Jamie Galbraith is one of my favorites: He speaks clearly and holds nothing back. Elsewhere he has called for the destruction of the Financial System and a clean rebuilding of it. Makes sense, since in its current form it serves us not, and instead extracts the value of our labor and output. Finance should be a utility: Moving money from where it is to where it is needed. However, the reality is that Finance instead preys upon the majority, stripping the value from our assets (via loans and speculation), pocketing money they create akin to Counterfeiting.
As Finance grows and extracts all they can from a particular market, it continually moves on. Currently its intended prey is our public institutions: Social Security, Medicaid, Medicare, and even perhaps our public lands. Through its tools in the House and Senate, they pretend that it is the only way.
But there is a another reasonable way of viewing the current situation. Finance promised us jobs and prosperity if we cut taxes on Capital and High Incomes. We did so in 2003, with dismal job growth and stagnate gains since. It was a loan that didn't pay off. It is time to call it in: If we have learned anything over the past 20 years is that leaving money in the hands of the Finance industry and the excessively wealthy does society no good - and there is no credible argument that the majority of society need to give anything up to pay for the misdeeds of the members of the Finance Industry.
Galbraith here explains the global state of affairs very nicely, and reveals in commonsense terms how what is happening in America is not distinct or separable from what is happening in Europe - that Finance is currently in the advanced stages of destruction of the World Economy. Although speaking to a European Audience, he reveals many things about the global economy, the US Economy, and exactly how and why there are different current outcomes, but that all is not stable...
Galbraith: Change of Direction
Showing posts with label counterfeiting. Show all posts
Showing posts with label counterfeiting. Show all posts
Tuesday, December 18, 2012
Thursday, October 20, 2011
What? The Fed is an Old-Boys Club of Backscratching Bankers!
The GAO released its report on the Federal Reserve Wednesday: Yves Smith has a nice summary.
And, just as many have long known: Those at the top build networks to ensure they remain at the top regardless of how they perform - the meritocracy breaks down under their myriad conflicts of interest. Everyone screams about individual accountability when its some poor individual who cannot afford to repay their bank loan, but no-one seems to care that none (as in zero!) of the major bank executives were held accountable for their roles in undermining the worth of their banks, counterfeiting the nation's currency through liar's loans, and their ultimate thievery of the production of a nation. Now we have it a little clearer: Literally, the fox is guarding the hen house!
We need leaders (are you listening, candidates?) who will make it a priority to wind-down the financial sector back to a size that is beneficial to society, rather than a cancer that sucks more and more of the life-blood of a nation in its greed. Candidates that will vow to staff the regulatory agencies (the Fed, the SEC) with people of diverse backgrounds and affiliations who will regulate, rather than remunerate, those under regulation.
Anyone? Anyone?
And, just as many have long known: Those at the top build networks to ensure they remain at the top regardless of how they perform - the meritocracy breaks down under their myriad conflicts of interest. Everyone screams about individual accountability when its some poor individual who cannot afford to repay their bank loan, but no-one seems to care that none (as in zero!) of the major bank executives were held accountable for their roles in undermining the worth of their banks, counterfeiting the nation's currency through liar's loans, and their ultimate thievery of the production of a nation. Now we have it a little clearer: Literally, the fox is guarding the hen house!
We need leaders (are you listening, candidates?) who will make it a priority to wind-down the financial sector back to a size that is beneficial to society, rather than a cancer that sucks more and more of the life-blood of a nation in its greed. Candidates that will vow to staff the regulatory agencies (the Fed, the SEC) with people of diverse backgrounds and affiliations who will regulate, rather than remunerate, those under regulation.
Anyone? Anyone?
Wednesday, January 13, 2010
A Nation's Counterfeiters
"These actions furthered blurred the lines between banking and counterfeiting.”
So iterates Stephen Mihm's “A Nation of Counterfeiters” - a book that traces the history of counterfeiting in America. But, although the book traces the lives and livelihoods of many of our nation's foremost counterfeiters, it is about much more than just counterfeiting. It is about money as a product.
Through its pages, we read about not only the problems of counterfeit notes, but counterfeit banks (dubbed wildcat banks.) For it was not uncommon in antebellum America for a group of men (and it was men, women were not yet allowed) to obtain a state charter for a bank, set up the vaults and the printers, take their deposits, print and circulate their currency, make loans, take profits (which they quickly exchanged for the currency of a well-known reputable bank), and then shutter their doors, insolvent. This left ostensibly 'real' tender in circulation that had often less value than a well-executed counterfeit note on a good bank.
Bankers have been earning our ire for 200 years.
We're caught in a double-bind. We need money, and for the money supply to correlate with the demand for goods and services and the productive capability we have to fulfill those goods and services. Although we now have a central printer of actual money, the printing presses of the Federal Reserve are not the only way 'money' as we know it comes into existence.
When a bank takes its deposits, say $10 million, it doesn't lend just $9 million back, but perhaps $90 million – thus creating $80 million dollars. That created money serves a purpose: It is the grease that enables a modern economy to run and expand.
But the unevenness of the money supply vis a vis demand and productive capability is a major factor in creating recessions and depressions – periods of adjustment to re-align production, consumption, and restore faith in the economy and the currency.
It would be fine, I suppose, if after a glut of money, it was bankers and other employees of finance who found themselves looking for new lines of work as their sector contracted. But, as we all know, it is predominantly non-finance people who lose their work as a result of too much money.
We need to acknowledge that losing one's job due to a severe contraction in the economy is not the same as losing one's job due to a lack of diligence or laziness. We should concentrate our ire on those most responsible – those who unreasonably profited while creating more money than the economy could absorb.
So, we have a right to be angry at these modern counterfeiters who devise new ways to create money for their own enrichment. And, just as the movement to a common, Federally executed currency and the creation of the Secret Service to ferret out counterfeiters after the Civil War brought early counterfeiting to heel, perhaps new regulations or stronger leadership at our current regulator (The Federal Reserve itself, Mr. Bernanke!) will even the economy.
Regulating or constraining the actions of some for the greater public good is not a descent into Socialism – it is precisely what good societies do. Antebellum counterfeiting died when the risks outweighed the potential profits. Modern day counterfeiting will, too, but only if we and our rule-makers are willing to restructure the laws governing the world of lending, investing, trading, and finance. Restructure the rules so that individual short term gains cannot be taken against long term risks. Regulate actions and products - just as it is illegal to print your own money, why can't it be illegal to create products (I'm thinking Credit Default Swaps) that mimic money?
We'd like to think that counterfeiting belongs to a time long ago. But, recent events prove otherwise. Until we address its modern forms, we remain A Nation of Counterfeiters.
So iterates Stephen Mihm's “A Nation of Counterfeiters” - a book that traces the history of counterfeiting in America. But, although the book traces the lives and livelihoods of many of our nation's foremost counterfeiters, it is about much more than just counterfeiting. It is about money as a product.
Through its pages, we read about not only the problems of counterfeit notes, but counterfeit banks (dubbed wildcat banks.) For it was not uncommon in antebellum America for a group of men (and it was men, women were not yet allowed) to obtain a state charter for a bank, set up the vaults and the printers, take their deposits, print and circulate their currency, make loans, take profits (which they quickly exchanged for the currency of a well-known reputable bank), and then shutter their doors, insolvent. This left ostensibly 'real' tender in circulation that had often less value than a well-executed counterfeit note on a good bank.
Bankers have been earning our ire for 200 years.
We're caught in a double-bind. We need money, and for the money supply to correlate with the demand for goods and services and the productive capability we have to fulfill those goods and services. Although we now have a central printer of actual money, the printing presses of the Federal Reserve are not the only way 'money' as we know it comes into existence.
When a bank takes its deposits, say $10 million, it doesn't lend just $9 million back, but perhaps $90 million – thus creating $80 million dollars. That created money serves a purpose: It is the grease that enables a modern economy to run and expand.
But the unevenness of the money supply vis a vis demand and productive capability is a major factor in creating recessions and depressions – periods of adjustment to re-align production, consumption, and restore faith in the economy and the currency.
It would be fine, I suppose, if after a glut of money, it was bankers and other employees of finance who found themselves looking for new lines of work as their sector contracted. But, as we all know, it is predominantly non-finance people who lose their work as a result of too much money.
We need to acknowledge that losing one's job due to a severe contraction in the economy is not the same as losing one's job due to a lack of diligence or laziness. We should concentrate our ire on those most responsible – those who unreasonably profited while creating more money than the economy could absorb.
So, we have a right to be angry at these modern counterfeiters who devise new ways to create money for their own enrichment. And, just as the movement to a common, Federally executed currency and the creation of the Secret Service to ferret out counterfeiters after the Civil War brought early counterfeiting to heel, perhaps new regulations or stronger leadership at our current regulator (The Federal Reserve itself, Mr. Bernanke!) will even the economy.
Regulating or constraining the actions of some for the greater public good is not a descent into Socialism – it is precisely what good societies do. Antebellum counterfeiting died when the risks outweighed the potential profits. Modern day counterfeiting will, too, but only if we and our rule-makers are willing to restructure the laws governing the world of lending, investing, trading, and finance. Restructure the rules so that individual short term gains cannot be taken against long term risks. Regulate actions and products - just as it is illegal to print your own money, why can't it be illegal to create products (I'm thinking Credit Default Swaps) that mimic money?
We'd like to think that counterfeiting belongs to a time long ago. But, recent events prove otherwise. Until we address its modern forms, we remain A Nation of Counterfeiters.
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