The Triad of Gap dynamics (Part 1)

Greenspan a

“The Triad” will be explained farther below, about half way through the post.

Over at Rodger’s blog, reader “Coolslim” noted that average people insist on being lied to.

“Coolslim” included a clip of Alan Greenspan telling “Meet the Press” that, “The United States can pay any debt it has, because we can always print money to do that. So there is zero probability of default.”

Greenspan said this in response to the ultra-corrupt bond rating agencies having laughably downgraded U.S. government T-securities. (Rodger correctly notes that Greenspan repeated the truth on several different occasions.)

“Any debt” includes the federal government’s Medicare and Social Security obligations. Therefore Medicare and Social Security can never become “insolvent” or “unsustainable.” And the “national debt” can never be a burden to the U.S. government.

And yet, despite 1.5 million viewers having seen Greenspan say that on 7 Aug 2011 (and despite the video being on YouTube with 66,600 views) the public still insists on believing the Big Lie that the U.S. government is…

  1. Broke
  2. Has a debt crisis
  3. Relies on tax revenue and on loans
  4. “Can’t spend money it doesn’t have.”
  5. Must have a balanced budget

Amazing, isn’t it? We could broadcast the truth all day, every day, every place, and people would still believe the Big Lie…

Greenspan bGreenspan caGreenspan dGreenspan eGreenspan fGreenspan gGreenspan hGreenspan iGreenspan jaGreenspan kGreenspan lGreenspan mGreenspan nGreenspan oGreenspan pbGreenspan qaGreenspan r

That last image shows one reason why people cling to the Big Lie (and thus doom themselves to poverty and inequality): no matter what side of the political or ideological spectrum you are on, the Big Lie has something to offer you.

Whatever you decide to hate, that target (in your mind) is “bankrupting the nation, since dollars are “physical and limited.”

Blacks, Whites, Jews, Muslims, liberals, conservatives, the poor, the rich – it doesn’t matter. Because of the Big Lie, your chosen object of hate is “bankrupting us.”

Sometimes people resort to Plan B, which is just another indulgence in the same mindless hatred, masquerading as “neutral and dispassionate analysis”…

Plan B

Let me pause and clarify (again) inflation and hyper-inflation.

Inflation happens where there are “too many dollars chasing too few goods.” The “too few goods” part is otherwise known as the demand side of the equation. Regardless of the number of dollars in circulation, if there are not “too few goods” then there is no inflation.

During times of major war (such as World Wars) the government pumps massive numbers of dollars into the economy, paying people to create weapons and such. Meanwhile consumer goods are rationed because of the war effort. This creates “too much money chasing too few goods.” Since dollars are plentiful, but consumer goods are scarce, sellers can charge higher and higher prices for consumer goods. This rise in prices is called inflation. Each dollar becomes worth less.

The government controls inflation by sucking money back out of the economy via  (a) raising taxes or (b) selling bonds, or (c) raising interest rates, or (d) some combination of a through c.

When dollars are sucked back out of the economy, people have less money to spend.  Prices for consumer goods start coming back down, as sellers compete with each other for business.

If the government allows inflation to become severe, then the government has great difficulty controlling inflation, since any attempt to rapidly suck money out of the economy causes unintended negative consequences. Imagine yourself saving a pile of money from your job at the munitions plant, only to be suddenly told that the government will tax it all away. You would not support the war. You would find ways to hide your money. You would be furious. You would burn your money if necessary.

To repeat, when you pump dollars into the economy faster than the supply of consumer goods can keep up with it, you cause inflation. When you suck dollars back out of the economy, you cause prices to fall again, thereby controlling inflation. But while price inflation rises fast, price reduction happens much more slowly, and it causes pain for everyone.

Therefore the government institutes anti-inflation measures (‘a’ through ‘d’ above) to control the money supply before going to war. The government devises ways to steadily remove dollars from circulation before pumping massive dollars into circulation.

The preferred way to remove money from circulation is to tie up money by encouraging people to buy “war bonds” while (falsely) telling them that the money they use to buy “war bonds” is needed to buy munitions. Average Americans are (falsely) told that their money is needed to “kill Japs, Krauts, and Muslims.” War bonds pay interest, and they can be purchased anywhere.  They are a far more effective way to control inflation than is taxing people’s money away.

In the case of Venezuela, quasi-socialist measures created many jobs, but an economic war by rich elitists caused severe inflation. Rich people owned all the means of production and distribution of consumer goods. They cut back their operations. Since money was plentiful, but consumer goods were scarce, there was “too much money chasing too few goods.” The rich elitists did this to hurt the masses and make them turn against the quasi-socialist government.

The resulting inflation and shortages caused severe suffering among average Venezuelans. They understood what the rich elitists were doing, and they demanded that the government stop them. When the government failed to do this, average Venezuelans lost patience, and they finally turned against the PSUV party. In December 2015, voters gave a majority to the MUD (the party of rich elitists) in the Venezuelan National Assembly. The elitists plan worked.

Meanwhile corporate media outlets falsely claimed that there was no economic war by rich elitists. Instead, the outlets falsely claimed that inflation was caused by government efforts to help average people. It was the exact opposite of the truth, but average Americans believed the lies, for the same hate-filled reasons that average Americans believe the Big Lie.

What if the U.S. government dramatically increased its deficit spending? What if the U.S. government reversed its austerity mania, and pumped large numbers of dollars into the U.S. economy? Would this cause inflation? Would there be “too many dollars chasing too few goods”?

No, because the supply of consumer goods would rise with the supply of consumer dollars. If the supply of dollars goes up, then the supply of goods goes up. When the federal government increases its spending, it causes stores and factories to spring up like weeds after a spring shower, thereby offsetting inflation.

With increased deficit spending, inflation only becomes a problem when we are in the middle of a world war with rationing, and a shortage of consumer goods.

Hyper-inflation is a different phenomenon. It is not an extreme form of regular inflation. It is a monetary inflation, rather than a price inflation.

Sometimes a catastrophe can cause a society and its government to become unstable. The cause can be a natural catastrophe, or a war, or whatever. When society breaks down, its monetary system breaks down. People stop giving their “full faith and credit” to the currency. If the government tries to compensate by creating massive amounts of money, that is hyper-inflation.

In most cases, hyper-inflation can only be controlled by restoring stability to the government, while changing the national currency to some new currency that is issued with very strict laws and controls. When stability is restored in society, and in the government, and in the money system, the masses can keep using the new currency or else – as happened in Weimar Germany – they can be weaned off it so that they resume using the old currency. In Zimbabwe, hyperinflation was brought under control when the government stopped using the Zimbabwe dollar, which had been pegged to the U.S. dollar.

It’s all very simple, but the finance ministers who implement these policies in times of hyper-inflation are called “wizards” and “geniuses.”

Greenspan r01

Now let’s get back to this phenomenon of people believing the Big Lie no matter what.

One factor involved is hate. If you falsely believe that the U.S. government can run out of dollars, then you can claim that those damned (fill in the blanks) are “bankrupting us.” This is fun, easy, and convenient. It requires no effort, and it helps you make sense of your world, even as it forces you to crawl around in poverty and misery.

Your hate causes you to support austerity. If this causes people at the bottom to suffer in agony (e.g. the poor Blacks of Flint Michigan) then so much the better. The ugliness of their suffering lets you dismiss them as ugly wretches — when in fact you should demand that the federal government help them right now. But of course the federal government can’t help them, since the federal government is “broke.” Right? And since dollars are limited, there are much more deserving people (such as yourself). Right?

However hate is only one factor in the triad. The other two factors are habit and authority.

Greenspan r02

Habit, custom, and convention are products of social inertia. “We do it this way because we’ve always done it that way.” If everyone says that the U.S. government is “broke,” then it must be true. It is sheer “common sense.”

The authority leg of the triad consists of pundits, professors, and politicians who make their living by spouting the Big Lie. They preach the Big Lie in order to consciously and deliberately cause things like the disaster in Flint Michigan. Anything to widen the Gap between themselves and those below.

The three legs of the triad (hate, habit, and authority) depend on each other and reinforce each other.

If you overcome your hate, you still support the Big Lie out of habit, and because of authority.

If you break out of your habit, you still support the Big Lie because of the other two factors.

If an authority figure like Alan Greenspan tells you to your face that the Big Lie is false, you still support the Big Lie because of the other two factors. Indeed, you demand that politicians lie to you, since the lies validate the other two legs of the triad (your hate and your habits).

If an authority figure tells you the truth, you feel uncomfortable and threatened. Therefore you redouble your hate and your habits, while your filter out what the authority figure says. You don’t even hear it, even when it is blasted into your ears. You become like that elderly couple (above) with the Confederate flag, while you congratulate yourself on your “brilliance.” You revel in your illogic and self-contradiction. You become a smug little moron.

Greenspan r03

Incidentally the hate leg of the Triad includes the emotions of fear. Where there is hate there is fear, and vice-versa.

Your world view consists of interpretations, opinions, and coping strategies. Your coping strategies help you deal with suffering. Such strategies are to some extent based on bullshit and delusion. If you fear becoming poorer, then you can hate those below you. You can delude yourself that people with less money are inferior to you. Therefore you will always be better than them. Therefore you have less to fear than they do.

How do you know you are better? Because “dollars are limited,” and the “cockroaches” below are eating all the dollars. The roaches are “lazy takers” and “welfare queens.” They are always looking for a “free lunch.”

When you self-righteously proclaim that “there’s no free lunch,” you prove that you are a cowardly little dwarf who is ruled by the Triad.

Greenspan r05

Hate, cowardice, selfishness, and self-righteousness are all mixed together in the mind of the slave. More than anything else, the slave fears truth and freedom, since these subvert his habits, his delusions, and his coping mechanisms.

Greenspan r06

Thus, politicians and other authority figures are only part of the problem. They are able to brainwash the masses, because the masses want to be brainwashed. Lies, delusions, and fairy tales make life simper for the peasants, although it increases their suffering.

And so the Big Lie marches on…

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2 Responses to The Triad of Gap dynamics (Part 1)

  1. Steve says:

    Reducing the Gap!

    Great news out of Latin America:

    (Oops. Neo-libs enraged! It’s nice Correa can still continue to flip us the middle finger.)


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