Dumb:

Project Lifeline is a Bush administration initiative to give distressed mortgagees an additional month before their homes are foreclosed upon. This reprieve goes not only to subprime borrowers but to all distressed borrowers. The subtext to this move is that not only are subprime borrowers in distress. One month’s grace is dumb because the amount of debt that we’re dealing with coupled with the loss of equity from falling housing prices is not something that is going to resolve itself that quickly. This is akin to giving a starving man a rice cake. We all know that rice cakes are good only as coasters, so too is Project Lifeline.

Dumber:

Interest rate cuts are an even dumber idea. Last month the Fed cut rates by a staggering 1.25%. There is strong rumour that more cuts are coming. This is a dumber idea for a few reasons. First interest rate cuts are the cause of debenture spending. The reason we’re in the mess we’re in is because people are/were spending money they didn’t have. Next, lowered interest rates cause economic bubbles such as the housing bubble which is just in the process of bursting. Finally, interest rate cuts increase government debt. The way that the Fed lowers interest is by buying treasury bills with printed money. This devalues the currency and increases government debt. Thus, interest rate cuts are the cause of the current economic quagmire, and certainly aren’t the cure.

Dumbest

The US Stimulus Package is the dumbest possible idea. Under the package, people could see $600 to $1200 in tax rebates. First off, the amount itself is a pittance. Next, where is the money coming from? The money is being borrowed from China to be repaid with interest. Where is the money going? The money, it is hoped, will be spent into the economy to buy ’stuff’. Where does all the stuff come from? The stuff comes from… China. The real underlying problem is that the US economy has shifted from a production based economy to a consumer based economy. Until you address that problem, any attempts to throw money at the problem will simply throw money in other people’s pockets. I’ll give the government some credit though, the US Stimulus Package does manage to stimulate an economy; perhaps the government will fund moving its citizens to Beijing where the positive effects can be felt.

AID · Beijing · bubble · bush · Bush administration · China · Coming · Economy · fed · federal reserve · Federal Reserve System · george bush · http · interest rate · life · mortgage · OJ · prime · project lifeline · Red · stimulus package · subprime · the fed · United States · US Federal Reserve · USD

On this anniversary of Sept 11, I am privy to a pre-release of a recent report from the 9/11 committee.  The report details the wholesale destruction of the US economy by Al Qaeda operatives operating within the United States in a coordinated strategy to bring the US economy to its knees. 

Evidently the terrorist attacks on Sept 11, 2001 were really just a smokescreen for the more prolonged strategy to destroy our economy.  It started with Fedr Al Grin, a high ranking operative deeply embedded in the US banking system, decided to lower interest rates under the guise of stabilizing the economy. 

Below is a transcript of the interrogation of the recently captured Al Qaeda operative Hanny P’Alsin:

This [Fedr Al Grin's actions] led to freely available money which the “infidels gulped up like candy.”  Fedr Al Grin smiled happily watching the infidels load up on overpriced housing and cars they couldn’t afford until 2005 when he started to tighten the noose he had placed around the necks of the infidels.

In 2005 Fedr Al Grin started to raise the interest rates, again under the guise of protecting the economy, and the foolish infidels fell for it.  Suddenly they all began to realize that they were living beyond their means as the money supply evaporated.  Fedr Al Grin played the clarinet as the mortgage market burned.  The Department of Homeland defense became wise to Fedr Al Grin and had him removed from office.  Under water boarding at Abu Ghraib, Fedr Al Grin admitted to many of his sins and wrote an expose detailing the turbulent times he had overseen. 

However, while Fedr Al Grin was on one hand admitting to the evils of the system he had overseen, he had already placed a backup, his protoge Bin Bernik in place.  Bin Bernik watched as banks suffered and fell.  In their weakest moment, he offered help with a secret system to bail them out with infidel taxpayer dollars.  Bin Bernik was well trained by Fedr Al Grin to use a financial terrorist tactic to counterfeit US treasury notes.  By printing too many of them and using this counterfeit money to bail out and own financial institutions, Ben Bernik was and is covertly taxing the entire infidel population into bankruptcy.

One by one the mighty infidels fell.  Bear Sterns, survivor of the great depression sacrificed itself at the feet of Ben Bernik and his plan.  Freddie and Fannie, sacrificed themselves to Bin Bernik saddling the infidels of America with $5 trillion dollars in debt in a single weekend.  Even to this very day, the great intelligence of this plan is still giving fruit.  Lehman Brothers of New York is faltering, soon to fall. 

The US infidel automakers are also rallying to the cry of Bin Bernik.  They too want this free money which secretly bankrupts the US economy.  Airlines, insurance companies, all too big to fail, will sing the song of Bin Bernik to their destruction.  Bin Bernik will happily supply all these companies with counterfeit currency and thus dilute the savings of all the infidels until their lavish economy implodes.

On this anniversary of 9/11 we as Americans have come to realize that all our problems exist overseas.  Clearly this latest report serves only to amplify our need for our continued efforts in the Middle East occupying more sovereign nations to ensure our freedom.  I call on all Americans to pick one of the non-invaded ’stans (Pakistan, Turkmenistan, Uzbekistan, Tajikistan) for immediate attack.  It doesn’t matter which one, clearly any country ending in ’stan will harbor some sort of terrorist.  Only in so doing will we secure freedom for our children and security at home.

9/11 · Al Grin · Al Qaeda · ale · Allan Greenspan · America · anniversary of 9/11 · anniversary of Sept 11 · bank · banking · bankruptcy · bear sterns · Ben Bernake · Ben Bernik · cent · Department of Homeland · Economy · fannie · fannie mae · fed · federal reserve · Fedr Al Grin · financial terrorist · freddie · freddie mac · great depression · Henry Paulson · high ranking operative · ILS · insurance · interest rate · king · lehman brothers · middle east · MIT · mortgage · New York · operative · Pakistan · printing · quote · Red · Tajikistan · Turkmenistan · United States · USD · Uzbekistan

At age 35, having recently been laid off, I found myself at a career exploration workshop run by the Jewish Vocational Services. [ed. note: The Jewish Vocational Service now serves people of all races and ethnicities. It is as identifiably Jewish as the star of Dennis; that is to say, not.] Coming from a lucrative yet unfulfilling career in Computer Sciences, I was looking to marry my other talents with my career or perhaps start a new career altogether. Other classmates were either seeking career guidance or training. Whatever our immediate goals, we were all in the same boat, fighting against the tide of layoffs and restructurings unleashed in this latest economic maelstrom. My shipmates flew the flags of many diverse nations, had charted the courses of many differing careers and hailed from all ages and walks of life. Just the same we found common steerage on our upstream battle for employment or fulfillment or perhaps the confluence of both.

Our first day consisted of pen and pencil cognitive tests adding numbers, mentally folding boxes, and figuring out which way a submarine will go when its control surfaces were adjusted. Rudely, I knew exactly where I’d like that submarine to go upon first inspection, but there was no entry on the form for my proposed destination. Despite the continued assurances of the counselors that these tests were only a part of the overall equation, they were a shot across the bow for many of us since these tests are becoming ever more popular in interviews. I personally lost several points on one test after falling into a daydream where I asked: “If I took a five pound weight and used a 10 meter lever, would it be enough to crush the infernal 5 minute timer which callously and repeatedly told us we were out of time?”

Were we out of time? Were we too old, too obligated to family, short on funds, or too far removed from Canadian culture to find the employment and fulfillment we sought? Despite healthy doses of gallows humour about the testing process and the general state of the economy there was a palpable weight on people’s shoulders. While we all smiled and shrugged off the indignity of the return to school days, we all feared that the next spatial visual acuity box we might fold might very well be a coffin in which we would be forced to bury our dreams.

Fortunately the rest of the program returned our egos to an even keel. Patricia, a course facilitator guided us through assessments of personality where the only wrong answer was to have no personality to speak of; fortunately this was a fate suffered by no one. She is a veteran of many lands, many careers and I imagine many recessions who seems to pay them no mind. Her right and proper British manner seems to remind us of Mary Poppins who would advise us all to take “a spoon full of [optimistic] sugar to make the [recession] go down.”

Then there was Derek, the course facilitator with a coy and sly smile which hinted at his razor sharp interviewing style sure to eviscerate any unsuspecting and inauthentic candidate. While we would rue having him on the opposite side of the interview table, luckily for us, he was on our side and was willing to share his insights. He built our confidence and ability to market ourselves and revealed some insider interviewing secrets such as having his secretary work on his behalf as a covert agent. Candidates be forewarned: be nice and polite to the secretaries – while you cannot remain silent, everything you say can and will still be used against you.

Career change is never easy, under any financial climate. I note that some attendees proudly claim that they can do anything while others are more reserved about their dreams and ambitions. Our facilitators would quickly point out that the differences in expressions were due to the different personality types we had studied that week. Both types of expression however are a defense against the underlying fear that our high flung ideas will run aground on McDonald’s Island where we’ll be forever enslaved serving cheeseburgers to other people who somehow managed to make it. There was tremendous talk among attendees of the economic climate and other external factors which the course could not possibly change. The course however, spent precious little time on the economic situation and instead looked to what it could adjust, our attitude and direction. Ultimately we all cast off and sought our own safe harbours but we did so with the benefit of a true and straight compass. For the beacon lighthouse JVS offered me in navigating a foggy and tumultuous job market, I am truly grateful.

AID · aig · ale · cent · Coming · Computer Sciences · Economy · equation · flu · Health · Jewish Vocational Service · Jewish Vocational Services · king · life · lighthouse JVS · Mary Poppins · McDonald’s Island · RAM · Red · secretary · secrets · the Star · unsuspecting and inauthentic candidate

PDF Version: AncientInjustice.pdf

Growing up, my Jewish education consisted of an after school program (‘cheider’ to the Yiddish inclined) while I attended public school by day.  On my walk to Hebrew School I would often try to marry the two bodies of knowledge from the two respective school systems.  A happy romance occurred around 1987 between the religious and secular bodies of knowledge.  As many may recall 1987 was the year of the big crash on the stock market.[1]  Debt and the economy were on the lips of many in those days.

In the secular world there was tremendous talk of personal and national debt, interest rates, unemployment and the like.  All the while, the Torah I was reading in Hebrew school was definitely running on about the sabbatical forgiveness of debt and the precept that “there should be no poor among you”. (Deut 15:1-4)  Now my mental image of the ancient Israelites was that of a pastoral, agrarian people.  With hindsight I can say that this image was only slightly misguided.  Despite the rumored grandeur of the Davidic kingdom, archaeologists hold that their society was more rural than urban.

But this left me with a theological problem:  I saw debt as a product of banks which were on city streets.  I failed to conjure an image of rolling agricultural fields dotted with banks and/or ATMs at the Temple gates. (Parenthetically, it turns out that if the Gospels have any historical veracity, there may have been just such an ancient equivalent of an ATM at the Temple gates.  More to follow shortly.)  Failing to imagine ancient banks, I was puzzled about what the ancient Israelites knew of debt and how then did this prescient warning against the accumulation of debt make it into the Torah?  I questioned my Hebrew school teacher along these lines and I was given the answer that ‘the Torah contained the writ word of God and all His wisdom.  It was written for all times and addressed all the problems that we would encounter until the end of days.’

Platitudes such as this are to young inquisitive men, such as I was, like drinking sea water when thirsty:  quenching only at first and then leaving you more thirsty than ever.  If my teacher’s answer was to hold water (pun intended) then there were conspicuous absences from the ‘writ word of God’.  Where were the foundations for democracy?  Where were the specific prohibitions against slavery (beyond the sabbatical release of Hebrew slaves)?  Where was the discussion about protecting the environment beyond the scant ordinances for burying excrement beyond the outskirts of camp (Deut 23:14)?  From those grandiose absences there were more mundane absences like: Where were the prohibitions against smoking and where were the prohibitions against high cholesterol foods?  My attempts to marry the religious and secular belief systems were thwarted by the absence of these secular guidelines which I had determined to be legitimate and necessary.  After a brief flirtation the attempted marriage failed in divorce with the judgment pronounced by my rationality decreeing that the Torah was not indeed the writ word of God.

Literalists may be tempted by the previous sentence to toss this work out of hand directly into the fire.  Indeed this may provide needed warmth to those suffering the effects of debt.  Just the same, with a bit of patience on both sides of the theist/atheist debate, I believe there is commonality to be found in the good intentions of the Torah.  While we may debate its authorship I will not debate that it was written with the best of intentions.  Further, I hold that it was written to describe an ideal rather than the actual practice of the day.  There is a common modern Israeli expression: “The synagogue I don’t go to is Orthodox.”  Similarly, I believe that the Torah describes an ideal set out for the people to follow which was likely, based on archaeological evidence, considerably different than religion actually practiced by the ancient Israelites.  Specifically, archaeology reveals the rampant practice of polytheism and idolatry up to the Babylonian exile.[2]  Biblical archaeology contends that the Torah was a compendium of tales written by a reformist movement railing against the practices of the day.  Setting aside the issue of biblical authorship, I will continue the discussion in the context of the good intentions of the author presently.

The now dubious authorship of the Torah made my original question even more pronounced.  If the Torah was not written by God, then who wrote it and how were the ancient Israelites aware of debt and its effects?  My research would lead me to the field of biblical archaeology.  I studied the works of William Dever and Israel Finklestein amongst others with the following results.  The ancient Israelites never conquered Canaan as told in the Torah canon.  They were instead Canaanites themselves who survived and replaced a decaying social order with a more egalitarian one.  For those interested in how I arrived at this conclusion there is a wonderful précis of biblical archaeology available on Public Broadcastings’ NOVA series: “The Bible’s Buried Secrets.”[3]  There you’ll find a terrific summary of all the archaeological and scientific findings to date.  I only wish this series had existed at the outset of my research for it would have saved me much trudging through many inaccessibly written academic works on the topic.  Researching biblical archaeology was much like archaeology itself: sifting through piles of academic detritus to yield occasional relics and then putting the pieces together.

So, accepting for the moment that the Israelite race emerged from the nadir of the Canaanite civilization, Zephaniah 1:11 becomes ever more clear:
“The dwellers of Machtesh [, a quarter of Jerusalem,] howl;/ For all the tradesmen [nation of Canaan] have perished, All who weigh silver are wiped out.”
Two things are critical in this passage.  First the time of Zephaniah, well past that of the Canaanite era, and second the reference to the weighing of silver.  Zephaniah was not admonishing the Canaanites but rather the Jewish merchants of Jerusalem who were acting like Canaanites.[4]  As to the reference to the weighing of silver, silver was then as it is now, a monetary metal.  All throughout history, every society has been plagued by the manipulation of their currency leading to their ultimate downfall.  Economists call the process seigniorage gain.

Seigniorage gain is the process by which the minter (usually the government) gains on the difference between the face value of the coin and the actual value of the metal used to make it.  I often think it is the job of economists to construct palatable names for what in the end turns out to be sheer larceny.  Those unfamiliar with the term may be more familiar with the contemporary synonyms such as ‘inflation’.  Whatever you choose to call it, ‘a lemon by any other name would taste as sour’ and inflation, currency manipulation, or seigniorage gain is quintessentially a tax on the middle class leading to widespread debt, poverty and wealth inequality.  It is a fundamental violation of the biblical injunction to have “fair weights and measures” (Deut 25:13-16).

It is my supposition that it was an economic collapse brought about by currency manipulation which spelled the end of the Canaanite civilization.  I will support this supposition by reviewing the log roll of history vis a vis currency manipulation and the subsequent unfolding of the relevant civilization.  Biblical archaeology tells us that the proto-Israelites literally fled for the hills in the face of the collapse of the Canaanites.[5]  There they regrouped and sought to set themselves apart from the evils of their past.  After the dust had settled they returned with a renewed spirit and purpose to set out a more equitable system.  To that end they developed laws against the accumulation of debt and the slavery that results.  Those laws were later canonized in the Pentateuch around the end of the Babylonian exile (4th to 6th centuries BCE).[6]

Some 600 years later we know that these laws were largely being ignored and that corruption again loomed large.  We have the historical testimony of the gospels of Luke and John which recount Jesus’ banishing of the money changers from the temple gates.  Around the time of the year 0 CE Roman currency was the common currency in the holy land.  These coins typically bore the images of pagan gods and were unacceptable for use in temple worship.  At the temple gates, benches of money changers would exchange these coins, at predatory exchange rates, to Levite coins for use in temple services.  These same money changers would charge the Levites unreasonable rates to change these coins back into Roman coins such that the Levite priests could make purchases in the markets.  Jesus found the entire process abominable and forcibly drove them from the temple.[7]  Whether you believe the historical veracity of the gospels is beside the point here.  What is known is that currency manipulation was clearly on the mind of the authors of the gospels and the gospels were known to be written around this time (admittedly within 400 years).  As a pertinent aside, the word ‘Bank’ comes from the Latin for ‘bench’ precisely referring to this historical antecedent.[8]  I believe it is social disarray caused by the financial ruin of Israel which led to its overthrow by the Romans.  There is textual evidence for this in the bible itself:  Jeremiah 7:11 reads “Is this house, whereupon My name is called, become a den of robbers in your eyes?”  Amos 5:7 reads “Ah you who trample the heads of the poor into the dust of the ground, and make the humble walk a twisted course.”

It is an irony of history, if not a recurring leitmotif, that the very same financial snare which destroyed Israel also destroyed its captors.  In Hebrew school we all learned of the famous (infamous) “Judea Capta” coin.[9]  This coin depicts the pride of the Romans in defeating ancient Israel.  It is in the silver or precious metal content of roman coinage with which we can track the decline of the Roman Empire.  The backbone coin of the Roman economy was the Denarius which started out with a silver weight of approximately 4.5 grams.  Have you ever noticed the ridges on the edge of a quarter?  These same ridges were present on the Denarius and there intention is to make any shaving of the coin obvious.  This made it harder for individuals to debase the currency but the government was free to mint coins with less and less silver content.  By the year 274 CE under Aurelian’s reign the coins had almost no silver content at all.[10]  The causes of the fall of Rome are admittedly complex, including the outsourcing of their military defense to barbarian mercenaries.  Just the same, the economic decline of Rome is certainly one of the principle causes and is yet another exemplar of the debasement of currency leading to the debasement of the underlying civilization.

The collapse of the Roman Empire led the world into the dark ages.  The Christian religion took hold championing the cause of the poor all through these long dark ages.  Eventually a fair monetary system was developed called the tally stick system.[11]  Very strict Christian based laws against usury (interest) prevented any monetary abuse.  However, in the 1500’s Henry VIII, obviously unaware of the peril, deregulated the economy and allowed for certain forms of usury.[12]  The economic maelstrom unleashed destroyed the English economy.  In the wake of the upheaval and in the aftermath of the English revolution of 1642, the Bank of London was established.  Oddly enough, the initial shares were bought with no other currency than talley sticks.  The bank of England replaced this monetary system with their own manipulated (or ‘fiat’) currency.  Currency manipulation was now institutionalized in the form of this ‘Central Bank’ put in place to ‘protect and regulate’ the money supply.

Just around this time, gold was being used as a currency.  Carrying ones gold on their person could be cumbersome and moreover, dangerous.  A robbery could erase ones savings.  The goldsmiths of the day agreed to hold gold for consumers at a nominal fee and issued them a certificate which they could then use to redeem their deposits.  These little slips of paper were much easier to work with and in a very short time, the slips of paper would be used in transactions instead of gold.  The goldsmiths made an astute observation.  Not all of their clients came to collect their gold at one instant.  As such they could lend out some of the deposited gold at interest making money on money they did not really have.  While this seems relatively harmless provided customers do not all come for their gold at once, it is in fact at the core of everything wrong in the world today.  The fraud is subtle yet essential to understand.  By using gold that say a farmer had deposited to make loans, you are using the hard labour of the farmer to make money with very little labour.  In a nutshell, this practice siphons up the value of labour and puts it in the hands of the advantaged few who are in a position to leverage it.  This is the practice of fractional reserve banking with is with us to this very day.[13]  When a middle class family takes out a loan to get an SUV, the bank does not lend you their money.  They lend you the savings of an auto worker who drives a compact sedan.  The banker turns interest on money s/he never owned and drives a luxury sports car on the profits.  Such is the food chain of fractional reserve banking.  Bankers love the practice for obvious reasons.  Politicians love it because they can finance their projects without reaching for tax dollars.  Projects can now be financed with thusly conjured money with only a nodding concern for inflation and the ever growing national debt. The average person neither loves it nor hates it because they do not understand it.  Hopefully, that is, until now.

The Bank of England was aware of the practice of the goldsmiths but instead of outlawing it, embraced it.  As such they succeeded in protecting and regulating the money supply insofar as her citizens of wealth were concerned but all to the detriment of the English parliament and the general public.  The bank so bankrupted England that England was forced to place a heavy tax burden on its colonies.  The American colonies revolted to the cry against ‘taxation without representation’ in the war of independence of 1762.  By the end of this revolution, with the effects of the Bank of England in mind the Americans set out to “form a more perfect union”.  Into their new constitution section 10 forbids “…emit[ing] Bills of Credit; mak[ing] any Thing but gold and silver Coin a Tender in Payment of Debts…”.[14]  It was pursuant to this section that the United States was on the Gold Standard for most of its existence up until 1933.  The Gold Standard ensured that every bill was backed by gold.  Bills printed prior to 1933 were marked “redeemable in gold”.  After 1933 they were marked as only “legal tender”.  The founding fathers knew of the threat of a manipulated currency but that memory and warning was, as we now see, historically fleeting.

The Americans had the first and second Banks of America which again started to manipulate the currency.  Andrew Jackson famously put a temporary stop to the banking cartels saying: “You are a den of vipers and thieves. I intend to rout you out, and by the grace of the Eternal God, will rout you out.”[16]  For a short while he succeeded.  From 1836 to 1913 the United States was free of a central bank and the currency manipulation they bring with them.

During this hiatus in central banking while financial crises persisted, inflation was flat.  That is to say that one dollar was worth one dollar for this interim period.[17]  This allowed for the accumulations of savings which is the true practice of capitalism.  Indeed by the early 1900’s bankers were concerned with the prevalence of self-financing of business development.  So concerned were the bankers that they sought to reassert themselves and in 1913, taking advantage of a recent (some say engineered) financial crisis, the Federal Reserve was born and central banking was reborn in America.[18]  Again too, the promise of the Federal Reserve was to regulate the money supply and again, so it did, to the advantage of the wealthy few.  As it has always been throughout history, currency manipulation manufactures debt and poverty.  Since the inception of the Federal Reserve, the purchasing power of the dollar has decreased by 95%.  Inflation has increased by 1929% (that’s 19 hundred and twenty nine percent!).[19]  The effect of this is that wealth inequality is now staggering.  As of 2001, in the U.S., the top 20% held 84% of all the wealth.[20]  For those who have trouble dealing with math, what this means is that if you are in the class of the remaining 80% (most of us are) then in a more fairly distributed economy – which would necessarily feature a fair currency – you would have approximately 5 times your current assets.

As common as monetary manipulation is throughout history, so too are the attempted fixes when the system gets out of whack.  A fiat currency (recall a ‘fiat’ currency is an ‘on faith’ currency) is a sort of monetary Golem: this time made of minted coins instead of clay.  Generally it functions impeccably as designed, siphoning wealth upwards but occasionally and often dramatically, it causes large financial upset.  When this Golem takes a swat at its banker creators the solution is to placate it with, yes, ever more printed or minted money.  This maneuver results in one of two results: 1) a temporary stabilization of the monster or 2) a hyperinflationary death when the monster collapses under its own weight.  Note that in either outcome, the best that can be accomplished is a temporary shoring up of the system.  Inevitably, the Golem collapses back into the imaginary ore it came from, only after raping the value of the land and passing it into the hands of the elite few.  Revisiting the economic death of Rome, Nero and other Emperors debased the currency via inflation fiddling and minting as it were while Rome burned.

However, one need not look as far afield to find a terrific example of the hyperinflationary death of an empire.  Just recently, the Weimar republic died just such a death.[21]  In the 1920’s Germany forced under the WWI reparations act to make payments to the victor nations.  The victor nations, most notably France and England who were in their own financial distress due to – you may have guessed by now – their own currency manipulation, pressured the Germans to make good on their obligations.  The German coffers were largely empty and as a result they decided to print money to meet their obligations.  The German citizens were wary of the stability of their currency and began to hoard cash fearing a crisis.  Simultaneously the German creditors began to fear default on their loans and closed the taps of credit.  The German economy stalled and went into a brief bout of deflation.  The Germans did what every other economy has tried all throughout history to solve the problem:  they threw more money into the market to try and jumpstart it.  The German citizens feared for their nest eggs which caused them to attempt to convert any cash they had on hand to real assets.  This unleashed a torrent of cash on the market which immediately lead to hyperinflation.[22]  Hyperinflation is runaway inflation fueled by panic and distrust of the underlying currency.  A corollary to the loss of trust in currency is an inevitable loss of trust in the government that promotes it.  It was thus that the Weimar republic fell leaving a political vacuum in its wake which would soon be filled by the Nazis.  Malcolm Muggeridge once wrote that: “It has been said that when human beings stop believing in God they believe in nothing. The truth is much worse: they believe in anything.”[23]  History will record that this is equally applicable to the cessation of belief in government.

Historians and economists alike may be quick to point out that there would appear to be a historic precedent for economic spending or stimulus as an escape to recession.  They undoubtedly would point to the Roosevelt era and the “New Deal”.  So hope filled were the citizens of the day that the New Deal was rhapsodized into the Great Depression era musical: ‘Annie’.  Daddy Warbucks swooned “I know the depression is depressing… But we’ll get a new deal for Christmas this year.”[24]  The character Daddy Warbucks was modeled after Paul Warburg.[25]  It was common knowledge at the time that this was so.  Warburg was one of the chief architects of the Federal Reserve which is the United States arm of the Bank of England.  The bitter irony here is that it was the Federal Reserve System which caused and exacerbated the Great Depression.  They were anything but the cure.  The famed economist Milton Friedman spent a lifetime promoting this interpretation of events.  On the occasion of his 90th birthday Ben Bernanke, the current chairman of the Fed said: “I would like to say to Milton… Regarding the Great Depression. You’re right, we did it. We’re very sorry. But thanks to you, we won’t do it again.”[26]  While I believe that Roosevelt was well intentioned, he was fatally naïve.  His New Deal served only to confiscate all public monetary gold and transfer yet more power to the Federal Reserve to manipulate currency.  The hidden tragedy of the musical Annie is that while she shares a stage with the theatric Roosevelt and Warbucks (Warburg) singing their accolades as her saviour, she is actually praising the instrument of her orphan plight.  (Annie was orphaned due to the financial insolvency of her parents.)

While unwittingly kissing the hand that starves you may be tragic when it occurs on stage, it is far more tragic when it occurs in the real world.  It is still a mainstream notion that Roosevelt’s New Deal was what rescued the Americans from the Great Depression.[27]  Even though all through history, government salvation through spending has led to financial ruin at every attempt some still espouse the idea that it is possible to spend our way out of the damage wrought by currency manipulation.  Currency manipulation is good for bankers and bankers fund business schools which produce bankers.  It is no wonder then that currency manipulation which goes hand in hand with government spending ‘has’ to be a good thing.  If you want to be at the top of this pyramid scheme you have to support the bricks that build it.  In this light, when the financial meltdown of 2008 hit, how did the pyramid builders propose to deal with the ‘Gre08er Depression’?  You guessed it, with more government spending.

Journalists are already pointing out the similarities in circumstances between Barack Obama and Roosevelt.[28]  I believe the comparisons are justified and that Obama is, like Roosevelt, well intentioned but critically misguided.  Mind you, not only is Obama misguided but most people are ill aware of monetary policy and its implications.  Obama promises trillion dollar deficits running for the next many years.[29]  It is his hope that this massive spending will shock the economy back to life.  The only shock it can reasonably hope to achieve though is shocking the Frankenstein of currency manipulation to life to turn on its creator.  The only reason Roosevelt’s New Deal appeared to work was that by the end of WWII, the US had developed tremendous manufacturing capabilities and the US was a burgeoning economy; the US emerged from the Great Depression despite Roosevelt’s New Deal, not because of it.  The situation in this Gre08er Depression is different.  There is no new manufacturing potential, indeed it is declining.  The US is not a burgeoning nation but is instead a declining one.  Thus the only shock government spending is capable of producing on the US economy is an electrocution.

Growing up I had trouble relating to the ancient Israelites I was reading about.  I could relate only to their enslavement in Egypt which I read as an allegory for my forced attendance at school.  Beyond that, they were a people very far from me both spatially and temporally.  My time was dominated by discussions and anxious anticipation of new technologies and new scientific discoveries.  While I could ‘upconvert’ an ordinance to help a neighbour right a fallen cattle to a more modern equivalent of assisting ones neighbour with a crashed computer in general the setting for torah morality written in terms of cattle, oxen and sheep failed to connect with me.  I was always amazed then as to how these seemingly simple people understood concepts such as debt.  Most debt in modern times comes from securing shelter.  In ancient Israel this could be accomplished by erecting four poles and securing canvas.  So where did these biblical injunctions come from, what wrong were they trying to right?

In trying to answer that question I would have to journey through studies of biblical archaeology and general history.  After so doing, I have found a new connection with the ancient Israelites.  They were trying to solve a very old and fundamental problem:  how to govern a large group of people equitably while preventing corruption.  Currency is one of the fundamental cornerstones of any civilization.  It is fundamental to most of our interactions and if it is corrupt, so too will inevitably be anything built on top of it.  Disappointment then comes in reading the scroll of history with each entry echoing the previous:  “Empire rises with high ideals.  The high ideals erode under complacency.  Corruption then leads to inequality and fiscal malaise.  Empire manipulates the currency to buy time.  Empire runs out of time.”

The tenet of monotheism according to the bible started with Abraham.  What the Torah describes as a moment of epiphany is revealed by biblical archaeologists to in fact be a long arduous process which took several hundreds of years.  Key here is that a stated ideal can become a practiced ideal with exertion of effort over time.  It is thus to the commandment that we “should have no poor among [us]” that we must redirect our time and efforts.  I have recently come to a conclusion that the reformed Canaanite predecessors of the world’s ‘big 3’ monotheistic religions likely came to long ago; poverty is not the result of a lack of wealth but instead a lack of justice.

——————————-

[1]   http://en.wikipedia.org/wiki/Black_Monday_(1987)
[2]   William G. Dever: “Did God Have a Wife?”
[3]   http://www.pbs.org/wgbh/nova/bible/program.html
[4]   http://books.google.ca/books?id=sIWn6lYS-MQC&pg=PA171
[5]   Smith, Mark “The Early History of God: Yahweh and Other Deities of Ancient Israel” (pp 6-7)
[6]   McDonald & Sanders, editors of The Canon Debate, 2002, The Notion and Definition of Canon by Eugene Ulrich, pg 4
[7]   http://en.wikipedia.org/wiki/Jesus_and_the_money_changers
[8]   http://www.etymonline.com/index.php?term=bank
[9]   http://en.wikipedia.org/wiki/Judaea_Capta_coinage
[10]  http://en.wikipedia.org/wiki/Decline_of_the_Roman_Empire#Michael_Rostovtzeff.2C_Ludwig_von_Mises.2C_and_Bruce_Bartlett [11]  http://en.wikipedia.org/wiki/Talley_stick
[12]  http://books.google.ca/books?id=pnszAAAAIAAJ&pg=PA8
[13]  http://en.wikipedia.org/wiki/Fractional-reserve_banking#History
[14]  http://www.usconstitution.net/xconst_A1Sec10.html
[15]  http://en.wikipedia.org/wiki/Gold_standard
[16]  http://quotes.liberty-tree.ca/quotes_by/andrew+jackson
[17]  http://www.economics-charts.com/cpi/cpi-1800-2005.ht ml
[18]  http://en.wikipedia.org/wiki/Federal_Reserve
[19]  http://postworthy.com/Worthy/ex/US_Dollar_Purchasing_Power_Decline/205.aspx[20]  http://mwiner.files.wordpress.com/2008/10/wealthdistribution.gif
[21]  http://en.wikipedia.org/wiki/1920s_German_inflation
[22] http://en.wikipedia.org/wiki/Hyperinflation
[23]  http://www.brainyquote.com/quotes/authors/m/malcolm_muggeridge.html[24]  http://www.youtube.com/watch?v=c2vGeaqM33g
[25]  http://en.wikipedia.org/wiki/Paul_Warburg#Legacy
[26]  http://www.federalreserve.gov/BOARDDOCS/SPEECHES/2002/20021108/default.htm[27]  http://en.wikipedia.org/wiki/New_Deal
[28]  http://www.time.com/time/covers/0,16641,20081124,00.html
[29]  http://www.usatoday.com/news/washington/2009-01-06-obama-economy_N.htm

AID · ale · America · ancient israel · archaeology · aurelian · author · bank · bank of england · banker · banking · Barack Obama · bible · biblical archaeology · canaanite · capitalism · cent · central bank · central banking · chair · chairman · CHIEF · dca · democracy · denarius · economist · Economy · egypt · Environment · evolution · FDR · fed · federal reserve · Federal Reserve System · fiat · fiat currency · finance · food · fractional reserve banking · France · God · gold · gold standard · Google · gospel · gre08er depression · great depression · head · henry vIII · historian · html · http · ILS · inflation · interest rate · Israel · israelites · Jerusalem · judea capta · king · life · logic · London · marriage · MIT · monetary policy · money changers · Music · Nero · new deal · obama · OJ · Paris · partial reserve banking · Paul Warburg · pdf · php · quote · RAM · Red · Religion · reserve banking · roman empire · Rome · roosevelt · secrets · seigniorage · slavery · teacher · the fed · Torah · United States · war of independence · wealth · weimar republic · willam dever · William Dever · william g dever · WWII · Yiddish

Walter Kirn on The Colbert Report (Canadian Link): http://watch.thecomedynetwork.ca/the-colbert-report/full-episodes/#clip174780

Walter Kirn on The Colbert Report (USA Link):  http://www.colbertnation.com/the-colbert-report-videos/228190/may-19-2009/walter-kirn

Review of:
“Lost in the Meritocracy:  The Undereducation of an Overachiever”
By: Walter Kirn (Doubleday)
Reviewed By: Martin C. Winer
June 28, 2009

When I picked up “Lost in the Meritocracy:  The Undereducation of an Overachiever” by Walter Kirn (Doubleday), I expected a semi-dry expose on the problems facing the American Education system with an emphasis on the Ivy League schools.  The only semi-dry thing in the book was the champagne Kirn poured over two fawning exchange students during a graduation night orgy on his way to Princeton.  Told with prose and wit more common to novels, Kirn details his experiences as he rises out of the rural Minnesota winning one of 20 transfer student spots at Ivy League Princeton.

By Kirn’s account it is a wonder that there is any ivy left due to the propensity of the students to smoke any mildly herbaceous looking thing.

“There is no drug scene like an Ivy League drug scene.  Kids can’t just get high; they have to seek epiphanies.  They have to ground their mischief in manifestos.  The most popular one around … held that drugs, … especially plant based psychedelic drugs helped to break down the rigid inner partitions that restricted one’s full humanity.” (p. 124)

Recreational drug use was pervasive at Princeton as were many other illicit activities, with education taking a back seat.  I was so engaged with the stories that I was half way through when I reexamined the title and asked “what is a meritocracy anyways?”

Meritocracy was introduced as a more equitable replacement for aristocracy. Insofar as education, Harvard’s James Conant championed the cause of educational reform towards meritocracy as a realization of Thomas Jefferson’s dream of a “natural aristocracy among men, founded on virtue and talents.” (Jefferson used the term ‘natural aristocracy’ instead of ‘meritocracy’ because it wasn’t coined a term until the 1958 book “Rise of the Meritocracy” by Michael Young.  Incidentally it was intended pejoratively.) As with many high minded theories, the implementation often renders an imperfect reflection of the ideal.

Conant set the controversial School Aptitude Test (SAT) as gatekeeper for the bastions of higher learning guarding all the rewards of power that lay beyond.  When Walter Kirn took the SAT, he discovered he “had a natural talent for multiple-choice tests [which] landed [him] without the vaguest survival instructions [at Princeton]”. (p. 6)  Throughout the course of the book which details his experiences at Princeton Kirn suggests that his education consisted of learning how to succeed in the education system;  this is a far cry from becoming educated.

The distinction is eloquently revealed when Kirn is asked to discuss the ‘critical assumptions’ he’s made in reading the Norton anthologies;  unfortunately, Kirn had done little reading at all:

“With virtually no stored literary material about which to harbor critical assumptions, I relied on my gift for mimicking authority figures and playing back to them their own ideas as though they were conclusions I’d reached myself. I’d honed these skills on the speech team back in high school, and l didn’t regard them as sins against the [Princeton Student] Honor Code. Indeed, they embodied an honor code: my own “Be honored” it stated. “Or be damned.” To me, imitation and education were different words for the same thing, anyway.  What was learning but a form of borrowing? And what was intelligence but borrowing slyly?” (p.119)

Throughout the course of the book Kirn refers to himself as a fraud – sometimes proudly but more often with remorse.  But is Kirn a fraud or instead a sufferer of “Fraud Syndrome”?  Fraud Syndrome (also Impostor Syndrome) is not an official psychiatric diagnosis, but it is a topic well known and documented by psychiatrists and psychologists.  It is an intellectual condition where the intellect feels disconnected from any accomplishments or abilities.  If the intellect were a tree, then the tree would lack any knowledge of its roots and thus mistakenly think that its ability to grow upright was the result of undeserved serendipity.

Kirn’s notion that he somehow managed to beguile and finesse the system into accepting him to its highest ranks is significantly, and ironically, weakened by the quality of the writing he uses in making said point.  What follows is an example of Kirn’s average writing:

“Certain questions which grown-ups deem unanswerable begin as answers which children find unquestionable.  For example: what is Death?  To me at eight years old, death was the signal for a person’s loved ones to cry and look stricken for a while and then begin dividing up his stuff.” (p. 30)

Witty and clever turns of phrases such as these are found on every other page.  While this made for a delightful read, it served to undermine one of his main tenets.  It seems far more likely that Kirn didn’t finesse the system, but that the system managed recognized his talent despite his own inability to do so – marshalling him exactly where he ought to be: in the commensurate Princeton English Program.

If Fraud Syndrome ever does make it one day to be an official diagnosis, then Kirn should appear on the Public Service Announcement poster.  The text is rife with examples of Kirn’s detachment from his talent and feelings of being a fraud:

“My genuine tears [over the news of John Lennon’s death] flowed along with my false tears, as they did the distinction between them blurred.  I wasn’t ashamed of this.  My fraudulence, I was coming to understand, was in a way the truest thing about me.” (p. 77)

“The need to finesse my ignorance through such trickery [(using catchphrases)] — honorable trickery to my mind, but not to other minds, perhaps — left me feeling hollow and vaguely haunted.  Seeking security in numbers, I sought out the company of other frauds.” (p. 121)

“I grew to suspect that certain professors were on to us, and I wondered if they too, were fakes.” (p. 122)

“[My poems] were concerned with grander matters such as the creeping loss of “personhood” in an era of technological change. How I’d hit on this theme I wasn’t sure, but the more time I spent on it the more convinced l grew that I’d borrowed it.” (p.140)

“I confessed that my poems were all a sham and that [my] Bittman [character] was a hybrid version of Eliot’s Prufrock and Berryman’s Henry two famously beleaguered characters from the North anthologies.” (p.144)

“I felt in [my friend’s] company, as in no one else’s, that my bullshitting was a defensible activity, a circular approach to enlightenment.” (p. 168)

One of Kirn’s Princeton encounters offers a possible cause for Fraud Syndrome.  Kirn has a conversation with Julian — undoubtedly Dr. Julian Jaynes best known for his book “The Origin of Consciousness in the Breakdown of the Bicameral Mind” – in a bar following the production of one of Kirn’s plays.  Julian explained that the human mind was actually two distinct entities, that in ancient times were:

“… virtual strangers to each other.  When a thought arose in one of them, the other one, acting as a receiver, processed the thought as a voice, an actual voice.  …  But who was this being?  …  Man had answered these questions in many ways.  He’d conceived of gods and spirits, angels and demons, trolls and fairies.  Muses.” (pps. 93-94)

When Julian asked Kirn: “did you ever feel, during the composition of your script, that someone else, not you, was in control?” Kirn replied: “Honestly, I feel that way a lot.  Down deep, in a quiet way, I feel it constantly.  And sometimes it shakes me up a little.” (p. 94)  Perhaps this is why Kirn was unable to identify with his obvious talent; it felt external to him.  While Kirn makes this point incidentally in his book, it is nonetheless a very important one.  While Kirn fails to connect with his talent due to this separation of the mind, many more do something far worse:  Many fail to express their talents at all – failing to listen to that other ‘voice’.

While Kirn fails to impress upon me that his placement at Princeton was either coincidental or accidental, he does make some well taken points about the education he received once there.  It seems that when reading in the English program, pretension superseded comprehension.

“We … concluded, before we’d read even a hundredth of it, that Western canon was “illegitimate,” a veiled expression of powerful group interests that it was our duty to subvert.  In our rush to adopt the latest attitudes and please the younger and hipper of our instructors, … we skipped straight from ignorance to revisionism, deconstructing a body of literary knowledge that we’d never constructed in the first place.” (p.121)

“To thinkers of this school, great literature was an incoherent con, and I — a born con man who knew little about great literature had every reason to agree with them. In the land of nonreadability the nonreader was king it seemed.   Long live the king.”  (p.122)

Kirn found that many of the supposed ‘greats’ they were asked to read were completely incomprehensible by students and professors alike:

“Here is a sentence (or what I took to be one because it ended with a period) from the contribution by the Frenchman Jacques Derrida, the volume’s most prestigious name. “He speaks his mother tongue as the language of the other and deprives himself of all reappropriation, all specularization in it.” On the same page I encountered windpipe-blocking “heteronomous’ and “invagination.” When I turned the page I came across – tucked in a footnote –“unreadability.”

That word I understood of course.” (p.120)

For Kirn, university was a process in learning to jockey jargon words and phrases effectively.  Phrases like ‘semiotically unstable’ (referring to T.S. Eliot’s “The Waste Land”) and words such as ‘hermeneutical’, ‘gestural’, ‘recursive’, ‘incommensurable’ were all synonyms for ‘hard’.  Kirn was extremely confused by the works he read but he realized that confusion was not something to be escaped by understanding, but instead something which could be exploited by mirroring it back at its source.

“I was a confused young opportunist trying to turn his confusion to his advantage by sucking up to scholars of confusion.  The literary works they prized — the ones best suited to their project of refining and hallowing confusion — were, quite naturally, knotty and oblique.  The poems of Wallace Stevens, for example.  My classmates and I found them maddeningly elusive, like collections of backward answers to hidden riddles, but luckily we could say “recursive” by then.  We could say “incommensurable”.”  (p.122)

Kirn was adrift in a sea of confusion but it seemed that he was managing to navigate it by drinking the sea water and rolling with the currents.  It wasn’t long before Kirn’s thirst for meaning caught up with him, just as he had become completely intellectually dehydrated, basking in the scorching sun of the top percentile.  Kirn suffered a collapse, unable to continue the charade:

“For a few weeks I was still able to write, but it was a punishing, grind, self-conscious labor. I began most of my sentences with “the.”  Then I went looking for a noun. “The book” was often the result. Next, I seemed to remember, should come a verb. “Is” is a verb. It because my favorite verb. I liked it for its open-endedness — the way it allowed for a wide range of next moves. “The book is always . . .”  “The book is thought to . . .”  “The book is green and . . .” Impermissible. Yes, a book might be a certain color, but starting an essay with the fact wasn’t what college was all about. What was it all about? It was about making statements that weren’t obvious for people who made such statements professionally. “The book is a gestural construct possessed of telos.”

There I could rest.  I’d done it.  An hour’s work.” (p.178)

Eventually Kirn recovered after undertaking a course of self guided education which he found more fulfilling.  He continued his academic career at Oxford as a recipient of the “Keasbey Prize”.  Kirn draws two broader conclusions from his experience.

The first is a ‘roll with the punches and everything will turn out alright’ sort of message.  “… I discovered the truth — if words like “truth” mean anything.  And even if they don’t perhaps.  Pause in your knowing to be known.  Quit pushing — let yourself be pulled.  Stop searching, frantic child, and be found.”  (p. 205)  This advice may bear meaning for someone like Kirn with an innate and wonderful talent.  Its relevance to the rest of us who must work at it is somewhat questionable.

The second conclusion comes out more strongly in the interviews surrounding the book, but it is mentioned briefly.    In an interview (The Colbert Report: May 19, 2009.) Kirn claims that the current meritocracy does not reward depth, but instead rewards the “ability to define ‘incipient’. “Basically people who are very good at cross word puzzles end up running the country.”  “They are able to shine in every cocktail party they attend, but when it comes to running the economy, fighting the war on terror, … not very good.”  Kirn is referring to Donald Rumsfeld and to certain Lehman Brothers board members, who are Princeton Alumni.  Given Kirn’s experiences, it is easy to imagine jargon slinging economists brandishing terms like “Collaterized Debt Obligations” and “Credit Default Swaps” using them as talking points, rather than understanding their deeper implications.  Terms like these undoubtedly are mentioned in numerous A+ Ivy League Economics theses, confounding both the authors and the readers while leading to economic ruin.

This second summation is made in the book when Kirn discusses a run in, after graduating Princeton yet before going to Oxford, with an old friend who was self taught and well read.

“We had a great deal in common, Karl said.

But we didn’t, in fact, or much less than he assumed, and I didn’t know how to tell him this. To begin with, I couldn’t quote the transcendentalists as accurately and effortlessly as he could. I couldn’t quote anyone, reliably. I’d honed other skills: for flattering those in power without appearing to, for rating artistic reputations according to academic fashions, for matching my intonations and vocabulary to the backgrounds of my listeners, for placing certain words in smirking quotation marks and rolling my eyes when someone spoke too earnestly about some “classic” or masterpiece,”       for veering left when the conventional wisdom went right and then doubling back if it looked like it was changing.

Flexibility, irony, self-consciousness, contrarianism. They’d gotten me through Princeton, they hadn’t quite kept me out of Oxford, and these, I was about to tell my friend, were the ways to get ahead now–not by memorizing old Ralph Waldo. I’d found out a lot since I’d aced the SATs, about the system, about myself and about the new class that the system had created, which I was now part of, for better or for worse. The class that runs things.” (p. 210)

AID · aig · ale · America · artist · author · cent · CHIEF · Coming · Deconstruction and Criticism · drugs · economist · Economy · God · Harvard · head · http · ILS · Impostor Syndrome · Ivy League · Jacques Derrida · John Lennon · Julian · Julian Jaynes · Karl · king · lehman brothers · logic · Martin C. Winer · Martin C. Winer June · Minnesota · MIT · OJ · Oxford · Princeton · professor · quote · Ralph Waldo · RAM · Red · Rome · Stephen Colbert · The Colbert Report · video · Wallace Stevens · Walter Kirn · Walter Kirn (Doubleday) · writing

I’ve been watching with horror as the US economy is reduced to socialism.  Few are asking how much this will cost.  Those who do ask are getting nonsense answers like 25 billion dollars.  The Savings and Loan crisis of the 90’s took 250 billion dollars to bail out.  This current crisis dwarfs that crisis by orders of magnitudes.  So let’s cut through the bull and look at some math.

The Government is now on the hook for 5 trillion dollars in loans.  The only way they can lose money is if people default on those loans AND the value of the underlying asset (the home) has depreciated since the time the loan was issued.

So let’s say that 3% of people default on their loans.  The government is now on the hook for 150 billion dollars.  The government will now try to sell those foreclosed houses at market value.  Suppose those houses were inflated by a factor of 2 (that is they’ve now lost 1/2 their value).  Now the government sells the foreclosed houses at half the price and they’re on the hook for the left over half.  Thus the cost to the government would be 75 billion dollars.  The formula is thus:

bailoutCost = totalValueMortgages * defaultRate * (1 – (1/inflationFactor))

Now the question is where do we come up with values for things like the defaultRate and inflationFactor? (The totalValueMortgages is given as 5 trillion dollars by the government.)

Google mortgage deliquency rates or mortgage default rates and you’ll find numbers ranging from 2-5,  (I took 3 as an average).  Next to figure out the inflation factor, look at this chart:
http://www.nytimes.com/imagepages/2005/08/21/business/21real.graphic.html
and you’ll see that homes are around 2X inflated in value. 

So given these current numbers, the best case cost would be 75 billion dollars.  If the default rate increases or housing devalues beyond 2X the numbers could of course be much higher.  I welcome any polite criticism and/or suggestions for alterations.

bailout · Case · cialis · Economy · fannie · Fannie Cost · freddie · Google · html · http · inflation · king · mortgage · Red · savings and loan · United States · USD

As I continue my studies of the Economy, I’m continually shocked and horrified to find more evidence of mass corruption.

http://www.gata.org/node/wallstreetjournal

The Gold Anti Trust Action Committee has taken out a full page ad in the Wall Street Journal asking, where is all our Gold?

For readers’ information… how did the gold get into Fort Knox in the first place? In 1933 Roosevelt passed a bill mandating that all citizens hand over their gold at base price. This gold was then melted down and stored in Fort Knox.

The last time a civilization was asked to hand over all its gold, they built a golden calf such that they could return to slavery. This time, there was no Moses to save us from our own stupidity. We don’t tromp in mud pits making bricks, but we do tromp to 9 to 5 jobs each day churning out contributions to our 401 K’s.

Fort Knox has never been officially audited. Moreover, strong rumours exist that the Federal Reserve has procured this gold as collateral against the US national debt. If there is no gold to be found in Fort Knox, perhaps with an open and honest audit, we may again find our liberty.

GATA has a video of a symposium they held. A summary can be found here:
http://www.gata.org/goldrush21

9 to 5 · Economy · fed · federal reserve · Federal Reserve System · fort knox · gold · Gold Anti Trust Action Committee · gold standard · golden calf · http · king · MIT · Red · roosevelt · slavery · the fed · the Wall Street Journal · United States · US Federal Reserve · video · Wall Street Journal

http://video.google.ca/videoplay?docid=-515319560256183936&q=the+money+masters&total=630&start=0&num=10&so=0&type=search&plindex=0

Normally any discussion of the economy or finance causes my eyes to glaze over. However, I chanced upon this documentary and started to watch it. Shortly thereafter, I was glued to it. I finally understand questions I’ve had for a long time.

1) How do they know how much money to print?

2) What causes recessions/depressions?

In addition I learned a lot more about the corruption inherent in our financial system. Well worth the 3.5 hours this documentary runs for. Just one question: what is with this guy and his pen?

Economy · federal reserve · finance · gold standard · Google · http · video

For years now, I’ve tried to understand how the Federal Reserve (the Fed) lowers interest rates and how it affects inflation. I mistakenly thought that the Federal Reserve was a wholesaler of money. I thought that it was a Federal institution which under the direction of the government could make money available to banks at a certain lending rate. Thus when the Fed lowered rates to say 3%, the banks could get money at that rate and pass the savings along to their customers by lending money at say 3.5%. I was partially mistaken in my interpretation as to how that affected interest rates. I thought that as a result of people being able to get money at a lower rate, people would spend more, and the more they spent, the more the market could tolerate higher prices for common goods. This is true, but isn’t the full story. So let’s get the full picture.

My first mistake occurred when I assumed the Federal Reserve was a federal institution of any sort. This is not at all true. It is a private bank enacted by an act of congress in 1913 to oversee the US monetary policy. I offer the following interesting nugget of information for those who are interested: It was passed on Dec 23 1913 when most of congress was on vacation, in absence of a proper quorum. If that tidbit piqued your interest, please see this post: http://mwiner.wordpress.com/2008/01/25/terrific-documentary-explaining-the-economy/

So how then does the Fed manage to control interest rates? First off, when you hear of the Fed lowering or raising the interest rate, it isn’t directly lowering or raising the interest rates, it is changing the target interest rate. At a high level, the Fed accomplishes this by controlling the supply of money. Money, just like any other commodity can respond to supply and demand. If there is a lot of money in the economy, interest rates will drop because banks will have an easier time of procuring money to loan. However, having more money in the economy encourages inflation because the value of the currency is lowered by increased supply.

If you want to understand how the Fed manages to expand or contract the supply of money, we need to first understand a few key concepts. The first is partial reserve banking. It was long ago that banks discovered that not every person needed their cash at any given time. It was thus that banks could loan money that technically they didn’t have on reserve. In the US, banks are required to maintain a 10% reserve which means they can loan out 10 times the amount they have on reserve. (This is often referred to as ‘banker’s reach’.)

Next you need to understand what a treasury bill is. A treasury bill is a promise issued to the buyer by the federal government to give you the maturation price of the bill on the maturation date. The bill is always sold at a discount rate, that is a rate, less than the maturation date. For example, a treasury bill may be sold at a discount rate of $950, a maturity rate of $1000 and a maturity date which is a year from now. This means you can buy the bill at $950 and make $50 dollars profit when it matures in a year.

So we now have enough knowledge to work a simple example of how the system works. Suppose that the interest rate is currently 8%. Suppose too that there are 100 people who have $10 each. These 100 people each put $2 in the bank. The bank thus has $200 in reserves and due to partial reserve banking, they can make ten times that amount, some $2,000 in loans. This means they can make a loan of $20 per person.

People typically want to buy things that are 4 times the amount they have on hand. In housing the standard financing model is you must have 1/4 the purchase price in capital. So people with $10 typically want to make a major life purchase which would be $40, but as we see, the bank can easily lend everyone $20, but $40 would be hard to come by at a reasonable interest rate. Thus, people stop purchasing, the economy stalls and the Fed decides to step in.

The Fed does some research and discovers that if the lending rate reduces to 5%, then most people will be able to make the payments and will take out loans and start spending again. So the Fed set the TARGET rate to 5%. To reach this level, the Fed offers to buy a treasury bill the bank has on hand with a maturity value of $500. The bank accepts and now the bank has $700 in reserves. Recall that the bank is allowed to loan out 10 times the amount it has on reserve. So the bank can make $7000 dollars in loans or $70 dollars per person. Since the amount to loan out is plentiful the bank lowers its lending rate to 5% to entice people to take out loans.

It’s important to keep track of the total amount of money in the economy while all this occurs. We started with 100 people having $10 each. Thus there was $1000 in the economy. When the Fed purchased the treasury bill, it printed money to do so. So now there is another $500 dollars in the economy for a total of $1500. You may be scratching your head over the previous sentence, but this is the second part of the misnomer “Federal Reserve”. The Federal reserve is not federal and it doesn’t have any reserves. It prints money to make purchases. I don’t want this post to become a rant against the Fed so I’ll cut it short here and explain the other side of the coin: how the Fed contracts the supply of money.

So now in our moot world, everyone can take out a $30 loan to get the $40 item they’ve been dreaming of. However, one of the principles of a free market is that prices will rise to the maximum that the market will bear. As a result, since most people can afford the $40 item, the market starts charging $42 or $44. Slowly the price creeps up because the value of money has been decreased by an increased supply. In short we are experiencing inflation.

So the Fed sees this situation and decides to curb inflation by raising the target interest rate. By raising the target interest rate, the Fed makes money harder to get, more scarce and thus the market can’t bear higher prices, slowing spending and curbing inflation. To accomplish this, the Fed sells treasury bills. By selling treasury bills, banks that purchase them are forced to spend their reserves to make the purchase, thus pulling cash out of the economy. Recall that banks can loan 10 times the amount they have on reserve. By lowering the amount of cash banks have on reserve, the Fed restricts the bank’s ability to make loans. Since the bank has less money to loan, it must charge more interest to compensate, and the interest rates rise. The key point here is that the difference between the discount rate and the maturity rate must be paid for at some future rate. When the bank comes to collect on this treasury bill, the Fed must pay the bank the promised maturity price. If you have an eye for catching trends then you may have already guessed that the money to pay the difference comes from, yup, you guessed it, printed money.

In conclusion, the Fed controls the supply of money. It accomplishes this by buying and selling treasury bills on the common market. It’s important to remember that when the Fed buys treasury bills it does so with printed money. Also when the Fed issues treasury notes and those notes are redeemed, the difference owed to the purchaser is paid with printed money. This is called a fiat currency, or a currency based on credit — in this case the credit of the United States. It doesn’t take a Harvard ecomonist to realize that every time the Fed runs through one of these cycles of inflation and contraction, that the amount of money in the economy is increased. It is only a question of time before the Fed destroys the currency it relies upon by making it too common. This process is called devaluation. If you want to see devaluation in action, see this graph of the US dollar vs. the Euro over the past 5 years:

http://finance.yahoo.com/currency/convert?from=USD&to=EUR&amt=1&t=5y

AID · ale · bank · banker · banking · Case · cash banks · Congress · Economy · fed · federal government · federal reserve · Federal Reserve System · fiat · fiat currency · finance · free market · Harvard · head · http · inflation · interest rate · king · life · monetary policy · partial reserve banking · private bank · Red · reserve banking · the fed · United States · US Federal Reserve · USD · wholesaler

Growing up I often heard people remark that the “poor get poorer as the rich get richer.”  I was led to believe that this was an unfortunate side effect of a free market economy.  This flaw aside, the free market economy was said to be a much better approach than anything else that had come along.  I spent my time focused on ways of making laissez faire capitalism more compassionate.  We exist in a welfare state and I, living in Canada, live in a society which offers socialized medicine.  Both of these measures are great first steps in assuring the compassion of capitalism however, I was always frustrated knowing that the only true compassion of capitalism would come in allowing everyone to earn wealth.

As I continued to study the problem, imagine my shock and dismay when I learned that we do not live in a free market system.  We live in a central bank monetary system (ie, the Federal Reserve) which has an invisible, moreover, malevolent hand in conducting the nation’s monetary policy.  This may sound like a conspiracy theory however if it was, it’s an awfully dull one given that the chairman of the Federal Reserve openly admits this.

http://www.youtube.com/watch?v=x56MpWZh88s
http://broadband.thecomedynetwork.ca/comedy/?vid=19058

Through the Federal Reserve’s mucking with the money supply and the resulting inflation, those with savings saw their savings erode silently falling into the hands of the nations richest few.  In order to escape inflation, you must own debt free assets which index to inflation.  Only the richest few of us can accomplish this and thus evade the silent erosion of our savings into the hands of bankers and the financial elite.  Here are a few graphs showing the effects:

source : http://lanekenworthy.net/2008/03/09/the-best-inequality-graph/

source : http://sociology.ucsc.edu/whorulesamerica/power/wealth.html

Central banking (The Fed) is an age old scheme of mob rule over the money supply. 

“Give me control of a nation’s money and I care not who makes the laws.”
– Mayer Amschel Rothschild

It has origins dating back to the temple days when Jesus drove out the money changers.  (The word ‘bank’ comes from the Latin ‘bench’ from which the temple money changers made their predatory exchanges.)  The only way to restore justice and equity is to restore the issuing power over money back to the people.  For more info, please see:

http://inflationtax.blogspot.com/

AID · alan greenspan · ale · America · bank · bank monetary system · banker · banking · blog · Canada · capitalism · cent · central bank · central banking · chair · chairman · Economy · fed · federal reserve · Federal Reserve System · free market · html · http · income disparity · inflation · king · MIT · monetary policy · money changers · piracy · quote · Red · socialized medicine · the fed · US Federal Reserve · wealth · welfare state

In 2001 Alan Greenspan at the Fed (Federal Reserve) lowered the interest rate to try to rejuvenate the economy after the fallout of the .com bubble burst. History will record that Greenspan went from the sublime to the ridiculous when he cut the interest rate to 1%. This set off a spate of irresponsible borrowing and lending the effects of which are still being dealt with today.The banks took advantage of this by starting to offer mortgages to subprime borrowers. Subprime borrowers are borrowers with a poor credit rating (specifically a FICO (credit) score of < 620). Typically these are individuals who habitually are unable to make credit card payments, or those who have suffered a foreclosure or bankruptcy. In the past they wouldn’t be able to get a loan, but thanks to the low interest rate, some could now afford the payments. With great fanfare out went the ads: “Send us your poor, your homeless, your great creditless masses!” Lured by the prospect of home ownership and lulled by the chimera of ‘buy now, pay later’, loans were issued as fast as the printers could print them.

Banks noticed that the default rates were lower than they expected. This led them to think that there was an untapped market in subprime lending. They developed many products, of which 3 were common 1) Variable rate mortgage with a higher rate due to the risk, 2) An interest only loan where they would start paying off the capital after an initial period and 3) low fixed rate initially, resetting to market rate after a few years.

The people who took these loans did so for two principal reasons 1) they hoped their income/credit would improve during the initial period of the loans and 2) the housing market was so hot, they hoped to use the newly gained equity in their homes to refinance the loans with more agreeable terms. Regrettably, Alan Greenspan, noting the now uncontrolled inflation, agressively started to increase the interest rates in 2004 right back up to around 5% and beyond.

For people with loans of type 1) and 3) above, the loans were typically huge so these interest rate increases made the payments impossible to cover, leading to defaulting. Those with loans of type 2) were pushed over the edge when the capital component of their loan kicked in.

Now, were it not for the avarice of the bankers, this crisis would have ended there; that is, a large number of repossessions but no further economic upheavel. However, bankers are weasels and behind the scenes they were pulling more ridiculous stunts.

Behind the scenes, bankers were looking to mitigate the risk of this subprime debt and also to make more profit on profit by creating and selling subprime mortgage bonds. To accomplish this they pooled together all subprime debt. Next they broke the subprime debt into levels. Suppose there were 3 banks involved in a given mortgage. The banks that would get hit by a default first were put into the lower levels and the banks that would be hit last were put into higher levels. By doing so, each level bore a reduced amount of the total risk. Now, many financial institutions that cannot purchase subprime debt were able to get around this limitation by purchasing bonds in the higher levels (less risk) of these mortgage bonds. Now, subprime debt was distributed all around the world to various institutions in this masked mortgage debt trading instrument.

So when the debt hit the fan, the big institutions which normally make loans to one another on a regular basis to keep the economy rolling, suddenly mistrusted one another. No one knew who held what amount of subprime debt. As a result the overnight lending rate went sky high and the Fed had to step in to push cash into the economy to help stave off a liquidity crisis — a crisis where cash flow starts to freeze.

At the time of this writing (Dec 2007) we are beginning to see the end result of this crisis. The large financial houses are beginning to crumble under the weight of their own stupidity. Just yesterday financial giant Morgan Stanley reported its first quarter loss in its 73 year history. Even more alarming, in seeking to assuage their woes, not only are they turning to the US government for help, but have successfully enlisted the help of the Chinese Government.

What may not be obvious, but should have the reader seeing red is that as the result of the irresponsibility of US financial institutions, we’re witnessing a wide scale buy out of US assets and institutions. What’s more, who speaks for the countless duped masses who have lost homes, equity and security as the result of this mass irresponsibility? There can be only a partial answer in paraphrasing Herbert Hoover who said: “Older men declare war. But it is the youth that must fight and die.” In this situation it is the financiers who tinker with the economy. But it is the working class that must work and suffer.

AID · alan greenspan · ale · bank · banker · bankruptcy · bubble · Chinese Government · Economy · fed · federal reserve · Federal Reserve System · finance · financial giant · Herbert Hoover · http · inflation · interest rate · king · liquidity crisis · MIT · Morgan Stanley · mortgage · prime · Red · subprime · subprime mortgage finance recession economy · the fed · United States · US Federal Reserve · US government · writing

In 1979 Jimmy Carter delivered a televised speech bemoaning the increasing US dependence on foreign oil.  In it he outlines his Energy Policy for the coming decades.

“[Foreign Oil is] a cause of the increased inflation and unemployment that we now face. This intolerable dependence on foreign oil threatens our economic independence and the very security of our nation. The energy crisis is real. It is worldwide. It is a clear and present danger to our nation.”

– Jimmy Carter  (http://www.pbs.org/wgbh/amex/carter/filmmore/ps_crisis.html)

Today the US relies on 60% foreign oil (http://www.fueleconomy.gov/FEG/oildep.shtml) in strong defiance of president Carter’s prescient warning.

As far as the US dependence on foreign oil, nothing has changed since the Carter’s clarion call aside from the problem getting far worse.  However, president Carter didn’t live in a world threatened by Global Warming (at least it wasn’t commonly known).   President Carter also didn’t live in a world with two superpopulations, India and China weighing in at a billion people each who are poised to ramp up their consumption.

Clearly oil will no longer do as a source of energy.  Luckily science has provided an alternative: The Hydrogen – Aluminum Cycle.  To be clear, I’m not speaking of hydrogen power alone.  Hydrogen power alone is a red herring of alternative energies.  The catch is that hydrogen is hugely expensive to make and today largely comes from the demethylization of hydrocarbons; ie oil.  No, the Hydrogen – Aluminum cycle is something different entirely.

When we think of hydrogen, some horrible images from the past might emerge.

Here we see the Hindenburg which was filled with hydrogen bursting into flames.  Many see the risks of hydrogen in cars and decry ‘oh the humanity!’.  Well there are no such worries with the hydrogen – aluminum power cycle because the hydrogen is produced in micro amounts and only as needed.  Hydrogen need not be stored in a cryogenic canister with motorists barrelling down the highways with a bomb on board.  This in situ or just in time production solves the danger of using hydrogen in a car.

Next, we must solve the problem of where to find our hydrogen.  Clearly deriving it from oil simply won’t do.  The other current method for obtaining hydrogen is through a process called hydrolysis which splits water into hydrogen and oxygen.  Regrettably, this process is too inefficient to be used on a wide scale.

Enter into the picture aluminum.  Aluminum has a high affinity for oxygen.  Whenever you hold a piece of aluminum it has a skin of oxidation.  This skin, once formed, prevents any further oxidation which is why you never have to worry about rust in components built of aluminum.  Aluminum likewise reacts with water;  A jealous lover of oxygen, it bonds strongly with it, ousting the hydrogen.  While a jealous lover aluminum may be, it is quickly satiated and forms a skin failing to react any further.

Jerry Woodall, a professor of Computer Science and Electrical Engineering at Purdue, discovered in the 60’s that when aluminum, gallium and water were mixed, the aluminum oxidized fully, liberating massive amounts of hydrogen.  It would seem that the gallium acts as a mediator in the reaction and prevents the formation of the oxidation skin on aluminum.  The end results of this reaction are hydrogen gas, aluminum oxide (aka alumina) and gallium.  The gallium is not consumed, and thus can be recycled.  The alumina can be electrically converted back into aluminum and thus recycled.  Burning hydrogen produces only water.

The idea of using hydrogen to power a vehicle is certainly not a new one.  While Woodall was experimenting with gallium in the 60’s, GM was trying to prototype a hydrogen fuel cell vehicle: The Electrovan.  It is recognized as the first hydrogen fuel cell prototype.  The prototype was scrapped due to the high cost of the rare (precious) metals used in its fuel cells and the complexity of storing hydrogen.

The aluminum-gallium-hydrogen cycle may allow us to succeed where the Electrovan failed.  So now, let’s put the pieces together: How does this get you to work in the morning?  Your new, non-polluting car has two fuel tanks, one containing water, the other containing aluminum and gallium flakes.  As hydrogen is needed the water and the flakes are mixed.  The hydrogen is harvested and runs the engine.  Also the heat produces by the chemical reaction may be harvested for energy by a Stirling Engine which is a type of engine which can run off of temperature differentials.

When it comes time to fuel your vehicle, the new filling station attaches three hoses to your car.  One removes the slurry of used alumina to be recycled.  The other two replenish your supply of water and aluminum-gallium flakes.  When it comes time to pay for your aluminum flakes, will it be competitive with gasoline?

“Since standard industrial technology could be used to recycle our nearly pure alumina back to aluminum at 20 cents per pound, this technology would be competitive with gasoline,” Woodall said. “Using aluminum, it would cost $70 at wholesale prices to take a 350-mile trip with a mid-size car equipped with a standard internal combustion engine. That compares with $66 for gasoline at $3.30 per gallon. If we used a 50 percent efficient fuel cell, taking the same trip using aluminum would cost $28.”

–  (http://www.purdue.edu/UNS/x/2007b/070827WoodallNanotech.html)

Next, some may wonder where the aluminum will come from.

Enough aluminum exists in the United States to produce 100 trillion kilowatt hours of energy. That’s enough energy to meet all the U.S. electric needs for 35 years.  If impure gallium can be made for less than $10 a pound and used in an onboard system, there are enough known gallium reserves to run 1 billion cars.”

–  (http://www.purdue.edu/UNS/x/2007b/070827WoodallNanotech.html)

Recall that alumina (aluminum oxide, the waste product) can be recycled electrically back into aluminum.  So it’s not like oil where, once burnt, we can’t reclaim it.  We can electrically reclaim the waste alumina back into aluminum.

Ecologically this is a dream come true.  When thinking ecologically it’s important to think in terms of cycles.  Everythings output must be something’s input cycling back to the original source.  Here we have aluminum going to aluminum oxide (alumina) going back to aluminum.  The alumina to aluminum step can be powered by non polluting nuclear or renewable sources such as solar or wind etc.  The water turns to hydrogen which combines back with oxygen to produce water.  Gallium is never consumed and is recycled continuously.

So there you have it: president Carter’s dream some thirty years later, but not too late.  With the skyrocketing prices of oil the need for this change has never been more clear.  The only missing ingredient in this equation is the political motivation to fund and accelerate the conversion process.  This may prove to be the trickiest part of the equation to balance.

Further reading:

Please don’t take my word on this matter, feel free to do your own research:

http://www.google.ca/search?hl=en&sa=X&oi=spell&resnum=0&ct=result&cd=1&q=aluminum+gallium&spell=1

http://youtube.com/results?search_query=aluminum+gallium&search_type=

There is also a similar approach using boron

http://www.google.ca/search?hl=en&q=boron+hydrogen+car&meta=

AID · ale · alternative energy · alternative fuel · aluminum · cent · chemical reaction · China · Coming · conversion · Economy · energy · energy crisis · engineering · equation · foreign oil · fuel cell · fuel cells · gallium · global warming · Google · html · http · hydrogen · hydrogen car · hydrogen gas · ie oil · India · industrial technology · inflation · Jerry Woodall · Jimmy Carter · king · levis · logic · mediator · oil · President · price oil · professor · professor of Computer Science · Purdue · quote · RAM · Red · solar · stirling engine · United States · USD · waste product · www.google.ca/search?hl=en& · www.google.ca/search?hl=en&q=boron+hydrogen+car&

Corruption and collusion are what is wrong with the economy.  The Federal Reserve (Central Banking) is a criminal organization which uses inflation to manufacture debt.  The tax you pay in income tax or retail tax is simply collateral for the vast sums of inflated money that is printed on behalf of the federal government, a willing accomplice in this scheme. 

A picture is worth a thousand words:

(click to see larger version)

What you’re looking at is a chart of inflation from 1800 on.  Notice the blips that correspond to the war of 1812 and the Civil War of 1863.  Note that aside from these blips, inflation was relatively flat for around 113 years.  Then in 1913 the Federal Reserve was created.  In 1933 FDR confiscated all public monetary gold and removed the gold standard.  In 1971 Nixon removed the last vestiges of the gold standard (the foreign currency gold standard) and the results of this are clear.

What does this mean to you?  It means that any money you save becomes devalued.  Money in the bank is no longer a sure thing.  Inflation makes the funds you hold an investment in the currency.  The Federal Reserve was invented to prevent self-financing and financial independence.  As you can see from the graph above it has been quite successful. 

Who let’s the Federal Reserve continue to operate?  You do.  Apathy and lack of education the keys to the success of the Federal Reserve.  They throw bits of cheese at you in the form of 401K’s and fancy beach houses and watch you scurry after them laughing all the while as they devalue the dollars you earn. 

Inflation is nothing other than a tax.  The ‘tax’ you think of as tax is only collateral on the huge reams of printed money that the Federal Reserve pumps out at the behest of Congress’ bloated budgets.  It siphons value out of all your assets and ensures you remain in debt for as long as possible.

Don’t believe me.  Good, you need to be skeptical to survive in this world.  Here are some starting points for more information:

http://video.google.com/videoplay?docid=-515319560256183936
http://video.google.com/videoplay?docid=-8484911570371055528
http://video.google.com/videoplay?docid=-594683847743189197

a fun calculator:
http://www.minneapolisfed.org/Research/data/us/calc/

bank · banking · cent · central bank · central banking · Congress · Economy · FDR · fed · federal government · federal reserve · Federal Reserve System · gold · gold standard · Google · html · http · income tax · inflation · king · Nixon · retail tax · the fed · US Federal Reserve · video

 

In the past few months we’ve witnessed remarkeable events in the market. First we have the Fed bail out of Bear Stearns. What wasn’t widely covered or discussed was that this was effectively a result of a run on a bank.

Modern banking practices partial reserve banking. That is to say that the bank relies on the fact that not every customer requires their funds in cash at any one time. As a result the bank invests your funds during the intervals where you don’t need the cash in your hands. Banks in the US are required to maintain only 10% reserves. A banker can then invest 90% of the banks funds to turn a profit. This is called banker’s reach.

A run on the bank occurs when customers or investors lose confidence in your banking facility and demand their cash back. If enough customers demand their cash, the bank exhausts its reserve and enters a liquidity crisis. This is exactly the fate that befell Bear Stearns. It is interesting to note that Bear Stearns was a financial institution which survived the Great Depression of the 30’s. Had the Fed not acted as it did to bail out Bear Stearns, we may well have been in a greater depression at this very moment.

Please don’t infer from the previous sentence that I agree with the Fed. I think they served to cure the disease by killing the patient. They’ve borrowed excessively from the taxpayers and the US currency to temporarily asuage the bleeding, but haven’t sutured the severed arteries. The Fed’s own actions of forever creating bubbles and taking hindsight corrective half-measures is the very cause of our current problems, not in any way a solution.

There is no doubt that we live in ‘interesting times’ intended in the confucian sense. Just this week we’ve witnessed a second run on the bank in as many months.  This time we’re witnessing a run on the food bank.  Reports are coming in of rationing at Costco stores of rice, flour and cooking oil.  We’re not talking about Costco stores in third world countries.  We’re talking about the continental United States.

What has happened is that large commercial bakeries and other such chains have panicked at the rapidly increasing price of these staples and snapped up local supply.  Yes, eventually this will all work itself out, but the question is, why is this happening in the first place.  There are a few answers:

• The price of oil.  The price of oil affects the food supply in two ways. First it increases the shipping costs which are passed on to the consumer.  Next, it creates a surplus of money in the Middle East which then funnels its way back into the US economy as speculation.  Hedge funds use this money to invest in grain futures which artificially drives up their price.
• Biofuels.  Biofuels are a useless ‘environmentally friendly’ measure which were put in place by politicians to placate the populace.  Corn and other staples are diverted to be converted into biofuels taking food out of the food supply and putting it into our gas tanks.  There has been worldwide rioting especially in regions where food constitutes a large percentage of the general publics’ expenditure.
• Loss of farmland.  Farmland is being lost to urban sprawl and to environmental measures whereby farmers are being subsidized not to plant crops.  Sure environmentalism is great, but it turns out that humans are animals too, and our suffering should figure into environmental equations.
• Malthus.  Malthus famously argued that populations grow geometrically (2,4,8,16, …) while the food supply grows arithmetically (1,2,3,4,5,..) .  We live in a world of approximately 6 billion which is expected to rise to 9 billion by 2050.  Further the billions of China and India are no longer content to eat simple rice and vegetables but also want cars, beef and the more excessive lifestyle of their North American Counterparts.  As a result, we can expect more shortages of gas and food until we learn to live within our means.

America · bank · Bank Run · banker · banking · Bear Stearns · biofuel · biofuels · biofuels taking food · bubble · cent · China · Coming · costco · Economy · Environment · equation · farmland · fed · federal reserve · Federal Reserve System · food · food bank · food supply · Foodbank · gas tanks · great depression · hedge funds · http · India · king · life · liquidity crisis · malthus · middle east · oil · partial reserve banking · rationing · Red · reserve banking · Run on the Bank · the fed · United States · US Federal Reserve

The State of The Union – As Seen on TV
Martin C. Winer

But first a word about how this article was written:  This article was the result of a ‘cluster’ or a free-word association.  This is an exercise which is meant to use the ‘right brain’ to spur creativity and generate writing topics.  You can create your own clusters or bubbles here: http://www.bubbl.us/ but it’s best to do them with pen and paper since one tends to self edit when typing.  Each word you see italicized below is from the cluster.  Usually, the idea is to take one theme from the cluster and write about it.  I thought it would be a challenge to include ALL the words and still have the article tell a cohesive story.   Read the article, taking note of the italicized words.  Then see the cluster below.

I have been worried about the state of the world as of late.  Being recently unemployed with no meaningful job on the horizon, I was wondering when I’d be returning to the 9-5 lifestyle.  It’s not that I ravish 9-5, as Dolly Parton’s famous song correctly puts it, 9-5 is all “takin and no giving” but it beats aimlessly strolling on sidewalks waiting for a direction to unfold.  Up until recently I was a member of the over 30 and unmarried class.  Fortune changes quickly and I now find myself suddenly being married with children.  The responsibilities are understandably far different.  Curious as to what direction my life would take over the next months and years, I turned on the familiar glowing oracle fitted in every living room, the television.

While I waited for my big screen TV, a vestige of my former employed self, to come to life, I recalled that a comic had mentioned that Dolly Parton had insured her breasts.  I wondered if the comic was putting us on, as he was apt to do.  Would an insurance company take premiums for such a ridiculous item?  What was the counterparty risk?  Were her breasts in good hands with Allstate (TM)?  The TV came to life with the evening news reporting of another hemorrhage on Wall Street of 213 ethereal points, with AIG requesting more bailout money.  Evidently, indeed, insurance companies would take premiums on just about anything and the only boobs in the interaction were the policy holders who actually thought the policy was worth something.  Bored with the evening news I changed the channel.

Dick Cheney was on “State of the Union” with John King on CNN.  Cheney, a bastion of the old guard was set to be ‘grilled’ by King as to the sins of his administration.  I flipped right past the interview because I knew it could not yield the satisfaction I was seeking.  Waterboarding and assassination squads would be second nature to a man like Cheney who shot his hunting partner in the face.  Waterboarding I imagined was just his technique for cleaning his felled game, human or otherwise.  I wasn’t interested in the past, I was curious to know what my future held.

There was an infomercial on with 90 year old Jack Lalanne sporting his leisure suit and his juicer.  I am a late night TV watcher and infomercials plague the airwaves from dusk ‘til dawn.  Jack Lalanne was born in 1914 and looked to be in better health than myself all thanks to his 1/2 horsepower juicer.  In went an orange, apple, and every other healthy fruit your mother tried to get you to eat as a child.  Out poured a fountain of youth which had purportedly kept Lalanne in such great shape over these many years, yet somehow, it hadn’t managed to save his fashion sense.  The leisure suit was last popular when the juice on everyone’s lips was Juice Newton, “Grease” was the new movie and disco was still in style.  I was intrigued with the notion of extended life and wondered if indeed Lalanne’s juicer could provide it.  Even if it could, what would my life be like, aged 90+ years drinking fruit and vegetables all day?  Would my life be fulfilling?  I changed the channel seeking an answer from the glowing oracle of TV.

The next infomercial was for Extenz tablets; an all natural ‘Male Enhancement’.  Well this held some promise now didn’t it?  At least my latter years could be herbally augmented with extra length and girth.  But just what were these pills I thought to myself?  “An all natural male enhancement?” I wondered to myself.  Didn’t we already have such a thing in Dolly Parton?  What were these herbs and how were they discovered?  Did someone eat a salad with wild herbs one night with shocking results in the bedroom?  How did they then suspect the salad and not anything else?  My mind was awash with questions and I wasn’t much in the thinking mood.  I wanted answers, not questions.  Come on oracle of television, what would my life be like?  The only effort I was willing to exert was in flipping channels.

Yet as I flipped there were a plethora of Viagra and its new copy Cialis ads.  Was the television intimating that my future would need these?  A Viagra ad promised that at age 50 I could trade in my sedan for a Harley Davidson and with one pill have the vigor of a 20 year old.  A Cialis ad promised 36 hour or daily dosing options to make sure I would be able to respond when the mood was right.  If I was as old as Jack Lalanne, would my wife still be ready for me?  I’d be worried about breaking bones at that age.  Another flip would quell that fear.

Once a month Boniva would rebuild my wife’s bones without the need to remember a weekly pill.  There would be no need to take those chalky calcium pills once a day.  Of course memory at that age will be compromised so the once a month dosing is ideal.  Side effects could include liver and kidney disease but at least you would only have to endure them once a month.  God bless Big Pharma.  I could have a once a day boner and my wife could have healthy bones all month.  I was comforted that the future would be bright.  My comfort was not long lasting, at least not as long lasting as 36 hour Cialis promised to be, when it occurred to me that Big Pharma was suffering from a horrible case of misplaced priorities.  With all of their attention focused on bones and boners, they had dropped the two big balls of cancer and heart disease.  I curiously imagined a big Pharma strategizing kick off meeting with people brainstorming on new drug targets and somehow bones and boners getting to the top of the list over cancer and heart disease.  I only hoped that Jack Lalanne’s fountain of youth Juice could get my wife and I past those two roadblocks.

I calmed myself thinking that my 90th year was well off, I being only 35 now.  Big Pharma had time to readjust their priorities.  I continued my flipping to discover yet another Big Pharma commercial for Requip, a medication for Restless Leg Syndrome (RLS).  My legs were perfectly atrophied into their TV watching position.  I didn’t believe that such a condition could occur.  “My doctor said ‘Requip’” said the announcer as a television doctor mouthed “Requip”.  I imagined that the doctor mouthed “bullsh*t” in response to the patients complaint.  [0u92R90U R ‘ jixz-]0039;ffaS980059-09ATRE MT3.  Oops, I’m ever so sorry about that previous mess, you see my arms tend to spontaneously move uncontrollably every so often…  Oh my, could it be I have Restless Arms Syndrome (RAS)?  Well at least I know that Big Pharma is on the case.  Perhaps if I ingest Requip while standing on my head, the medication will settle in the appropriate appendages?  Parenthetically I wonder if all Requip contains is a bottle of gel caps filled with Brandy?  All it seemed Big Pharma could do for me in my latter years was give calm legs and arms and a rock hard erection.  The Viagra commercial warned that any erection lasting over 4 hours constituted a medical risk and thus I knew my fulfillment from Big Pharma would leave me with 20 remaining hours in the day to fill with what?  What would I do?  I looked to the financial stations to see if I had any prospect of finding a job.

CNBC was heralding the success of the latest Apple Computer quarterly results.  The IPhone and the IPod were unrelenting successes.  The host discussed the failing health of Steve Jobs as a concern for the future of the company and since we now know all that Big Pharma is good for, the concern is justified.  I myself am not a gadget freak.  I often mockingly eye people walking down the street sweaty palmed typing at lunatic speeds on their Palm, Blackberry or blueberry or whatever the latest berry is.  I have no need to be so totally connected, but evidently there is a huge market for these devices.  Just the same I was delighted to see the success of Apple whose Macintosh computer was, in my mind, the superior computer in 1985.  Bill Gates was the smarter CEO, not the better innovator.  Steve Jobs didn’t allow clones of Macintosh’s while Gates allowed clones of the PC.  As a result Apple’s market share fell like Newton’s apple under newly discovered gravity.  With all the discussion of executive compensation these days, I think Steve Jobs deserves the lion’s share of the reward when it comes to innovation.  The IPod is simple to use media device which takes advantage of the recent wave of music piracy and MP3’s that puts the tale of the Maersk Alabama to shame.  Now don’t get me wrong, copyright infringement was not created by Jobs, he only capitalized on it.  The IPhone is the next logical extension of a handheld computing device incorporating maps, navigation and a whole host of other useful features we come to expect from Apple.  The Macintosh, the IMac as it’s now called, is gaining market share in leaps and bounds.  I guessed that I had attained some inspiration from the glowing oracle;  perseverance, like that of Steve Jobs in the face of constant opposition and I too could one day go on to innovate a pile of handheld devices – or something like that.  Of course this special was being aired on CNBC the so called financial news network that managed to complete miss any predictions of the financial collapse which had claimed my job.  I wasn’t about to take any advice from them.  No, the Corruption National Broadcasting System as I had renamed them would have to find another mark. I dismissed them with a flip of the channel.

The Cheney Interview was over on CNN and now Anderson Cooper on A.C. 360 was sporting a pie chart showing the distributions of the American reinvestment Plan.  There were huge allotments for infrastructure building projects.  A clip revealed workers building bridges all over the country.  Wasn’t it another Democratic president who wanted to build a bridge to the 21st century?  Now are we building bridges out of Chapter 11?  There was discussion of incentives to homeowners to renovate and rejuvenate their properties.  I thought of stopping in at Home Depot but immediately balked because the 27 minute hand waving discussion with 17 year old ‘Skippy’ who works there never seems to get me the results I want.  For all the talk of hope and economic plans CNN was pushing out, I knew that the recession was receding faster than Dick Cheney’s hairline.

Then they aired a clip of the master of hope: President Obama.  “America has been great and shall rise to be great again” he prophesized.  I thought this had a familiar tone.  I quickly switched to the Catholic Television Service and the pastor proudly boomed “and the phoenix shall rise out of the ashes just as Jesus raised Lazarus from the dead.”  The pastor went on to solicit donations for a new building project.  This also had familiar overtones and I flipped back quickly to CNN.  “It will take considerable investment from us all but we shall rebuild and come back stronger” proudly acclaimed Obama.  It then occurred to me that Obama was more than just a President, he was our primary minister.  He then intimated at his plan to remove toxic assets from the books of the banks without providing the necessary details I was looking for; undoubtedly he would turn water into wine.  The rhetoric of hope was overflowing my ears and I needed a counter position to ground myself again.  Luckily there was the FOX network who was lambasting Obama as the bane of humanity whose short stint in office had already thrown the economy into apocalypse from which only a miracle could now save us.

Putin and other former Soviet interviewees were quoted as saying that the end of capitalism has finally come.  A commentator remarked: “the American dream of picket fences has been replaced by picket lines” as the video showed protesting auto workers.  Am auto worker protested: “The companies are trying to divide and conquer us, taking advantage of this downturn to cut our benefits and pay.  I say enough taxing the middle class!”  Cheers and hurrahs followed.  My brain was like a pair of Levi’s jeans iconically being pulled by these two polarized stations in opposite directions, at the risk of ripping.  There had to be some truth on the glowing oracle of television.  PBS I thought to myself quickly.  That will save me.

(Ed. Note: Actually it’s IOWA that is ok with Gay Rights, not Oklahoma.  In my cluster, I confused the two, but I went with it because the challenge was to write an article using all the clustered words.  I was only off by a 10 hour drive anyways.    )

Public Broadcasting, publicly funded and publicly ignored in favour of watching MTV to hear if Britney Spears of Lindsay Lohan were wearing underwear today.  Today Jim Lehrer was discussing the state of Gay Rights.  Evidently in Ahnold’s (sic) California the rights of gays have been ‘terminated’.   Ironically, Oklahoma seems “Ok” with gay marriage.  Is that what the song “Oklahoma, OK” is about from the musical Oklahoma?  The world seemed upside down.  Had I inverted myself such that Requip went to my arms and forgot about it?  Oklahoma was a place where I expected politicians to spout the bible about ‘being Fruitful and multiplying’ and how homosexuality was unnatural.  In liberal California, I expect them to say anything goes, from Gay Rights to cloning dolly the sheep.  After all doesn’t Hotel California by the Eagles promise “Plenty of room at the Hotel California / Any time of year, you can find it here”?  I couldn’t make sense of my world.  I was about as comfortable as a man swimming in itchy wool trunks.  I needed to flip the channel quickly.

Up next was a documentary “American Justice” revisiting the O.J. Simpson trial.  It brought back names like Mezza Luna, Nicole Brown, Robert Kardashian, Kim Kardashian… whoops my mind wandered.  Robert Kardashian had helped set a murderer free but brought us Kim Kardashian.  Now they say justice should be blind, but have you seen Kim Kardashian?  He was off the hook in my books but the rest of the characters who let O.J. go were open to attack in my imagination.  I recast the events of that fateful night as a Quentin Tarantino movie.  I’d have my justice, if only in my imagination.  Nicole Brown would now be Jackie Brown.  She would seductively seduce O.J. by dancing for him like Salma Hayek in Tarantino’s “From Dusk ‘Til Dawn”.  She’d then immediately turn into a vampire and eat him alive.  Next, Travolta and Samuel Jackson from Pulp Fiction would show up and after quoting Ezekiel 25:17 would lace into the O.J. lawyers.  Finally the women from “Chicks who love Guns” as seen in Jackie Brown, armed with the AK-47 and they would deal with every “mother [t]ucker” in the jury room.  Returning from my daydream I realized that 10 years had passed and there was no justice to be spoken of.  The only thing I had learned from the episode was that justice is a function of wealth and that O.J. stood for Orenthall James, not Orange Juice.  I’m not admitting I was that stupid however, I’m about to write another article: “If I was that stupid, here’s how I’d admit it.”

I knew how the O.J. saga ended so I flipped again to see what else was on the glowing oracle.  John Sebastian crooned “Welcome Back, to the same old place where you started from…”  It was a rerun of Welcome Back Kotter.  Truly, I was basically back where I had started from, only an hour of flipping elapsed.  I knew nothing more of the future than when I started.  Sure I knew that my bones and boners would be safe, boobs could be insured, and that if I worked very hard, I might find a job.  But I was looking for important answers to important questions like, what would justice be like in the future?  What would the economy be like?  I was sure that Kotter’s Vinni Barbarino wasn’t going to be able to answer my questions.  With that, I turned off the glowing oracle for the night.

‘Apple’ cluster which generated the article.

This is the free word association (or cluster, or bubble) which generated the article.  Again, each italicized above came from the cluster below.

9 to 5 · 9/11 · AID · aig · AK-47 · ale · allstate · America · american justic · Announcer · apple · arnold schwarzenegger · auto workers · bailout · bank · bankruptcy · bible · bill gates · blog · boniva · bubble · california · cancer · capitalism · Case · cent · chapter 11 · chicks who love guns · cialis · cluster · dca · dick cheney · dolly parton · eagles · Economy · Executive · extenze · Ezekiel 25:17 · free word association · gay rights · God · grease · head · Health · heart disease · home depot · homosexuality · hotel california · http · ibm · ILS · insurance · Internet · iphone · ipod · jack lalanne · Jackie Brown · jim lehrer · John Sebastian · John Travolta · juice newton · kim kardashian · king · lawyer · lazarus · levis · life · logic · maersk · maersk alabama · marriage · Martin C. Winer · MIT · mp3 · Music · nature · O. J. Simpson · obama · OJ · oklahoma · palm blackberry · piracy · pirates · President · Pulp Fiction · quentin tarantino · quote · Red · requip · rls · Robert Kardashian · Rome · Salma Hayek · sex · steve jobs · Tarantino · viagra · video · Vinni Barbarino · waterboarding · wealth · Welcome Back Kotter · writing

Glenn Beck has a video railing against printing of money by the US in epidemic proportions.  Beck shows a graph of total money in the system, but should also be showing a graph of CPI, or inflation as in this post:

http://mwiner.wordpress.com/2008/08/19/whats-wrong-with-the-economy/

This graph shows that the problem started back in 1913, not in 1971 as Beck describes.  Beck is however correct in asserting that it is a problem with the US withdrawing from the Gold Standard.  The US withdrew from the Gold Standard in 1933 domestically, and 1971 internationally.

Even before that, the Federal Reserve was able to manipulate (inflate) the currency to a limited degree from its inception in 1913.  It is the Fed which has and always will be the problem.  The Fed has never and will never be able to offer a solution.

For more information, please see:

http://mwiner.wordpress.com/2009/01/15/the-ancient-roots-of-injustice/

Beck - Inconvenient Debt Glenn Beck · Economy · fed · federal reserve · Federal Reserve System · Glenn Beck · gold · gold standard · html · http · inflation · MIT · printing · the fed · United States · US Federal Reserve · video

DVP Suicides Not Newsworthy

Martin C. Winer

“The Don Valley Parkway has reopened following a police investigation that had closed the southbound lanes from Eglinton Avenue to the Bayview Avenue/Bloor Street ramp for several hours.” [i] Those few simple words from the official news report veiled a darker truth.  On the roadway below the Millwood St. bridge a woman lay veiled in a white sheet; dead, nameless and not newsworthy.  Other non-newsworthy witnesses reported scattered pieces of flesh but that isn’t what people wanted to hear during their commute. [ii]

Commuters wanted to hear when the damned highway would open again so that they go to and fro from work and about their business.  After all, the economy is down and a closure of the DVP is the last thing Toronto needs as it tries to emerge from the recession.  The world is on the brink of the next ‘greater’ depression, and we can’t afford to be concerned with human depression.

To prevent any suicide related delays to business, the City of Toronto constructed a multimillion dollar barricade on the Bloor St. viaduct to prevent just this sort of inconvenience.  A cold metal architecture suspiciously rife with crucifixes keeps the depressed from interrupting our workday.

[iii]

Over the years there have been talks of constructing a similar structure on the Millwood bridge which is now the ‘favoured’ bridge of jumpers.  This reasoning is a classic example of detached bureaucratic thinking trying to solve a human problem with technology.

When we look at the problem of suicide from a human perspective, erecting barriers to prevent it is like the allegory of the Dutch boy who sealed a leaking dam by putting his finger in the hole.  A cold, hard crucifix bedecked barrier will never replace the warm compassion of an empathetic human heart.

---

[i] http://cp24.com/servlet/an/local/CTVNews/20090826/090826_don_mills/20090826/?hub=CP24Home

[ii] http://www.theilliteratescribe.com/2009/08/bits-of-flesh.html

[iii] Photo Credit: http://www.marielugli.com/Viaduct/supportsystem_9.htm

ale · Bayview Avenue/Bloor Street · Bloor St. viaduct · cold · cold metal architecture · Don Valley Parkway · Economy · Eglinton Avenue · html · http · king · Martin C. Winer · Millwood bridge · RAM · Red · servlet · the southbound · toronto