Blockheads

neo foreverOn 19 Nov 2015 I wrote a post titled “Who is the most cement-headed?”

In that post I said that the most obtuse people of all are not deficit hawks, nor people who invoke the bogeyman of Zimbabwe hyperinflation, nor the liars or cynics, or the mean spirited, or  idiots in general.

No, the most block-headed people of all are those who insist that all money is created by banks as loans.

I’ve discussed this many times, for two reasons. First, these people’s delusions are reprinted in numerous “progressive” blogs like Counterpunch. Second (and more importantly) their foolishness strengthens the lie that the U.S. government is “bankrupt,” and has a “debt crisis.” This lie lets politicians impose more austerity and neo-liberalism on the masses, in order to widen the gap between the rich and the rest.

You cannot set the blockheads straight. They reject the facts no matter how tightly reasoned are your comments. Being “geniuses,” they are not teachable.

Donald Trump “gets it.” On 9 May 2016 Trump correctly said the U.S. government will never default, since it can “print more money.” For the blockheads, the U.S. government cannot create money. Only the banks can.

Here’s Ellen Brown, as reprinted in Counterpunch. This is all one paragraph, but I will break it down. My comments are in blue.

As the Bank of England recently acknowledged, the vast majority of the money supply is now created by banks when they make loans. Yes, because the U.S. government creates money out of thin air, but deliberately creates too little of it, in order to force us to take out loans, and become debt slaves. It’s called gratuitous austerity. Ellen believes the lie told by the Bank of England that all money is created by banks as loans.

Money is created when loans are made, and it is extinguished when loans are paid off. True. Money is also created by government spending, and it is extinguished via federal government taxation.

When loan repayment exceeds borrowing, the money supply “deflates” or shrinks. New money then needs to be injected to fill the breach. The U.S. government can do that, but if politicians refuse to do so (refuse to create enough money) they cause the real economy to remain in a permanent recession. Politicians do this intentionally, in order to widen the gap between the rich and the rest, and to force us to take out loans. They reduce us to a world of “payday loan” scammers, in which all money in the economy flows upward to the criminal bankers at the top.

Currently, the only way to get new money into the economy is for someone to borrow it into existence. WRONG! And since the private sector is not borrowing, the public sector must borrow, just to replace what has been lost in debt repayment. The “public sector” (i.e. federal government) does not borrow a single penny of its spending money from anyone. But government borrowing from the private sector means running up interest charges and hitting deficit limits. WRONG! And by the way, Republicans in the U.S. Congress use their “debt limit” charade when they want to slash social programs, but there is no such thing as a “deficit limit.”

The alternative is to do what governments arguably should have been doing all along (and which they have been doing all along), which is to issue the money directly to fund their budgets. Having exhausted other options, some central bankers are now calling for this form of “helicopter money,” which may finally be raining on Japan if not the US.

Following a sweeping election win announced on July 10th, Prime Minister Shinzo Abe said he may proceed with a JPY10 trillion ($100 billion) stimulus funded by Japan’s first new major debt issuance in four years. The stimulus would include establishing 21st century infrastructure, faster construction of high-speed rail lines, and measures to support domestic demand.

No, Ellen. The Bank of Japan may “issue debt” (i.e. sell treasury securities) but this “debt” does not fund the Japanese government. Instead, the Japanese government funds itself. The government creates money out of thin air by crediting bank accounts. It’s as easy as changing numbers on an electronic scoreboard. Meanwhile banks create loan money in exactly the same way.

Incidentally I have always disparaged the phrase “issuing debt.” Technically it is correct, but practically it is clumsy. When you yourself give someone a loan, do you “issue debt”?

Let’s get our terminology straight…

[1] Debt and credit are one and the same thing. They are two sides of the same coin. Yin and yang. What matters is which side of the balance sheet you are on. If you issue a loan, then you issue credit. If you accept a loan, then you are in debt. If you lend me a dollar, then you credit me with a dollar. I am in debt to you for a dollar. Simple.

[2] A credit is a claim to ownership. The claim may or may not be monetary. Likewise a debt may or may not be monetary. A debt is an obligation to honor a credit, which can take any form. Suppose you are at a public place, and you give your coat to an attendant in the cloak room in exchange for a token. The attendant is now in debt to you for one coat. Your token is a credit (claim to ownership) for one coat. In this sense the attendant has “issued debt” and also “issued credit.”  But why not keep things simple, and just say the attendant gave you a token?

Likewise, why not drop the mumbo jumbo-about “issuing debt”? Why not just say the government sells Treasury securities?

[3] All money is both a credit and a debt. If you have a dollar, then you have a credit (i.e. a claim to ownership) for one dollar’s worth of the “full faith and credit of the United States.” This credit for a dollar is also a debt that is owed to you by everyone who agrees that your dollar is worth a dollar.  Everyone owes you an obligation to honor your credit of one dollar, even though they have not lent any money to you. Debts and credits do not necessarily involve monetary loans.

Again, a credit is a claim to ownership. A debt is an obligation to honor a credit.

[4] A monetarily sovereign government may sell treasury securities, but this is not to “fund the government.” The government creates money out of thin air, and therefore does not need to borrow from anyone.

Why then do monetarily sovereign governments sell treasury securities?

To help control inflation. Every dollar that is used to buy a treasury security is a dollar deposited in a Federal Reserve savings account. That dollar is out of circulation until the treasury security matures on a timeline that can run from anything between a month to thirty years. If inflation becomes a problem, then the Fed can raise the interest rate it pays on treasury securities, so that more people buy securities, and thereby remove more money from circulation, thereby reducing inflation.

To steady the financial markets. Suppose you want to make a bet in the markets, and you need collateral to back you up. If a nation’s government has monetary sovereignty, then the best collateral of all is a government-issued treasury security. It’s as good as liquid cash, amd the security is worth more than its face value. Moreover the government and central bank will never default on the security. This is one reason why there are twenty trillion dollars on deposit at the Fed (the so-called “national debt”). Twenty trillion dollars as a back-up creates a lot of stability in the speculative markets.

To steady the banking system. Banks are required by law to have reserves. Reserves are money, but they cannot be spent like money. Reserves are secondary money. Quasi-money. Reserves back-up the regular banking and monetary systems by sustaining public trust in the systems. The ultimate in reserves is twenty trillion dollars that people have deposited at the Fed by purchasing treasury securities. That twenty trillion dollars is money, but it cannot be spent. Hence it is called “reserves.” If you purchase a security for a dollar, then your dollar becomes part of the USA’s central reserve (i.e. the Federal Reserve). To convert your reserve dollar into a regular dollar, you must sell your security to someone, or else wait until your security matures, at which point the Fed will automatically convert it for you.

To maintain global trust in the dollar. Suppose your company is Chinese, and you sell ten billion dollars’ worth of goods to U.S. consumers. What will you do with your ten billion dollars? You can’t spend it in China (although you have a bank convert it into renminbi, so you can spend the renminbi in China). You can use it to buy things in foreign nations, but their governments limit what you can by. (For example, they don’t want you to buy their military forces.) Also, your foreign investment may turn sour. You can deposit it in a bank, where your ten billion dollars will earn interest, but banks can fail, and are subject to corruption. What to do? You can deposit your ten billion at the U.S. Federal Reserve by purchasing treasury securities. Not only will your money earn interest; it will back up whatever gambles or investments you choose to make in your life. This is one reason why the U.S. dollar is so popular worldwide. This popularity is the core of U.S. power. Without it, the USA as we know it would cease to exist.

Returning to Ellen Brown’s article…

According to Gavyn Davies in the July 17th Financial Times:

Whether or not they choose to admit it – which they will probably resist very hard – the Abe government is on the verge of becoming the first government of a major developed economy to monetise its government debt on a permanent basis since 1945. The direct financing of a government deficit by the Bank of Japan is illegal, under Article 5 of the Public Finance Act. But it seems that the government may be considering maneuvers to get round these roadblocks.

Nonsense! There is no “financing of a government deficit by the Bank of Japan.” In order to enact a stimulus, the Japanese government simply increases its creation of money out of thin air. Money which the government then spends into the Japanese economy. I scanned that Financial Times article. It is so full of s—t that I will not dignify it with further analysis. I’ll just stamp it…

STAMP

Then Ellen Brown’s article discusses tangential trivia that is of no concern. Next she asks, “Who should create the money supply, banks or governments?”

How about both, which is what actually happens?

Today, all money is created out of thin air; and most of it is created by private banks when they make loans.

Yes, and in addition to that, each fiscal year the U.S. government creates $4 trillion of out thin air, and not as loans. By the end of FY 2016 (which will occur on 30 Sep 2016) the U.S. government will have clawed back $3.525 trillion, leaving a deficit of $474 billion, which is not nearly enough to get the U.S. real economy out of its recession.

Who would we rather have creating the national money supply – a transparent and accountable public entity charged with serving the public interest, or a private corporation solely intent on making profits for its shareholders and executives? We’ve seen the results of the private system: fraud, corruption, speculative bubbles, booms and busts.

Again, Ellen falsely thinks that all money is created by banks as loans. The Fed is indeed privately owned, but it is still subject to federal laws and Congressional oversight (if the U.S. congress ever chose to exercise its oversight). Yes, the Fed is corrupt, since it focuses more on helping Wall Street than helping Main Street. But the U.S. Congress does the same thing. It too is corrupt. It is very rare to find any federal politician or central banker who is not corrupt.

Adair Turner, former chairman of the UK Financial Services Authority, is a cautious advocate of helicopter money. He observes:

“We have been left with so much debt we can’t just grow our way out of it – we should consider a radical option.”

Not that allowing the government to issue money is so radical. It was the innovative system of Benjamin Franklin and the American colonists. Paper scrip represented the government’s IOU for goods and services received. The debt did not have to be repaid in some other currency. The government’s IOU was money. The US dollar is a government IOU backed by the “full faith and credit of the United States.”

Ellen falsely thinks the colonial scrip was issued by colonial government banks (i.e. public banks). In reality, colonial scrip was issued by privately owned colonial banks, or sometimes by privately owned companies such as mines or railroads.

scrip 01

scrip 02

scrip 03

scrip 04

 The USA’s first de facto central bank was the Bank of North America. It was privately owned, and it was first chartered on 26 May 1781 by the Confederation Congress. It opened in Philadelphia on 7 Jan 1782. Even then, some states and territories continued to use their own scrip (i.e. their own currency) created by privately owned banks.

(Personally I think that privately owned banks are okay as long as the public has a choice between them and publically owned, non-profit banks.)

The U.S. Treasury was created in 1789, but the U.S. government did not fully become the master of the dollar until the U.S. Civil War. Only by the end of the war (1865) did the entire USA accept federal dollars.

The U.S. Constitution gives Congress the power to “coin money and regulate the value thereof.” Having the power to regulate the value of its coins, Congress could legally issue trillion dollar coins to pay its debts if it chose.

Yes, but what would be the purpose? The U.S. government pays its debts by crediting accounts. It creates money out of thin air, like banks do. The purpose of the “trillion dollar coin” gimmick in 2011 was to offset Republicans and their “debt ceiling” gimmick.

All of Ellen Brown’s articles are based on the false premise that all money is created by banks as loans.  She continues…

As Congressman Wright Patman noted in 1941:

“The Constitution of the United States does not give the banks the power to create money. The Constitution says that Congress shall have the power to create money, but now, under our system, we will sell bonds to commercial banks and obtain credit from those banks. I believe the time will come when people will actually blame you and me and everyone else connected with this Congress for sitting idly by and permitting such an idiotic system to continue.”

As you can see, misunderstandings about the “national debt” have been around for many decades.

It is true that the Constitution of the United States does not give the banks the power to create money. However the Constitution does not deny them this power either. Banks create money as loans. Monetarily sovereign governments create money too, and not as loans. Why is this so hard to understand?

As for “selling bonds to commercial banks,” this means the U.S. government sells Treasury securities (for reasons I noted earlier) to investors, which include commercial banks. Proceeds from the sale of T-securities stay in the banking system, and are not used to run the U.S. government. The U.S. government does not borrow money from anyone to fund its operations. The U.S. government creates it spending money out of thin air.

The power to create money has been hijacked from governments by a private banking monopoly engaged in its own sleight of hand, euphemistically called “fractional reserve lending.” The modern banking model is a magician’s trick in which banks lend money only a fraction of which they actually have, effectively counterfeiting the rest as deposits on their books when they make loans.

The U.S. government creates money and spends it. Banks create money and lend it. This is not “counterfeiting.” It is how things are done. The problem is that federal politicians refuse to create enough money to get the U.S. real economy out of its recession. The big banks bribe politicians to impose austerity on you, so that you will have to borrow from the banks. Austerity also leads to mass privatization of public assets. Austerity also creates jobs in law enforcement at all levels, since austerity causes social unrest.

Governments today are blocked (no they aren’t) from exercising their sovereign power to issue the national money supply by misguided legislation designed to avoid hyperinflation. Legislators steeped in flawed monetarist theory are more comfortable borrowing from banks that create the money on their books than creating it themselves. (Wrong. Federal legislators borrow nothing from anyone.) To satisfy these misinformed legislators and the bank lobbyists holding them in thrall, governments must borrow before they spend; but taxpayers balk at the growing debt and interest burden this borrowing entails. By borrowing from its own central bank with “non-marketable perpetual bonds with no maturity date,” the government can satisfy the demands of all parties. Nonsense.

As noted in a July 11th ZeroHedge editorial, Japan “has given the world a glimpse of not only how ‘helicopter money’ will look, but also the market’s enthusiastic response, which needless to say is music to the ears of central bankers everywhere.” If the Japanese trial balloon is successful, many more such experiments can be expected globally.

Ah yes. The Zero Hedge blog, whose clowns have no understanding of monetary sovereignty.

All this chatter about “helicopter money” simply means increased government spending.

For Ellen Brown, it would be a radical and revolutionary thing if monetarily sovereign governments created their own spending money, which if course they already do.

jane

 

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A conspiracy theory

dictionMalaysia Airlines Flight 370 disappeared on 8 March 2014 at 1:22 am local time.

The only logical conclusion is that the plane was accidentally shot down during a USA-Thai Joint Strike Fighter exercise occurring in the same area at the same time.

This truth is being covered up for reasons I will explain below.

Accidental shoot-downs happen. On 3 July 1988 the USS Vincennes destroyed Iran Air Flight 655 (290 people murdered).

On 17 July 1996 a missile destroyed TWA Flight 800 (230 people murdered).

Malaysia Airlines Flight 370 is the only disappearance of a large airliner since a Varig Brazilian Airlines cargo jet vanished on 30 Jan 1979. The Varig cargo jet (a Boeing 707) departed from Tokyo en route to Rio de Janiero, with a planned stop in Los Angeles. A half hour after leaving Tokyo, it lost radio contact and disappeared 200 km (124 miles) east of Japan. It was never found. This is understandable, since the cargo plane vanished directly over the Japan Trench, which is 21,000 feet deep. That’s over five times the mean depth of the South China Sea, where MH370 was shot down.

The MH370 disaster is being covered up because South China Sea is one of the most sensitive areas in the world. It involves myriad territorial disputes between nine different nations, and is believed to hold huge oil and gas reserves beneath its seabed.

The area is crucial to the Western naval encirclement of China. The American, French, Japanese, South Korean, and Australian navies all patrol there. German naval ships will soon arrive as well.

The South China Sea also has a third of the entire world’s shipping, plus a third of the entire world’s marine biodiversity. Over-fishing has caused much tension between local nations, who are trying to assert fishing bans.

In such a sensitive and highly contested area, the USA and NATO would suffer politically if it came out that Malaysia Airlines Flight 370 was accidentally shot down in the South China Sea. Hence we hear nonsense about the plane having done an about-face and heading out to the Indian Ocean. No proof of this has ever been provided by anyone.

The crux of the matter

The South China Sea is a geopolitical flashpoint. It is the zone of the Western Empire’s “pivot to Asia” (a phrase coined by Queen Hillary). What’s at stake is the future of Asia, as well as the East-West balance of power. Hence the Western Empire cannot afford the political cost of admitting the truth.

More specifically, China and the Philippines have ratified the UN Convention on the Law of the Sea (UNCLOS), which the USA refuses to sign.  China, India Brazil, Vietnam and Malaysia have been struggling to modify the UNCLOS so that foreign warships cannot enter those nations’ Exclusive Economic Zones (EEZs) without permission.

In most cases a nation’s EEZ extends up to 200 nautical miles (230 statute miles) from the nation’s coast. If two or more zones overlap, then it is up to the states to delineate the actual maritime boundary, but generally any point within an overlapping area defaults to the nearest state.

Naturally the USA and most nations of the Western Empire oppose this measure, although they defend their own EEZs militarily. A military exclusion zone would prevent the Empire’s warships from entering large sections of the South China Sea. Indeed the Empire does not want to ask permission before sending its warships closer than 200 nautical miles to any foreign nation.

The Empire’s efforts to defeat these EEZ measures would be torpedoed if the truth about the MH3670 shoot-down was exposed. And if the missile came from a Lockheed Martin F-35 Lightning II, then the extremely troubled F-35 program (with its countless billions of dollars) might be politically killed.

MH370aMH370b

A 220-ton aircraft doesn’t simply vanish in comparatively shallow waters. Not in an age where a stolen smartphone can be pinpointed to any location on earth. Today, nothing that gives off any kind of electronic or energy ‘signature’ cannot be found, down to the battery of a wristwatch worn by someone in a remote forest.

And so the Western Empire has staged a wild goose chase in the Indian Ocean, far away from the shoot-down spot in the South China Sea.

Every day the corporate media outlets present a fresh wave of lies, irrelevances, and trivialities designed to keep everyone confused and guessing.  Today’s bullshit (two years and four months after the plane disappeared was shot down) is that MH370’s captain (Zaharie Ahmad Shah) had a flight simulator at home, on which he had plotted a course over the Indian Ocean. This is according to the Joint Agency Coordination Centre, an Australian government agency that dispenses lies about MH370.

The plane’s captain, Zaharie Shah, had flown for more than 15 years, and was so experienced that he was what the airline industry calls a teaching pilot.  Yet suddenly he wigged out and flew in the opposite direction of his intended flight path? I call bullshit.

The western media outlets claim (with zero proof) that the pilot committed suicide, but Malaysian government absolutely denies this.  No one has produced any evidence that the captain was suffering from any personal or financial stresses at the time.

What about the couple of small pieces of debris that supposedly washed up on Réunion, an island in the western Indian Ocean? This is more bullshit designed to maintain the distraction from the truth. The couple of pieces were supposedly sent to France, where they vanished.

MH370c

MH370d

To repeat: if the truth about MH370 came out, then the nations of the South China Sea (including China itself) would have political leverage to keep out the Western Empire’s warships.

No one does that to the Empire (although the Empire does it to everyone else). And so the cover-up will continue.

MH370e

Incidentally I’m surprised that politicians and the corporate media outlets haven’t yet blamed MH370’s disappearance on ISIS™.

After all, they blame everything else on ISIS™.

 Pearl

MH370g

Bloomberg is crying

Header

The neoliberal Bloomberg blog is weeping because Japanese Prime Minister Shinzo Abe has announced a plan for “comprehensive and bold” fiscal spending this fall.

If Mr. Abe is serious, this would be a reversal for him, since he has always pushed for more austerity (i.e. less spending for special programs that help average people, and more spending for the military, for bank bailouts, and for whatever else widens the gap between the rich and the rest).

On 10 July 2016 Mr. Abe (pronounced “AH-bay”) was reappointed as Japan’s Prime Minister for the third time in a row, and started talking about doing an about-face on austerity.  This is worrying the rich, who depend on austerity to widen the gap between themselves and the peasants.

Abe’s announcement isn’t getting a warm reception among economists who say that while a stimulus package may temporarily bolster the economy, they’d prefer he focus on long-term structural reforms.

“Long term structural reforms” means permanent austerity.

Since Bloomberg is a neoliberal blog, it is full of lies…

One worry among analysts is that a significant spending boost would further add to Japan’s public debt burden, without necessarily shifting the economy’s slow-growth path — which some see as Japan’s natural state at the moment.

Japan has no “public debt burden,” since the Japanese government creates its spending money out of thin air. If you could create limitless money out of thin air, would you have a “debt burden”? Of course not.

Economists (with very few exceptions) are paid to lie, in ways that enhance inequality. They know they will be dismissed from their well-paid jobs at universities if they tell the truth.

“If ever there’s a country that doesn’t have fiscal space, it’s got to be Japan,” said Desmond Lachman, a resident fellow at the American Enterprise Institute in Washington, a research institute neoliberal propaganda mill that advocates free-market policies austerity and inequality. Japan has “a high public debt, they’ve got a large budget deficit, their savings rate is going down because their population is getting older, so to me this makes absolutely no sense to increase the budget deficit further through deficit spending.”

PACIFIER

The government is discussing supplementary spending of about 3 trillion yen ($28.3 billion) for the current fiscal year. Chief Cabinet Secretary Yoshihide Suga in a recent interview ruled out issuing deficit bonds to fund a stimulus package, hinting at using construction bonds for longer-term investments.

Translation: The Japanese government will create the stimulus money out of thin air.

Economists and analysts say they aren’t convinced of the need for fiscal stimulus now, or whether it would do much to reinvigorate Japan’s economy. Several said they’d rather see Abe focus on his own third ”arrow” of Abenomics — making structural reforms to the economy (i.e. they want an increase in the austerity that has boosted Japan’s financial economy, and wrecked Japan’s real economy).

Because of austerity, Japan is experiencing an explosion of homelessness, unemployment, and underemployment (i.e. temporary work with low pay, and no benefits). “Economists and analysts” want this explosion to increase.

Jap homeless 01Jap homeless 02

Koya Miyamae, an economist at SMBC Nikko Securities Inc., worries that fiscal stimulus policies could distort the economy by providing a big temporary boost that could later lead to a sharp contraction, creating appetite for yet more stimulus. “The economy is crawling sideways. It isn’t improving, but it isn’t getting worse. If you introduce these policies now it’ll create distortions,” he said.

Translation: If the Japanese government creates an increased amount of money out of thin air, it will create millions of new jobs. If that money is spent on infrastructure improvements, it will create still more jobs. Average Japanese people will enjoy a boost in their living standards, without going further unto personal debt. The gap between the rich and the rest will be narrowed. Such a nightmare will create “distortions.” Therefore it must be defeated/

With some analysts seeing Japan’s potential growth rate at somewhere between zero and 0.5 percent, there is a case for arguing that it’s not worth pursuing a fiscal stimulus package.

Why not? The money will be created out of thin air. The only time the Japanese government should ever reduce spending is when the Japanese economy has 100% full employment, and inflation becomes a possibility.

Japan is nowhere near that point.

Incidentally we are tired of bullshit phrases like these…

“Experts say…”
“An official who spoke on condition of anonymity said…”
“A key insider who is not authorized to speak publicly says…”
“According to officials familiar with the talks…”

“Considering Japan’s fiscal position and the balance of supply and demand in the economy, I don’t really think that stimulus is necessary,” said Junko Nishioka, chief economist at Sumitomo Mitsui Banking Corp.

Even the Wall Street Journal admits that the Japanese economy continues to dip into and out of recession. The Journal’s “solution” for this is to change the labor laws so that workers can be fired more easily.

Japan’s labor laws allow even clearly incompetent employees to file wrongful dismissal cases that drag on for years. The Nikkei newspaper cites an estimate that six million full-time workers have nothing to do.

Even if that was true (which I seriously doubt), the solution is not to fire millions of workers so that wages fall, but to increase stimulus spending. Consider the ever-worsening problem of homelessness in Japan. In some cases these people have mental health issues. In other cases they have criminal records, and are unable to get jobs. Some actually like being homeless. But in 90% of cases, these people are homeless because they have no money, and no income.

To reduce homeless, the Japanese government needs to put a lot more money into circulation, so that everyone can find work. If workers are attacked, it will increase the number of homeless Japanese.

Jap homeless 04Jap homeless 03

Shinichi Ichikawa, chief market strategist at Credit Suisse Securities Ltd., said he’d rather see the government work on economic reforms (i.e. more austerity) “rather than pursue policies focused on near-term conditions.” He emphasized making greater use of foreign labor and overhauling Japan’s work and education systems.

Got it. If unemployment is high, and wages are low, the solution is to bring in more foreign workers, who will drive wages even lower.

Here’s the Wall Street Journal

Japan’s lifetime-employment system worked well during the high-growth postwar years. But as the economy slowed and the population aged, companies shifted their hiring to part-time employees who can be laid off easily.

The result has been falling wages, rising homelessness, and increasing personal debt. Just what the economy needs, aye?

The rise of part-time contracts explains why Japan’s low 3.2% unemployment rate hasn’t led to wage increases. Instead of laying off workers, companies reduce the number of hours they employ part-timers. Japan suffers from massive underemployment rather than unemployment.

Solution?

more

Socially liberal; fiscally conservative

Apologies for disappearing, but a car accident put me out of action for a while. All I could do was leave an occasional comment at Rodger’s blog.

Before I get going on my topic for today, I note that the European Council is threatening to impose fines on the governments of Spain and Portugal if those governments do not further increase their austerity.

The European Council is now making the following demands…

[1] The Spanish government must enact another 10 billion euros in tax hikes and spending cuts.

[2] The Spanish government must surrender total economic control to the EU.

[3] The Spanish government must send quarterly reports on austerity measures to the European Commission. Failure to send these reports every three months will result in ever-higher fines and ever-tighter controls from Brussels.

In response to threats of EU fines, Spanish Economy Minister Luis de Guindos announced on Tuesday (21 July 2016) a rise in corporate taxation, which will be passed on to workers in the form of salary cuts.

In Spain and Portugal, all politicians (all of them) favor more austerity for the masses, and more obedience to EU dictates, since all politicians are directly or indirectly on the EU payroll.

This includes politicians with the faux-leftist Podemos coalition in Spain, along with politicians in the anti-socialist “Socialist” Party.

In Portugal the faux-leftist “Left Bloc” is allied with the faux-Communist “Communist” Party. All of them favor more austerity, and more control by the EU.

All of them.

The “Left Bloc” in Portugal wants the government to hold a referendum on whether the Portuguese government should submit to the EU’s latest demands. This fake referendum will allow the the “Left Bloc” blame austerity on the other parties.

The French government’s budget deficit is far larger than the Spanish or Portuguese governments’, but the EU tyrants are not threatening to fine the French government. Reason: France is not a peripheral nation like Greece, Spain, or Portugal.

The blame for all this lies not with the bankers or politicians, but with the peasants who refuse to dump the euro that is killing them.

ZebrasZebras2

Change of topic…

Socially liberal; fiscally conservative

I intended to write about this a couple of weeks ago, but a car accident knocked me out of action for a while. Let me start by paraphrasing a Counterpunch article.

A corporate liberal is someone who supports anything progressive that does not challenge corporate power. The corporate liberal fights for progressive identity politics such as feminism, gay rights, and reproductive rights. He supports African-American protests against police brutality, unless the protests threaten the corporate establishment. (It was Bill Clinton who initiated the prison industrial complex that incarcerates huge numbers of minorities.)

Hillary is a corporate liberal. She claims to oppose racism and so on, while she supports the capitalist greed that worsens racism and other social frictions. Hillary is a liberal on social issues like “gay rights,” but she is fanatically right-wing when it comes to war, Wall Street, Israel, and financial inequality.

In fact, all politicians today are either right-wing fanatics, or corporate liberals.

The problem is that many average people are the same. They call themselves “social liberals and fiscal conservatives,” meaning they care about things like racism and “gay rights,” but they largely ignore the things that maintain the gap between the rich and the rest. Things like war, austerity, neo-liberalism, or “free trade” treaties.

Idiots

These people are useful idiots for the rich and the bankers. By focusing on equality between races, genders, and so on, they distract from the most important equality of all, which is financial equality.

Back to the Counterpunch article…

We are expected to support whatever Democrats do, because Democrats are supposedly better than Republicans. We must support Democrats even if this means a deteriorating quality of life for all identity groups. Even if it means lower incomes, higher unemployment, bigger personal debts, fewer jobs, less social support, more inequality, more incarceration, more suicide, more alcoholism, more drug abuse, more stress, more violence, more crime, more war, and more unhappiness.

Indeed.

Hillary will privatize Medicare and Social Security. She will ram through the TPP. She will nuke Iran if she can get away with it. She will start new wars, and perhaps start World War III with Russia.

Still, we must vote for Hillary in order to defeat the Republican (Trump) — even though Trump opposes the TPP, opposes the privatization of Medicare and Social Security, and opposes war with Russia. (Trump is a buffoon, while Hillary is a psychopath.)

Hillary will increase every social ill in America today. Nonetheless we must vote for Hillary because Trump said he wants to build a wall on the U.S.-Mexican border (which already exists).

border wall

In order to help refugees, we must vote for Democrats like Obama, who has deported more refugees than any previous president did.

Since Democrats are always the “lesser evil,” Democrats always get away with perpetrating the greater evil.

Democrat presidents oversaw the USA’s entry into World War I and II, plus the Korean War, the Vietnam War, the Kosovo War, the destruction of Libya, and the proxy war on Syria. Nonetheless we must vote for Democrats because Republicans are “pro-war.”

A Democrat (Bill Clinton) gave us NAFTA, and he repealed laws such as Glass-Steagall. Nonetheless we must vote for Democrats because Republicans are “pro-corporation.”

The point here is that too many people get caught up in identity politics (e.g. “gay rights”) while they ignore class warfare. They are social liberals, but fiscal conservatives, meaning they echo the lie that the U.S. government is “bankrupt,” and should have a balanced budget.

Wall Street uses this lie to reduce the masses to debt slaves. And the masses eagerly put their heads into the noose…

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Rich people are fiscal conservatives and social liberals, meaning they support any development in society long as it doesn’t challenge their control of society. For example, David Koch of the Koch brothers says, “I’m a conservative on economic matters and I’m a social liberal.”

For Koch, this is camouflage. By condemning racism, he distracts public attention from his racist actions, such as his support for privatized prisons that seek more profits by incarcerating more people of color.

Put another way, in Western societies what matters is not what you do, but what you say. You are praised for doing racist things like supporting austerity, charter schools, and privately owned prisons. But you are condemned for saying racist things. You are praised for supporting the extermination of millions of Muslims. But you can’t say that all Muslims are evil (unless you are a Jew). This is why the fanatically anti-progressive Hillary is considered a “progressive.” It is why Trump is considered a racist bigot even though, in practice, he is far less racist than is Hillary.

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acceptable

Again, it’s okay to do racist things, like destroy Libya and Syria, but not to say racist things. This is true not only in the corporate media outlets, but in society at large. Trump is a “racist” because of what he says. Hilary only does racist things, like supporting institutionalized racism, and the mass extermination of Muslims.

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Establishment Republicans hate Trump because he blew their cover. Trump said racist things. Because of Trump, Republicans now realize that if they want to continue promoting economic inequality, then Republicans must say socially liberal things, like Democrats do. Republicans must become socially liberal and fiscally conservative. Just as there are “New Democrats” (who support financial inequality) there must be “New Republicans.”

Reince Priebus

Current drug policies in the United States perpetuate a permanent black and brown underclass of underpaid, disenfranchised, disempowered servants, sentenced to do shit work at low wages for their entire lives. And let’s not forget the slave labor provided by prisons. Hillary supports all this, but she is not a “racist,” since she doesn’t say racist things.

Hillary’s neoliberalism means more privatized prisons, whose profits depend on an ever-increasing number of Black inmates.

But Hillary is not a “racist,” since she doesn’t say racist things. She only promotes and advances racism.

Neoliberalism means more monopolies, more pollution, and more abuses of workers. “Free trade” lets corporations move overseas where they can hire non-white children to toil 16 hours a day in unsafe and unsanitary mines and sweatshops. This is Hillary’s “non-racism.”

The point, again, is that rich people and their puppets (like Hillary and Obama) do racist things, but they avoid saying racist things in public. They are social liberals and fiscal conservatives, meaning they  want less government spending on the “welfare state,” and more on the warfare state.

The essence of Libertarianism (in practice anyway) is to support all progressive movements except those that promote financial equality. The Koch brothers call themselves Libertarians. They want liberty for themselves and a police / surveillance state for you.

Gary Johnson, the Libertarian candidate for President, calls himself “socially liberal, and fiscally conservative.” He wants a balanced federal budget. That is, he wants to reduce federal spending on programs that help average people.

Genuine equality means economic equality. What does it profit a man if he is allowed to eat at an integrated lunch counter, but he is paid so little that he cannot buy lunch? Social rights mean nothing without economic rights alongside them.

Looked at another way, you cannot claim to support any form of equality until you support all forms of equality.

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Palin

Osborne’s threat

British Finance Minister George Osborne intends to follow through on his threat to punish the U.K. masses because 52% of them voted “incorrectly” in the Brexit referendum. Osborne has vowed to continue using austerity to punish average Britons until the 2020’s, and he is blaming his attack on the Brexit vote, even though the British parliament might not vote to leave the E.U.

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The decision means that austerity and more spending cuts and tax rises – forced on the government by the UK leaving the European Union – will now have to be made until the 2020s.

“Forced on the government”? UK austerity is 100% gratuitous. (Meanwhile austerity for Greece will remain unavoidable as long as Greece keeps using the euro.)

Mr. Osborne had pledged to deliver in line with Office For Budget Responsibility (OBR) forecasts, which predicted the UK to have a budget surplus of £10.4 billion in 2019/20 and £11 billion the year after.

Every pound of surplus for the UK government is a pound of deficit in the UK economy. The bigger the surplus, the deeper the recession, and the harsher the slavery of average people to debt.

Meanwhile the Labour Party (the “opposition”) supports Osborne’s attack on workers…

Labour welcomed Osborne’s decision. Shadow chancellor John McDonnell said: “It is only a shame he was not realistic sooner, as under Jeremy Corbyn, Labour has been unequivocal in its opposition to failed Tory austerity.” 

No, Labour has been unequivocal in its defense of austerity, since the Labour Party agrees that the U.K. government must have a balanced budget, which can only be achieved via austerity.

“Austerity is unpleasant, but the country faces hard choices. Bullshit. When Labour MPs voted with the Tories to increase cuts to welfare, they made a determined statement to the electorate that we stand ready to make those difficult choices, just as the Tories have been.” ~ former Labour leader Ed Miliband.

As you can see, the British Labor Party is anti-worker and pro-banker, just like Democrats in the USA, and the “socialists” in France.

The amazing thing is how strongly the people in London support austerity. They do it by worshipping the EU, which means worshipping Osborne and the bankers. The London nitwits are incredibly stupid, and yet Forbes claims they are “more educated” than the Britons outside London who voted for Leave.

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Osborne 04From this we see that the problem is not Osborne, but average people in London who think what Osborne tells them to think, and who worship Osborne’s lies.

We see this worship in average people’s speech patterns. For instance, when the national government wants to increase the billions it gives to weapons makers, no one asks, “How will you pay for it?” But when someone suggests helping poor people, the cry goes out among rich and poor alike: “How will you pay for it?”

The U.S. government’s “intelligence” budget is over $70 billion per year, of which $49 billion is given to private contractors. Hillary says she will increase that $70 billion to “keep us safe.” Military contractors get far more. This is corporate welfare. But since the recipients are rich, no one asks, “How will you pay for it?”

Rich people get “contributions.” Poor people are “bribed.” For example, when the city of Everett in Washington State lowered the Boeing Company’s taxes to zero, this was a bribe to get Boeing to stay in Everett. But since Boeing is rich, the bribe was called “a growth policy.”

Bernie Sanders called for universal health care. Since this would have helped average Americans, Forbes called it a “bribe for the voters.” Whatever helps average people is a “bribe for the voters.”  That which helps only the rich is “sound policy.”

The lower classes internalize all this. They believe and the lies told to them by the rich and their toadies. They echo the lies to each other (e.g. “How will you pay for it?”) They are poor materially because they are poor mentally.

Rich people are always scheming to increase their “free lunch,” while they tell poor people that “there’s no free lunch.” Poor people believe this lie. That’s why they are poor.

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A peasant is someone who wants to be owned and ruled. Most people are peasants (but not all, as proven by the Brexit vote). They prefer the certainty of slavery to the uncertainty of freedom. They view their owners as parents, saying, “They should provide for us.” In reality, the owners are not parents, but parasites that provide nothing.  The lower classes do all the work.

Sadly, the more the lower classes become peasants, the more they cheer when the upper classes rob them.

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In some cases, entire nations consist of almost nothing but peasants. During the Brexit referendum, Scotland and Northern Ireland voted to remain in the EU. Scotland wants independence from the U.K., but Scotland is too cowardly to stand on its own. If Scotland votes to leave the U.K., then Scotland will petition for membership in the E.U. so that the Scots can enjoy the “protection” of E.U. gangsters that despise them.  This will likely mean that Scotland will adopt the euro. If that happens, and if Scotland has a trade deficit like Greece, then Scotland will be forced to surrender all its public assets to the rich, like Greece. Average Scots will long for the days when they were part of the U.K.

If Northern Ireland moves to leave the UK, and become part of the Republic of Ireland to the south, then Northern Ireland will be subject to the gangsters in Dublin, Brussels, and Frankfurt.

At present the Republic of Ireland is enjoying a large enough trade surplus for the Republic to not need loans from the criminal bankers, or from the E.U. gangsters. Nonetheless, average people in Ireland are suffering because of gratuitous austerity imposed by their politicians (the Dublin gangsters).

All these disasters arise because of mass stupidity regarding money. And the stupidity never ends. Nearly eighty years ago President Franklin Roosevelt, obeying his psychotic Treasury secretary Henry Morgenthau, decided to balance the federal budget at the same time the Federal Reserve raised its reserve ratio requirements for member banks. Furthermore taxes increased sharply because of the introduction of the payroll tax. These events caused a disastrous contraction of the monetary base, which in turn caused a severe recession that continued until the onset of World War II.

Then as now, average people believed the lie that the U.S. government must have a balanced budget, even though the government creates its spending money out of thin air. (The “gold standard” gimmick never limited the U.S. government’s ability to create money. Its purpose was to justify politicians’ lies whenever they wanted to claim that the U.S. government was “broke.” The gimmick was set aside for World War II.)

Then as now, average people believed the lie that the U.S. government runs on loans and on tax revenue, and has a “debt crisis.”

Then as now, politicians and bureaucrats falsely claimed that austerity would bring prosperity for all.

Then as now, the peasants said that austerity had “failed,” when in fact it had spectacularly fulfilled its purpose, which was to widen the gap between the rich and the rest.

They never learn.

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Osborne 09The EU that these idiots love includes the European Commission, whose unelected and unaccountable bureaucrats are planning to ram through a free trade agreement between Canada and the EU, known as CETA, without giving any European national parliaments a say in it.

European Commission President Jean-Claude Juncker claims that CETA would fall within the exclusive competence of the EU executive, and therefore didn’t need to be ratified by any national parliament in the 28-nation bloc. Juncker says that allowing national parliaments to have a democratic say in the agreement will paralyze the process, and put the European Commission’s authority and credibility at stake.

Osborne12CETA (a free trade treaty with Canada) is a model for the Transatlantic Trade and Investment Partnership (a free trade deal with the USA). Both are designed to replace national sovereignty with corporate sovereignty, in order to further increase the gap between the rich and the rest.

Trade Commissioner Cecelia Malmstrom hopes that Canadian Prime Minister Justin Trudeau will come to Brussels and sign the CETA treaty before the end of October. Then the European Commission plans to get U.S. President Hillary’s signature for the TTIP in Jan 2017.

Both treaties lock in privatization and corporate decriminalization. Both treaties will let corporations sue national governments for any perceived loss of future profits. The lawsuits will be filed in courts owned by the corporations, whose tribunals are also owned by the corporations.

Anyway, as I said, George Osborne will take his revenge by increasing austerity. The UK Guardian says Osborne will continue to cut funding for the National Health System, which is currently predicted to be more than £20bn short of what the NHS will need 2020. The purpose of this constant cutting is to make the peasants scream until they beg for relief in any form, including privatization (which will bring no relief at all).

Osborne will also cut welfare spending by £12 billion, and will aim his attack at the poorest people. A study for the Joseph Rowntree Foundation last year found that in the UK’s most deprived communities, social care spending fell by £65 per capita, while it increased by £28 per capita in the least deprived communities.

When will the masses wake up? Perhaps never.

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