The Pentagong Show

The Pentagong Show
United State of Terror: Is Drone War Fair?

Monday, December 24, 2012

John Law Shredded = Coal's Law


The reason I'm so adamant about the rot being deeper than the prosecution of a few financial criminals and greedy bankers is going to solve, is illustrated, I believe, by the assertion in the washingtonsblog.com that, "The Lie that Prosecuting Bank Fraud Will Destabilize the Economy Is What Is REALLY Destroying the Economy". This belief is belied by the 'punchbowl' metaphor I mentioned in my previous post, namely, that of the Greenspan's FED that taking the punchbowl away will dampen the spirit of Irrational Exuberance.


This guiding motto was enunciated in 1970 by William McChesney Martin who was chairman of the Federal Reserve Board during his lengthy 19-year tenure from 1951 to 1970, who stated that it was his job to shut down any wild and irresponsible “party” involving money before it could start.  He was going to take the punch bowl away before people started profligately spending money and negligently loaning money.

This is diametrically opposed to the public stance of the current FED board and the ECB, whose stated policy is do exactly the opposite. Their current belief, given what the Global Economy has morphed into, is that the only wind in the sails of the current ships of state are the one blowing bubbles of speculation up our collective assets.

Which isn't all to say that prosecuting criminals is a job that should be shirked, but just that I can't help but wonder whether restoring confidence in a system that is a confidence game isn't in fact doing a disservice to the very people that it's claiming to serve. The economic system and the products, services and necessities it brings to people's lives, providing them with a steady livelihood and a degree of stability, should not be left to those who consider it to be just one big party put on for their own benefit.  Should the underlying edifice on which that system is built, the dollar and its exalted status as the  world's reserve currency, really be thought of as an intoxicating drug, the access and control of which is in the hands of an anointed few who have the audacity to laugh in our face as they puke on our shoes?

The reason that "the central bank has not been immune from suspicion and lack of respect" is that, while claiming that "Our country can not enjoy the long-run "maximum employment and stable prices" if the financial system is unstable", and that the "central mission of the Federal Reserve, to maintain financial stability and reduce and contain systemic risks", it maintains the punchbowl in fully spiked mode, via ZIRP, all the while knowing that, in its own words, "lower interest rates will unleash inflationary forces, inflicting severe damage on our economy", and that the resulting "inflation destroys jobs".
 

For, as Greenspan says, "at root, money--serving as a store of value and medium of exchange--is the lubricant that enables a society to organize itself to achieve economic progress. The ability to store the fruits of one's labor for future consumption is necessary for the accumulation of capital, the spread of technological advances and, as a consequence, rising standards of living."

So, by derstroying the value of that dollar, by purposely inflating its numbers, thereby deflating its value, the FED brings the analogy of monetary policy to the world's energy policy, both of which are inflicting undeniable damage to future living standards in order to uphold the illusion of present prosperity. Because, just as burning larger and accelerating quantities of coal poison's tomorrow to enjoy today, using John Law dynamics to stimulate an economic structure that will otherwise collapse into chaos and World War similarly enshrouds the globe in an obfuscating miasma of toxic fumes that is used for the sole purpose of hiding the fact that it is their own policies that have brought us to this impasse.

Instead, the FED keeps the bowl spiked, its speculative acolytes drunk and reeling, so that when the consequences of this poisonous policy occur, a smokescreen is already there for them to hide behind, and once again, using the well-tested cry of plausible deniability, claim that no one could have seen it coming.  Neglecting to mention that the reason for that is because smoke gets in your eyes, and they are the main source of that smoke.

My contention that this is deliberate, is based on quotes, such as that cited above, that "money--serving as a store of value". That value, being derived by the labor and productive installed manufacturing base of the underlying economy, is stored energy. Money is a sort of battery that a laboring public uses in order to, not only use as an exchange medium, which is more analogous to a capacitor, but to, via savings, store the energy output of its useful years into a battery that it can draw down when its unable to use its carbohydrate-fueled labor any longer, ie, when it ages.

And its that very nature of money as a store of energy that is being surreptitiously dissipated via the policies of the very institution whose stated purpose is to maintain it. That is fraud, and criminality as stated in the beginning sentencce of this post, but, given the statement and policies of the very persons in charge of it, one that it is unable, by its very nature and structure, to provide.

The only way to change this dynamic is to confront it, but by harping on the necessity to prosecute those responsible and bring them to justice, we actually aid and abet the chicanery because we create the false impression that if only we could rid the system of these lawless elements, confidence will be restored and all will once again function fine.

But that is not the case.  It is the same as saying that if only we can fine the Corporations who burn coal, and institute carbon credits, install scrubbers, and initiate carbon sequestration, the issue of Climate Change will be addressed, and everything's hunky-dory. Great, all-fixed, let's all go for a drive in our electric-powered vehicles. 

But what is actually expressed by that attitude is one of hopelessness  and despair. Both attitudes admit something different then what they pretend. They assume, and want us all to agree in that assumption, that this is the best we can do, this is all we can hope to accomplish. And perhaps that is really the case. But the fact that any other suggestions are quashed, any real meaningful dialog on the future prospects of humanity, other than one in which we're all skewered on a spit and left turning in the gyre, are denied, I remain profoundly suspicious that this is the only route to take ... and you should be too. 















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