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Suppose a friend told you that he was $18 trillion in debt. And suppose that every time you asked him who he owed this money to, he gave you a different answer.

If that was the case, then you would rightly say, “He claims to have a debt crisis, but he doesn’t know who he owes money to.  He is either an idiot or a liar.”

However, if your friend called himself an economist, then you might believe his lies.

For example, the U.S. government is supposedly $18 trillion “in debt.” If you ask who this $18 trillion is supposedly owed to, you get a different answer each time. Here are some examples…

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That’s enough. If no one can agree on who the “national debt” is owed to, then how can the U.S. government have a “debt crisis”?

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Money isn’t physical. It has no substance. Money exists only in human minds, like points on a scoreboard. The lights on the scoreboard above are not points. They are lights. But the human mind interprets them as points. The lights represent points, which exist only in the human mind. Neither points nor dollars have substance, and therefore can never “run out” or be “depleted.”

The item below is not money. It is a piece of paper. But the human mind interprets the numbers printed on the paper as money. True money exists only in the human mind, and is logged in the digital accounts of banks, although not all bank money consists of bank loans.

A currency note represents money, just as the lights on a scoreboard represent points. A currency note can be used to buy things, because we mentally agree that the note represents money-points.

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For currency notes, we could use wood, or stones, or anything else that we agree on. (U.S. currency notes are made out of flax and cotton.)

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sea shell currency

BELOW: Some Native American tribes in North America used their own form of money called wampum. The word meant “white” in the Algonquin language, because one type of wampum consisted of disc-shaped beads made from clam shells, perforated through the center, and threaded on a string. Another type of wampum consisted of small cylinder-shaped beads, again threaded on a string. The first European colonists in New England used native wampum as money, and they began to counterfeit it for use in trading with the natives. Their counterfeit scam worked for a while, because the natives did not think that anyone would be so evil as to counterfeit “wampum.” (The essence of European “superiority” was a sociopathic tendency to do evil.) Eventually the European counterfeiting caused the first inflation in the Americas.

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wampum chips

Below are Massachusetts shillings, the first government-authorized coins in America. Made out of a silver alloy, they were authorized by the Massachusetts Bay Colony in 1652. Other coins (the Massachusetts Willow, Oak, and Pine Tree shillings) were issued between 1652 and 1682. Many had teeth marks, or dents, or bended edges, put there by superstitious colonists who were trying to keep witches away.  Often when food became scarce, and life became hard, the colonists went insane, and formed into mobs that conducted witch hunts.  This practice has continued throughout human history. In today’s tough times, people go on witch hunts for “terrorists.”

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Below is the first government-authorized paper money in America. In 1690 the Province of Massachusetts Bay began issuing these “bills of credit.” This was done for a specific purpose (to finance a military expedition), but like modern paper money, they circulated freely.

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BELOW: The English word “dollar” comes from the valley and town of Jáchymov in the Czech Republic, which was called by the German name of Joachimsthal until 1898. In the early 1500s silver mines started operating here. One family, the Counts von Schlick, became very rich in terms of property, and they started minting coins they called Joachimsthalers, which were later called shortened to “thalers.” Coinage systems spread across Europe. In Spain, coins (“thalers”) were called “dollars.”

In various parts of the New World (e.g. Mexico and Ecuador) the Spanish minted silver coins (“dollars”) which became commonly used in the American colonies. In fact, Spanish coins continued to be used throughout the USA for much of the 1800s.

The coins were worth eight reales in the Spanish monetary system, and they were often cut into eight pieces to make change. The bits were known as “pieces of eight.” For English-speaking peoples a “bit” was one eighth of a dollar, or 12.5 cents. “Two bits” meant 25 cents.

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BELOW: The first coin issued by the authority of the United States was the Fugio cent. Issued in 1787, it is a copper coin bearing 13 circles linked together. It also has a small circle with the words “United States” around it. The reverse side has a sundial and the word “Fugio,” which means “time flies.”

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The point of all this is that money has no intrinsic value. Money is whatever we agree that it is. What gives value to money is not gold or any other substance, but human agreement. A dollar is a mental unit of account, which we symbolize as numbers. Coins and notes can represent money, but actual money has no physical existence, and therefore has no limits.  It is in-finite.

Therefore when someone says there is “no money” to help the people of Flint Michigan, he is either lying, or else he is speaking from habit and mental conditioning, in which case he is a slave of those who control the money scoreboard.

Remember that if someone says, “Flint needs eighty million dollars,” the U.S. government creates that much money out of thin air for its wars every two minutes, round the clock, 365 days per year. Recently Obama spent $500 million to train some “moderate” terrorists in Syria.  (For Obama the terrorists were far more important than the people of Flint Michigan.)

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By the way, note how right-wingers want government “out of the way” (of their greed and their evil). They want less government spending (on programs that help average people). But when right-wingers get into trouble, they are always the first to beg for federal bailouts. An example is Michigan governor Rick Snyder who, in response to the disaster in Flint, begged Obama for money, and who has a heartfelt message for America…

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BELOW: A postcard sent by Rick Snyder to his mother.

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I notice that during the eighteen months that the people of Flint were being poisoned, and authorities were dismissing people’s complaints as “baseless” and “conspiracy theories,” Rick Snyder’s administration quietly provided bottled-water coolers for the offices of his state officials in Flint.  While the Snyder regime told Flint residents to shut up about the water, the regime was protecting its own people from the water.

Incidentally, what is a “conspiracy theory” anyway? Let’s check the online dictionary:

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The following bullshit comes directly from a Goldman Sachs…

China is walled in. If its reforms are implemented too quickly, then China risks a sharp slowdown. If the reforms are implemented too slowly or not at all, then China risks an unsustainable increase in its debt-to-GDP ratio, which could push the country past the tipping point into economic and, in all likelihood, political instability.

This is from Goldman Sachs report titled, report titled, “Walled In: China’s Great Dilemma.”

The report bullshit, since it makes no distinction between China’s domestic “national debt” (denominated in yuan) and China’s “foreign debt” (denominated in foreign currency). The domestic “national debt” is trivial, since the Chinese government can create as many yuan as it wants.

Goldman Sachs’ chief, Lloyd Blankfein, took home US$23 million last year for overseeing such bullshit.

Whoever said, “Crime doesn’t pay” has never worked on Wall Street, or in a bank, or in the federal government.

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Rubio to the rescue

On Monday (27 Jan 2016) Republican presidential candidate Marco Rubio vowed to solve the U.S. government’s (non-existent) “debt crisis” by radically cutting reforming Medicare and Social Security, and by forcing Congress to balance the federal budget, and by promoting economic growth.

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By the way, I have not watched any of this year’s presidential debates, nor have I seen any speeches by any candidate, but just now I watched three minutes of a speech by Marco Rubio. This loser has absolutely nothing to offer except the garbage we saw in the images above. Nothing. And Rubio’s ears are so huge that he could fly with those things.

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Hey, that picture reminds me that an elephant is the symbol of Republicans (like Rubio).

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Anyway, during Rubio’s speech on Monday he mentioned the U.S. government’s (non-existent) “debt crisis”:

“Every time the alarm starts blaring, signaling we’re reaching the debt ceiling, Washington hits the snooze button and goes back to sleep. I will stop this irresponsible spending and solve our nation’s debt crisis.”

I would hit the snooze button too. Forever.

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Very few people understand what the “national debt” is. If people go online to try and find out, they get lies and bullshit, even on official U.S. government pages. People become more confused than ever — which of course is the whole point. By brainwashing the masses to think “national debt = evil,” politicians get to do whatever they like. Politicians are there to protect you from the “national debt.” And from “welfare queens.” And poor people. And socialists. And ISIS™.

Also adding to the problem are web sites like Press TV (from Iran) and Russia Today. Both web sites are anti-Washington, and they frequently gloat about the U.S. government’s (fake) “debt crisis.” In doing so they hurt average Americans. Here’s an example

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If Russia and Iran really wanted to hurt Washington and imperialism, they would broadcast the truth about Monetary Sovereignty. Unfortunately they can’t, since it would create “blowback.” That is, it would cause average Russians and Iranians to also understand the truth, which is not acceptable.

Also on Monday (25 Jan 2016) two former politicians (U.S. Sen. Judd Gregg and Pennsylvania Gov. Edward Rendell) gave yet another speech warning of the dangers of the (fake) “national debt crisis.

What do you do with yourself if you are retired, lonely and bored? You travel the country warning everyone about the U.S. government’s (fake) “debt crisis.” You get a free dinner, and you get to meet various people. (Hey, it’s better than rotting in a nursing home.)

Anyway these two clowns are with the “Fix the Debt” group, whose mission is to promote austerity and inequality.

By the way, have you noticed how much these losers are aggressive panhandlers? Everywhere you go, they jump in your face with their hands out. What losers.

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There ought  to be a law against this. All real Americans hate beggars (unless the beggars are rich).

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Meanwhile the article below says that you personally owe $70,612.91 on the “national debt.”

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Wow. With interest and penalties accruing, I lie awake at night, dreading the arrival of that awful notice from the collector. It’s like sweating on death row while I wait for my court appeals to run out…

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Of course, none of us will ever have to pay a penny on that, but it’s fun to talk about “crises.” Politicians talk about (fabricated ) “crises” all the time.

Finally, the web site below has some cool (but misleading) graphics on the mammoth proportions of the (fake) “national debt crisis.”

Not bad, guys. A bunch of lies, but not bad. (For one thing, money has no more physical existence than do points on a sports scoreboard.)

Take a look.

 

Stupid genes

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We previously discussed stupid comets and stupid viruses. Did you know there are stupid genes in our own DNA?

I refer to the part of our genetic makeup that is formally known “ae-34@3w/6,” or simply the “bullshit gene.”

This component is what makes us babble when we try to justify the lies that we tell ourselves and others. It is a vestige left over from our cave-man days when the only way we had to protect ourselves from animal attacks were various forms of bluffs and camouflage. Centuries later, bluffs and camouflage evolved into lies and bullshit. Now bullshit is an integral part of most people’s makeup. Most people are bullshitters.

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The bullshit gene was originally a defense mechanism. Later it evolved into a habit, and then into a form of mental retardation. When people’s tendency to bullshit is challenged by facts and truth, the bullshit gene elicits reactions like this…

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Let’s see a real-world example.

In mid-December 2015 the Disney Company released a film titled Star Wars: Episode VII – The Force Awakens. I have not seen this movie, but I know that it is so lousy that it will end up making far less money than the studio executives had hoped.

How do I know that this movie is awful? At the IMDB web site, audiences from all over the world leave comments on the films they have seen.

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The gold star has a rating of 8.4 out of a possible 10, which indicates a movie that is well above average in popularity. However everyone ignores this score, since everyone knows it is rigged on the IMDB web site. Studios rig it to make a movie appear much more popular than it really is, in order to entice people to pay to see the movie. (Movie ticket prices in Manhattan NYC are now $17.49 per person. Snacks are also expensive.)

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To the right of the gold star you can see that 3,329 people have viewed The Force Awakens and commented on it. If you go deeper into the IMDB web site, you discover that over two thirds of these 3,329 viewers (69%) blast the movie as garbage. Viewers give specific reasons why they hate The Force Awakens, but I won’t go into that here.

I have used the IMDB web site for 25 years, and I have rarely seen a movie so overwhelmingly panned by average people as is The Force Awakens. People in multiple different countries say it stinks.

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So where does the bullshit gene come in? (And what does this have to do with Monetary Sovereignty?)

In terms of movie theatre ticket sales, the world’s second biggest market (after the USA) is now China. Disney had hoped that The Force Awakens would be a smash hit in China, pushing total revenues to a new world record, but the movie fizzled in China, and – after a wild first weekend – it fizzled in the USA too. It will turn a profit, but not as much as its makers had hoped.

In China The Force Awakens is far less popular than Boonie Bears 3, a relatively low-budget Chinese animated feature. Reason: it stank.  Thousands of readers worldwide agree on this.

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Magazine pundits are trying to figure out what went wrong, but they are crippled by the bullshit gene. They say The Force Awakens bombed in China because Chinese audiences are not as familiar with the Star Wars series and franchise as a whole.

This is nonsense. The Stars Wars saga is now almost 40 years old. The latest movie bombed because it was lousy. This is not my opinion (I haven’t seen the movie). It’s the opinion of thousands of people who have seen it. But the bullshit gene makes people say, “No, there has to be a formal reason for its failure. In order to explain it, let me bullshit you.”

And the bullshit fills many blogs.

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The bullshit gene kicks in when we want to rationalize the lies that we tell ourselves and others. For many of us, bullshitting becomes such a habit that truth and honesty actually feel threatening. Politicians get paid to bullshit, as do many academicians…

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The point is that when we try to explain the facts of Monetary Sovereignty to people, one of the obstacles we face is sheer habit.

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Parting shot…

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The Twenty-Six Theses

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On 31 Oct 1517, Martin Luther (above) posted his “Ninety-Five Theses” on the door of the All Saints’ Church in Wittenberg Germany. These were ninety-five attacks on the perceived corruption of the Catholic Church.

Luther’s note caused a great controversy, and it triggered the Protestant Reformation, which involved two centuries of war and conflict.

Luther tacked it onto the church doors, because in those days churches were central meeting places for people at all socioeconomic levels.

There is an even more important document titled “The Twenty-Six Theses” that I wish had the same effect as did Luther’s note. I urge you to read it here.

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Facts and theories

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I see this all the time. An article (like the one above) starts out well, but quickly lapses into stupidity.

This idiocy is from the blog for the “Motley Fool,” a financial-services company that provides stock and financial advice to its clients. Headquartered in Alexandria Virginia, the company employs more than 300 motley fools. 

I liken these kinds of articles to being a flight instructor with a student pilot…

Expansionary fiscal policy is when a government starts spending more, or taxing less.

Or doing both at the same time. Expansionary fiscal policy is simply the opposite of austerity. So far so good. In the illustrations below, I am the flight instructor; the one speaking.

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In the U.S. today, expansionary fiscal policy is typically associated with an expanding deficit and national debt. A government can have a budget surplus and still use this policy. The key is that it just spends more or taxes less, regardless of its budgetary surplus or deficit.

Wrong!

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The “national debt” is simply the amount of money that investors (plus the U.S. government itself) have deposited in Federal Reserve savings accounts. In real life this has little to do with the size of the federal deficit. Furthermore if the U.S. government has a budget surplus, then the government is spending less, or taxing more, or both.

Governments pursue expansionary fiscal policies as a tool to stoke an economy into growth and to create jobs.

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The theory behind these decisions is based on the Keynesian Theory of economics, one of the more widely accepted and respected schools of thought today.

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An expansionary fiscal policy is a powerful tool, but a country can’t maintain it indefinitely. Eventually, its budget deficit will become too large, driving up its debt to an unsustainable level. Therefore, this policy is typically viewed as a short-term tool, not as a constant.

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The only time a budget deficit could ever be “too large” is when it creates the possibility of inflation, and we are light years away from inflation problems. In fact, the only time this has happened during the last hundred years in the USA was during the World Wars. Everyone had a job, but consumer goods were rationed for the war effort. There was near zero unemployment, while the U.S. government created mountains of money for the war. Thus, the U.S. economy was awash in money, but there were not enough consumer goods to spend it on. This caused the threat of price inflation, plus hoarding, black marketing, and so on.

To keep the war effort going, the U.S. government needed to pump massive amounts of money into the economy. And to avoid inflation, the government needed to suck massive amounts of money back out of the economy.

The government put money into the economy by awarding military contracts. And the government sucked money back out of the economy by frantically urging people to buy “war bonds,” which took money out of circulation until the bonds matured at some future date. The U.S. government (falsely) told Americans that “war bonds” were needed to “pay for the war effort.”

During World War Two, the U.S. government once again frantically urged people to buy “war bonds.” Also, the U.S. government enacted the individual withholding tax (i.e. payroll taxes). Again the U.S. government (falsely) told Americans that the “war bonds,” and the revenues from personal income taxes, were needed to “pay for the war effort.”

By the way, how can the “national debt” be driven up to an “unsustainable level” if the U.S. government creates all the dollars it likes out of thin air?

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Then the article recovers somewhat, until we come to this…

Macroeconomics is extremely complex.

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Macroeconomics is not extremely complex. But rich people and their puppets (i.e. pundits, professors, and politicians) want you to think it is, so you will submit to poverty and inequality.

It is next to impossible to prove these theories as stone-cold facts.

No! It is a “stone-cold fact” that a larger federal deficit means more aggregate demand. This is basic Keynesian theory.

The word theory (as opposes to a hypothesis) refers to a workable, practical, usable, verifiable nexus of facts.

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Then the article confuses monetary policy (which concerns interest rates and inflation) with fiscal policy (which concerns government spending and taxation).

Also the article calls quantitative easing “stimulative,” when all it stimulates is the financial economy (i.e. the markets and Wall Street), not the real economy.

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Then we get sheer stupidity… 

The point is, be careful in accepting economic theory as fact. Expansionary fiscal policy may be a particularly strong influence on these markets, but it remains theory — not fact.

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The point is, be careful in accepting economic theory as fact. Expansionary fiscal policy may be a particularly strong influence on these markets, but it remains theory — not fact.

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It’s nice to dream

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Since 2011, Finland has spent most of its time with a trade deficit.

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The reason for this is that Finland’s export economy is based on manufacturing, as opposed to the export of food, or oil, or raw materials. When austerity mania became global in 2011, it caused Europe’s economy to slow down, which caused Finland’s export market to slow, which caused Finland to fall into a trade deficit. Since Finland uses the euro, the national government cannot create money out of thin air. Thus, the red zone (above) means that billions more euros have been sucked out of Finland than have entered into Finland.

Finland is now in the death spiral of debt and austerity.

For average people in Finland (pop. 5.5 million) this has meant ever-worsening debt, poverty and unemployment. However it has been a bonanza for rich people in Finland, since the sole purpose of austerity is to widen the Gap between the rich and the rest. And austerity is unavoidable in countries that have large trade deficits, plus no Monetary Sovereignty. (For the USA, austerity is fully avoidable, and therefore fully gratuitous.)

Finland is one topic where Paul Krugman messed up and actually spoke the truth. In June 2015, he correctly called the euro currency a “straightjacket” for Finland.

Why can’t Finland recover this time? Debt is not a problem; borrowing costs are very low. But it’s all about the euro straitjacket.

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Speaking of messing up, politicians in Sweden erred badly in 2003. Failing to properly brainwash the Swedish public into thinking they would all die without the euro, the Swedish politicians put it to a national referendum, and the people voted no. They voted to keep the Swedish krona. As a result, Sweden’s economy is much stronger than Sweden’s, while Sweden’s poverty and inequality are much less severe. (Whoops.)

Anyway Paavo Väyrynen is a veteran politician in Finland who mounted a drive to have a national referendum on whether Finland should keep using the deadly euro currency. The citizen’s initiative gathered more than the 50,000 signatures required to take it to the Parliament for consideration by MPs.

But Mr. Väyrynen evidently thinks the politicians will kill it (since the politicians are owned by the rich, who want the euro because they want more austerity, because austerity widens the Gap between the rich and the rest). Either that, or Mr. Väyrynen has sold out to the bankers, and to rich people, since Väyrynen no longer supports having a referendum.

I don’t know what’s true, but one article says:

Paavo Väyrynen wants a faster approach to exiting the eurozone than a national referendum. He says government* should present a statement to MPs supporting leaving the common currency region, in much the same way it argued for joining back in 1998. He says that ordinary Finns were deprived of a chance to decide whether or not they wanted to adopt the euro.

“A referendum could take years. We don’t have any time to waste now that the economy is in such bad shape and the euro area is rapidly becoming a debt union and a federal union.” 

* (By “government” I assume he means the executive branch.)

According to Väyrynen, given the fact that a referendum would last too long, the process should work in the same way as it did back in 1998, when the government provided a statement to lawmakers on the matter. This time, however the government’s statement would take the opposite position, and outline the case for dumping the euro.

Väyrynen says that introducing a referendum would also be burdensome, because it would require legislative changes. However the faster procedure, the government statement, is also an unlikely outcome. Like I said, Finnish politicians are owned by the rich, who like the euro. It causes the government to be so starved of money that it must sell public assets at fire sale prices, thereby plunging average people into poverty. (Whatever is privatized becomes a profit machine, and therefore rapes the average people who use it.)

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Mr. Väyrynen admits that his fellow politicians want to keep the euro that is killing Finland.

But it’s nice to dream.

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