The US is in denial about the possibility of a debt crisis that significantly lowers the value of the US dollar or worse. It's only a matter of time before the interest on the debt overtakes social security. The huge jump in wealth inequality is normal in a late stage cycle where collapse in a reset is the inevitable consequence. We are 15 years from Oblivion so far as the US dollar is concerned and US exceptionalism hegemony. That elitism in tycoon capitalism manifests as the dominant paradigm at the same time as AI reaches its teenage years is a disaster waiting to happen. We are witnessing the last years of U.S. dollar Supremacy.
Okay, an excellent listing of the negatives. What's now required is its opposite--a listing of policy proposals to correct the ship's listing and maintain its balance. I've long advocated for the elimination of the USA's overseas empire and a 75% reduction in defense spending that would provide about $2 Trillion annually for infrastructure investment. Another need is single-payer healthcare and elimination of most insurance, not just medical and replacement with federal-backed home insurance plans; life insurance would remain in the private domain. The saving from that massive change would be close to 25% of GDP annually that would noy only pay for the programs but allow for the expansion of healthcare facilities and subsidizing MD and RN education that's badly needed. And finally, there must be a restoration of the cap on the maximum interest that can be charged plus the rewriting of bankruptcy law. I'm sure more policy changes can be made, but as with my suggestions the barrier to implementation is political and will remain so until the Duopoly is undermined/overthrown.
Sensible solutions, of course, Karl, but their implementation, even in part, rests on a political system that elects politicians who will never permit change. In other words, I suspect it’s too late. The possibility of a “peoples’ revolution” seems increasingly remote (which proves the wisdom of the elites in selecting Trump).
In this round of the match, it’s Brian Berletic over Alex Trainer.
Starts off well and reasonable but when buzzwords like green, sustainable, equitable as solutions betrays a profound bias. Also assuming US oil capacity is falling is another myth. I will study this further to figure out what is truth and what is fiction.
Money has always been endogenous. I have long said that saying there is not enough money, is like saying there are not enough numbers for counting. The problem is what it is what you make endogenous to. When money is created according to microeconomic financial criteria (profits of banks) alone, it will automatically be destructive as it is a system that maximises externalities. Banks competing for profits with other banks, will lend to the businesses that are most successful in creating externalities or liquidating resources, rather than those businesses supporting long term productivity.
As you say bond sales are a means of managing interest rates (real positive rates for rentiers), but they are also a way for investors to impose a tax on the whole population, by making the state their defacto tax collector. The state could always issue non-interest bearing bonds (i.e currency) for its spending, but that would mean the gravy train would stop for bondholders.
A rich discussion on the USD based on political economy and economic considerations. I think the article underplays how the USD cannot fail. FIAT currencies are only worth what others believe they are worth and the hollowing out of the real US economy in favour of financialisation will have increasingly negative consequences.
Furthermore, as Mises pointed out, feckless politicians with access to a printing press will destroy the currency (and real savings) on electoral promises - and far worse use it to fund wars nobody wants. The final point is enough reason to require a gold or other solid standard to prevent politicians running the currency printer.
The scope of this article is as vast as its length and the points were carefully made in writing of exceptional clarity — reminding me at times of Zoltan Pozsar.
Your exposure of the ‘fake’ anxiety over the Moody’s downgrade is spot on (ratings exist for institutions with funds under specific fiduciary constraints). The puncturing of the “deals” that KSA, Qatar et al did — very different to the surface and imho another bullseye. I’ve not found this interpretation (doubtless correct) anywhere else.
In the meantime, the decoupling ‘caravan’ of China moves steadily on. I’m fascinated by how close China can come to strangling the MIC — the export controls are not formally linked to the tariffs. If China stands firm, I expect this to blow up in the 90 day period — the worse is yet to come.
I’m sure you’re following the ongoing progress in the [originally mBridge] blockchain central bank payment non-dollar clearing system Apart from its vastly superior execution (time and cost), the opacity of information to outsiders is supremely intriguing.
The US is in denial about the possibility of a debt crisis that significantly lowers the value of the US dollar or worse. It's only a matter of time before the interest on the debt overtakes social security. The huge jump in wealth inequality is normal in a late stage cycle where collapse in a reset is the inevitable consequence. We are 15 years from Oblivion so far as the US dollar is concerned and US exceptionalism hegemony. That elitism in tycoon capitalism manifests as the dominant paradigm at the same time as AI reaches its teenage years is a disaster waiting to happen. We are witnessing the last years of U.S. dollar Supremacy.
Okay, an excellent listing of the negatives. What's now required is its opposite--a listing of policy proposals to correct the ship's listing and maintain its balance. I've long advocated for the elimination of the USA's overseas empire and a 75% reduction in defense spending that would provide about $2 Trillion annually for infrastructure investment. Another need is single-payer healthcare and elimination of most insurance, not just medical and replacement with federal-backed home insurance plans; life insurance would remain in the private domain. The saving from that massive change would be close to 25% of GDP annually that would noy only pay for the programs but allow for the expansion of healthcare facilities and subsidizing MD and RN education that's badly needed. And finally, there must be a restoration of the cap on the maximum interest that can be charged plus the rewriting of bankruptcy law. I'm sure more policy changes can be made, but as with my suggestions the barrier to implementation is political and will remain so until the Duopoly is undermined/overthrown.
Sensible solutions, of course, Karl, but their implementation, even in part, rests on a political system that elects politicians who will never permit change. In other words, I suspect it’s too late. The possibility of a “peoples’ revolution” seems increasingly remote (which proves the wisdom of the elites in selecting Trump).
In this round of the match, it’s Brian Berletic over Alex Trainer.
You can only print as long as someone is buying. And running massive deficits does devalue the dollar.
Starts off well and reasonable but when buzzwords like green, sustainable, equitable as solutions betrays a profound bias. Also assuming US oil capacity is falling is another myth. I will study this further to figure out what is truth and what is fiction.
Excellent article! Thank you for taking the effort to frame the issue with a pragmatic perspective on money, credit, and productive capacity.
Money has always been endogenous. I have long said that saying there is not enough money, is like saying there are not enough numbers for counting. The problem is what it is what you make endogenous to. When money is created according to microeconomic financial criteria (profits of banks) alone, it will automatically be destructive as it is a system that maximises externalities. Banks competing for profits with other banks, will lend to the businesses that are most successful in creating externalities or liquidating resources, rather than those businesses supporting long term productivity.
As you say bond sales are a means of managing interest rates (real positive rates for rentiers), but they are also a way for investors to impose a tax on the whole population, by making the state their defacto tax collector. The state could always issue non-interest bearing bonds (i.e currency) for its spending, but that would mean the gravy train would stop for bondholders.
A rich discussion on the USD based on political economy and economic considerations. I think the article underplays how the USD cannot fail. FIAT currencies are only worth what others believe they are worth and the hollowing out of the real US economy in favour of financialisation will have increasingly negative consequences.
Furthermore, as Mises pointed out, feckless politicians with access to a printing press will destroy the currency (and real savings) on electoral promises - and far worse use it to fund wars nobody wants. The final point is enough reason to require a gold or other solid standard to prevent politicians running the currency printer.
The scope of this article is as vast as its length and the points were carefully made in writing of exceptional clarity — reminding me at times of Zoltan Pozsar.
Your exposure of the ‘fake’ anxiety over the Moody’s downgrade is spot on (ratings exist for institutions with funds under specific fiduciary constraints). The puncturing of the “deals” that KSA, Qatar et al did — very different to the surface and imho another bullseye. I’ve not found this interpretation (doubtless correct) anywhere else.
In the meantime, the decoupling ‘caravan’ of China moves steadily on. I’m fascinated by how close China can come to strangling the MIC — the export controls are not formally linked to the tariffs. If China stands firm, I expect this to blow up in the 90 day period — the worse is yet to come.
I’m sure you’re following the ongoing progress in the [originally mBridge] blockchain central bank payment non-dollar clearing system Apart from its vastly superior execution (time and cost), the opacity of information to outsiders is supremely intriguing.
Another Debt-Credit-Usury-Parasite currency system bites the dust. Nothing new. When will we learn?