The current crisis will never be solved by anything more then remedies until somebody calls a duck a duck. Credit is unhealthy, even cancerous to a free market economy. In the US we have laws against making counterfeit money. Why? Because adding money without adding actual wealth to the system weakens the integrity, allows stagnation to occur, and causes inflation as “bidders” in the auction known as the “free markets” are able to bolster the price of goods and services using money they don’t securely have. If everybody had to pay cash at time of delivery for every house bought, the average price of a house would be about $20,000 in the current environment. In reality, the cost of living would be somewhere around 1950’s levels.
This self defeating activities are not limited to credit. We have immigration laws. Why? Because illegal immigrants do the same to our labor pool as counterfeit money and credit do to our wealth. Drugs are legal that are worse for our health then the ones that are illegal are encouraged and fined at the same time. On and on the paradoxes continue.
To cure our economy, instead of just remedy, and the current crises two things must happen. First, the legislators must realize controlling who gets credit and how freely it is distributed is as much a part of their job as it is to control the Fed’s printing presses. In reality, that is what credit distributing companies are doing, allowing counterfeit money to enter the system. There is a reason every dollar bill has, “property of the US government” written in it. Because money is a function of the system. It is not a right of the citizens as many conservative minded people seem to think.
The second is that the legislators need to stop indirectly trying to influence wages in the system and take a more direct, but free market, approach to minimum wage. The current static number needs to be replaced with a dynamic “minimum percentage”. This free market symbiotic method of setting a wage floor would be more effective. If the economy needs to increase circulation, the legislators could simply increase the minimum percentage. That would hold the top in check, while delivering market stimulation to the bottom and most immediate participants in the economy.
Credit should be a tool, like printing more money, in order to influence and tweak the system. Want to stimulate the economy? Release a few billion in credit to the financial institutions. They can "bid" on the credit by offering the terms in which they will be extending the credit. The best terms for the public will be allotted their desired amount of credit. If the prices are getting out of hand, a recall could be issued to the financial companies to reduce their credit lines. This would inherently force financial companies to consider the risk they are getting involved with.
The US economy doesn’t need more remedies. It needs cures. Those cures are going to require that the American people give up on these ideals of entitlements that were never part of the original promises.
This self defeating activities are not limited to credit. We have immigration laws. Why? Because illegal immigrants do the same to our labor pool as counterfeit money and credit do to our wealth. Drugs are legal that are worse for our health then the ones that are illegal are encouraged and fined at the same time. On and on the paradoxes continue.
To cure our economy, instead of just remedy, and the current crises two things must happen. First, the legislators must realize controlling who gets credit and how freely it is distributed is as much a part of their job as it is to control the Fed’s printing presses. In reality, that is what credit distributing companies are doing, allowing counterfeit money to enter the system. There is a reason every dollar bill has, “property of the US government” written in it. Because money is a function of the system. It is not a right of the citizens as many conservative minded people seem to think.
The second is that the legislators need to stop indirectly trying to influence wages in the system and take a more direct, but free market, approach to minimum wage. The current static number needs to be replaced with a dynamic “minimum percentage”. This free market symbiotic method of setting a wage floor would be more effective. If the economy needs to increase circulation, the legislators could simply increase the minimum percentage. That would hold the top in check, while delivering market stimulation to the bottom and most immediate participants in the economy.
Credit should be a tool, like printing more money, in order to influence and tweak the system. Want to stimulate the economy? Release a few billion in credit to the financial institutions. They can "bid" on the credit by offering the terms in which they will be extending the credit. The best terms for the public will be allotted their desired amount of credit. If the prices are getting out of hand, a recall could be issued to the financial companies to reduce their credit lines. This would inherently force financial companies to consider the risk they are getting involved with.
The US economy doesn’t need more remedies. It needs cures. Those cures are going to require that the American people give up on these ideals of entitlements that were never part of the original promises.
Comments
That's right, fingerprinted.
This was the beginning of the brave new world in banking. A consortium of bankers unveiled in Newsweek around that time, their intent to do away with all paper (including Federal Reserve Notes), in a move that would have completely freaked the bible-thumpers out: they literally wanted to embed computer chips under our skin so they could keep track of who was spending and on what.
My take on this is that things are going to be hard for all of us for a long time, but that some good things will come from it. You are correct about credit: economist Michael Hudson paraphrased Adam Smith, saying that "no government had ever paid its debts and the same could be said of the private sector." The permanent debt structure we inherited from Hamilton has been a repeated failure, and in the over two centuries that we have been a country, only three Presidents succeeded in operating in the black: Jefferson, Ike and Clinton. If you track it, real prosperity--as in the kind created by jobs--co-incides, not with deficit spending, but with fiscal responsibility.
I suspect that we will return to this at some point, but there is going to be a lot of pain associated with it. Auto makers will have to learn how to live with most people buying a new car every 3-5 years, as opposed to the annual or bi-annual big-ticket purchases they've been pushing. The actual realization that "a man's home is his castle," while it might take a decade or so for the standard square footage to shrink, will affect humbler digs; that, or we'll see an increase in the average number of people living in a single-family home, like we did back in the Depression. You might see those of us who've gained some recession skills dusting them off, baking our own bread, darning socks and stitching torn trousers that we used to throw away. $4 latte? time we mutinied and made Starbuck walk the budgetary plank. Movie stars? who has eight bucks to blow on a flick with a plot thinner than Jessica Parker's ass?
But more than that, the money that used to make us so affluent--the "credit" that everyone made use of--used to come from savings. We all used to have it, because we all used to get more than a quarter of a percent out of it. Then Greenspan made money so cheap (in terms of interest) that there was no longer any point in saving it. At the same time, we were all sold on this idea of the great 401K (RIP), which forced the average person into buying non-voting shares in the stockmarket. Good for multi-national corporations, but not for your average investor.
Hang on, Dwight. You're in for a wild ride.
If you get any ideas for how to survive the recession, come see me.
http://pcanarchistscookbook.blogspot.com/
Dwight’s strange coffee brew
Ingredients
1/3# French Vanilla Coffee cooked to espresso roasts and course ground
3.3# dark malt extract syrup (John Bull)
3.3# Dar Malt Extract unhopped (John Bull)
12 oz. Chocolate malt grain
8 oz. Black Patent Malt grain
2# Dark Malt Dry
1.5 oz Vanilla extract
¾ oz. Nugget hops
1 oz cascade hops
.5 0z liberty hops
.5 # brown sugar in wort
.5 # brown sugar in for priming
½ cup honey
1 Package yeast (ask for type. I think laggering)
1)Put 3 gallons of water into brew kettle. Start to raise temperature to 150F.
2) Crush Chocolate malt grain and Black Patent Malt grain with rolling pin lightly cracking them.
3) Place cracked grains in brew kettle until steeped @ 140f for 20 min.
4) Remove gain sock and let drain with out squeezing.
5) Heat brew kettle to boil. Add Malt extracts.
6) Boil for 60 min.
7) 40 min into boil add Nugget hopps
8) 50 min into boil add Cascade hops, Liberty Hops, Coffee, and Honey.
9) Add Yeast nutrient
10) Pour wort into carboy
11) Add water to 5 gallon mark
12) Shake vigorously
13) let ferment in primary for 9 days then in secondary for 11 days.
14) bottle and wait 4 to 6 months.
It has all the functions and wholesome goodness of your bread, with the bonus feature of making me look better and sound way more inteligent. Made right, it ends up being 10 to 12 abc.
I am the second cheapest man alive and have made it through plenty of self imposed "depressions". Turns out that if your ambition leaving high school is to be a rock star with a "plan 'b'" of being a pirate, you are in for some economic hardship. But I am also smart enough to know never to turn down a free meal, or free advice.
Is America better off in 2008 than in 1932? It depends who you ask. In 1932, Franklin Delano Roosevelt was elected president, and took over during a time when the economy was nose diving into a recession. FDR introduced his “New Deal,” which drastically changed the government’s approach towards the U.S. economy. The government’s new role in the economy was much more involved than it had been previous to FDR. Roosevelt's “deal” revitalized the economy in the short run, but some argue the negative repercussions can still be felt today. In this Wall Street Journal article, Paul Rubin writes that although the present U.S. economy is not identical to the economy of 1932, there are many parallels: the stock market is faltering, credit markets are locking down, and a popular Democratic presidential candidate – Barack Obama – is advocating for increased government regulations in the economy. If Obama becomes president and the Senate is controlled by democrats, our country will face the most liberal agenda in its history. Free market economists are concerned with Obama’s “hands-on” policies and fear they steer the American economy off-course in the long run. Proponents of capitalism will disagree that we’re better off today than in 1932. On the contrary, they would most likely tell you that America is in for more of the same – a “New, New Deal.”
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First and foremost, your title expresses that idea that you are in favor of the idea of “payday loans”. To me the creation of this market was the last step to eat away the miniscule savings that America’s middle class and poor had left. As if years of quick car loans, credit cards, and no money down/ 30 year housing loans hadn’t taken up enough of the savings. Along comes payday loans which extracted the last cents that people were saving on a weekly basis.
“The New Deal” policies were a brilliant remedy at the time and might have lead to a cure if not exploited. In 1932, most people still grew part if not all of their own food in the 1920’s. Oddly enough about that time the “charge card” began to gain steam. So did the “mortgage”.
In the end, this “spending money you have not yet earned” has lead to this crisis. The practice hurts the borrower and the economy in two ways. One, it causes them to suffer when they loose their source of income unexpectedly. Two, it allows the cost of goods to be inflated with money that doesn’t really exist. Instead of forcing a producer to sell goods at a price affordable with ones earned salary, they are able to demand a price related to ones credit limit.
You have got to see this, man!
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