More musings from Murph

Let’s Take a Look at the Money

I have been spending more and more time reading the economic sites referred to on LATOC and at other sites on the web. Hopefully, in an attempt to understand what is happening to this country financially, and this insane system we are trying to operate under. I am coming to the opinion that it is like a lot of the systems in our society - it has been deliberately made so complex and intertwined that even the experts don’t grasp the full ramifications of what is happening, much less being able to project accurately even a few months down the road. One example of this complexity is the official figures for unemployment. As I mentioned in a few post back, from what I have read, the actual unemployment is around 10% and not the under 5% of official figures. With the housing market going down the tubes, it is going to increase a whole bunch more too. In actuality, it appears that official unemployment figures are only composed of the number of people collecting unemployment insurance and those that have applied. One of the ways they can keep the figures from rising too much is making everything so complex that it takes an expert to do anything at all about it. That keeps a whole bunch of people employed. For many aspects of our society, as an example, it is mandatory that you hire an attorney for a variety of reasons. If we took all the tax attorneys and tax accountants and threw them out of work because the relevant codes were made very simple, the unemployment rate would bloom big time. Can’t have that now can we? Let’s keep employment higher by only having mostly less skilled or less educated people not working. Besides, it would take away the incentive to hire more high-powered lawyers to squelch law suits and find loopholes so the wealthy don’t have to pay taxes and be responsible for their actions in the market place. Not coincidentally, who makes the rules? Lawyers! Nope, it is going to get worse until these elites have absolute total control, then they won’t have to justify legally their theft, they can just say ‘get used to it’. So far, Bush and crew have done a monumental job progressing toward this very goal.

In this mixture of opposing views and analysis of economics (depending on who is spouting off today) several general principles seem to stand forth: 1. The higher the liquidity in the society (how much cash is available for use), the higher the rate of inflation (increasing relative cost of stuff, or the less your money will buy). (In terms of 1940 dollars, you dollar will buy 4 cents now). 2. Historically, any nation that engages in increasing the liquidity of the money supply in the society will self-destruct the economic system and create chaos within the society, eventually and without fail. 3. Every government that has tried to spend its way to prosperity fails eventually. 4. Every government believes that it has found the secret to avoid this (but it never has worked). In all cases every time, it is the general population that pays the price for this folly. It sure isn’t going to be the top financial people of the world. They have their private estates and islands they can snuggle down in and wait out the caused chaos.

In almost all the countries of the world, this increasing of the liquidity of the markets is taking place with a vengeance. This is especially noticeable in America. The Federal Reserve is printing money at an alarming rate to allow the government to have money to pursue its goals (like Iraq). They do this by exchanging this newly printed money for government bonds and securities (which of course have a rate of return on them). So, in effect, the government is borrowing money from a private entity (the Federal Reserve) that prints the money with nothing of tangible value behind it and charges the U.S. government interest on it. In actuality, it has no value beyond the paper it is printed on, and this makes money for the people running the whole scam. In turn, we pay the interest on this paper money by taxes and inflation, of course using this paper money that has no value other than what the government says it has. So those that can accumulate money faster than the taxes and inflation take it away, make out like literal bandits. But, that is just the beginning.

This increased debt liquidity is being poured into all kinds of newly created financial entities, like bundled bogus mortgage packages and hedge funds and smoke and mirrors devices. Huge amounts of American workers’ mutual funds have been poured into the big gambling hall racket on Wall Street. In this scam, the truly rich are getting richer by making sure that wealth is being transferred to them through market manipulation. If the workers’ pension funds get lost in the process, who gives a rat’s ass? The Plunge Protection Team is there to save the rich not the middle class or the poor. According to what I read, the banks, mortgage companies, and the big players in the markets are so over extended with leveraged debt that it won’t take much of a cage rattling to bring the whole kit and caboodle down. Who gets hurt if that happens? All the people with the Ira’s, the 401K accounts, and the poor suckers that have their life savings into the markets. The really big boys in finance won’t get cut bad enough to notice.

They will do whatever it takes, even if it means increasing the heroin trade to prop up the banks and stock markets. If you haven’t been keeping up with what is happening in Afghanistan lately; since we kicked out the Taliban and are effectively running the country, the drug trade has exceeded what it was before the Taliban. The Taliban dropped the growing and harvesting and processing of the hard narcotics to 5% of what it was before. Who says the Muslims are stupid? They knew perfectly well that Allah wouldn’t approve and banned the growing and processing of the stuff. Talk about an effective war on drugs! But our good Christian Judea-praise-the-lord-government can’t do that. Instead, since we took over, the growers and processors of opium are going full blast. Where are these billions of dollars going? Spell stock markets through laundered drug money through American owned banking systems, (of course our country isn’t the only one doing so). So in effect, the drug markets are being supported essentially by the U.S. and British governments. Is your bullshit antenna quivering yet?

Of course we have the war on drugs to oppose this, right? Wrong again. Since we have privatized the prison system making it a bottom line business, you can’t make money without having the beds filled and cells stuffed. So who is being used for the stuffing and filling? Oh my goodness, 30% of the Afro American male population in this country is either incarcerated or has been incarcerated to make money for the privatized prison system. This was accomplished by introducing hard drugs in huge amounts into the black urban areas where they were embraced (of course), with passion, as a means of making money in an otherwise hopeless economic situation. It also provided an easy way to numb a hopeless social situation, and this despite the heavily promoted few that made it out without drug addiction. We make drugs illegal (unless you’re a big pharma outfit) then distribute drugs to those parts of society least able to say ‘no’. It is a win-win situation for the capitalistic way, don’t ya think? I am sure you all have read the statistics that the good old US of A has a higher prison population than the combination of the other top five industrial countries in the world. Most of this population is from minor drug offenses. By the way, the Democrats, for years, have been sitting on their hands regarding this one. It reminds me much of how our medical system works. You first create a medical situation where a large amount of the population needs treatment; then you create the treatment at exaggerated cost and you never do address why or how the medical situation came about in the first place. Same old bullshit in a different package.

Economically, the only positive information I find circulating around is put out by the government itself or assorted chambers of commerce. It centers on what I have mentioned before: low unemployment, booming stock market. Neither of which is true and the figures have to be heavily doctored to get people to accept the statements. The very few (but increasingly larger group) that is trying to put out accurate information on the internet (seemingly the only mass media that consistently publishes this information) are starting to gain some traction. It further appears that this year has a high probability of being the year where it all ends economically. But then again, this has been predicted since the late 70’s and it hasn’t yet all come crashing down, which gives substance to the supporters of this insane system more leverage. “Wolf” has been cried too many times and it didn’t happen. But it sure looks like we are on the edge of the cliff again. While the country is being looted of every single tangible asset and a consistent increase in the poor or marginally poor is taking place, we are being bombarded with “how good it is” and, “some sacrifices are going to have to take place” propaganda. Meanwhile, the neocon supporters, wealthy and poor alike, keep screaming their invectives at those warning of doom.

I think I am going to do another post on this subject, taking a historical and analytical look at what happens when a country loses its currency. But for the time being, amid all the confusion and technical talk buzzing around at economic sites, try and understand what they are saying and what it means to us personally and the country at large. One of the more entertaining and interesting writers on the economy is Mogambo Guru with a new post every Wed at:

http://www.independencejournal.com/mogu/

I haven’t found a way to access his back issues yet, have to keep up with him on a weekly basis. (I would surely plagiarize his style of writing if I thought I could get away with it)

Follow the money if you can. Just doing that is a full time proposition with the incredible intertwining and complex system around money and who handles it.