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« Did Paulson & Bernanke Lie About Why Lehman Was Allowed To Fail | Main | Video: Dylan Ratigan On Corporate Communism: "$24 Trillion Of National Capital Is Being Sucked Into A Broken Banking System At Our Expense" »
Wednesday
Oct072009

Guest Post From MSNBC's Dylan Ratigan: Corporate Communists Control (Own) The Economic & Political Structure Of America

Submitted by Dylan Ratigan

---

The Cost Of Corporate Communism

Lately I have been using the phrase "Corporate Communism" on my television show. I think it is an especially fitting term when discussing the current landscape in both our banking and health care systems.

As Americans, I believe we reject communism because it historically has allowed a tiny group of people to consolidate complete control over national resources (including people), in the process stifling competition, freedom and choice. It leaves its citizens stagnating under the perpetual broken systems with no natural motivation to innovate, improve services or reduce costs.

Lack of choice, lazy, unresponsive customer service, a culture of exploitation and a small powerbase formed by cronyism and nepotism are the hallmarks of a communist system that steals from its citizenry and a major reason why America spent half a century fighting a Cold War with the U.S.S.R.

And yet today we find ourselves as a country in two distinctly different categories: those who are forced to compete tooth and nail each day to provide value to society in return for income for ourselves and our families and those who would instead use our lawmaking apparatus to help themselves to our tax money and/or to protect themselves from true competition.

If you allow weak, outdated players to take control of the government and change the rules so they are protected from the natural competition and reward systems that have created so many innovations in our country, you not only steal from the citizens on behalf of the least worthy but you also doom them by trapping the capital that would be used to generate new innovation and, most tangibly in our current situation, jobs.

We are losing the opportunity cost of all the great ideas that should be coming from the proper deployment of that 23.7 trillion in capital. Everything from innovation in medical delivery systems to accessible space travel, free energy to the driverless car; all of these things may never come to bear because those powerful individuals who have failed, been passed over by technological advancements, innovation and flat-out smarts, have commandeered our government to unfairly sustain their wealth and power.

Unfortunately, they use our wealth and laws not only to benefit their outdated, failed companies, but also spend a small pittance of their ill-gotten gains lobbying and favor-trading with politicians so the government will continue to protect them from competition and their well-deserved failure.

The massive spike in unemployment, the utter destruction of retirement wealth, the collapse in the value of our homes, the worst recession since the Great Depression have all resulted directly from the abdication of proper government.

Even with all that -- the only changes that have been made, have been made to prop up and hide the massive flaws on behalf of those who perpetuated them. Still utterly nothing has been done to disclose the flaws in this system, improve it or rebuild it. Only true rules-based capitalism ensures constant adaptation and implementation of the latest and best practices for a given business, as those businesses that don't adapt fail, and those who deploy the latest innovations to their customers benefit, prosper.

The concept of communism is rightly reviled in this country for the simple reason that it is blind to human nature, allowing a small group of individuals near-total control, while sticking everyone else with the same crappy systems -- and the bill. America spent countless lives and half a century fighting against this system of government. So why are we standing for it now?

 

PLEASE See The Accompanying Video from Dylan Ratigan Here...

"$24 Trillion Of National Capital Is Being Sucked Into A Failed Banking System"

 

 

 


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Reader Comments (79)

Thanks to Dylan's great staff for the all the cooperation.
Oct 7, 2009 at 4:20 PM | Registered CommenterDailyBail
"Thanks to Dylan's great staff for the all the cooperation. "

Ditto that. x10.
Oct 7, 2009 at 4:37 PM | Unregistered CommenterJames H
Dylan,

I'm with you Brother. Run for Congress. Raise holy Hell!! I'll help in your campaign any way I can.
Oct 7, 2009 at 6:06 PM | Unregistered CommenterBG
Could be big news...I will cover this when I return from dinner...

http://blogs.wsj.com/economics/2009/10/07/ron-paul-calls-for-delay-in-bernanke-confirmation/
Oct 7, 2009 at 6:31 PM | Registered CommenterDailyBail
This Friday, NASA is going to fire a "missile" (empty fuel tank) into the surface of the moon to find out if there is water or, more likely, ice, reports CBS station WBZ-TV.

The cost? $79 million. NASA is a government agency, which means this is your tax dollars at work.

Do you like how the agency's spending them?

Gobias says...if only we knew the real reason behind the "mission".
Oct 7, 2009 at 8:19 PM | Unregistered Commentergobias
"So why are we standing for it now?" Yeah! And why the F are they giving the title "czar" to every goddamn person that walks up to the White House.


"Americans of 1900 never referred to one of their own as a “czar” because they understood the term. Because they generally embraced liberty and limited government, they knew that it was pejorative. No respectable American of that day would have accepted the title, and no job at any level of government at that time even pretended to bestow czarist-like authority. Americans of today haven’t forgotten what the term means. Sadly, they simply put far more faith in powerful, centralized government than did their ancestors."

-Lawrence Reed, No More Czars Please, http://fee.org/pdf/the-freeman/1004Nomoreczarsplease.pdf


@ Gobias

I thought that was story from The Onion when I first saw it. What a joke. Add that to the list of make-work projects....
Oct 7, 2009 at 11:27 PM | Unregistered Commenterallie
Oct 8, 2009 at 8:41 AM | Registered CommenterDailyBail
Statewide, more than 300 hotels were in foreclosure or default on their loans as of Sept. 30 -- a nearly fivefold increase since the start of the year, according to an industry report released Tuesday.
http://www.latimes.com/business/la-fi-hotels-foreclosure7-2009oct07,0,744154.story
Oct 8, 2009 at 8:42 AM | Registered CommenterDailyBail
In First Lady’s Roots, a Complex Path From Slavery
http://www.nytimes.com/2009/10/08/us/politics/08genealogy.html?_r=2&pagewanted=1
Oct 8, 2009 at 8:43 AM | Registered CommenterDailyBail
Bachmann voices ire at ‘Bail-out Nation’
http://www.ft.com/cms/s/0/6559c650-b36e-11de-ae8d-00144feab49a.html
Oct 8, 2009 at 8:44 AM | Registered CommenterDailyBail
The dollar plunges! How scared should we be? Economist Simon Johnson says not as much as you think—it’s part of Obama's plan to restart the manufacturing sector and win the midterm elections.
http://www.thedailybeast.com/blogs-and-stories/2009-10-06/obamas-secret-jobs-plan/
Oct 8, 2009 at 8:45 AM | Registered CommenterDailyBail
Editor's Note: Allie (one of our commenters) got published in Barron's over the weekend.

****************************

Letter to the Editor:

The September 21 Editorial Commentary, “One Cheer for Hyman Minsky,” gave an undeserved cheer to an incorrect conclusion. Minsky incorrectly blames the market itself for its instability when it is the government’s monetary and fiscal policies that are the main source of economic and financial instability today. Capitalism is inherently stable, and booms and busts are not an inevitable part of true capitalism.

To understand the root causes of booms and busts, Minsky should have read Ludwig von Mises’s The Theory of Money and Credit, which explains that government intervention is the principal source of uncertainty, false expectations, and excessive debt-leverage in the economy.

I also disagree with Minsky’s notion that there is no simple answer to the problems of our capitalism. He said there is no solution that can be transformed into a catchy phrase and carried on banners. I can think of one catchy phrase that is a simple answer to a lot of problems:

End the Fed.

Allison D.

Fla.

****************

Well done Allison, just one more little step on your way to Congress in 2016.
Oct 8, 2009 at 9:19 AM | Unregistered CommenterDailyBail
Nice job, Allison D. from Florida.
Oct 8, 2009 at 9:22 AM | Unregistered CommenterJames H
Now AB, Mark, Spidey, James, Sonic Ninja, Gompers, Wil, Robert M, Assassin, Sell Short, MAttSF, James S, Ano Mous, Gobias, (Ken--but no quote mining), ed.meese-something polish, Mary G, Puzo, Evil Henry Paulson, Morton, Angry Jones,...and myself...

I'm sure I've forgotten some names and I apologize...but the current score at Barron's is:

22 yr-old Allison
*****************
1


The Rest Of Us
**************
0
Oct 8, 2009 at 9:33 AM | Registered CommenterDailyBail
Good job Allie.
Oct 8, 2009 at 9:38 AM | Unregistered CommenterS. Gompers
Way to go, Allie!

As for Dylan's article--yup, yup, 'n yup!

"The ultimate result of shielding men from the effects of folly is to fill the world with fools." (Herbert Spencer, English Philosopher, 1820-1903) At least it makes for an interesting show.

Gobias--I give--what's the underlying mission?
Oct 8, 2009 at 10:27 AM | Unregistered CommenterSonic Ninja Kitty
Thanks guys! :)
Oct 8, 2009 at 10:39 AM | Unregistered Commenterallie
I have a question that has been bothering me for some time now, and I would like to know what everyone thinks.

In the Bankers Manifesto it states;

“We (the bankers) must proceed with caution and guard every move made, for the lower order of people are already showing signs of restless commotion. Prudence will therefore show a policy of apparently yielding to the popular will until our plans are so far consummated that we can declare our designs without fear of any organized resistance.

Organizations in the United States should be carefully watched by our trusted men, and we must take immediate steps to control these organizations in our interest or disrupt them.”

And also states;

"This at the present time would be premature. We are not yet ready for such a crisis. Capital must protect itself in every possible manner through combination (conspiracy) and legislation."

And ends with;

“By thus dividing voters, we can get them to expend their energies in fighting over questions of no importance to us, except as teachers to the common herd. Thus, by discrete actions, we can secure all that has been so generously planned and successfully accomplished.”

My question is, what if the moneyed priests want to end the FED, and have created this recession as the excuse to do so. However they intend not to return to a constitutional currency as we would like to see, but would rather implement something along the lines of a North American Currency Union.

http://en.wikipedia.org/wiki/North_American_currency_union

What guarantees do we have that we are not pawns in this game, and that the demand of the people will be realized, and not be unwitting partners in the creation of something that further deteriorates our national sovereignity.

Create the problem to make their "solution" more "palatable"...


The "plan" is to control all resources, human and natural. The control is not by elected public officials, but by a self-appointed oligarchy. This is born out by reading the details of Article 21 and 39 of the "Convention On Biological Diversity." This treaty declares there are no reservation of rights. Article 21 mandates that three international organizations, the UNEP, UNDP and the World Bank, will direct and control "the policy, strategy, programme priorities and eligibility criteria relating to access to and utilization of resources" in each member country.

John Prukop of the Coalition of a Constitutional Washington



"When the going gets weird, the weird turn pro."

-- Hunter S. Thompson (1937-2005)
Oct 8, 2009 at 11:49 AM | Unregistered CommenterS. Gompers
Gompers, I think this theory is a bit out there...that the recession was created on purpose to allow the moneyed priests to usurp more power. Hell the moneyed banks all got caught with their pants down by this recession...

Everyone was loaded to the gills with securitized madness on and off their balance sheets...None of them saw it coming...So I'm not sure how you can make that case...
Oct 8, 2009 at 12:02 PM | Registered CommenterDailyBail
What is remarkable to me, and also a great sign that America still has a healthy core, is that the mainstream media is allowing Dylan Ratigan to tell the truth to a large group of American viewers. (Thanks, we can suppose, to Bill Gates who is the owner of MSNBC)

Ralph Nadar, after all, has been saying the same thing for forty years and so have many, many other Americans. But few people listen to them. Until now.

I myself have been saying, for many years, that America will pay a huge price for demonizing communism.

Other countries had the good sense to trust their own people and allow them to experiment with socialism. In this way they inoculated themselves against the worst aspects of it. Americans have not, and as a result, a near totalitarian system has evolved around them without them even noticing it.

But Americans, thinking they were defending themselves against communism, like their Puritan ancestors defending themselves against the temptations of the Devil, allowed the very thing they had demonized to slip in under the tent and grow up around them in the form of the oligopolistic capitalism, or Corporate Communism, which operates completely outside the control of the people and their representative governments.

In fact, these corporations now control our governments, for the most part, and are indistinguishable from the socialistic demons that we have been battling against for almost a hundred years.

It is interesting that Bill Gates' Microsoft Corporation represents both the very best and the very worst of capitalism and that Ratigan is allowed to broadcast from his television network.

In the early 1980s, Bill Gates fledgling mouse, Microsoft, took on the mighty monopoly lion IBM and to everyone's surprise came out the victor. Because of the a nature of "Corporate Communism", Microsoft has now turned into a near monopoly itself and I'm sure Gates is well aware of that fact. He is rightfully proud of Microsoft's ascent but probably ashamed of its present hegemony.

Let us hope that Ratigan will continue to be Gates' spokesman and that these are only the opening skirmishes in the war against the giant, Corporate Communism.
Oct 8, 2009 at 12:11 PM | Unregistered CommenterJames Street
DB

"Everyone was loaded to the gills with securitized madness on and off their balance sheets...None of them saw it coming...So I'm not sure how you can make that case... "

People saw it coming, there were warnings, and they were disregarded, and the banks seem to be cruising fine on our dime.

Which brings me back to my second question, what guarantees do we have that we are not pawns in this game, and that the demand of the people will be realized, and not be unwitting partners in the creation of something that further deteriorates our national sovereignity? I have seen nothing about what to do after the FED is eliminated, do we try anarchy?

The banks and corporations are in this together, why is there no plan for what to do after the FED is gone.

There is a great power grab under way, and a people without personal savings or homes are more easily controlled. It is also not by chance that the same banks that the Pujo Commission http://en.wikipedia.org/wiki/Ars%C3%A8ne_Pujo sought to limit in their power, are today the major beneficiaries of the current financial crisis.

JP Morgan Chase received the assets of Lehman Brothers in a deal brokered by the government and the Federal Reserve. Washington Mutual, AIG, and Wachovia Bank are also being consolidated into an ever smaller number of super banks that are all controlled by a cabal of bankers, the same cabal that control the Federal Reserve.
Oct 8, 2009 at 2:30 PM | Unregistered CommenterS. Gompers
Well, well, Steve. I do recognize a gauntlet when I see one. Consider your challenge accepted.

(PS--My real name is not Sonic Ninja Kitty, ya know. I may have to rethink the whole anonymous thing.)
Oct 8, 2009 at 2:35 PM | Unregistered CommenterSonic Ninja Kitty
At James S who wrote:

"What is remarkable to me, and also a great sign that America still has a healthy core, is that the mainstream media is allowing Dylan Ratigan to tell the truth to a large group of American viewers"
**************************

It's really not as bad as you would like to think in terms of control of content within MSM...producers are generally open to pushing the envelope if they see an oportunity, and except for rare cases, there is little negative pushback from management...having worked among these people, the problem is that most on-air folks want to be TV stars, celebrities if you will...they are really NOT paying attention to the issues and if they do pay attention, they often never take the time to understand them completely, so they don't give them the attention they deserve...

Ratigan said these same things when he was at CNBC and it never caused a problem...his problem was with a wacko producer that no one should have to work with...watch this to see just how crazy....

http://dailybail.com/home/ratigans-ex-producer-suan-krakower-revealed-clip.html

And I appreciate your comments on capitalism, and Microsoft...i worked at the investment bank that brought Microsoft public in 1986...Alex Brown & Sons...so I know all about their cannibalistic capitalism...just ask Google...they're doing the same stuff to competitors now...and Apple of course is guilty of same currently and in the past.....

Windows as a concept was created in a lab by HP employees (or was it Bell Labs?) in the 60s if i'm not mistaken...Steve Jobs stole it and used it at Apple and then Gates stole it and used it in what we now call Windows...i remember the landmark infringement case very well...
Oct 8, 2009 at 5:47 PM | Registered CommenterDailyBail
The departure and dismantle of the Petro-Dollar standard will usher in a more dangerous phase of that trade war, one to include a battle of the crude oil in the Middle East region. The US leaders have been so pre-occupied with stealing Iraqi oil, defrauding USGovt contracts in Iraq, pacifying Turkey in the Kurdish region, removing threats for the tiny ally that looks northwest to Italy on the Mediterranean, that they have lost sight of the US isolation in its own hemisphere. See the missing $50 billion from the Iraqi Reconstruction Fund that nobody is even searching for. See the Chinese deals to capture new Athabasca oil sand output from Western Canada. See the upcoming halt of Venezuelan oil shipped to the US. See the new Chinese protectors of the Panama Canal. See the depletion of Mexican oil deposits and rapid deterioration into a failed state. By the way, another motive for the Iraq War liberation was to disconnect (illegally of course) China from its oil product concessions with Saddam, that are in the process of reversal and remedy. The USGovt foreign policy reads like a private syndicate business plan.

The emergence of the Intl Monetary Fund is a strange story, one that seemed unlikely a year ago. But the big push by Russia, China, India, Brazil (the BRIC nations), and others has resulted in more credibility for the IMF basket of currencies. The big wrinkle for the IMF currency basket is that it will include a gold component. Some clarification. The IMF ‘gold sales’ in recent years have been actually closure of past short gold transactions between nations, usually the US as borrower. Their short covers have been described, complete with lies and deceptions, as new sales, when they are actually purchase buybacks to end the short position. The next chapter for IMF in the Gold Halls could easily be large scale gold bullion purchases.
Oct 8, 2009 at 5:50 PM | Unregistered CommenterKen
@ James S who wrote

"In the early 1980s, Bill Gates fledgling mouse, Microsoft, took on the mighty monopoly lion IBM and to everyone's surprise came out the victor. Because of the a nature of "Corporate Communism", Microsoft has now turned into a near monopoly itself and I'm sure Gates is well aware of that fact. He is rightfully proud of Microsoft's ascent but probably ashamed of its present hegemony."
********************

I disagree...First of all it surprised no one when Gates negotiated the rights to software (operating system) in the IBM deal, because no one had even heard of Gates or Microsoft...it was the shout heard round the world that no one heard...the idiots at IBM thought the future was hardware, not software...it was their bungle...

And secondly, Gates is a ruthless competitor, so trust me he is not ashamed of Microsoft and their practices...the guy hates to lose...period...he personally destroyed countless software start-ups through the years by incorporating their features into Windows...it was illegal and anti-competitive, but he got away with it despite the legal challenges...
Oct 8, 2009 at 5:52 PM | Registered CommenterDailyBail
@ Sonic who wrote:

"Well, well, Steve. I do recognize a gauntlet when I see one. Consider your challenge accepted. "

Hey I was throwing the gauntlet down to myself as well...
Oct 8, 2009 at 6:02 PM | Registered CommenterDailyBail
@ Gompers who wrote:

"People saw it coming, there were warnings, and they were disregarded, and the banks seem to be cruising fine on our dime."

Yes, lots of folks saw it coming...but not anyone who ran one of these banks...they were all caught wrong-footed...and they have been destroyed in the process...C is at 4 bucks, BAC at 15, Lehman is toast, Merrill gone, Morgan Stanley had to sell a huge stake to the Japanese...plus Goldman had to beg Warren Buffett for very expensive capital...virtually every bank was forced to do outside equity offerings diluting themselves and their shareholders...hundreds of smaller banks have failed and hundreds more will in the next few years...CRE exposure is going to obliterate one hell of a lot of bank capital in the next 5 years...

There is simply no way to make the case that this was done on purpose.

But in the end, through capture of Washington and global financial panic, the remaining players were able to get their rescue passed (but with costs)...but it was not planned...if it were planned they would have off-loaded all the crap to foreign banks and then collapsed the system...instead the system collapsed around them and they were NOT expecting it...Lehman is one of many owners of the Fed, and they themselves couldn't be saved...

The reasons that JP Morgan, Goldman, Citi and BAC were saved plus countless others who received TARP funds, was to prevent a total collapse...they would have let each of these firms go as well (except maybe Goldman because of Paulson) if there had existed even bigger banks ready to absorb them...but there was no one bigger...Dimon has said he would not agree to the Bear Stearns deal if given a chance to re-do the last 18 months...as an example...

Please read this and you will have a better idea of what was going on during the franctic week...they were doing anything and everything to keep the system alive...you will see that they attempted to force a lot of deals on a lot of different survivors...deals that the CEOs of the survivors didn't want to do...

http://www.vanityfair.com/business/features/2009/11/too-big-to-fail-excerpt-200911?printable=true

And for the record, Goldman Sachs didn't exist when the Fed was created...not for another decade or so...

Your 2nd point/question is a very good one...many have written on this subject of what would replace the Fed...

In a nutshell, we would hopefully return to a more sane system of FRL based possibly on a gold standard (the experts debate this part), where there would be a limit on the amount of credit that could be created within and by the system...

I have asked the same Q myself many times to economists of the Austrian school...we must have some form of FRL otherwise there could be no credit creation of any sort...

End the Fed, start over, and let's be rational this time...
Oct 8, 2009 at 6:10 PM | Registered CommenterDailyBail
Useless websites

AMEN

USA masses are cowards and the demise will show them the way
Oct 8, 2009 at 6:41 PM | Unregistered CommenterKen
My question was not that far out there, while the herds have been grazing the plan has moved forward for years. Lets just hope our dream doesn't get subverted along the way...

http://www.humanevents.com/article.php?id=14965

http://www.sourcewatch.org/index.php?title=North_American_Union

http://www.dailymotion.com/video/x6g41d_barack-obama-talking-about-the-nort_news

http://loudobbs.tv.cnn.com/2008/04/22/north-american-union-talks-in-new-orleans/


When the Fed was being sold to the public, its advocates told people it would prevent panics and recessions by virtue of its power to provide money and cheap credit on demand. Eight years after its inception, the country slid into a recession (1921), and after another eight years the stock market crashed. By the time a new administration took power in 1933, the economy was on its knees. This theft was planned, sure some banks were injured, but it was done to consolidate power.

Funny how history keeps repeating itself...

We should wipe every trace of the Federal Reserve from our lives and allow the market to freely choose our monetary standard, which I would hope would be gold. In the meantime, we should shut down the printing presses for good.

The movement in its infancy is still in danger of infiltration/ usurpation by combination (conspiracy) and legislation, for they still control the politicians.


"Yes, lots of folks saw it coming...but not anyone who ran one of these banks"

Pretty hard to believe...
Oct 8, 2009 at 6:43 PM | Unregistered CommenterS. Gompers
Is it really a loss for them, when it is just paper, and the government will give them all the paper they want?
Oct 8, 2009 at 6:50 PM | Unregistered CommenterS. Gompers
I apologize if I made you think your question was out there...i did not mean to be critical...

"Yes, lots of folks saw it coming...but not anyone who ran one of these banks"

Pretty hard to believe...
**********************************

Yes it is hard to believe they were this blind, but the evidence is there...sitting on the balance sheet...or off the balance sheet...

I once read Stan O'neill (CEO of MErrill at the time of the crisis) explain why it happened: he said it was a giant game of musical chairs that would end at midnight...and every firm assumed they would see the signs and leave the party at 11:59...

But the problem was that when people figured out that the party was over, there was NO ONE to buy the shit assets they were attempting to unload...

I used to write about it all the time at the beginning of the site in JAnuary and February...Since everyone was leveraged 30:1 and all were looking to sell...there were no buyers...none of the bankers anticipated this crucial element...

In order to sell, you must have a buyer...there were no buyers...
Oct 8, 2009 at 6:54 PM | Registered CommenterDailyBail
Is it really a loss for them, when it is just paper, and the government will give them all the paper they want?
**************************************

Again, yes it was a loss...look at the stock prices, the companies now gone, the outside capital that had to be raised diluting them...this was a real collapse that hurt everyone in the sector...

And don't forget, Citigroup and BAC will eventually be 0's as well...the pain has been real and will get worse...

Lehman CEO lost several hundred million...same for Bear Stearns and Merrill...same for Citigroup..same for BAC...same for AIG...these were real losses...this was not planned i assure you...if it were planned they would have been prepared...

no one was prepared except for the hedge funds and investors who saw it coming...
Oct 8, 2009 at 6:58 PM | Registered CommenterDailyBail
Obama "The International" Banker's Puppet
http://www.youtube.com/watch?v=QBgAd9xNCQI

The Verdict - Judge Napolitano on Obama's Plan Giving Unlimited power to the Federal Reserve
http://www.youtube.com/watch?v=aWlDnv5oYdg&feature=player_embedded
Oct 8, 2009 at 7:03 PM | Unregistered CommenterKen
No apology necessary, and it is still hard to imagine they thought they could sell shit. I got a lot of it if someone would like to buy it, LOL.

I guess you see things differently when you see flying pigs every day.
Oct 8, 2009 at 7:06 PM | Unregistered CommenterS. Gompers
Gompers, you should get on the mises blog re: what to do after the Fed is gone. They debate this stuff in depth. Or read The Mystery of Banking by Murray Rothbard. Skip to page 261-- "How to Return to Sound Money." Rothbard is practical and notes that its unlikely---"This would be a massive deflationary wringer indeed."-- but it's a good read on what, in my opinion, should be done. http://www.scribd.com/doc/7657768/The-Mystery-of-Banking-by-Murray-Rothbard

There's an interview of Ron Paul explaining this question (and he makes it sound so simple!), but currently it is lost in cyberspace... looking...

And, sorry, but it is hard to believe the conspiracy theory. I think you're overestimating their intelligence.
Oct 8, 2009 at 7:29 PM | Unregistered Commenterallie
No apology necessary, and it is still hard to imagine they thought they could sell shit. I got a lot of it if someone would like to buy it, LOL.

I guess you see things differently when you see flying pigs every day.
*****************************

Yes...this really is the crux of the issue...why didn't they anticipate it?

The answer is complex and i could write for days on it...but i'll try to sum it up...the first problem is that the CEOs were not even close to aware what was on THEIR OWN BOOKS...they were disconnected from their prop trading desks and their risk management departments had been long marginalized...

John Thain gave a speech yesterday where he addressed some of these issues...

http://www.businessinsider.com/john-thain-unleashed-2009-10

http://www.businessinsider.com/john-carney-john-thain-admits-he-didnt-understand-merrills-risks-2009-10

The 2nd factor was that none of them anticipated the speed and breadth of the decline...and so when a few first tried to sell, the bids were so low they laughed...and waited...the only problem is every month of '08 the bids for the toxic assets kept falling...

So if a private equity fund or some other fund offered 70 cents in January of '08 the bid might have dropped to 50 cents by June for the same assets...

MEredith Whitney used to talk about this issue all the time on CNBC...she would tell the banks to accept whatever bids they might receive because these bids would invariably be lower next time around...

You might recall that UBS odd-loaded a $26 Billion Alt-A portfolio in may of last year for 65 cents on the dollar...the Street was stunned they took such a low bid...three months later ALT-As were worth 45 cents...and now some are worth Zero...

It's like selling a stock when it's way down...sometimes you have to suck it up and take the loss, otherwise it's likely to get worse...

As millions of individuals understand quite well from the popping of the internet bubble...once prices fell from the peaks many individuals and institutions were paralyzed, didn't sell and watched everything fall towards $1 dollar...

Meanwhile, short sellers who were almost wiped out by the bubble, were finally proven right...the stories I could tell...from eToys to Priceline to JDSU and thousand of other bubble stocks...the carnage was real and destroyed lives...
Oct 8, 2009 at 7:41 PM | Registered CommenterDailyBail
Allie...try to find that link to Ron Paul talking about a replacement for the Fed...i know i've seen it somewhere but also can't find it...
Oct 8, 2009 at 8:04 PM | Registered CommenterDailyBail
This isn't it, but here's a debate on the Gold Standard vs Discretionary Paper, with Ron Paul vs Charles Partee -- probably the most annoying speaker ever. If you can take Partee's incredibly obnoxious "uhs," its cool to see Ron Paul fired up about the gold standard. http://www.youtube.com/watch?v=kcm8VvBcUdE

From the comments:
Summarizing Partee's argument: Paper uh, money uh, allows uuuuuh, government to uh, spend uh wrecklessly, uuh, which, uh, is, uuuh, precisely, uh, what uh the, uh, bums, uh, in Congress, uuh, want to, uuuh, do, uuhh, uuuuh!
Oct 8, 2009 at 8:12 PM | Unregistered Commenterallie
"End The Fed"

Just finished reading this book .Total of 15 chapters., last of the three sections of this book, as I categorize them, is the greater portion of the book and this is where Dr. Paul really makes the "Case Against the Fed" (to borrow a book title from the late great Murray Rothbard). All the cases for a fiat currency, and for a central bank, and blown to shreds by Dr.Ron Paul in the final 7 chapters.There really is only one answer for a Fed replacement, and it extremely simple,The answer is not the gold standard, however, gold (and silver) are a big part of the answer. The books he suggests in the reading list, some of which I've already read, further expands on the solution.Purpose of this book was to bring to light the most corrupt and fraudulent institution the American people have seen since we were under the British Royal Crown Taxation Hell.

This is from BRIC and anti Dollar forces in play:
The emergence of the Intl Monetary Fund is a strange story, one that seemed unlikely a year ago. But the big push by Russia, China, India, Brazil (the BRIC nations), and others has resulted in more credibility for the IMF basket of currencies. The big wrinkle for the IMF currency basket is that it will include a gold component. Some clarification. The IMF ‘gold sales’ in recent years have been actually closure of past short gold transactions between nations, usually the US as borrower. Their short covers have been described, complete with lies and deceptions, as new sales, when they are actually purchase buybacks to end the short position. The next chapter for IMF in the Gold Halls could easily be large scale gold bullion purchases

The byline of the past year could be written as the ‘End of US Lackeys’ quite accurately. The Japanese have a new #1 trade partner in China. After the surprise election of Hatoyama in Tokyo, his first state visit as Prime Minister was with Beijing. Take that as a hint that Japan will no longer act as US Lackey. Watch the Bank of Japan and Yen currency management. The Japanese Yen is a key signal to the transition of the US$ to the trash heap. The other nation soon to shed its lackey role is Saudi Arabia. They have crawled into bed with the Kremlin, in a necessary step to maintain military protection. They need it in order to continue the private royal pillage of the last resource wealth the nation offers. The Saudi Royals are setting up shop in the south of Spain for retirement homes. The Saudis might open the first big new foreign bank accounts in Russia’s emerging financial system that Western analysts are blind to. Talk about a tall breeze from a mammoth shift of funds! The deal between Saudis and Russians is certain to have many sides.

The deal to support the shutdown of the Petro-Dollar contract between the US and Saudis represents the latest big piece to the Comprehensive Chinese Plan. Note the Yuan Swap facility to aid global trade (check Brazil). Note the transition to the Yuan in the Chinese banking deposits. Note the ASEAN emergency fund in Yuan accounts. Note the announced dishonor of OTC derivative contracts with a declared Stop Loss. Note the accumulation of gold by the Chinese central bank and permission for citizens to save in gold also. The Chinese have embarked on a comprehensive plan that escapes Western financial media analysts. This latest development is a climax step that changes gears of the transition.
Oct 8, 2009 at 8:18 PM | Unregistered CommenterKen
must see video

The Death of Freedom in America

http://www.youtube.com/watch?v=xyWzQ6knLRk&feature=player_embedded#
Oct 8, 2009 at 8:34 PM | Unregistered CommenterKen
@ Ken

"There really is only one answer for a Fed replacement, and it extremely simple,The answer is not the gold standard, however, gold (and silver) are a big part of the answer. The books he suggests in the reading list, some of which I've already read, further expands on the solution."

I finished reading it too, and I'm pretty sure Paul was saying the answer is the gold standard and (in the mean time) return Fed powers to Congress and the Treasury (pages 203-204). What else are you referring to?
Oct 8, 2009 at 8:39 PM | Unregistered Commenterallie
"I have asked the same Q myself many times to economists of the Austrian school...we must have some form of FRL otherwise there could be no credit creation of any sort..."

You'd still have credit alright, easy peasy, but it would have to come from real savings. Oh, and you wouldn't have much inflation or the boom-bust cycle, either.

On the other hand, you could have FRL that's still sane and safe, but you would also have inflation and booms that are likely to get ahead of themselves. In other words, FRL robs savers and holders of currency through price inflation. Savers' money is "borrowed" while they're not using it, but it's used to bid up the prices of things they might later wish to purchase in the market. They get their dollars back whenever they demand them from the bank, but those dollars buy less stuff. FRL benefits holders of assets, however.

Both systems are economically feasible, but FRL is slightly evil (theft by inflation) because it hurts the poor and middle-class savers, and it is likely to lead to booms and busts.
Oct 8, 2009 at 9:35 PM | Unregistered CommenterJames H
So James this has always been my contention about a system without FRL, and maybe you can help me figure it out...

You said credit would come from savings...and by this you meant deposits, which is correct...but i'm wondering where the growth in credit will come from...we still want to be a nation that allows and encourages innovation...and innovation generally needs credit in order to turn an idea into an actual business...so how do you meet the demand for increased credit (imagine the creation of silicon valley for example and all the innovation that used credit in order to build real businesses)...

There has to be some multiple of deposits that is allowed...maybe it's 5...as existing savings wouldn't even come close to covering the demand for credit even in a dead economy...

Obviously, in a gold-based system we would need some multiplier or essentially FRL, since the amount of gold in teh world would be the limit of total credit....

And one last thing, let's not forget that if the system were entirely based on gold, wouldn't it be greatly subject to the fluctuations in the price of gold...so let's say gold price dropped 30%, well tehn what happens to all the extra credit that was extended when gold was higher...by the price dropping you've created FRL of sorts because the amount of credit would be greater than the amount of gold...

Or maybe gold would stop fluctuating if it were then the standard...i honestly don't know...

MAybe I'm missing something or a lot of things...a world without FRL of even some small sort is not something i've studied so i'm happy to be corrected...
Oct 8, 2009 at 9:59 PM | Registered CommenterDailyBail
"...so let's say gold price dropped 30%, well tehn what happens to all the extra credit that was extended when gold was higher..."

I can't claim expertise, but I think this ^ is an easy one. If you're using a gold-based currency, then how can the price of gold in that currency drop by 30%?
Oct 8, 2009 at 10:24 PM | Unregistered CommenterJames H
Yeah...i figured that one out a few minutes later and added this to my post...

"Or maybe gold would stop fluctuating if it were then the standard"

So as for the other questions...anyone have answers...?
Oct 8, 2009 at 10:29 PM | Registered CommenterDailyBail
As for "growth in credit", it would grow as savings grew. Price inflation/currency debasement simply mask the effects of FRL, so that it looks like the holder of currency never lost anything, but of course he has.

There's no economic (or mathematical) reason that innovation requires "credit out of thin air." Silicon Valley is the product of capitalistic innovation, as such, not the availability of FRL-produced credit. You could just as well have had the same innovation -- or even more economically sound innovation -- by using the credit derived from savings. AND, holders of currency would not have slowly lost purchasing power over time in the process. Granted, FRL allows for wealth creation. 100% Reserve Lending also allows for wealth creation. The difference is that FRL also results in the *transfer* of wealth, away from savers and holders of currency. Ron Paul doesn't talk alot about this, but FRL is the real culprit. The Fed is just its most obvious manifestation, and it has evils all its own through the control of the Fed funds rate.

Think about it, if you are an entrepreneur and the bank creates credit out of thin air to give you a loan, then you have already usurped some of the purchasing power from each and every depositor. Even if your endeavor is profitable and you pay the loan back (which is to say, the loan was productive), the bank itself has made a profit that in part derives not from the innovation, but simply from the creation of credit out of thin air and then "selling" that credit to the borrower. Except for a few bells and whistles, it's no different from counterfeiting.

Imagine you loaned your friend some counterfeit bills you just printed up. Say he goes out and starts a business, is profitable and then he pays you back. Then say you burn the amount of the original loan, but you pocket the interest. That's no different from what banks do with FRL. Your friend bids up the prices of goods and capital with the fake bills you gave him, but then you, the "banker," keep the interest as profit. But where did that interest come from? You didn't actually give him any of your savings. Your "profit" -- the interest -- is really stolen from all other holders of currency. They lose a teeny bit of purchasing power because you've created bills out of nothing but paper and ink. Obviously on a macro basis you would have to "net out" the increase in output represented by your friend's new business in order to get the GDP effect of your FRL loan. But regardless of any positive GDP effect, there is still a wealth transfer from savers/holders of currency to you and your friend.
Oct 8, 2009 at 10:45 PM | Unregistered CommenterJames H
(You might be responding as I write this, but...)

I think any good Austrian would say, drawing from Mises, that an increase in credit, without an increase in savings, almost always leads to the boom and the bust. The growth of credit without a corresponding growth in savings sends false signals to the market, particularly to those investing in real capital -- price signals say that there is more potential demand for the finished goods than there really is. The entrepreneur builds up his capital stock, expecting a certain level of demand for his goods, but at some point in the cycle consumers, for example, can't borrow any more. The "credit" that the entrepreneur used to build his capital stock wasn't backed by savings and so there isn't enough real wealth in the hands of consumers with which to purchase his finished goods. If consumers had actually been saving money in the bank, and those savings were used to finance the capital project, then that savings would be on hand to purchase the finished goods. Now, if consumers really were saving that money rather than going out and spending it on the types of goods that the entrepreneur was hoping to manufacture and sell, then the price and demand signals would have been far different. The entrepreneur would then have been much less ambitious in his capital project and his project would have been much more likely to have been profitable (i.e. less capital investment balanced with greater real savings = sustainable, profitable growth).

Now, I don't know if some Austrian has put together a mathematical model of ABCT (Austrian Business Cycle Theory), but I suppose it's possible under certain conditions that FRL would not necessarily lead to boom-busts. My guess is that those conditions would be in the form of unrealistic rates of return on capital. Just a guess.
Oct 8, 2009 at 11:02 PM | Unregistered CommenterJames H
Well said James.

DB, James said it all, but read The Case Against the Fed, or just pages 20-29. http://mises.org/books/fed.pdf
Oct 8, 2009 at 11:13 PM | Unregistered Commenterallie
Tell me more about credit growth under a system without FRL..

Is it sufficient to handle growth in an economy of our size...

Anyone know the ratio of dollars per oz of gold that could be proposed as a standard given the amount of gold owned by the US gov't currently...?

Used to be 1:20 I think before the gold standard was abandoned...
Oct 9, 2009 at 12:49 AM | Registered CommenterDailyBail
Allie,

"And, sorry, but it is hard to believe the conspiracy theory. I think you're overestimating their intelligence. "

Is it really a conspiracy theory when our leaders speak of a North American Union all the time, and have for years, no matter who is in power?

Never underestimate your opponent, they have not controlled things this long by dumb luck. Never reveal to your opponent your true strength, as they will plan accordingly, it is always better to feign a weaker position than you have to lull your opponent into a false sense of security.

I love your enthusiasm.

James Street

Great post,

"In fact, these corporations now control our governments, for the most part, and are indistinguishable from the socialistic demons that we have been battling against for almost a hundred years."

Does everyone believe the corporations that control our government will voluntarily relinquish control, or will they try to guide change to favor themselves. They are for the NAU, it benefits them.

Ken,

I have been following closely those seeking to get away from the petro dollar and know that it will signal the death of the FRN.
I have also been following the mutual defense agreements with Russia , Iran, Syria, etc. China's gold position, the talks between China and Japan, which are historic by the way. And the IMF basket of currencies.

I have also been following China's global acquisition of oil/ mineral/ agricultural rights while we continue to coddle those (poor, innocent, bankers, who everyone seems to think are clueless, but are not) who have sought our demise as a first world power.

Is their enough gold to achieve this aim, and will those who control our government allow it, since it does not directly benefit them. Since the amount of wealth they could generate would be directly proportional to the amount of gold that exists.

http://www.youtube.com/watch?v=opGwEp6U4U0

Remember, this is America, and the majority does not rule.

James H

loved your post, and agree with the way it should be.

However "I think any good Austrian would say, drawing from Mises, that an increase in credit, without an increase in savings, almost always leads to the boom and the bust. The growth of credit without a corresponding growth in savings sends false signals to the market, particularly to those investing in real capital", is directly against the "get rich quick crowd" sentiments that guide business and government in today's markets. This would hinge their profitability on the ability to save, thereby limiting the ability to buy now, which is instant gratification profits now.

Their goal is to continue decreasing wages to increase profits, which will decrease savings, which would decrease profits under this scenario. "They" do not like this.
Oct 9, 2009 at 8:06 AM | Unregistered CommenterS. Gompers

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