The Pentagong Show

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

Tuesday, December 31, 2013

Oh Money Tree, Oh Money Tree, how well-Fed are Bank Branches.

 Driving to Extinction.

 An intensely speculative equities market can look to another 10 months and, presumably, another $500bn of QE:

"The powers of financial capitalism had (a) far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland; a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank... sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world." - Carroll Quigley, member of the Council on Foreign Relations
With the largest prison population and incarceration rate in the World, the US is facing severe overcrowding and more spending on prisons than education. 

The 1970s were framed by two “oil shocks”: the OPEC embargo of 1973 and the U.S. boycott of Iranian oil after the mullahs swept to power in 1979. During the decade, the price of a barrel of oil rose from $3 to $31. Productivity, which had been rising at nearly a 3 percent annual clip in the postwar decades, slowed to a 1 percent yearly increase during the 1970s. Europe and Japan had recovered from the devastation of World War II, and Japanese imports, chiefly autos, doubled during the late ’60s. In 1971, the U.S. experienced its first trade deficit since the late 1800s. Starting in 1976, it has run a trade deficit every year. 

Yet note that there is no such talk of a George Bush "Oil Shock" even though the same phenomenon - a 10-fold increase in the price of oil - shocked  the global economy so intensely it has yet to, nor will it ever,  recover.

 The key point is that both the belief that the metal was sitting there and the belief that the metal was no longer sitting there gave stability and yet took stability away. Fiat money is thereby irrelevant when trust in the money is altered or destroyed. Finally, fiat money has very little intrinsic worth and cost of producing it is very low relative to its face value.

That last is a truly interesting statement when one considers the value of zinc in a nickel. The cost of producing a nickel in coin far exceeds the cost of producing a one hundred dollar bill such that one must wonder how many of the 2000 nickels represented by the hundred dollar bill would be enough to cover the cost of mining and minting, transporting and accounting for one of the nickels that the paper C-note supposedly represents. However the monetary aggregate is so huge compared to the percentage that is actually represented by any physical entity, paper or metal, that the cost of seigniorage is paid for by the Treasury, ie. the US taxpayer, (not the banks).

Also paid for by the US  taxpayer is the new method of alleviating the necessity of shipping pallet-loads of dollar bills around the globe, such as the GW Bush regime did, in order to, like any criminal enterprise, reward those it held in favor without any accountability to the US taxpayer who was paying for those pallet-loads of disappearing billions. Instead, using the Internet, also a technology developed and paid for by the US taxpayer, for which they received no return on investment, Corporations used it to enable the easy transfer of funds and jobs to other countries. This technology was given away to the rest of the world, much of it Communistic in nature, for at the same time that we were intent on destroying the USSR and bringing its economy to its knees, we moved to 'open' China to Western Investment, as their fearless leaders were far more pliant, and more willing to enslave its own people to meet, not the necessities of the US public, but merely its most fanciful whims.

But what this cynical method of disencumbering sovereign Nations of their sovereignty does, is it leaves no one to govern Corporations, as the collapsing buildings in Bangladesh so vividly demonstrated, and yet whose message we completely ignore, as though it were a Phantom. It means that there is no way to halt the decline in wages that is happening all over the globe, but mostly in the demand-driven economies of the OECD, whose energy paradigm falls apart when energy prices for transport increase 10-fold. Whether it is hidden by government subsidies or the now-accepted practice of deceptive accounting methods, the absorption of an increase of cost of doing business of this magnitude does not occur without severe dislocations in all kinds of previously contracted business arrangements. The fact that businesses have moved production to, "where wages are very low and the pressure to work faster and cheaper has spawned familiar problems: unsafe buildings, substandard work conditions and repeated wage and labor violations. Consumers know little about these factories, even as global brands promise that their clothes are made in safe environments" for example, was done under a cheap transportation paradigm that is now proving untenable. Yet the fact that Corporations have moved such factories out of the market where its customers exist means that the normal feedback mechanisms of normal Classical Economics are no longer functioning as they should, because they were purposely severed. 

Even as economists, such as Krugman and Summers wring their hands over Keynesian dysfunctionality, they fail to notice that the reason for that is that the dollar is now designed to serve not its own economy, but those of other countries, being, as it is, the reserve currency of the world. So just as the first Action that the first Bush Presidency took, declaring a "Peace Dividend" and closing hundreds of bases in the US, wrecking local economies, when his son then reopened them, but located in other countries, the economic boon moved to that local economy and failed to turn that deficit spending, of which all military spending is, it being stimulative in nature, and almost always made for exactly that reason with a mere veneer of justification using the usual phrases as 'military preparedness', 'updating technology', and 'fighting Communism', that last never more so than now as our entire nuclear facility is necessitated on the threat from one country only, Russia, the nation that has been decommissioning its nuclear arsenal and selling the uranium for a nuclear power of a more electrifying sort, into a stimulative boost to our own economy.

And this is the template upon which the US economic system is run. Most of the deficit spending that occurs doesn't stay in the National economy even though it is this Nation's taxpayers from which that deficit spending is wrought, even as its stimulative effect goes to other Nations' citizens.  When the US was a mighty center of manufacturing, the logic behind such an arrangement was that by stimulating other countries' economies, enriching their citizens, they will become customers for our goods, in turn setting our factories humming to supply Their needs. But the US has had a trade deficit for decades now, and exported its factories to other lands, so deficit spending has instead turned into a constant drain, because, somehow, people don't want to import other countries' nationals simply to do their nails. Well, that's not completely true, but no one wishes them to be uppity, demanding US citizens, who actually expect, not only pay, but a porcelain toilet! Can you imagine? Who'd bother when compliant kowtowing Asians can be had for practically nothing, and are happy to shit squatting over a stinking, fly-infested hole in the ground?

As the 100'th Anniversary of the start of WW1 looms ahead, we have the same disconnect now as they did then as to how the very heart of our society, its political economy, functions. Even, maybe especially, since they'd have to unlearn that which they know, those who lobbied, bribed, and wrote the legislation for the changes that wrested labor's power from it using all the tools that a constantly flowing energy supply and a government sponsored internet and complete computerization of the economy has put at its disposal, have no idea how it will respond to changing circumstances. Because by destroying what was in order to create a never-ending flow of funds to the already rich and infamous, what's been wrought is not what ever has been, so all that we knew is now obsolete. Like a tradesman such as a letter-setter on a printing press, once the modernization of your skill has been  effected, all your hard-earned knowledge and skill is obsolete, that is what the World's Financiers have, unwittingly, done to themselves. Because the infrastructure they think they know how to contain and tweak, and cause to work they way THEY want it to work, to promote their own self interest over and above the very country in which they reside, has been so successful that the day of Warring Corporations, or Corporations, having monopolized the means of production, refusing to meet the needs of one set of a pair of Warring Nations, having become unanswerable to anyone, is upon us. This is easily imagined once one realizes that, for example, the enormous percentage of REE's (rare earth elements) that are controlled by one country. And one thing that hasn't changed since man first learned how to wield power over his fellow man, is that absolute power rules absolutely, and arbitrarily. Gone is justice, gone is equality, and fraternity is simply weakness.

A World has ended and another one waits to be born. Many think they know the shape it will take, others still mourn what is already gone, thereby ignoring the needs of the newborn while it is instead nurtured by those who wish them, and perhaps it, harm. It is time to stop grieving and move on. To what, we know not; but first, we have to admit that what was can not be, not because it is right or wrong, right or left Liberal or Conservative, but because it is dead.

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