Guest essay by Eric Worrall
Michael Metcalfe, a senior merchant banker who gave a TED Talk in 2014 campaigning for money to be printed on a vast scale, to fund global charities, now wants governments to print 100s of billions of dollars, to combat Climate Change.
Can we print money for climate finance? Three years ago, the idea of using money in this way was something of a taboo. Once you break down and dismantle the idea that money is a finite resource, governments can quickly get overwhelmed by demands from their people to print more and more money for other causes: education, health care, welfare — even defense.
And there are some truly terrible historical examples of money printing — uncontrolled money printing — leading to hyperinflation. Think: Weimar Republic in 1930; Zimbabwe more recently, in 2008, when the prices of basic goods like bread are doubling every day. But all of this is moving the public debate forward, so much so, that money printing for the people is now discussed openly in the financial media, and even in some political manifestos.
But it’s important the debate doesn’t stop here, with printing national currencies. Because climate change is a shared global problem, there are some really compelling reasons why we should be printing that international currency that’s issued by the IMF, to fund it. The Special Drawing Right, or SDR, is the IMF’s electronic unit of account that governments use to transfer funds amongst each other. Think of it as a peer-to-peer payment network, like Bitcoin, but for governments.
And it’s truly global. Each of the 188 members of the IMF hold SDR quotas as part of their foreign exchange reserves. These are national stores of wealth that countries keep to protect themselves against currency crises. And that global nature is why, at the height of the financial crisis in 2009, the IMF issued those extra 250 billion dollars — because it served as a collective global action that safeguarded countries large and small in one fell swoop.
But here — here’s the intriguing part. More than half of those extra SDRs that were printed in 2009 — 150 billion dollars’ worth — went to developed market countries who, for the most part, have a modest need for these foreign exchange reserves, because they have flexible exchange rates. So those extra reserves that were printed in 2009, in the end, for developed market countries at least, weren’t really needed. And they remain unused today.
So here’s an idea. As a first step, why don’t we start spending those unused, those extra SDRs that were printed in 2009, to combat climate change?
The Climate TED Talk was filmed in 2015, though the recording appears to have just been posted on the internet today.
From my perspective, there seems to be a remarkable similarity between Metcalfe’s 2014 plan to print vast sums of new money and give it to the UN, to combat global poverty, and Metcalfe’s November 2015 plan to print vast sums of new money and give it to the UN, to combat climate change.
Both of Metcalfe’s schemes seem to involve imposing what is effectively a gigantic new UN tax on the world’s workers.
Printing money is the ultimate stealth tax – instead of openly taking money out of people’s pockets, printing new money drains value from cash already in circulation. People still have the same amount of money as they did before you printed the new money, but some of the buying power of that money has been transferred into the newly minted cash.
But what about the alleged “benefits” of inflating the economy with newly printed money?
I spent a lot of time with bankers during the crisis, developing banking software. The rest of the economy had already collapsed, and I had bills to pay.
In my opinion, the only people the bailouts “saved” were bankers, and friendly senior politicians and donors who were heavily invested in banking stocks.
The bankers I talked to knew Subprime Mortgages were trash, well before the financial crisis, but there are fancy strategies by which sharp financial traders can make money out of the most unlikely rubbish.
However these fancy strategies require certain preconditions to function. One of these implicit preconditions is that the market remains “liquid”. The magic only works, when traders can keep their inherently unstable Portfolios balanced, by continuously buying and selling small parcels of financial instruments.
When Subprime mortgages collapsed, triggering the 2007 banking crisis, the market totally froze. Nobody was interested in buying subprime mortgage products at any price. Almost everyone was stuck with unbalanced portfolio positions which they were no longer able to adjust, positions which rapidly toppled into bank breaking losses.
Then suddenly it was all better – the friendly politicians showed up, with a huge deluge of freshly printed money, to make it all better. Not only did this public cash save the jobs and savings of the people whose recklessness had created the crisis, the public money actually enriched many of the failed bankers, in some cases beyond their wildest dreams.
Precious little of the bailout money helped ordinary taxpayers, who ultimately funded the bailout, via the money printing stealth tax.
If politicians listen to Metcalfe’s plan, and fire up the printing presses to “save the climate”, fund global charities, or for this year’s noble sounding cause, whatever that is, all that will happen in my opinion is that bankers will grow even fatter. The increased funding will help the UN to become more powerful. And of course, ordinary people, who would ultimately pay for this new banker party through the depleted spending power of their debased life savings, will be further impoverished.
From the article: “So here’s an idea. As a first step, why don’t we start spending those unused, those extra SDRs that were printed in 2009, to combat climate change?”
What would we spend it on, and how would that help?
Because climate is controlled by the sun, i get the sun will get it ..
I vote to spend them on tearing down unsightly and deadly (to birds) wind turbines.
Give all of the money to the UN who has been scheming for decades to redistribute wealth from the countries that create it, via the free market system, to countries that don’t. Obama’s gave the UN a $500 million handout and our fool of a PM, Trudeau Jr., promised $2.65 Billion of taxpayers’ money over the next 5 years during a recent speech to the UN. Trudeau’s largesse elicted wild applause from the representatives of so-called third countries – their leaders probably went to bed that night with visions of a new fleet of Mercedes or a deposit to their Swiss bank account dancing in their heads.
The money would end up where most western foreign aid goes (over $1 Trillion to Africa alone since the ’60’s), including food aid, into the pockets of dictators, their cronies and military. The idea they would spend it on wind and solar farms is ludicrous in the extreme. Even if they did use the money for “Green” energy projects, experience in Europe and the Canadian province of Ontario where I live, shows it has a minimal impact on CO2 emissions because of the need for fossil fuel backup.
Should I modify my wheelbarrow so it can hold enough money to buy a loaf of bread as they did during the Weimar republic?
How ’bout we DISMANTLE the UN, then there’ll be no need to “print money.”
+1,000,000
Because my personal “climate” is most important to me, I say give me at least $20 Billion to help out.
I mean, shouldn’t we take care of ourselves so we can, when conditions are right, help others?
My beneficiary will be most grateful.
/sarc.
Who should appear on the bills? Michael Mann’s hockey stick would nicely track the rate of inflation, so put him and his stick on the bills.
In Mann We Trust
Bernie supporters would love the idea. Also Clinton’s. supporters. — Eugene WR Gallun
Bernie’s Bludgers has a certain ring to it! Bludging off other people’s money.
bludger
ˈblʌdʒə/
nounAustralian/NZinformal
noun: bludger; plural noun: bludgers
a scrounger.
“just look at that bludger, can’t get his thieving hands on the cash fast enough”
From the era of my childhood (admittedly fading into the twilight):
Bludger: a man living off the earnings of his wife’s prostitution.
Whenever you play with money, it’s always the ones in control that make out like bandits. The “lesser” people just take it in the shorts.
Kleptocracy needs this.
How else are they going to steal from the productive.
Every financial decision by government of late,has been designed to steal from the thrifty and reward the foolish.
Course they may as well print new money,as the use of government backed paper as a unit of exchange is almost over,hell they could bring out some UN dollars,backed by the highest international ethics we have…
Sarc off.
The Ban Key Moon buck?
International 3 dollar bill?
Endless possibilities,all of as much value as the UN can provide.
Man is fool.
Printing money is an expensive business. State treasury just needs to add now and then 2-3 zeros to their income account. It is instant, virtually ‘costless’ anonymous, and no visible ‘street’ evidence, but could be far more devastating than the wheelbarrows of cash dolled every afternoon to the workers of the Weimar Republic.
Is that his wages or is he going to the market for a new pair of shoes
Most likely just about enough for the lunchtime sauerkraut wurst,
Gramps dumped a whole suitcase of that money stuff into the river before he emigrated from Germany to America before WWII, because he needed the suitcase. At the time it wouldn’t buy a loaf of bread. Hitler was supposed to fix the economy. He sure fixed things all right. “Give me five years and you won’t recognize Germany: Adolf Hitler.” ~graffiti seen by invading American troops.
There are always way more foolish people than there are thrifty people.
The result of universal suffrage is always the same. Those who don’t want to work, vote to plunder those who do work.
Voting should be limited to those who are net tax payers.
Just another (and particularly insideous) form of taxation. Money which is based on gold & silver *cannot* be printed — so is the best defense against the socialist loonies who want us all to be equally poor. 100 years ago, all money was based on gold & silver — those people were free.
Also, if you sell your belongings (shares, house…) at an inflated price, you get to pay a tax on the “benefit” of inflation you did NOT made.
Tax on tax.
Of course, the cost of technological goods goes down as technology progresses, allowing the institutes of public manipulation (called institutes of public statistics) to pretend inflation is low. The price of goods is “inflation” only in a technically quasi-static world. Inflation is how much we don’t get the economic benefits of technical progress.
Saying inflation is price change is propaganda.
too damned right simple-touriste !
http://photoweasel.diaryland.com/Money2.html – the banks already own all the money in Australia, they’ve left monopoly money for the rest of us to play with until such time as they call in their debts and then we’re back to being indentured debt slaves
Yes, and this is very serious. When 46% of China’s borrowings go to pay interest, they are in real trouble, and so as a consequence is all of the West. How do we control it? 1% GST on bank transfers? Clearing houses? Higher retention ratios? International currency such as special IMF drawing rights, with a clearing house at each transaction?
The banks create money by making loans and through currency speculation then approach the Reserve Banks to get the money to cover the business written up on their books. Clever, but how do we make it illegal? It is this write up of new business that enables the governments to flood new money into the economy without any inflation. But Joe and Josephine Bloggs get trapped in huge debts.
Inflation is low because the government indexes things we don’t often buy or cheap crap made in Asia. The transfer of wealth out of the western world – balance of payment deficit – over the last several decades caused the current crisis of the middle class. The wealthy will always be wealthy. The poor are supported by welfare and government dept and the middle class goes down the drain. Obama’s 4 trillion “save the economy” simply went into banks and then into the stock market as did his 9 trillion overdraft.
I actually think we should more of this. Get the crash of fiat money over and done with, including of course the subsequent war(s) then back on gold and silver. It’s got to get worse before it gets better. Duck and cover folks.
Some are also working the other end by asking people to provide economic boosting through encouragement of more debt by negative interest rates. One would think that these bubbles would have to end sometime in one big “pop” (or is it “poop”).
http://money.cnn.com/2015/04/22/investing/negative-mortgage-rates-europe/
“Once you break down and dismantle the idea that money is a finite resource…”
Money isn’t a “resource” at all. It’s a medium of exchange. I sure wouldn’t bank with this guy.
Absolutely right, but the problem is we now treat it as if it were a solid and real commodity. In earlier (and wiser) days the value of a tradable item was set by the price the seller and the buyer agreed on. This, paradoxically, also set the value of money by the aggregate transactional valuations in the economy as a whole. If you purchased an ice cream for a dollar, this not only set the price of the ice cream, it also, given the millions of similar transactions in the economy, set the value of a dollar as being equal to one ice cream. The dollar had real value and could be trusted. But once the speed and convenience of currency transactions allowed by the development of the computer and the internet, the dollar itself became a tradable item in being traded by money exchangers. This destabilises the transactional system. Money is now being printed not only to facilitate trades in goods, products, resources, and services, but also trades in money itself. That’s why we don’t have inflation in spite of the vast amount of funny money being printed as fast as the printing presses will go. But the whole thing leads to a debt-based system since there is so much “free” money floating around, so is destructive. How it will end I don’t know, but if people lose their faith in the value of “unbacked” money (fiat money) then it will be the end of the international system. It is also a fundamental flaw in democracy that politicians desirous of being elected make promises that can only be fulfilled by debt transactions. There is plenty of “free” (unbacked) money floating around so it is easy to get loans. And we are suckers in letting them do it. No matter whether you are on the right or the left of the political spectrum in this we are united in the horrible effects we have unleashed – unfortunately.
are the printing presses really running overtime, or is the “new Money” just electronic 0’s. What ever, real inflation such as mentioned earlier has so far been avoided because all that “new Money” has yet to find its way into the general economy. Stays on wall street (and other equivalent “streets) rather than making it’s way to main street. Currently, there seems to be a move to actually ban cash–all monetary transactions need to be electronic–for our protection from criminals and terrorists of course. I say, bring it on–no better way to shore up an underground (real) economy and thriving black market. Not sure about other places, but here in the good old USA, nothing the government says about the economy, jobs and employment, inflation has any truth to it.
Along with the idea that money is no longer a finite resource is the corollary that money ends up having no value at all.
Michael Metcalfe, have you ever heard of runaway inflation? Just ask Jimmy Carter or people that are are aware and lived through that era…
As far as i’ve been able to tell, the stagflation of the carter years was due to the high cost of doing business because of higher oil prices. (keep in mind that the price of gasoline tripled in the seventies) Now, the carter economy was a robust growing economy which also lends itself to “demand inflation”. This is a little different than oil price inflation in that people actually have to be making more money to sustain demand inflation. (so by definition, people always come out ahead with demand inflation) Carter’s big mistake was appointing paul volker to the fed chair in august of 1979… Volker set out to destroy the economy by raising interest rates thus curbing the demand inflation (along with curbing demand, which is to say, the growth of personal wealth). So people were actually worse off under volker. The thing to do would have been to allow the economy to grow. Personal wealth would have out paced the demand inflation (that the growth of that wealth would cause) thereby allowing people to combat oil price inflation with their gain. The unemployment rate under volker was lower when he took over than at any time during his tenure which lasted until 1987 when he was replaced by alan greenspan… Greenspan essentially continued volker’s policy (although less heavy handed) presiding over what he called “the era of moderation” which translates into “the era of lousy economies”. As of december 16, 2015 the fed has begun it’s work of destroying the economy once again all in the name of saving us from the dreaded demand inflation. Most people, pundits and politicians are under the impression that our economy is growing too slowly. The fed in it’s infinite wisdom thinks otherwise, hence it has begun raising interest rates to curb economic growth (that is to say, demand inflation). The next interest rate hike should commence in june, our next recession won’t be too long in coming. As the old saying goes…
THE FEDERAL RESERVE: CAUSING RECESSIONS SINCE 1913
Dumb spell check. That was supposed to be “Economic prosperity…”
I suspect the carter stagflation years were due in part to Nixon taking the dollar off of it’s peg to gold–thus opening the fiat printing presses.
jvcstone, yes, i’ve found it very difficult to research nixonian inflation on the web. (if you have any links that might help me out, i would greatly appreciate it) My scant take on it is that nixon wanted in essence to reduce the size of the national debt. He did it by creating inflation so that the relative size of the debt then would become small. One would think that it worked pretty well (unless of course you happened to be a bond holder)…
Yes, Volcker definitely ushered in the steep shock that probably doomed Carter’s reelection. However, inflation was a very real problem, and it is arguable, at least, that the Fed did what it had to do. It really was getting out of hand.
The problem of inflation certainly owed a lot to the oil shock. And yes, at least initially, and strictly by the numbers, Carter’s economy was growing. One might even say it was robust.
But, it was deeper than that. There was a malaise upon the land, a moral and a spiritual crisis. One might even say,
He was right. There was a crisis of confidence. But, then we got the hectoring that it was all our own fault, and that the solution was to pull inward, temper our ambitions, and accept our diminished lot in life. It was a demotivational speech par excellence. It told us that we were suffering a crisis of confidence, and the cure was to have less confidence.
Economic property depends critically on motivation. At the time, we were retreating from the world stage, and the Soviets were advancing. Our cars were rattling cages, coming from the factory with pre-installed body rust, and breaking down every few thousand miles. The message of the popular culture was, have no pride in achievement or a job well done. Slough off, get high, and live for the day. If you put in too much effort, you’re a chump, and don’t expect any reward for it.
Today, we are told that, if you put in a lot of effort, and think you should be rewarded, then you are a blood-sucking parasite. You didn’t actually accomplish anything. Everyone who made it possible for you to sweat out the the actual doing is responsible, and deserves an equal cut. Is it really any wonder we have limped along for 7+ years now, in an economy that could only charitably be described as anemic?
Dumb me. Hit the wrong reply button. See above for correction.
“…it is arguable, at least, that the Fed did what it had to do.”
Hey there, Bart, great to “see” you… It may well be arguable, but it’s a losing argument. Let me cut to the chase here and boil it down to the basics. Which is worse, people being wealthy enough to afford higher prices OR people being too poor to afford lower prices? That’s essentially what the federal reserve does. They create poverty. Poorer people spend less, therefor demand and the ensuing inflation gets held in check. Now, getting back to the 70s… Everybody lost with oil price inflation (excepting the sheiks). The way to combat the oil price inflation is to let the economy continue to grow. Personal wealth would grow outpacing the demand inflation that it causes. The net gain would then offset the oil price inflation. Keep in mind that the growth of personal wealth MUST outpace the demand inflation that it causes in order to service the progressively higher demand. Think of it this way, Friedman is quoted as having said, “inflation comes like a thief in the night”. If we were to use the same sort of analogy for demand inflation it would go like so, “demand inflation comes like the relatives who show up on your door step after you’ve won the lottery”. (after you’ve paid the college tuition for all of your nieces and nephews, there’s plenty left for yourself)…
[ oh, and one last thing… If you don’t win the lottery, your relatives don’t show up :•) ]
But, Fonzie, it’s a runaway condition, unstable in the long term. The more uncertain the future value of money becomes, the less able businesses and entrepreneurs are able to afford risk, and the lower the growth. Growth is everything. Without it, the economy becomes a zero-sum game in which most people see only deteriorating fortunes.
It was getting really bad. The rate hit 15% in March of 1980, and we didn’t know where it would go from there. If you were born after that, you’ve never lived through any comparable period. The highest rate since was 6.3% in 1990.
Bart, what you’re describing here is a self correcting problem… If instability (due to inflation) lowers growth, it will also lower the demand inflation (which is all that the fed does anyway). In other words, inflation may (or may not) cause a recession just like fed policy will cause a recession. (is one method preferred over the other?) Key is that it is not a given that inflation will cause a recession. But if it does, then we’re no worse off than fed policy.
Now, with the carter economy we were still seeing economic growth when volker took over (which is why they put him there in the first place). If the economy had continued to grow even with the inflation, that would have been an indicator that the growth of wealth is outpacing inflation. Would more people buying and selling progressively more goods and services in the face of high inflation have been a bad thing? At the very worst, economic growth (as you say) would have slowed or stop or even recessed. With fed policy, we got that ANYWAY(!)
Bernanke actually used the words “red hot” to describe carter’s economy. Now, i don’t know for sure whether or not we’ve ever seen what you’re describing, Bart. Seems to me that all our economies (since WW2) have chugged along at a steady clip, the ONLY thing dragging them down being fed policy (sometimes allowing other drags to catch up with things). If inflation can cause the problem that you’re describing, have we actually seen it before? It certainly had yet to be a problem for the carter economy (not according to bernanke nor observations).
You know, Bart, this could be just another example of intelligent people doing stupid things. We see the idiocy of society attempting to curb human emissions when it won’t affect carbon growth. I think we’re also engaging in lunacy by destroying the economy every time it gets going to save our selves from demand inflation. (and perhaps the same lunacy as well in shunning butter for margarine) False paradigms abound. AGW may be the most obvious one, but you’ve gotta think that fed inflation policy is the most damaging one by far. Ten years ago the whole world saw an economic prosperity (no spell check for me…) like never before. That’s the way the economy should be ALL the time. The only reason it isn’t is because of this dopey idea of holding the economy back at no less than 4% unemployment AND in the process creating these boom/bust cycles that don’t have to happen. AGW is bringing human stupidity to the forefront. Hopefully when the agw mess collapses people will begin asking about what else we’re doing wrong. Fed policy may well prove not only difficult to bring to the fore, but, having done so, it will most certainly be a tough nut to crack…
It’s not self-correcting, though. It’s a positive feedback system. Rising prices produce anticipation of further rising prices, resulting in rising prices.
The supply of money has to keep up with growth in the economy, but not rise in a manner in which inflation takes off. Somebody, or some entity, has to decide how much. If we abolished the Fed, someone, or someones, still have to do the job. The Fed’s as good as anyone else.
Yes, the Fed’s tenure has seen some missteps, and there have been some bad calls, and some slowdowns. But, the pre-Fed era was no picnic either. Except for the Great Depression, the Fed’s record has been fairly good, and the extension of the Great Depression long past its natural expiration date had more to do with FDR and his radical interventions that overrode the natural corrective cycle.
“It’s not self-correcting, though. It’s a positive feedback system. Rising prices produce anticipation of further rising prices, resulting in rising prices.”
What i mean by “self correcting” is that at the very worst the inflation will cause a recession. (and the recession will stop the inflation…) At best, the economy will continue to grow unabated, which mean more people will progressively buy & sell more goods & services in spite of inflation. Inflation is a drag on the economy just like any other drag on the economy. If people can’t handle it, the economy recesses. Conversely, if they can handle it, the economy continues to grow. Fed policy acts in much the same fashion. Interest rates are hiked to the point where people can’t handle it and the economy recesses. Pretty simple really…
Bart, i think we’ve begun a discussion on economics probably at it’s most difficult point of discussion (that being the relatively complex carter economy). We might have been better served talking about fed inflation policy in general. That way we could have avoided the nuances of the carter economy altogether. In the more general sense, there are some points of contention that i think we can come to agreement with. For example, the fed shuts down the economy at about 4% unemployment and then a drag eventually comes along causing a recession. Now, i think that’s a terrible thing. You may think it’s a good thing. But at least we should both be able to agree that it does happen. Most people are clueless about it. So just from an educational stand point, i like to tell people about it. Dr Spencer likes to dabble in economics, what he calls “fundanomics”, even wrote a book about it. (his concept is that creativity and ingenuity are the drivers of a truly successful economy) I used to spoof his concept by dubbing my take on economics as “fonzanomics” which was always good for a laugh. I think there are two parts to this. Firstly, enlightening people as to just what the fed does. And secondly, discussing/debating whether or not fed policy is a good idea. Kind of like the game of chess. People first have to learn how the pieces move and then secondly learn strategy…
“What i mean by “self correcting” is that at the very worst the inflation will cause a recession.”
Yes but, there is no law limiting those recessions to be mild. That is the reason the Fed was brought into existence in the first place. Prior to it, the boom and bust cycles were severe.
Nothing in life can be made perfect, only optimal. And, it is better, more optimal, to have the economy chugging along smoothly at less than 100% employment than it is to experience periodic booms and subsequent crashes where everything is lost.
Bart, i’m having (more than) a little trouble with my insomnia today. Nothing new (same old same old), but it will make my comments brief (and perhaps a bit less coherent). I do hope you’ll keep posting replies, as this is “good stuff”. (i think that the more folks talk about money the better)
fonzie…
Now, to my (sleep deprived) knowledge, fed inflation policy has nothing to do with the severity of a recession. The fed has two basic functions, primarily it is a lender of last resort and then there is the inflation policy. You can have the lender of last resort without the inflation policy. It was the lender of last resort function that brought in the existence of the u.s. federal reserve. Lessons were learned from the collapse of the knickerbocker bank (?) in 1907. A wealthy business man stepped in and played the role that the fed would later play. (it was fdic that would play a role later in stopping runs on banks after the 1929 crash) Those are the things that keep recessions from going too deep. The inflation policy is primarily concerned with boom side, curbing growth. My thinking is that if our modern economies were allowed to grow, then we would see booms near 0% unemployment and busts at no lower than 5% (instead of the usual 5% boom, 10% bust). Stablizing the bust part of the cycle has nothing to do with fed inflation policy…
Bart, i’d better put it in park right here. I would think that there is scant evidence that bigger booms create bigger busts. (perhaps the 50s show the opposite of that) The greenspan era WAS very stable, but that could have been due to a number of factors. (who knows why?) I do think you are right to zero in on this though, it may be the crux of the biscuit…
Bart, here’s a (hopefully) coherent question that i might throw in there for you…
If it can be said that the boom/bust cycles have in recent decades gone back and forth from 5%-10% unemployment, do you think that if the unemployment rate were near 0% that we would have recessions that top out at lower or higher than 10%? (keep in mind that even if we were to top out at just 10% in both cases, the swing would be worse with full employment but the average rate over time would be lower)
Bart, sometimes ya just gotta hit the books (it’s been a while and i’s a bit rusty): Looking over the unemployment rate back to the turn of the century (excepting the great depression), economies before the 70s had not only lower unemployment rates during booms, but also as a rule had lower unemploymet rates during busts as compared to economies after the 70s… The duration of recessions don’t seem to be any longer either. It’s not unreasonable to think that the unemployment rate could ALWAYS be easily held under 5%
Monetary policy can only do so much. The Fed can’t abolish cycles. It has no power over fiscal policy, and little over the pace of innovation. It can do basically two things: it can create money, and it can set a floor for interest rates. And, with those two weak tools, it does its best to moderate the economy so that it does not become too depressed, nor too overheated.
Following the Great Depression, when they finally got their act together, and
up until the recent mortgage crisis (which was brought on by insane lending policies mandated by the Congress, not the Fed), the Fed’s record at taming the economy was very impressive. Prior to this, there were major financial panics every few years. Afterwards, the incidence dropped precipitously.
Now, you may think the Fed had nothing to do with it – after all, there were a lot of other changes during the post-WWII period. And, sure, that’s possible. But, I am conservative by nature, and I don’t like the idea of throwing away something that arguably appears to be working reasonably well, in favor of something nobody can predict with assurance. You don’t know what you got until you lose it, and better the devil you know, and all that jazz.
Yes, the Fed does appear to take away the punchbowl just when everyone’s having a good time. But, in the morning, at least you don’t have a hangover, and nobody’s drowned in the pool. Dampening is needed in any high performance system. Try driving your car down to road without shock absorbers to see why.
If you are enjoying these far flung analogies and mixed metaphors, I have dozens more. But, hopefully, you get the gist of what I am trying to tell you about my perspective. Not convince you – I’ve argued with enough people to know that nobody changes their mind in the middle of a discussion. But, maybe, down the road, you will say, “hey, that Bart guy was right”, or “you know, that Bart guy was full of __it.” Either way, I will have been a stepping stone on your path to enlightenment, and I will sign out with the satisfaction of taking preemptive credit for your epiphany, whichever way it goes 😉
“…something that arguably appears to be working reasonably well…”
NOT… Bart, have you taken a look at the economic shape of the country since the seventies? The path we are on is unsustainable! The unintended consequences of holding the economy to no less than 4% unemployment are staggering. We are 19 trillion dollars in debt. How big would it be if tax coffers were not so anemic? How large would it be if we weren’t creating an entire poverty class that is strapped for cash? (and remember, this poverty class can vote) How about the malaise of a country that at best sees mediocre economies and at worst recessions? A military strapped for cash? A middle class that sees poor wage growth and has concerns about medical care (which get’s answered by o’care)? A conservative movement that can’t win anybody over because it’s remedies include tepid economies couple with budget restraint in the face of great economic need? (consigning them to back seat status even in the GOP) How about women who take the easy road out in the face of manufatured economic hardship and get abortions? A world beyond our borders that depends on a successful america to lift them out of poverty?
Bart, just recall how good the bush boom was just ten years ago. That should be the worst we ever see. (full employment would effectively eliminate the boom/bust cycle with recessions like that) There’s a saying which goes,”life is about more than just money, except when the money isn’t there” (then it’s all about the money)…
“There’s more to life than money, except when the money’s not there. (then it’s all about the money…)”
i hate it when i get my quotes wrong :^(
BTW, Trump’s vision for america’s economy is for high growth going forward. (pretty much what i’m advocating for) Should he get in the whitehouse, he’s going to do what he says he’s going to do, BUT the fed will oppose him every step of the way. Growth is at 2% now and the fed won’t have any more of it. Raising interest rates is a powerful tool in shutting down the economy. (The Fed trumps Trump)…
I don’t think you need to worry, Fonzie. It’s not the Fed that’s been responsible for 2% growth in the last 7 years. It’s the current occupant of 1600 Pennsylvannia Ave. Once he’s gone, and assuming Trump gets in, things are going to take off.
Bart, here i’ve got to hearken back to a comment that i made about learning how to play chess… First we learn how the pieces move. Secondly strategy. I have to “make” you understand here that what Trump is proposing will be MASSIVELY INFLATIONARY(!!!) What he’s planning on doing goes against every thing that you’ve said up until this point. (certainly, you must realize this) We are almost to full employment by greenspan standards. If Trump gets in, it will create the very situation that you’ve been lecturing me against. According to the fed, 2% growth at this juncture is IT. Starting on december 16, 2015, the fed has spoken and they’ve said “no mas”. No matter what Trump does when he gets in, it will be met with interest rate hikes to cancel it out. The fed will slowly allow the unemployment rate to go down to just above 4% and then no further (in much the same manner that greenspan/bernanke did ten years ago). That’s what they do… You’ve said you are for that and i think it’s been proven disasterous. One thing that i think we have to agree on here is that this is the reality that we’re facing. Getting back to my chess analogy, we can disagree on strategy, but we can’t disagree on how the pieces move…
Getting to a genuine 4% is a LONG way from where we are. There is a lot of slack in this economy to take up before it starts tightening up. It’ll be OK.
Fair enough… However (and there is always a “however”), we’re not going to get there any faster than if obama were to stick around for another four years. The fed has spoken. The economy is growing too fast as it is. They’ve got their foot on the brake. A president trump would get in and put his foot on the gas. The response of the fed will simply be to put it’s foot on the brake even harder. The economy is maxed out and now it’s time to shut it down…
AND don’t believe what you here from the politicos and punditry. I’ll give you an example. In august of 2004, then presidential candidate john kerry lambasted the bush economy saying that “it has the flu”. At that very same juncture alan greenspan said, “we have entered a period of maximum sustainable growth” and then he commenced the raising of interest rates. (this would be analogous to taking a person with the flu and sticking him outside in the cold) In the same manner that the fed laid the ground work for the collapse in ’08, the fed is now laying the ground work for the next one. After a few more years of sluggish growth, some drag will come from somewhere and the house of cards will collapse in typical fashion…
Bart, we’re nesting here. I’ll put a comment down at the bottom of the page. (if you want to bow out just let me know) I’ve enjoyed the exchange very much. It’s not often that i get to debate economics with anyone as most people have never even heard of this stuff before. (it makes the fonz look like a genius to debate the clueless, but it ain’t much fun…) You’ve been a great “sparring partner” and i really appreciate that. One direction that i want to head in my studies is the economic stability aspect that you mentioned. While not an unheard of aspect of fed policy, it’s generally not considered a big deal. The inflation in and of itself is considered a big deal even without worrying about any instability that it may or may not be causing. (and inflation fears can easily be dismissed as less than dynamic analysis) This instability thing that you brought up should be interesting to check out. I would think that could conceivably be the only legitimate argument against full employment. So, i’m glad that you brought it up as i’m admittedly fuzzy on that. (so far, though, it’s enough for me to realize that recessions with lower unemployment economies tend to be less severe) See you at the bottom of the page…
Well written article. Would be improved by mentioning that the bankers were forced by law to issue that subprime crap mortgage via the anti redlining clauses of the CRA Community Reinvestment Act.. by those same politicians. Signed by Clinton (the first one).
If this money printing is ever done, the starting gun of hyper infation sounds, and cash heads to worthless. But it is already 95% of the way there… When we went totally off the gold standard, a stamp was 5 ¢ a car about $1800 a house $8000 to $20000 and minimum wage was 35 ¢ / hr. And life was good. So the $ today is about a Nickle. ..
Prepare then to buy land, houses, jewlery, collectables, metals… and dump cash as soon as you get it.
Agreed, they were pushed into issuing subprime mortgages, but then they got a taste for it…
http://spectator.org/articles/42211/true-origins-financial-crisis
…yes, with GSEs Freddy and Fannie leading the way, all protected by the senate Finance committee.
Not only did they get a taste for it but they created complex, high order derivatives like CDOs to palm off the risk to investors with the ratings agencies in on the game by giving these derivatives “investment” grading. They may have started off with a push but the banks didn’t miss a stride and ran on.
Note who one of the lawyers was in the “Buycks-Roberson v. Citibank” case. https://iusbvision.wordpress.com/2008/09/30/obama-sued-citibank-under-cra-to-force-it-to-make-bad-loans/
The liberal take was the movie The Big Short. It was all greedy bankers, realtors and the odd stripper. Nothing to do with forcing banks to loan to unworthy credit risks.
if the value of it constantly diminishes due to inflation then it’s not serving as a store of wealth
that makes it not money = counterfeit.
3 silver dimes will still get you a burger, a pack of smokes or a gallon of gas
The total of subprime mortgages last time the economy cratered was $1.3 Trillion. Currently, the total of subprime mortgages exceeds $7 Trillion. (Once the culprit was identified, nobody lifted a finger to solve the problem.)
Does anybody believe we’re not heading for an economic collapse proportionately larger than the last?
Leftist governments around the world are printing $trillions to “finance” the already unsustainable sovereign debt crisis…
Such an insane monetary policy works great for debtors for a time, as it allows feckless Leftist governments to nominally pay off the interest on existing debt with devalued currency and allows them to take on more debt with more printed money, however, the BUYERS of debt get screwed in the process.
Eventually, bondholders will FINALLY realize Leftist governments can NEVER payoff the principle on existing outstanding debt obligations and will demand higher yields to offset the default risk and to compensate for currency devaluation and monetary inflation.
Eventually, bondholders will realize we’re in the largest debt bubble in human history, and will dump their bonds for whatever price they can get, which will cause yields to spike, leading to most government bonds going into to default and causing the worst global economic collapse since the Great Depression…
We’re already in Loonyville with NEGATIVE yields, which is the beginning of the end.
Fiat currencies NEVER work as governments ALWAYS print money rather than raise taxes to finance their debt and profligate spending….ALWAYS…
The US is on the verge of losing its reserve currency status, which will be replaced by China, who is purchasing 100’s of $billions in gold and silver in preparation of creating a gold/silver backed currency to replace the Fiat US$/€ currencies..
Yeah, let’s print MORE money to waste on the disconfirmed CAGW scam… What a wonderful idea!… Why didn’t I think of that? /sarc…
And so it goes…..:until it doesn’t…
The issue is partly that the “extra” money gets used to make contributions to the politicians who nominally regulate the money supply in the first place–a rather nasty feedback loop.
Banks and other cronies give political hacks money for favors…it’s just pay-to-play corruption, of which Hillary is the worst…
Hillary and Bill have made $100 million by giving silly boilerplate 20-minute speeches to corporate cronies looking for future favors….
It’s sick.
“If politicians listen to Metcalfe’s plan… all that will happen in my opinion is that bankers will grow even fatter. The increased funding will help the UN to become more powerful. And of course, ordinary people… will be further impoverished.”
To a politician, this would sound like a crony capitalist’s greatest dream. It would effectively redistribute wealth from the lower classes to upper-class bankers and the politicians they control. And it would increase their power and influence in the world at the same time. But to me, printing more money just sounds like flooding the market with Subprime Mortgages, but this time without the mortgages. What could go wrong?
The stupid Dodd/Frank Bill institutionalizes “too-big-to-fail” bank bailouts… Banks keep all after-tax profits during government-created stock market, real estate and bond bubbles, and when these bubbles inevitably pop, the taxpayers cover all their losses…
Not a bad gig, if you can get it…
I think we are all agreed that we are witnessing the early stages of the ultimate collapse of Western civilization. The template was struck with the collapse of the Roman Empire; we are following their example.
The obvious question is for us to ask what we need to do in order to save our civilization.
The less obvious question is to ask whether our civilization deserves to be saved.
At least the Romans pillaged the countries the conquered and sent the money back to Rome and the conquered countries continue pad to pay tribute to Rome…
The Roman model was: rape, pillage and THEN burn…. The US model is:pillage our own economy to burn down our enemy’s country, and then further pillage our own country to rebuild our enemy’s infrastructure….
The US needs to rethink their model…
My UN rant
This exposes the real agenda. It’s money. Both the size and budget of the UNEP have grown by orders of magnitude when they figured out that they could scare us into giving them money. It is now a bloated and growing bureaucracy and a kind of life form that exists only to feed itself. The ozone scare alone increased their budget from $20 million to $300 million. The UN is a tax supported bureaucracy that is so far removed from the taxpayers that they have no direct accountability to them. The UN should be restructured with a fixed budget. If the budget needs to be increased then the contribution sought from member countries should be put to a referendum of the taxpayers who will ultimately make that contribution. Otherwise the UN will remain a money-sucking bureaucratic boondoggle out of control and it will keep inventing new ways to scare us into giving them money.
(Definition of boondoggle by Google: “work or activity that is wasteful or pointless but gives the appearance of having value.”)
The great unholy contradiction among socialists is that they only pretend to love the poor. Most of their schemes actually impoverish the least well off and strengthen the control and bank balances of the governing elite.
” they only pretend to love the poor. ”
I think they are too dumb to know what harm they are causing.
No, they are definitely not dumb, they know exactly what harm they are causing, but they don’t care as long as they are on top of the pile.
Clarke’s Corollary to Heinlein’s Razor: “Sufficiently advanced incompetence is indistinguishable from malice.“
So is psychopathy, Paul.
PiperPaul April 30, 2016 at 4:00 am
Clarke’s Corollary to Heinlein’s Razor: “Sufficiently advanced incompetence is indistinguishable from malice.“
For that very reason, I tried announcing awhile back that Progressives had at last produced the Holy Equality they’d been searching for! But for some reason it just didn’t catch on.
Fiat currencies ALWAYS fail because governments will ALWAYS opt to print more bogus money rather than increase taxes to pay for profligate government spending and finance existing debt.
Money printing is a stealth tax, as it decreases the VALUE of EVERY asset you own, compared to an income tax, which simply decreases the AMOUNT of one’s take-home pay for a particular year…
That’s why in 1971, you could purchase 1 oz of gold for $40, whereas now it takes $1,280 to buy the same 1oz of gold, which is a direct result of MONETARY inflation. BTW, we officially went off the gold standard in 1972.
Eventually, monetary inflation leads to high or even hyperinflation and a complete collapse of all fiat currencies…
This proposal to print even MORE money to finance the illegal (never approved by Senate) UN Climate Action obligations is complete insanity.
It’s only a matter of time before governments are forced to default on most of their existing debt obligations, as bondholders will demand higher yields to purchase additional government bonds to offset the currency and default risks…
The debt-bomb fuse has already been lit and when it explodes is anyone’s guess. It all depends on when bondholders will realize that governments already have no intention of ever paying off all their debt obligations with stable currencies…
Why bondholders haven’t figured this out yet is a mystery….
Gold ownership was illegal in the USA from 1933 to 1975.
“From 1933 forward, private possession and ownership of gold was illegal for U.S. citizens. Any refusal to return one’s gold was punishable by a fine of 10,000 $ and 10 years in prison. These exceptional measures were aimed at preventing the general public from storing gold. The solution was simple: make it illegal to directly own gold.”
http://goldcoin.org/numismatics/the-great-confiscation-gold-ownership-was-illegal-in-the-usa-from-1933-to-1975/165/
Yes, do the people who lend their money to the government (19 trillions worth) really think they’re going to see it again? (i’m asking this in the hopes that one of y’all can set me straight if i happen to be wrong on this…)
Oh they will see their money, eventually. How much it will be worth is another story.
Maybe you are being too hard on this guy. Odds are his oxycontin was manufactured in a rat poison plant and they didn’t clean the machine properly.
Seems like a self-defeating plan to me, the more money that is printed the less climate alms it can buy.
The physics of CO2 are extremely complex. It takes months of dedicated study to begin to be able to comprehend it. To reduce this process to its simplest analysis, the Earth must radiate to space to shed the Sun’s daily input of many Joules of energy. CO2 is involved, as CO2 in the atmosphere is opaque to the particular infrared radiation at the temperature prevalent at the Top of Atmosphere, where radiation to space is free to escape, only at an altitude high enough where there is not still an opaque layer of CO2. So, more CO2 raises the altitude of this layer. Since raising the altitude of this layer lowers the temperature of this layer, less energy is radiated to space. However, raising the altitude of this layer also increases the area of this layer, increasing the radiation to space.
And, only the particular frequencies absorbed by CO2 are affected. There is almost no water vapor up there above five miles altitude, so CO2 is the boss up there, but, no one has shown any convincing calculation of this process.
The atmosphere does not heat the surface, this concept is absurd, Trenberth who is a Michigan guy just like myself, is embarrassing all the rest of us.
It is virtually impossible to comprehend all this if you don’t have the degree, as who in hell would want to go through this learning process if you did not need to graduate? DeCaprio certainly did not, nor did Hansen, shall I go on?
But not only is the area larger as the layer rises but the partial pressure , the number of molecules per square meter radiating out is also higher. Our radiator has more elements sending radiation to space.
Saying playing with money is a good idea is like saying playing with units is a good idea.
Someone should go the Pavillon de Breteuil and try that.
We just don’t learn from history… See the book : “This Time Is Different: Eight Centuries of Financial Folly”.
Counterfeit for thee, but not for me? What an (fill in blank with your choice of derogatory, insulting names)
The stupidity is just gigantic.
Just give them Monopoly dollars and see what happens, lol…
You just keep thinking there, Metcalfe. That’s what you’re good at. (huge eye roll)
Ludicrous. Abysmal economic theory.
Yup, jorgekafkazar, ludicrous. While reading the article, I kept thinking, “Can he really believe that’s a good idea?”
But then I realized that someones crazy uncle had escaped from the attic and now that he’s out there in public, they can round him up, bring him home, and settle him back into his rocker in the attic with a warm sweater, a cup of tea, and a plate of cookies.
Yess. It is an excellent idea to create an unlimited supply of money by the printing press. It was tried multiple times in history, with good results. Not.
This is the most ridiculous thing I’ve ever read. And this guy’s a senior merchant banker? It’s worse than I thought. We need a worldwide push to get the Left out of power – these guys seriously don’t have a clue!
A.D. Everard wrote: “We need a worldwide push to get the Left out of power – these guys seriously don’t have a clue!”
I think that is the *real* solution. The Left are the ones trying to take us down this insane path, not the Right.
So the idea is to print more bogus money,
to finance bogus solutions, to a bogus problem……sounds like a plan……what could go wrong ??
It’s not bogus money it is real money, taken from you when it lowers the worth of your dollars.
If they do this, like Quantitative easing, it is diluting your salary.
But here’s the kicker, whomever gets the money first, gets it at full value, only when there is a transaction made and the cash enters the financial system, after that first transaction, the money then becomes devalued.
With QE whomever got the cash (banks) get it at full value and it is worth less thereafter.
Fraud fraud fraud, financial fraud.
The dollar is worth 3 cents what it was 80 years ago
The fed has also given out undeclared loans to other banks around the world, in the amounts of trillions, and they wont even say who they gave the money to.
It amazes me Americans accept the Federal Reserve, private bankers not accountable to government.. talk about the perfect circumvention of “democracy”
The ECB is the Fed for the EU. Though the ECB openly threatens countries with “Financial bombs going of in their capitals” should they resist being asset stripped and chopped up.
You need to be blind to not see what is going on, bail-ins, savings account theft (cyprus) and the scam that is fraction reserve lending.
What is the most insane thing ever and it happens in every country, is obviously that Governments borrow money from private bankers instead of creating their own currency, and any nations that have resisted this have mostly been bombed and destroyed or regime changed.
Saddam was a gonner the minute he wanted to trade oil for Euros
Gaddafi was gone the moment he announced to the world his plan for a gold backed currency for Africa.
Imagine what a gold backed currency would do on global markets! Mayhem, Africa on such a currency would have gained immense economic power and their currency would be trading at amazing rates to the point where 100 dollars may, may get you a bottle of water.
The French PM called Gaddafi the greatest threat the financial systems of the world (the west).
Money is intentionally and criminally devalued consistently, inflation is theft through money supply control.
There is no economic reason why money should be worth less and less and less over time unless it is not backed, and there is the scam, the gold.
Without FIAT trading OPEC and QE , the dollar wouldn’t be worth wiping your behind with.
Look, the fed government consider a Strong Euro a threat to national security or any other currency, if that is not the most messed up thing ever lol, free markets my behind, there can be no free market if government controls currency (Actually gets private bankers to control currency)
Who are they borrowing this green fortune from? It is borrowed (with interest) and the interest and loan drive down the actual value of your salary as they are in the financial system.
Fed loans create money out of nothing and creating money out of nothing devalues a currency which is why the dollar is worth 3cents of the dollar 70 or 80 years ago and in 80 years the dollar will be worth a fraction of today’s dollar, perpetual slavery
So!?
Let them print the money. Only require that the money be named something completely different; something like UNcent or UNeuro.
Do not allow the new money to be backed by any existing currency!
Require that UNeuros and whatnot must be tracked under new accounts that keep them separate from real money.
Let the UN print the money, distribute the money, track the money. Then one day, when the buggers deserve it (after the UN has betrayed themselves by distributing trillions of UNeuros to personal accounts and bogus companies; then pull the plug.
UN bucks would be worthless. Maybe even worth less than Monopoly money or Zimbabwe bucks
UNbacked UNbucks!
“Think of it as a peer-to-peer payment network, like Bitcoin, but for governments.”
Except that it’s nothing like Bitcoin. The final global supply is limited to 21,000,000 bitcoins, some of which haven’t been issued yet. It’s not possible to create new ones on a political whim, or for any other reason, except for the proportion of the 21,000,000 not yet released.
I think the rot set in when stockbrokers began trading in their own right, rather than facilitating share deals between investors in companies.
You can now make more money moving money than running a productive enterprise.
The joke used to be: the Dollar is backed by the full faith and credit of the U.S. Gov’t; when the credit is gone how long will the faith last? Opinions vary.
There are not enough dollars in existence to pay back total US debt, let alone anything else.
There is not enough money in the world to pay back global debt either.
No the joke was the dollar was a gold certificate. You took 20 dollars into a bank and came out with one oz. of gold. After FDR, the rascal (my grandfathers strongest epitaph) got done you could still go into a bank with 20 dollars (silver certificate) and come out with 20 oz. of silver more of less. After LBJ and Nixon, you came out with essentially nothing but a promise.
Suggestion: Contract with Parker Brothers (or whoever owns the rights to Monopoly now) because any Dollar printed by the government without the backing of real wealth has no more real value than Monopoly money. Parker Brothers can print an almost infinite supply of money.
The government goes to the Fed (who are not government) and someone at the fed taps a few 1s and 0s into accounts which is a loan, the US gov has no control over US currency
Obama borrows, at interest. That debt at this stage is on the head of your great great great grandchild’s head.
Well I fooled them, Mark. Due to various circumstances, I won’t have grandchildren, or great or great great grandchildren. (My apologies in advance to those who will have them.)
I happened to live in the country that actually tried this – Yugoslavia had the economic policy of “programmed inflation”, the idea being to print money to finance development. It quickly evolved into hyperinflation which was one of the prime causes of Yugoslavia’s economic collapse and dissolution.
A minor correction : historically in the Weimar Republic money was printed in the years 1921-23 not in 1930. please correct this point
Printing money is theft, whether it is done by governments or by forgers.
The people who think that the State can “just print money” and toss it at whatever problem they so choose ignores several aspects of reality.
First is the fact that the government usually makes things much worse anytime they get involved in “fixing a problem”.
Second, various governments have tried printing boatloads of currency to pay for running the state. It always ends in hyper-inflation and that is a civilization killer. The first example I was ever taught was Germany after WWI but there have been many of these idiocies around the world since then.
“Hyperinflation Around the Globe” https://www.lewrockwell.com/2012/10/michael-hewitt/hyperinflation-around-the-globe/
“…various governments have tried printing boatloads of currency to pay for running the state. It always ends in hyper-inflation and that is a civilization killer.” The Left’s dream – money AND population control.
All banks create money by loaning it into existence. It’s called “fractional reserve” banking, which simply means that, for every dollar on deposit a banker can loan out (often up to) 9 more, all of which must ultimately be paid back, regardless of whether those dollars were actually ever there on deposit in the first place. Inflation, therefore, becomes an unpleasant necessity. Wrap your mind around that.
Loans, of course, are generally covered by “collateral” in the form of hard assets (i.e. a house, business, car) so in the event of default, the bank takes the collateral. If you make a loan, then redeposit the funds in the same bank to hold for your later use, they love you, because now they have even more funny money to loan out. Banking is both a shell game and a Ponzi scheme, but it is, unfortunately, absolutely necessary in a free economy.
Banking is necessary, but fractional reserve lending is not.
“Printing money” is the economic equivalent of perpetual motion and M.C. Escher art.
Just what would we use these trillions of dollars for? Public assistance for paying higher energy bills? Welfare checks for steel workers, coal miners, railmen, rig workers? Paying interest and default charges on the debt it generates?
Metcalfe is a nutjob.
When you want a one world government with the world tied up to iron clad trade deals like TTP and TTIP, a non backed currency makes sense folks…
Just sayin
Inflation is literally like when a drug dealer cuts his dope with something, diluting it.
Added commodities to the economy is the only reason more currency should be created.
Goods, but not services or anything else.
Other wise money will always lose worth.
Now importantly!
Those with all the money have been buying commodities and taking them out of circulation BUT leaving the money in, Art, gold land property yachts and all manner of things that dont devalue.
This is stripping the economy of commodities out the top of the pyramid. If you take out commodities constantly from the economy it will also devalue currency, but in a way that is not structurally identified.
The creation of wealth through means not related to actual physical objects just damages the economy.
FX trading, money out of thin air as is much of what happens on the stock markets, not if all that money out of thin air is used to buy real world commodities minerals and so on, this is damaging, it is literally slash and burn economics.
This is why it will always crash over and over
or in short “money” is for us unwashed masses to scramble over, the top 0.000000001% have no use for money as it is worthless.
Only us serfs have money, rich people are “worth” x amount but you can bet that almost all of their wealth is not in currency but investments and actual physically real things.
Funnily, if you took all of the laundered drug money out of the banking systems, they would collapse. Remember HSBC caught laundering billions in Colombian and and Mexican Drug cartel money, and no one does one day in jail. Apparently people were “too important” to imprison.
It is really depressing when you examine this world and it’s inner workings and actual history.
“Added commodities to the economy is the only reason more currency should be created.
Goods, but not services or anything else.” Bring back indentured servanthood and then goods would include the service of people.
“Added commodities to the economy is the only reason more currency should be created.”
well, that’s what gets you a position as witchdoctor at the whitehouse- any rationale that’s plausible to justify the stealing, right?
because as economies of scale and amortization naturally lead to a drop in cost of any manufactured commodity, you can steal the difference and tout it as ‘price stabilization’. nobel prizes are awarded for that…lol.
“Quantitative Easing” :
US Gov’t prints money and buys corporate bonds with the it.
So It’ll just be “Climate Easing” More of the same.
Inflation is the answer to a17 Trillion dollar national debt.
Imagine if a future dollar is worth, say,
.0038% of a dollar today; $17 Trillion becomes much less.
Throw them a roll of pennies and tell them not to spend it all at one place.
Here is a semi-funny story as in schadenfreude about Venezuela who can’t even pay the bill printing companies for new bills so there it is now “something is going to hit the fan” finally.
Socialist bill-printing paradise where they can’t even keep the electricity on any more.
http://www.bloomberg.com/news/articles/2016-04-27/venezuela-faces-its-strangest-shortage-yet-as-inflation-explodes
All the central banks learned long ago that controlling inflation in the 1-3% range was the number one priority for them. There can be others but this is the most important tool they wield and the easiest to manage so it becomes no 1 principle.
“The Climate TED Talk was filmed in 2015, though the recording appears to have just been posted on the internet today.”
It was filmed last year but conceived of in the stone age apparently.
Another example of the failure of our education system to teach people basic economics so important to making decisions that affect everyone.
If anyone wants to see what a real hockey stick graph looks like then please watch this video on monetary expansion and inflation. (Hockey stick completes at 9mins). Admittedly, this is economics 101, but for some reason the truth is so unattractive to the mind that we tend to disregard this essential information.
People with cash savings are being taken for fools. And having their wealth stolen by corrupt governments.
And for those who would prefer a “There will be Blood” themed explanation.
“I told you I would beat you, didn’t I boy. You see, I drink your milkshake.”
http://www.dansanchez.me/feed/how-inflation-drinks-your-milkshake
Hey, let’s all follow the print more money plan of Mugabe in Zimbabwe. 1,000,000 percent inflation is just fine and dandy as long as it’s saving the planet you know. Sheesh.
Wait a min….this might work. I think I’ve got some clean room paper somewhere in a box and I’ve got a printer I can augment with some pigment dye. So I can print the money, give it to the UN climate change fund and let everyone else off the hook! What do you say? We could do it—just model (pun intended) a dollar bill, photoshop it to make a million dollar note and if everyone runs off 10 notes we could ship it off and be done with the entire thing!
As a backup there is always Monopoly money we could send instead. It’ll spend the same way.
“Once you break down and dismantle the idea that money is a finite resource”
My operative rule is that if the first paragraph of a paper contains a serious defect, there’s no need to bother with the rest. On the other hand, people who either don’t notice it or even think it’s true, will keep reading enough to get to the miraculous goodies and even more nonsense to follow, which is usually the real object of the article in the first place.
This is a great way to spread propaganda. Because then such people think they can forward the article to say, my sister, so that she has to read it in order to make a friendly response. So I give her my rule or have her read the first paragraph to me over the phone. [There’s usually a big defect there if even the title or truncated intro sounds suspicious – see Salon, Slate, and Green Peace tweets, etc. on Twitter for some examples. I’ve taken to respond to them on that basis alone, because that’s their main point and they don’t care very much if anyone reads the article anyway, because their little intro usually includes the propaganda’s pay off.]
But my sister can then read the rest, as she often feels obligated to do, in the light of that defect, and form her own unique response to her friend, which she’s really good at. However just as we find here at WUWT, she can seldom make a lasting effect on those to whom she is responding. They simply can’t make such “what’s wrong with it?” judgments on even their own thoughts, right from the start!
It boggles the mind that people this stupid not only exist, but somehow have a means with which they can spread their stupidity to others.
I liked the old style method of simply running the presses in overdrive to jack up the money supply. At least that way, once the money became worthless due to inflation, you still had some value to it. You could wad up a bunch of useless $10,000 bills, throw ’em in fireplace, burn ’em, and get some feeble heat in your home during winter.
But these slit eyed, cloven hoofed, blood sucking, vultures, by using electronic transfers, deprive you of even that value.
I thought that bankers were smart enough to be aware of Say’s law. All the money we have is sufficient to purchase all the goods and services we produce. If we’re just printing money, and not producing the additional goods and services to back it up, we’re not getting any richer, we’re just sending false signals and screwing up the economy.
What’s to stop the UN from printing its own money? I mean, aside from the fact that no one would want its worthless scrip?
A few years ago Timothy Geithner (income tax cheat; head of the IRS) proposed that the Treasury should mint giant platinum coins with a face value of $1 trillion (IIRC). These coins would be deposited into the Treasury as a way of getting around the legal debt ceiling limit.
The idea was so preposterous that it went nowhere. But it was no more preposterous than sending taxpayers’ money to the totally corrupt UN, where it would fill the pockets of the elite but otherwise accomplish nothing.
Furthermore, even if we confiscated $Trillions from American taxpayers and shoveled it into the UN, that money would not change global temperatures by even 0.000001ºC.
Anyone even suggesting sending more money to the UN should be locked up in an insane asylum as a danger to society.
Frankly, the best way to solve the climate crisis is to terminate all funding to to the various organizations prompting the swindle. This would remove the $1.5 trillion wasted every year on this non-productive enterprise, and that money would in turn find its way to useful endeavours.
>>The bankers I talked to knew Subprime Mortgages
>>were trash, well before the financial crisis.
Even I knew this, back in 2006. I was in Chicago, and the talk was all about the ‘overhang’ – the huge number of 99% mortgages that were interest only and barely being repaid. It was obvious to anyone with more than a dozen synapses, that the first small downturn in prices would turn into a flood of reposessions, which would exacerbate and accellerate the situation. If I could see that, why could bankers not see it?
And yes, the quantitive easing – printing of money – was only beneficial to bankers. Not one business in the UK benefited from any of this governmental largesse. Even the government was gaining. In the UK, the government was getting about £2 billion pa from interest on the money it had just invented.
R
Michael Metcalfe, a senior merchant banker who gave a TED Talk in 2014 campaigning for money to be printed on a vast scale, to fund global charities, now wants governments to print 100s of billions of dollars, to combat Climate Change.
Yes, even senior merchant bankers minds have to be tolerated – even when uttering sheer madness.
Printing lots more money in a national currency has the undesirable effect of devaluing the currency for everything else. There is a very simple solution: Create a new currency – the “UN Climate Dollar” (UND) say – and use that to buy all the goods and services that are needed. The market will establish an effective exchange rate between UND and other currencies. All they then have to do is to make sure that the UND is backed by sufficient assets to give a reasonable exchange rate.
[OK, that’s a bit tongue-in-cheek, but just work through it a bit more: The UN’s principal asset is its funding in national currencies given by various nations. The UND exchange rate will be set by the market by relating the number of UNDs printed to the amount of national currency given to the UN. Like other currencies, it may get its own nickname, as in for example “Undies dropped in New York last night”.]
Of course he will…
The bigger the printing the bigger his cut.
More climate idiocy which is disastrously wrong in every way but it will probably happen. Today – unlike only 3 years ago – the ecofasc15ts are having everything their own way. Everywhere you look, governments, the UN, other international companies, regulatory organisations, all are capitulating 100% to the most extreme AGW agenda. We can agree with eachother here till we’re blue in the face, what total BS it all is, but it does not change the fact that they’ve won. The world is at their feet. And sooner than you think they will start rounding us up.
The time for flapping our mouths uselessly and simply doing the fasc15ts work for them in identifying targets, is over. Go quiet and make plans to go underground. I have family connection with Russia and speak the language so my emergency plan is to emigrate there. Russia may soon be one of the only places safe from ecofasc15m. Historically, fasc15ts have not fared well in Russia.
Michael Metcalfe, a senior merchant banker … campaigning for money to be printed on a vast scale
He’s a senior merchant banker who doesn’t understand what money is or how this would cause massive inflation??
Maybe he is just new at this and is senior as in kinda old.
The monetary system is slavery and that is easily shown
If your dollar was at the same rate as 1920 you could afford to retire at 35-40, home bought kids in college.
Inflation means most people will never ever get ahead and as more time passes, the problem gets worse.
In 50 years people will probably have to work until they drop dead, no retirement age.
We have to work until we are old and immobile and we get the last shitty failing health years to ourselves lol.
No man should have to work 50+ years in order to spend the last bit of his life in basic comfort.
Financial slavery has invisible chains.
As soon as SDR was mentioned I knew it was scam from top to bottom. Noone should ever be sucked into this UN scam…..do NOT allow it to grow from where it is….an IMF slush fund.
Money is on it’s way out … red ink is the new green!
governments to print 100s of billions of dollars
====================
Most people do not realize that the Federal Reserve Bank in the US IS NOT a government institution. When the US government prints money, for every dollar it prints it must borrow that dollar from the Federal Reserve. From that point onwards the American People owe that dollar to a private company.
So when a banker tells you to print money, think twice. You ARE NOT printing money, you are borrowing money. All that money that Obama has been printing in quantitative easing? You thought that was free money? Think again. That is a mortgage on the US held by the Federal Reserve. A privately held company. A company that wants all of you to think is owned by the government.
The big question the American people should be asking is why they need to go into debt to the Federal Reserve? It isn’t like the Federal Reserve actually lend the money to the US. The money is printed out of thin air. What the Fed does is put up a percentage as matching funds, for which they receive a guaranteed 6% interest. But having put up only a percentage in reserve, they are still entitled to be paid the full amount , plus their reserve, plus their interest.
That’s exactly right. Think of it this way: You have a gizmo. Someone offers you $10 for your gizmo. You now have $10 to offer someone else to buy a thingummy. But if the government gives the seller of the thingummy $11 newly minted dollars, the thingummy isn’t there for you to buy. You now have to pull out an extra $1 if you want a thingummy because the price has gone up – and it will! – all those extra purchasers of thingummies will drive up the price. And there is no end to it. If newly minted money drives the price to $20 or $30, you either have to cough it up or go without.
And where has the thingummy gone? Into some useless piece of bird killing junk that never pays for itself.
The proposal by Metcalfe is merely the ultimate expression of “The Third Way”. It all boils down to a Ponzi scheme to benefit the providers of “emergent green technologies”.
Thy can print up trillion dollar bills but the actual act of printing such bills will have to effect on climate. The climate change that we have been experiencing is caused by the sun and the oceans and Man does not have the power to change it.
There are people who shouldn’t be allowed anywhere near a pencil, let alone a computer. Someone with these opinions is not someone I would have wanted in a senior position in a Monopoly bank.
Who’s face (or backside(!)) would go on this money?
Fonzie – as per instructions, here I am. I don’t think I have much else to say. I just don’t think some incremental changes in interest rates can hold back the tsunami. I could be wrong, but I sense there’s a lot of pent-up activity waiting to be launched as soon as people know A) their efforts will be worth the reward and B) they won’t be regulated and litigated out of existence.
“Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.” – Ronald Reagan
Alright, Bart, i guess we’ll let this thing go then. I do think we have a ways to go here though. In fact i’ll try to critique your comment to at least give you some food for thought to take with you. (i’ll try to coach it in language that doesn’t make you feel compelled to answer; a text smiley in return would be nice just to let me know you got my comment)…
If it is a tsunami then it WILL be inflationary. And those interest rates that would hold back the tsunami won’t necessarily be “incremental”. Volker had them up near 20% and there is no limit as to how high and how fast they’ll be rising. (my dim recollection of greenspan in early 2000 with the “dot com” bubble might be a case in point) As for your points “A” and “B”, “A” the fed could do that without Trump all on it’s own just by letting the economy grow and “B” fed inflation policy (keeping people poor keeps prices down…) is the ultimate regulation specifically designed regulate peoples’ success out of existence. Just some food for thought here, Bart, no need to answer me back
(do leave me a smiley, eh?)…
Oh, and one last thought that’s sure to be provocative: i hate to say it, bart, but when it comes to economics, reagan was just a big dummy! (he just wasn’t as big a dummy as carter was)…
(wink!)…
Yo, Bartemis, down here {8^D)
If you want to call it quits let me know. As for me? The fonz is always ready to roll!!! (aaaaaaaaay)…
The Fed didn’t stop Reagan’s recovery.
Right, but by then they didn’t have to. The recession brought inflation down and with the unemployment rate so high there was plenty of room for the economy to grow without inflation concerns.* The eighties were without the oil price shocks of the seventies, but even so by the time reagan installed greenspan inflation was up to the levels of the nixon administration (which the fed considered to be too high). Bart, i was very surprised recently to find out that the unemployment rate was higher under reagan than the low of the carter administration (may ’79) until april 1988, the last year of his administration!!! Now that’s quite a stat. Perception (at least my own) always seemed to be otherwise. About reagan, i’d just say that you can’t have it both ways. High growth with low unemployment inherently means high inflation. Reagan sought both the growth AND low inflation… Truth be told, ALL the presidents didn’t quite get it. I’m not sure who was goofier. Nixon with his price controls, carter with the appointment of volker or obama with his stated desire for full employment only to install a fed chair who’s at least as tight fisted as “cranky bernanke”. I think it’s kind of like agw. Leaders just aren’t that smart when it comes to agw. So the same with economics. They just don’t realize what’s going on. And with fed policy, to politicians i think it’s even more obscure than agw. So they just ain’t getting it on the left or the right. (the unanimous cries for better wages for the middle class are nonsense in light of greenspan economics) In all fairness to reagan, he did inherit a BIG mess and i’m sure it’s alot harder being president than it looks…
*bart, this point i’m making (at the asterisk) will be the key difference with a president trump verses president reagan. The economy is already at full employment by greenspan standards. Reagan had plenty of room to grow; Trump won’t…
Someone tell our senior merchant banker and TED talker that they’re already doing it.