mass unemployment, rather than productive businesses and workers. Similar observations have been made by many on the left and some mavericks on the right.

Edited April 1, 2013 by Northern Avid Judo Ant

[voidisyinyang]

Ultimately this issue is twofold:

 

On one hand, a favorable tax structure provides incentive for people to do business. Conversely a confiscatory tax structure discourages business and when bad enough, actually incentivizes businesses to seek other avenues for their revenue stream.

 

On the other, crony capitolism shapes the landscape via lobbying and buying politicians. The big business heads and government heads arent always in collusion - but when they are, loopholes get inserted into an otherwise confiscatory scheme - so you either have ins and "know how to play the game," or, you get penalized, sometimes at the cost of pretty much your entire bottom line, as we're seeing with Obamacare and all of the government burden placed on us in the last 15, 20 years. Of course it can go back much further than that.

 

 

 

This system is set up to help those who play the game and punish those who want to do things "properly."

 

 

 

If the US government (and let's not forget the local governments who also institute confiscatory tax schemes) really wanted businesses to thrive then they wouldnt be penalizing the bottom lines of all businesses and they'd shore up loopholes that allow companies like GE or Apple to get a tax refund bonus while paying a tenth of what they "should" be in taxes.

 

The problem with this video is it assumes that governments are free to charge whatever the hell they want to in taxes and the people (and businesses) should just cough it up - but really only those of a certain size (and lobbying strength) wind up making the cut to really get past the coefficient of friction of a confiscatory tax scheme, everyone else is penalized - including the poor, who probably get the most hit as usual because "its no longer worth it for Bob to collect a 1% profit on his widget factory."

 

 

Ergo, those who "obey the law" and "the little people" get screwed in such a setup.

 

 

 

Same with the offshoring of businesses - you think that's cheap to do?!? Not - it only winds up being cheap in the face of a punishing tax structure where all of the money spent offshoring actually winds up "saving" the company money - because the government has cut into their bottom line *that much* already. (Kinda like its been shown that money spent lobbying actually returns a huge percentage!)

 

 

These "tax havens" are not so much the issue as Governments Gone Wild™ - an ever expanding state winds up needing ever expanding resources, and ever expanding authority means carve-outs for the politically connected so that the state may "keep its finger on the pulse" of the nation's resources. Its the same with the states, businesses are running away from places like CA, NY, IL, CT, Detroit, because of the confiscatory tax rates - so then those localities turn around and offer large businesses "incentives" to come and do business there. People seem to forget that if the government wasnt in the midst of power bloodlust and needing more tax revenue like a crack junkie, if it worked within its means instead of dipping into people's pockets every time they hit their budget wall, they wouldnt have to contort themselves (and the law) so badly just to attract a business to their locale.

 

When bankers damn near own a government, we get things like the EU, the IMF, the tragic rolling takeover of the US government. Rule of law is spat upon, and we're told its our fault for some idiotic straw man reason.

 

Tax Havens are the tip of the iceberg.

 

"favorable business climate" means fascism.

 

Every corporation has to get permission to operate from the people through a charter and the charter can be revoked any time a corporation violates it charter.

 

So since the Civil War the judicial system has given corporations "legal personhood" so that the 14th amendment has applied more to corporations receiving "due process" rights and "free speech" rights, etc.

 

So much for democracy but the "founding fathers" were not really in favor of democracy which is why the constitution as the "commerce clause" which enables the U.S. government to over-ride any states that try to limit corporate power.

 

And so previously corporations were the "divine rights" of kings but this "divine right" is actually built into the property system of so-called free enterprise -- it is the freedom to loot and pillage and this is what you call a "favorable business environment."

 

That's a euphemism for genocide and ecocide.

 

So 51% of taxes go to the military.

 

Obamacare is a tax haven for the corporate "health scam" companies.

 

If there was real government healthcare it would be a single payer system.

 

So the government can not cut the military budget because the corporations have placed their manufacturing strategically in all 50 states so any closing of military contract operations is considered too much of a threat to the politicians to get re-elected.

 

But the fact is the military is the most inefficent means of job creation.

 

So a progressive tax system has been considered essential to democracy since the Greeks.

 

A "favorable business environment" means a regressive tax system.

 

Dude to claim that businesses with multi-billion profits are having their bottom line "cut into" by the government is totally bonkers.

 

The fact is in the 1950s Corporations paid a much larger share of tax revenue - -and that was under Eisenhower and the economy did fine.

 

The reason the economy tanked is because the U.s. Empire over-extended itself with the IndoChina GENOCIDE that was great profit for the military corporate welfare machines.

 

The real reason taxes are high is to fund the imperial genocide.

 

But this is just as World War II was needed to end the depression.

 

The West as a "civilization" relies on warfare as economic growth. It's all a big scam.

 

Even Greek democracy with a progressive tax system could only survive based on imperialism.

 

You want to take about "productive business" in the U.S.? C'mon it's a genocide culture!

 

 

Between 1820 and 1860 more than a million enslaved people were transported from the upper to the lower South, the vast majority by the venture-capitalist slave traders the slaves called “soul drivers.”

 

and

 

 

It is not simply that the labor of enslaved people underwrote 19th-century capitalism. Enslaved people were the capital: four million people worth at least $3 billion in 1860, which was more than all the capital invested in railroads and factories in the United States combined. Seen in this light, the conventional distinction between slavery and capitalism fades into meaninglessness.

 

Capitalism equals slavery. http://opinionator.blogs.nytimes.com/2013/03/30/king-cottons-long-shadow/?ref=todayspaper

 

No wonder there are more slaves on Earth than ever before -- I think it's 28 million slaves.

 

 

corporate prices are just undemocratic taxes! So when people pay "low" prices for food and clothing -- guess what -- that's because the people pay high taxes to bailout the corporations! So corporate welfare means a corporate-state elitism that promotes low quality food and slave-wages - just so the consumer is fooled by "low" prices which really means high taxes!

 

So the tax havens are "lending" money to governments to fund the bailouts which would not have happened if governments were actually taxing corporations!

 

So corporations have not increased minimum wage since the Indochina genocide and so the workers are forced to go into debt and then to rely on government welfare even though the corporations get even more welfare!!

 

So corporations pay slave-wages and then the corporations get government welfare!

 

Meanwhile the workers have to go into debt just to survive while the corporate elite are billionaires.

 

And so what happens? The governments go into further debt to the corporations!

 

That's fascism. Military genocide slave labor fascism.

 

 

A new tally puts the combined cost of the Iraq and Afghanistan wars at between $4 to $6 trillion — the most expensive conflict in U.S. history. The figure from Harvard University’s Linda Bilmes updates a previous study estimating a cost of $3 trillion. The study concludes the bulk of the wars’ cost has yet to be paid off, meaning their legacy "will dominate future federal budgets for decades to come."

 

http://www.democracynow.org/2013/4/1/headlines#4114

 

What do you mean a "tenth" of what GE or Apple should be paying? More like a "thirtieth" of what they should be paying - three times more. http://rdwolff.com/content/corporations-government-give-us-more-tax-us-less

Corporations to Government: Give Us More, Tax Us Less

 

General Electric (GE) deserves special mention. TheNew York Times reported that its total tax payment amounted to 14.3% over the last five years.⁴ Citizens for Tax Justice promptly corrected it: the profits tax it paid in the US, (as opposed to its worldwide taxes on its worldwide profits), is only 3.4%.⁵ Thus, GE paid a far lower tax rate on its income than most Americans paid on theirs. In 2009, GE received a huge $140 billion bailout guarantee of its debt from Washington.⁶ By choosing GE's chief executive, Jeffrey R. Immelt, to head his Economic Advisory Panel, President Obama effectively rewarded the corporate program: give us more and tax us less.

 

 

Is the massive shift of the tax burden from corporations to individuals a statistical mirage?

http://rdwolff.com/content/massive-shift-tax-burden-corporations-individuals-statistical-mirage

 

Are corporations unfairly double taxed?

http://rdwolff.com/content/are-corporations-unfairly-double-taxed

 

 

That is simply because, the richest Americans earn the largest portion of their income from sources other than wages and salaries – such as interest, rents, dividends, and capital gains. Incomes from such other sources do not have to pay social security or Medicare taxes. Since Washington’s social security and Medicare tax receipts are now as large or larger than its individual income tax receipts, any honest assessment of what the richest Americans pay cannot exclude counting social security and Medicare taxes paid disproportionately by the bottom 99% - just what most of the right-wing analyses routinely do.

 

http://rdwolff.com/content/who-really-pays-taxes

Who REALLY Pays Taxes?

 

During the Great Depression federal income tax receipts from individuals and corporations were roughly equal. During World War Two, income tax receipts from corporations were 50 % greater than from individuals....By the 1980s, individual income taxes regularly yielded four times more than taxes on corporations' profits.

Edited April 2, 2013 by pythagoreanfulllotus

[Birch]

I keep getting reminded of Madison. To paraphrase (badly maul:-)) his quote about government. It's just a way of underwriting power relationships.

 

 

[joeblast]

Tax Havens are the tip of the iceberg.

 

"favorable business climate" means fascism. you're not going to get around the fact that whatever "expenses" there are for a given locality, that is priced into the product they sell. the locality that doesnt try to herd its citizens as if they were sheep and corral them into doing what the current controllers of the locality want doesnt have to raise anywhere near the same revenue (fees for an entity to do business, fees for a person to...occupy.own a property) as burden on both companies and individuals. you're going to have to do better than to make a simple equivalence with nothing to back it up - that some mechanisms were captured and perverted in our current environment does not negate any of the points I am making.

 

Every corporation has to get permission to operate from the people through a charter and the charter can be revoked any time a corporation violates it charter. let's call a spade a spade here - they need to obtain permission from the local regulatory agencies, not "the people."

 

So since the Civil War the judicial system has given corporations "legal personhood" so that the 14th amendment has applied more to corporations receiving "due process" rights and "free speech" rights, etc.

 

So much for democracy but the "founding fathers" were not really in favor of democracy which is why the constitution as the "commerce clause" which enables the U.S. government to over-ride any states that try to limit corporate power. ascribing bastardizations of the commerce clause as intentional in the design by the framers? bull. that's the result of money and politics, not any sort of reflection on framers intent.

 

And so previously corporations were the "divine rights" of kings but this "divine right" is actually built into the property system of so-called free enterprise -- it is the freedom to loot and pillage and this is what you call a "favorable business environment." if you want to talk about how to get rid of the bastardizations, that would at least be constructive. the simple fact that the more a local government tries to do is proportional to the amount of overhead they extract from businesses and individuals, and said proportions substantially affect whether or not a business is profitable enough for the owners to continue or enter with a given business model. now if you want to start talking about how politicians are bought off in order to enable the pillaging, by all means, you'd best be pointing the finger at the corrupt politicians as well, because you know as well as I do that if the politicians did not allow themselves to be bought in the first place than many of your gripes would be nonexistent, whereas just about everything I'm saying here still stands.

 

That's a euphemism for genocide and ecocide. that's a biiiig extrapolation.

 

So 51% of taxes go to the military. whether that's correct or not, we spend booku billions too many

 

Obamacare is a tax haven for the corporate "health scam" companies. never meant to bring down costs or get everyone covered, this is another step towards fascism - and it wasnt even "passed" like other laws to boot. scam, scam, scam.

 

If there was real government healthcare it would be a single payer system. but then again, if we're going to let the federal government define its own bounds....wait, we're seeing the results of that. simply put the federal government has no authority for obamacare or a single payer system. social security is unconstitutional also, but hey, who's counting or going by what's in the constitution?

 

So the government can not cut the military budget because the corporations have placed their manufacturing strategically in all 50 states so any closing of military contract operations is considered too much of a threat to the politicians to get re-elected. who was it juncker over in europe that said when it gets serious, you have to lie?

 

But the fact is the military is the most inefficent means of job creation. yes, yet another government malinvestment

 

So a progressive tax system has been considered essential to democracy since the Greeks.

 

A "favorable business environment" means a regressive tax system. not necessarily, but often times that is a byproduct in whatever form it manifests.

 

Dude to claim that businesses with multi-billion profits are having their bottom line "cut into" by the government is totally bonkers. I wasnt meaning big corporations. I mainly meant small businesses there. what happens when your business you own that only has a 2, maybe 3% profit margin all of a sudden has all kinds of government induced distortions to deal with? small businesses like that arent typically the rent seeking tax evading money schemes huge monopolistic ones are. ya know, the ones that "will do a locality a favor by bringing their business there....provided you give us some huge tax breaks and wave fees, etc." instead if how it truly should be, the business having the privilege of being able to go somewhere to operate and make money.

 

The fact is in the 1950s Corporations paid a much larger share of tax revenue - -and that was under Eisenhower and the economy did fine.

 

The reason the economy tanked is because the U.s. Empire over-extended itself with the IndoChina GENOCIDE that was great profit for the military corporate welfare machines.

 

The real reason taxes are high is to fund the imperial genocide.

 

But this is just as World War II was needed to end the depression.

 

The West as a "civilization" relies on warfare as economic growth. It's all a big scam.

 

Even Greek democracy with a progressive tax system could only survive based on imperialism.

 

You want to take about "productive business" in the U.S.? C'mon it's a genocide culture!

 

 

 

and

 

 

 

Capitalism equals slavery. http://opinionator.blogs.nytimes.com/2013/03/30/king-cottons-long-shadow/?ref=todayspaper

 

No wonder there are more slaves on Earth than ever before -- I think it's 28 million slaves.

 

 

corporate prices are just undemocratic taxes! So when people pay "low" prices for food and clothing -- guess what -- that's because the people pay high taxes to bailout the corporations! So corporate welfare means a corporate-state elitism that promotes low quality food and slave-wages - just so the consumer is fooled by "low" prices which really means high taxes! departures from capitalism can't be used as an indictment of capitalism, just doesnt work. that's as bad as using a word to define itself.

 

So the tax havens are "lending" money to governments to fund the bailouts which would not have happened if governments were actually taxing corporations! yeah, government tilts the playing field...outcome? stuff gets screwed up. instance #2093409834098091 on this earth.

 

So corporations have not increased minimum wage since the Indochina genocide and so the workers are forced to go into debt and then to rely on government welfare even though the corporations get even more welfare!! it keeps going back to the government every single time. enabling, aiding, abetting large corporations.

 

So corporations pay slave-wages and then the corporations get government welfare! nifty setup for those who have captured the system, eh?

 

Meanwhile the workers have to go into debt just to survive while the corporate elite are billionaires.

 

And so what happens? The governments go into further debt to the corporations!

 

That's fascism. Military genocide slave labor fascism. and that's how we walk from a republic to a democracy to a fascist state.

 

 

 

http://www.democracynow.org/2013/4/1/headlines#4114

 

What do you mean a "tenth" of what GE or Apple should be paying? More like a "thirtieth" of what they should be paying - three times more. http://rdwolff.com/content/corporations-government-give-us-more-tax-us-less

Corporations to Government: Give Us More, Tax Us Less

 

yeah, I knew tenth was probably pretty small, but I just tossed it out off the top of my head.

 

Is the massive shift of the tax burden from corporations to individuals a statistical mirage?

http://rdwolff.com/content/massive-shift-tax-burden-corporations-individuals-statistical-mirage

 

Are corporations unfairly double taxed?

http://rdwolff.com/content/are-corporations-unfairly-double-taxed

 

 

 

http://rdwolff.com/content/who-really-pays-taxes

Who REALLY Pays Taxes?

your gripes are legitimate, but they of course will only be rectified by a return to the rule of law, prosecuting the fraud, etc. so long as the progressives think more government control will fix all this, so long as conservatives ignore their libertarian roots and keep electing already bought politicians, we're going to continue to be stuck with this garbage.

 

or will we?

 

 

I'm sure as soon as the government sees this achilles heel to their monopoly on money, they will do everything in their power to make something like bitcoin illegal as they possibly can.