What’s missing?


It’s frustrating when someone knows that he is missing a piece of a puzzle, and he refuses to accept the missing piece when you offer it to him.

Assume that the puzzle (above) represents a person’s understanding of economics. Over time, the person finds various pieces of the puzzle, and he puts them together correctly. Finally there is only one piece missing from the puzzle. That’s when the person gets stuck. He refuses to see that last piece, even when it is right in front of him, and even when you offer it to him.

This happens because people cannot recognize that last missing piece until they first let go of something else, whether it is a belief, a prejudice, a habit, or an emotion. People get stuck when they cling to errors.

For instance, Ellen Brown and her disciples falsely insist that all money is created as bank loans. If you try to awaken them from their trance (i.e. if you try to give them some missing pieces of their mental puzzles) they reject you.

These people got stuck when they learned two things…

  1. Banks create money out of thin air.
  2. The top executives of many banks are Jews.

Both of these propositions are true, but personal bigotry against Jews leads these people to a false conclusion…

  1. All money in our economy (all money) is lent to us by Jews.

Since these people will not let go of their bigotry, they will not accept the missing piece of their mental puzzle. Indeed, they think their bigotry is the last piece. Hence they falsely think that their puzzle (i.e. their understanding) is complete.

In reality it is not true all money in the economy is created as bank loans. Therefore it is not true that “All money in our economy is lent to us by Jews.” Hence these people are still missing a piece of the puzzle.

The reason I mention all this is that I have watched syndicated columnist Paul Craig Roberts improve his understanding of economics over the years. Roberts notes that standard economists distort or ignore many facts, but Roberts himself is missing a crucial piece in his mental puzzle. Here is that missing piece…


Paul Craig Roberts, 77, is missing this piece. Hence he still thinks the U.S. government runs on loans and on tax revenue. He served as an Assistant Secretary of the Treasury for Economic Policy in the Reagan administration, and still he does not understand that the U.S. government creates its spending money out of thin air. He is a former editor and columnist for the Wall Street Journal, Business Week, and Scripps Howard News Service, and still he doesn’t  “get it.”


Okay, so what? Who cares? I mention this because I repeatedly see how people learn for decades, and they mean well, but they refuse to see that they are missing a puzzle piece.

Paul Craig Roberts recently found some important pieces of his own mental puzzle by reading Michael’s Hudson’s latest book…


Mr. Hudson says nothing that I have not been saying for years, but for Paul Craig Roberts, the book is an eye-opener.

Hudson agrees with me that there are two economies: the financial economy and the real economy. The financial economy is the markets (i.e. “Wall Street”). The real economy is Main Street.

There was a time in the past when the two economies were united. Wall Street served Main Street (at least to some extent). Finance served industry.

Today the two economies are separate, and Wall Street is a deadly parasite on Main Street. Eventually the parasite will kill the host.

Economists are paid to camouflage this nightmare by pretending that the two economies are still one and the same. Thus, when the financial economy is booming, the pundits falsely claim that the real economy is also booming. They say it is in a “recovery.”

Put more simply, by falsely claiming that Wall Street is Main Street, the pundits can falsely claim that Main Street is booming, when in fact Main Street is dying. That’s the situation we have today.



Also, as I have often noted, the purpose of austerity is not only to widen the Gap between the rich and the rest (and widen the Gap between Wall Street and Main Street) but also to reduce the masses to debt slaves. For example, federal politicians could pay for everyone’s college education by using money created out of thin air. But politicians refuse to do this, since they have been bribed by the bankers, who use loan money (created out of thin air) to reduce millions of college students to debt slaves. This is an example of austerity and the Big Lie in action.


You already knew all this, but for Paul Craig Roberts it’s an astounding revelation. And Roberts was an official in the U.S. Treasury!

Readers often ask me how they can learn economics. I tell them to spend many hours with Hudson’s book. Study it closely, section by section. When you understand the book, you will understand economics better than any Nobel prize-winning economist. Many current events cannot be understood independently of Hudson’s explanation of the financialized Western economy. Michael Hudson is the world’s best economist.

Now if only we could get Paul Craig Roberts to understand that the U.S. government creates its spending money out of thin air.

As for Michael Hudson, his book is correct, but incomplete. Debt and financialization are only part of the picture. There is also gratuitous austerity, which is why we have debt slavery in the first place.

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6 Responses to What’s missing?

  1. coolslim says:

    The national debt is a useful propaganda tool, I used to think that the government borrowed in order to provide assets to investors but now I am skeptical. I think the government borrows to give the impression that personal finance functions in the same way as government finance, in order to promote austerity. If it were simply about providing safe assets, they would sell a lot more bonds.

    Liked by 1 person

  2. Chunch says:

    Holly wow…

    This is so frustrating i alnost want to cry.


    Let me be explicit because you liberals love to twist words.

    1) The government first created money via fiat.

    2) That money was introduced to the economy.

    3) Today, Banks create ALL debt.

    How do banks create money? Easy, they lend the same money the government created years ago, over and over and over.

    If you think otherwise than you dont know the banking system – i’ve worked in banking for years.

    To fund itself, the government sells bonds (IOUs) for which they have to pay the principal plus interest.

    The treasury does not issue payments, the treausury is NOT a bank and cannot do such a thing. Dont embarrass yourself spewing this nonsense.

    The fed has created money by lending to banks.

    The government pays its bill by FUNDING their accout at the FED and initiating payments from it. I used to work for the bank that processed all social security checks all over the world, the payments come from a fed owned account at one of the large banks, and they sure as hell fund that account before payments go out.

    Another thing your “piece” conviniently misses is that not only is printing the same as counterfeiting, it would cause banks to have proof breaks all over the place. If you ever worked in banking you know exactly what i mean – all books have to balance at the end of the day. If they dont balance and remain as such, you have to report it to (you guessed it) the government.

    So stop spewing this nonsense and acting like we are morons and you are so smart. Sorry to burst your little bubble. And no, calling me stupid is not being “smart”.


    • Bill J. says:


      Look at the piece. Look at it. Put down the myth, so that you may pick up the piece, fill in the puzzle, then complete your understanding. This essay was for YOU.


  3. Bill J. says:


    You’re standing on that missing piece. Pick it up. This essay was for YOU.


  4. Chunch says:


    You are the ones missing pieces, thats the funny part. Can the government create money out of thin air if IT WANTED TO? Of course it can, but the truth is IT DOES NOT DIRECTLY CREATE MONEY.

    The government creates money by borrowing it from BROKER DEALERS. Rodger used to work in the field, he knows what they are, but he’s a con.

    What i am telling you is what the law says happens, it is what the fed says happens, it is what the treasury says happens, it is what the government says happens.

    Can the US government pass a law to change that so they can create the money without getting it from broker dealers? Sure it can, but IT HAS NOT.

    I saw some posts over at RMM about the declining value of the dollar and im surprised that is coming from folks claiming to understand money. No you dont.

    We run on mostly credit in the us, and credit/debt acts like money. If you understand the basic law of supply and demand, than you would know that the more money/debt relative to the economy, the less the value of the money.

    So debt is not only bad because you will be taxed in the future to pay for todays expenditures, you get hit with a tax today as well as the value of your savings in the form of dollars will decrease.

    Also, saying that people use dollars because the US promises to pay is not only sad, i have no words to describe it. No, people use the dollars as a medium of exchange and because they think dollars will retain their value for as long as they will need it. What do you think most will do if the US changes the law to print all it needs? Not that the existing arrangement is the best, its not, but it sure beats politicians who are happy to spend to buy votes.

    My blog is sucesofinanciero.blogspot.com


  5. Chunch says:

    To clarify what i meant on my last statement about the full faith and credit comment. And what infuriates me more is that i know with 100% certainty RMM knows this, but he choses to lie.

    Why would i care about your damn “full faith and credit” and promise to always pay if i lend you a buck today that tomorrow will be worth 10 cents? How would you feel about that full faith?

    Not to insult anyone, but the comment is stupid and RMM knows it.

    Look, i know some of us need help, i know it would be great if i didnt have to wake up at 4am everyday. It would be awesome if there were no poor people and we just enjoyed our time with our families.

    But as long as you need to grow rice to eat it, as long as you need to pay for raw materials to build it – NOTHING will ever be free. NOTHING.

    SOMEONE will ALWAYS PAY. So Bill and Mrs Harris, pick up your pieces and leave your next generation with the tools they will need to sirvive. Because if crap hits the fan, you want to make sure they can figure it out and duck, instead of extending their hand. What they get may not be what they expect.


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