Archive for the ‘Economy’ Category

QUANTATIVE EASING LITTLE MORE THAN PUSHING ON A STRING

July 11, 2012

So says leading Austrian economist Dr Frank Shostak of the Cobden Centre think tank

 

Inflationary expectations and US economic recovery

“The Economist on July 3, 2012 suggested that it is possible to revive the US economy by means of monetary pumping. They believe that  by means of loose monetary policy the Fed could raise inflation expectations. Consequently, people would speed up buying at present knowing that goods will be much more expensive in the future. This in turn would speed up the pace of economic expansion.

“On the contrary, at the Cobden Centre we hold that the Fed’s loose monetary policy will lead to the consumption of capital, thereby inflicting damage to the foundation of the economy. Consequently, the ability of the US economy to stage a meaningful expansion will be diminished”.

Dr Frank Shostak is a leading Austrian economist and director of Applied Austrian School Economics Ltd, which aims to assess the direction of various markets using the Austrian School methodology. AASE aims to make Austrian economics accessible to businessmen.

On the Cobden Centre website he writes:

“Doesn’t additional easing amount to little more than pushing on a string? The Economist is of the view “it doesn’t”. By lifting monetary pumping the Fed could raise inflation expectations, which in turn is going to raise inflation in the present, argues The Economist.

“Consequently, this is going to lift the present demand for goods and services. (People will speed up buying at present knowing that goods will be much more expensive in the future). The increase in present demand for goods and services will speed up the pace of economic expansion – so it is suggested by The Economist.

Note that the essence of this way of thinking, which is accepted by most economists including the Fed’s Chairman Bernanke, is that what is required to revive economic growth is to boost the demand for goods and services”.

read the full article by Dr Frank Shostak here

The core truth in Dr. Frank Shostak’s article here is this. He says :

“In the real world people pay for goods and services by means of the goods and services they are producing”.

–  (these are called jobs)

“Hence the more is produced the more goods people can have for themselves in order to support their life and well being”.

–  (because they have wages in their pockets and can save a bit after buying essentials. What they save is a store of wealth which can be lent to others to create more jobs)

“What permits the increase in the production of goods and services is the availability of a suitable structure of production. To secure such a structure various individuals that are employed in the maintenance and the enhancement of the production structure, or the infrastructure, must be supported”.

–  (this translates into ‘do everything possible to prevent unemployment. At all costs keep people working. Never think unemployment  is ‘a good thing for the economy’ as some demented economists sometimes think.

Everyone wants to possess a degree of ‘wealth’.

The mirror image of the old adage “money can buy anything’ is that virtually everyone wants to work to obtain a suitable degree of wealth. All you have to do is have a means of persuading people to work. This means of persuasion is to give them something they want (money – which is just a means of exchange to enable every kind of trading, instead of using primitive barter) to do something useful for their employer.

The worker can then take this money he has just been paid for working hard for his employer making something sufficiently useful other people want to buy, and go and spend it on what he needs to buy – and save a bit for a rainy day.

This simple process is the economy; made to sound immensely complicated by ‘economists’ who make a living interfering in it, talking utter nonsense and causing incredible damage in the process.

Oh, and just one little thing which might indicate what a pig’s ear ‘economists’ and governments  (and bankers !) make of our lives is the simple truth that there are, and always will be, a completely unlimited number of ‘jobs’ out there in the Universe that will always need doing. They are just there for the  taking.

Figuratively speaking, everyone wants a pink Rolls Royce and a yacht; and when they have those, they want their very own  spaceship to explore the Universe. And desires like these require lots of workers doing lots of jobs to meet this insatiable demand for  ‘wealth’.

More realistically, there are enough jobs available  on planet earth right now  to usefully employ every human being willing and able to work towards eradicating ignorance and poverty, war and pestilence, and then to provide comfort and security for every man, woman and child on earth.

That’s a lot of jobs screaming out to be done by willing workers who are all out there in their countless millions just waiting in desperation for the opportunity to be able to work both to earn a useful wage for themselves and contribute to the greater good of mankind.

And when all that is achieved, and it appears there might be fewer jobs around for people to do, fear not. Because a very, very big job indeed looms on Mankind’s distant horizon which will take the monumental efforts of centuries of hard work for millions of people.

Ultimately, we need to learn how to ensure our long term survival of all the effort already put into our very existence, by escaping the ‘surly bonds of Earth’ to some other home far beyond the Solar system which is remorselessly heading towards it’s own extinction, taking us with it.

We need to put a lot of work in to ensure the long term survival of the human race – the sooner the better – because it is a very, very, very big job, enough to keep everyone busy for a very long time.

Guaranteed jobs for all from here to eternity !

Meanwhile, the reality is that unemployment, war, pestilence and poverty ebb and flow in a choking, filthy tide of ignorance and greed as it destroys everything in it’s path.

There are enough jobs available for everyone alright. It is just that incredibly stupid people stop it from happening.

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Not such a good idea after all?

June 14, 2012


From the BBC News of 29 September 2008

Analysis

By Ian Pollock

Personal finance correspondent, BBC News

With the nationalisation of the Bradford & Bingley, the last of the demutualised building societies has lost its independence.

The end of an era for demutualised building societies

Some people have been tempted to argue that this proves that converting from a building society to a bank was always a bad idea.

What looked like a good way of expanding business and becoming a modern, thrusting, go-getting organisation for the modern age (in other words, a bank) became something different – a new and exciting way to lose money.

But John Wriglesworth, an analyst of building societies for the investment bank UBS in the 1990s, and later a senior executive at the Bradford & Bingley, sees things differently.

“The reason the demutualised societies have gone has been due to investors having panic attacks,” he said.

“It has been a self-fulfilling, cataclysmic spiral into the abyss.”

Way back when

Just 11 years ago, demutualisation among building societies was all the rage.

It has been utterly, unbelievably, astonishing” 

Adrian Coles, Building Societies Association (BSA)

The year 1997 marked a sea change for a movement of safe and sound financial organisations, most of which had started up in the 1800s.

One after another some of the biggest names jumped ship.

The Abbey National had struck out on its own back in 1989 to become a bank and, overnight, it converted its savers into shareholders.

But with the Cheltenham & Gloucester agreeing to sell itself to Lloyds bank in 1995, the dam burst.

Within the space of twelve months in 1997, the Alliance & Leicester, Halifax, Northern Rock and the Woolwich, all well known mortgage lenders, decided they wanted to be banks as well.

The Bristol & West jumped directly into bed with the Bank of Ireland that year, and two years later the Birmingham Midshires did the same with the Halifax.

By the year 2000 the Bradford & Bingley was the last to join the stock market.

Adrian Coles, of the Building Societies Association (BSA), disapproved of all this at the time, but does not hide his amazement at recent events.

“It has been utterly, unbelievably, astonishing,” he said.

“Seeing the swift disappearance of the former societies in the firestorm, which I don’t claim to have predicted, has also been astonishing.”

No guarantee

In fact the B&B directors campaigned against converting to be a bank, but were defeated after a saver from Northern Ireland, Stephen Major, succeeded in forcing a vote on the issue among members the year before.

There’s no guarantee it wouldn’t have happened anyway” 

Stephen Major

“It’s unfortunate but that’s the way these things go,” he told the BBC regretfully.

“Nine years ago we didn’t think about credit crunches or that building societies or banks could go bust.

“There’s no guarantee it wouldn’t have happened anyway,” he added.

According to the BSA, the total value of the payouts in 1997 amounted to £36bn in shares and cash into demutualisation.

The B&B members were simply too keen to cash in on the value of their society, and so it went the same way as the other societies.

Share options

So why did all this happen?

Branch closures and job cuts are now likely.

Until the mid 1980s building societies dominated the mortgage lending business, more or less as a cartel.

That changed with the 1986 building societies act, which also paved the way for demutualisation.

The house price boom of the mid and late 1980s alerted the banks to the rich picking to be had in home loans, as well as selling endowment investment policies, house insurance and, so they thought, estate agency.

They also recognised that the quickest way to get a large slice of this profitable business was to buy up an existing lender.

And according to John Wriglesworth, directors of building societies were only too keen to join them.

“They used words like ‘freedom to compete’ and ‘access to capital,’ but the main reasons were excessive pay, share options and testosterone”.

Investment banks from the City and Wall Street did their best to speed up the process, touring the boardrooms of the larger building societies, convincing their directors that now was the time to break the mould and demutualise.

The fact that these investment banks often made large fees as advisers to the eventual flotations or takeovers was not a coincidence.

Funding

For the past decade the banks, building societies and other specialist lenders have all taken part in the biggest house price, and mortgage lending, boom in the UK’s history.

There was no reason for the Northern Rock to go down the sub-prime route, or for the Bradford & Bingley to go down the buy-to-let route” 

John Wriglesworth

One thing that has helped the banks in particular has been their ability to borrow money from other financial institutions, rather than just from savers, to fund their mortgage lending.

Building societies are restricted by law to funding just 50% of their lending this way and the average among societies is much less, at about 30%.

It is this borrowing, and the current difficulty in repaying it, that lies at the heart of the problems that have been experienced by the Northern Rock, Halifax and now the B&B.

“With hindsight they raised more money than they would have done had they stayed as building societies and with the credit crunch that now looks like a mistake,” said Adrian Coles.

But John Wriglesworth argues that losing their independence because of this was certainly not inevitable for the former mutuals, especially for the Halifax and the Alliance & Leicester.

“They had a viable comprehensive strategy – their demise is due to the exceptional circumstances, based on fear breeding fear, not their areas,” he said.

“There was no reason for the Northern Rock to go down the sub-prime route, or for the Bradford & Bingley to go down the buy-to-let route.”

DECORATING CUP CAKES IS USEFUL JOB HUNTING SKILL TAUGHT BY INSANE GOVERNMENT EMPLOYMENT DEPARTMENT

October 30, 2011

Watching a BBC TV programme – ‘The Future State of Welfare’ about Social Security and unemployment benefits being cut last week, I heard ex-newscaster John Humphrys interviewing the organiser of a Government ‘back to work’ training scheme for unemployed people designed to equip them with job skills.

This organiser breathlessly gabbling meaningless nonsense about how useful and successful this ‘job training’ was to the hopeless unemployed who turned up in sheer desperation it might somehow magically conjure a job out of thin air earnestly told John Humphrys that part of the training these unemployed people received was ‘decorating cup cakes’.( About from minute 28 of the programme. Not any more ! I’ve just discovered the BBC have pulled the programme. It is no longer available to view. Perhaps it was embarrassing ?)

It was a useful skill, the organiser said because it taught ‘self confidence’ to the unemployed.

“But these are grown up men and women….. are you sure you are not treating them like children” replied John Humphrys, looking poleaxed with sheer wide eyed amazement, clearly scarcely able to believe his ears.

So, all you two and a half million bone idle unemployed layabouts , go out to your nearest Asda supermarket, buy some repulsive and inedible garishly pink iced ready-made cup cakes and jolly well learn to decorate them just as quick as you can.

Then the magic cup cake fairy will wave her magic wand and suddenly there will be loads and loads of really well paid jobs for every idle layabout currently without a job.

All the jobs will be just decorating horrible iced cup cakes all day, but that doesn’t matter because it’s a job innit ? And the good old Government which creates all the millions of other phantom jobs like this will score even more Brownie points with the irretrievably stupid electorate.

Oh, and meanwhile all benefit payments can become slashed by the Government so no unemployed people can have enough money to even survive in abject poverty in order to force them all to go out and gainfully decorate cup cakes.

That way Bankers will become richer and decent people even poorer, but who cares ? Not the people running the country and certainly not the wickedly dishonest bankers who destroyed so many jobs with their uncontrollable. dishonesty, greed and corruption.

BANKS ARE ONLY CAUSE OF ECONOMIC CRISIS – BRING THEM UNDER CONTROL NOW !

October 11, 2011

Economy being poisoned by banks. Greed is good they said smugly as they wrecked the World economy

Let’s cut through all this economic technobabble and get to the point. It is desperately simple and is needed in order to discover what the root of this economic problem really is and give us a clue as to how to tackle it.

– Nearly all people capable of working really, really, ‘want’ to work both for the psychological benefit and the financial reward so they can go and buy what they wish to buy.

– Broadly speaking, it is a fact that overall consumer demand is theoretically entirely unlimited and insatiable.

– Everyone, generally, wants more and more; and when they actually have more, then they want yet more. There is no limit to the amount of work needed to make the World a better place and reach beyond it to the stars.

– With this unlimited, insatiable demand, there is no limit to the amount of goods & services that could be produced to satisfy the inexhaustible demand – if that demand is gainfully employed and receiving proper financial reward for it.

So what stands in the way of this happy way of things ?

It isn’t the workers, most of whom who would work like dogs if adequately rewarded. and working like dogs for proper reward would have an ever increasing ability to spend their wages to buy the manufactures of all the other busy workers.

No, it is primarily entirely caused by the banks venal and even fraudulent manipulations of the financial system, over which they seem to have been allowed complete control by ignorant, feeble and weak governments who haven’t got a clue what they are doing.

The banks have consequently persistently devalued the entire system of currency by their breathtaking greed. The banks issue virtually all the money in existence and therefore have total control of it. They use that control to milk the entire working population for the exclusive and excessive profit of the banks.

Put simply, if every business and every individual had no debt at all, and all the money they possessed was owned entirely by them without it being issued by the banks, the entire World would be an infinitely more prosperous place.

This whole economic crisis can be solved by taking control of the currency completely away from the irresponsible, greedy, dishonest, and venal banks who artificially force everyone else into the never ending servitude and serfdom of debt.

Just observing how the UK national debt has exponentially soared from 29% of GDP in 2002 to 37% in 2007 to an eye watering 148% of GDP now – if you include all the bank bailouts – is a big fat clue.

The dishonest greed of Lehmans Bros bank very suddenly causing the first economic crisis of 2007/8 (currency stoppage & general Worldwide currency logjam making currency instantly unavailable for commerce, causing said commerce to start seizing up) is clearly the trigger for what is also happening right now – which is more of the same; also simply caused by banks hoarding currency and refusing to issue or release it into the working and manufacturing population. The simple result is – commerce just seizes up and poverty ensues. It’s really easy to understand.

The banks are making less and less money available so viable business’ go bust and workers no longer have wages to buy the goods. But both the workers want to work and the manufacturers want to manufacture.

It is just that the banks get in the way of both those good intentions.

The banks need dealing with immediately. They are poisonous and mostly the exclusive cause of all the economic problems the developed World faces.

Over to you Mr Cameron. Have you lot in Westminster got the guts to do it ?

BANKERS RUTHLESS DESTRUCTION OF ECONOMIES TO FEED OWN GREED

August 19, 2011

All these economic & political problems have been created by banks miss-behaving and miss-managing. The problems are entirely artificial and unwanted and are purely the product of banker’s greed as they seek to divert wealth from the people who actually create it, to themselves.

In the real World where there are no bankers controlling every move everyone makes, there are literally unlimited jobs waiting to be done as humankind would wish to to advance civilisation and eradicate poverty, deprivation and mediaeval ways of life which are a disgusting product of politicians’ venal stupidity and self interest.

Bankers stop people working. Bankers destroy jobs. Bankers destroy wealth and wealth creation. Bankers destroy whole economies and damage people’s lives. Bankers are ruthless, violent, merciless, unthinking and greedily inconsiderate as all they are concerned about is their own profit. Banks do not care about destroying people’s lives; they do it all the time.

Wealth is what is created by people working away at something that needs doing. Workers create assets as they build cities and invent new and useful things to manufacture to improve modern life. Different types of workers like medical workers use skills to beaver away at looking after people while other workers beaver away at a million and one useful tasks that create all the goods and services needed to advance human civilisation. This is the real creation of wealth.

But banks interfere with all those good intentions; banks stifle and choke it with their iron grip of greed and control.

Real wealth is not “money’. Money is just a convenient invention needed to enable trade between people and avoid bartering assets between each other. Instead we use ‘money’ to measure assets and wealth and just barter money between ourselves instead.

But banks have grabbed control of all money; grabbed control of it from the governments who originated it, and have debased and destroyed it by how they have used and manipulated it.

Banks have vastly increased how much they charge the rest of us for using money in Modern Times as they learnt they could exert almost a complete stranglehold on all money by developing new banking tricks designed to grasp almost total control of all money away from everyone else – governments included.

Computers and subsequent electronic based banking processes were a godsend to feed the greed of bankers. The rest of the non-banking population was bemused by the onslaught of banking and financial market gobbledegook nonsense language designed to confuse and discombobulate everyone else not part of the magic circle of financiers.

Interest rates charged by banks have soared to ludicrously usurious levels based on pure fantasy. Banks have also invented imaginatively fictitious reasons for other charges everyone is forced to pay just to use their own money; charges which often are no more than pure fraud. But the banks get away with it. Banks have even attempted to charge people for taking their own money out of the bank to spend .

They have effectively taken away nearly all money from individuals, businesses or governments in order to then dole it out back to to everyone else, but only with onerous terms and conditions attached to it to give banks control over it and make everyone using the bank’s money the effective slaves of the banks

This enables banks to milk as much profit as they can get away with and squeeze out of the exhausted financial slaves they now control.

Because the banks have wormed their way into virtually all financial activities anyone, individuals, businesses or Governments ever engage in, the banks dictate to and control everyone through their control of the money supply, over which they have an iron grip.

They do so with only one objective in mind – making as much profit for themselves as they can possibly do so, and protecting themselves as much as possible by seeking as much domination and control of their ‘customers’ as they can get away with.

In order to make ever increasing amounts of money for themselves, the banks have needed to lend more and more because this is their principal way of making almost unlimited amounts of money to line their own pockets with. Hence the obscene banker’s bonuses stretching into the millions of pounds paid to bank staff who have skills no more remarkable or worth huge rewards than the skills of all the rest of the averagely well educated workforce.

But in their blind stampede to earn obscene profits and grow so large they now control the entire Global economy, the banks have connived to persuade and brainwash everyone into believing that borrowing ever increasing amounts of money from the banks under more and more onerous conditions is a good idea.

It isn’t a good idea at all ! Because all the borrowers are stifled and choked by the control the banks have over everything they do. Banks take away everything from their borrowers and turn them into milch cows for profit forever condemned to perpetual servitude to the banks greed.

The increasing unemployment is entirely due to the activities of the banks preventing people who want to work from doing so. The whole Global economic crisis is caused entirely by the banks – no one else.

Until someone takes away from the banks their selfish and destructive control of the money supply and puts it back into the hands of each and every individual worker who needs to use it in order to create work and therefore real, lasting actual wealth, then this economic crisis will only get worse and more and more jobs will be lost as unemployment skyrockets.

Money as debt doesn’t work because the banks own and control all the debt which they then mismanage spectacularly in pursuit of greed.

It is essential that control of the money supply is completely removed from the banks in order to rescue the World from the economic manipulation and collapse which the banks have inflicted on it !

Death to money as debt (controlled by the banks ).

Long live real money owned by the people (controlled by the people who actually use it and create real wealth) !

UNDERSTANDING THE REASON FOR OUR ECONOMIC MELTDOWN – AND IT WILL GET WORSE !

August 8, 2011

THE SIMPLE EXPLANATION OF HOW THE WORLD WIDE CREDIT CRISIS EXISTS AND WHAT CAUSED IT

Understanding the reasons for the Worldwide economic meltdown are not easy. This is only because the banking world wrap even the simplest of ideas in gobbledegook language no one else outside the financial industry usually understands.

That is because they don’t want anyone else to understand it, otherwise finance would lose it’s mystique and bankers would lose their sinister hold over everyone else. So, all we have to do is unwrap all this gobbledegook and use plain language instead.

let’s get straight to the point. Amongst all that pompous financial verbiage wittered by all those self important bankers is this simple truth.

If nobody had ever borrowed a penny from anyone else, and everyone had always paid for everything they had purchased only with money already in their possession, nobody anywhere would owe any money to anyone else at all.

If that was the case, and it is only an imaginary idea just to illustrate exactly where this awful financial armageddon came from which is destroying the World economy right now, then there would be absolutely no credit crisis and no financial meltdown. It would simply be impossible ! Everybody would be in complete control of their finances !

There would be no loss of jobs and no increase in poverty and no meaningful inflation either. No governments would be going bust or falling apart at the seams in their desperate attempts to be able to pay all their debts.

Everyone – governments, businesses and individuals would be in complete control of their financial lives because they would have no debts to pay. Therefore no one else would have any control over anyone else and be able to interfere in their lives and even destroy them because they owed money to the interferer.

Debt makes the person borrowing the money beholden to the lender. The borrower immediately loses control of their own lives when they borrow money.

A government, individual, business or bank which depends for survival by always being able to borrow money from someone else is not only permanently in the control of whoever lends them money, but is always a hairsbreadth away from complete annihilation if nobody is willing to lend them money anymore.

And that is exactly what has happened. The banks have gradually engineered a vice like grip over every financial transaction. They have also successfully brainwashed most of humanity into believing that borrowing nearly all the money needed for trading with each other is the proper way to conduct financial affairs whether you are a business, government or individual.

Of course it is the banks that lend the money, which is why they want everyone to believe that borrowing money for everything is the right way to do things. It is also a curious fact that people lending others money think they have a right to tell the borrower what to do and what not to do, generally boss them about and tell them how to conduct their lives – particularly when it comes to how to organise the money borrowed.

The present financial crisis arose quite simply because with everyone borrowing more and more money as the banks wished and duly persuaded them, more and more control of everyday life went from businesses, individuals and governments into the hands of the banks. And the only thing the banks knew or cared about was making more and more money for themselves.

Then the same problem of loss of control hit the banks too. This first of all happened to Lehmann’s bank in 2008 when it suddenly discovered that it could no longer borrow money from other banks to pay for what Lehmanns owed to others.

Other banks didn’t want to lend to Lehmanns because they had observed Lehmanns becoming more and more greedy, dishonest and devious with increasing suspicions of fraud as well. Lehmanns were at the forefront of driving the concept of borrowing into an arcane stratosphere of unreality where they contrived to lend the same bit of money again, and again and again – all at the same time; Lehmanns conjured up an idea where the same money could be lent almost an unlimited amount of times all at once.

When Lehmanns discovered no one else wanted to lend them any more money, that in turn meant Lehmanns couldn’t pay money it owed to other banks. Those other banks then found they, in turn, hadn’t got enough money to pay their creditors either. And so the whole sorry merry-go-round of financial industry fictional fantasy money created out of thin air collapsed. All because everyone owed everyone else ever increasing amounts of money and no longer had any control over their own financial lives.

This whole rotten edifice has been crumbling ever since Lehmanns went bust and everyone found out mendacity, fraud and corruption were rampant in the financial industry, nowhere more so than in the banks.

Banks have effectively destroyed money by completely debasing it; turning it on it’s head and making it into debt instead of money. This has resulted in the banks controlling every aspect of all of our financial lives, taking away our own ability to manage our affairs efficiently.

This is why there is a Wordwide economic meltdown of nightmarish proportions.

Quite simply, banks have succeeded in destroying the money we all need to conduct any form of trading because they turned it all into debt instead of real money. and now everyone is finding it increasingly impossible to pay it all back as the debt just gets uncontrolably bigger and bigger.