Without a radical reform of the monetary system, deficit spending and accumulation of public debts will continue to accelerate regardless of who is in power. The problem is systemic.
“More than 100 years ago, Lord Acton wrote: “The issue that has swept down the centuries, and which will have to be fought sooner or later, is the people versus the banks.””
This lays it all out in a way that’s hard to refute. The debt curve can’t be flattened, not because politicians are lazy or greedy (although sure, some are), but because the system itself demands it. Fiat currency plus fractional reserve banking is like a treadmill that only speeds up the longer you're on it. Whether it's red or blue in charge, they’re both strapped into the same machine.
That whole bit about the deflationary gap? Spot on. People instinctively know “saving is good,” but on a macro level, unless those savings get reinvested fast (and wisely), the whole economy starts starving for cash.
And yeah, we’ve been sold this illusion of choice between “capitalist” and “socialist,” but as you say, the system steamrolls everyone down the same path. You will get government expansion, you will get debt, and the only real variable is whether that money flows through Boeing and Raytheon or through food stamps and health care clinics.
At the end of the day, unless we overhaul the actual plumbing of the system (money creation, credit, and the whole fiat game) we're just arguing over the color of the curtains in a house with termites.
"People instinctively know “saving is good,” but on a macro level, unless those savings get reinvested fast (and wisely), the whole economy starts starving for cash."
Is this why Von der Leyen said that for the Commission’s re-armament program of Europe, the people’s "unused savings" will be utilised, and she was referring mainly to people’s deposits in bank accounts? She stated on X: "We'll turn private savings into much needed investment."
I guess we 'The People" can save voluntarily and allow that money to be invested, or the government will intercede and do it for us.
Problem is when government chooses how savings will be invested (wars/military armaments/biowarfare preventative (jabs) measures, etc.) that people say 'NO' and try to take back their savings for a different use.
Then government (doing whatever the hello they want) goes ahead and prints and devalues your savings whether you like it or not.
Either way, "The People" lose, either by savings being manipulated, or devalued.
I had to laugh at that Leyen comment. As if the peoples bank saving weren't mostly already being utilized by the banks for other loans. I dont live in the EU but I truly wonder how many people look at Von der Leyen and see a person of intelligence.
Alex: Please grab a copy of Dr. Stephanie Kelton’s book, “The Deficit Myth,” and acquaint yourself with MMT. Our entire concept of money is currently fraudulent.
In the 1970s when I did my Economics A-Level we were taught that the economy suffers from Stag flation - High inflation & low growth, and that therefore the Phillips curve trade off between unemployment and inflation wasn't working.
After 3 state funded years at University I was a Bond Trader on the London Stock Exchange. I cut my teeth arbitraging Big 98s against the Long Gilt future (Treasury 15 1/2 % coupon 1998 gilts).
But gradually the Economists got it right, Inflation fell, growth was maintained or grew and the coupon rate on bonds fell from 15 and a half to almost zero.
Hurrah - perhaps. Inflation and low growth has been replaced by low inflation and higher growth. Magic.
But... I stopped being a bond trader and took an ordinary job. I learnt about Wealth Inequality. In particular I discovered that Inequality had fallen and fallen constently from the extremes of the 1930s to the mid1980s and then completely reversed itself to 1930s levels since.
Indeed during the rapid growth of 1980s onwards, real GDP had doubled but median Income per head had gone up only 10%.
All this low inflation high growth had done nothing for Most of the population. Whereas decades of stagflation had done wonders for the many at the expense of the few. (No wonder the elites hated it ).
It isn't surprising and Alex's article has already laid out the differences.
In the 1970s deficits were to created pay benefits to the poor. And what do the poor do with more money - They Spend IT. How awful, and inflation results.
By the 1990s the Laffer curve was accepted by all. Use Deficits to cut taxes on the rich and we get growth! All the money goes to the already rich - so no one spends it (except on ever more expensive housing and investments). Zero inflation - Perfect. QE is even better - pure asset price pumping with no impact on the cost of eggs or farmers labourer wages at all.
Socialist Stagflation is vastly superior to capitalist growth and low inflation for most people.
In a sensible world we would adopt what I would call 75% GDP. The wealth created for the bottom 75% of the population. I think the top 25% can take care for themselves, it would be difficult to challenge this on any democratic grounds where the targeted minority is the top quartile in earnings. Only improvements on "75% GDP" per head should be targeted, and rewarded by re-elections.
In that period there were also two large macro effects: the rape of the former USSR and its resources and people; and the discovery of North Sea oil that supercharged the City of London (And the related Clintonite deregulation of banksters).
To agree with your main point, circulation of currency/wealth can be related to the flow of blood - anyone whose blood pools in one place, such as the 'head', will soon die.
Money pumped in at the lower extremes will circulate through the system, creating economic growth *Every time* the currency changes hands. If it circulates enough times before being stored as 'savings', it can actually pay for its own creation.
Pumping it to the already wealthy so that it *immediately* goes into savings, as you say "Reduces inflation" - but does bugger all for the economy or population.
So yes North Sea oil helped reduce inequality a little, but still only the tail end of a 50 year run. But from memory (and I was there) it was deregulation that supercharged the City of London not oil. City salaries were probably the first sector where premium salaries for a few went through the roof, and then every profession followed in the 1980s. Nowadays a School headmaster earns 6-8 times that of an ordinary teacher. then it would have been twice. (and that is the state sector).
Oil & Gas production actually peaked in 1999 not 1985 but revenues did peak in the late 80s in real terms per your link.
I joined BP in 1978 and was paid one of the highest graduate starting salaries around. The company couldn't recruit enough engineers. By the late 80s that had all changed though and the banks in the City were sucking in talent and paying huge salaries. I agreed it wasn't oil revenue that supercharged the City.
My ONLY disagreement with that is that N.S.O. "reduced inequality"; like you I was there too, and I can clearly recall the sudden massive increase in legal usury - you couldn't move past the letterbox without a new influx of letters begging you take on a new credit card, HP, 'catalogue goods', or overdraft. All at "Low low" deregulated usurious rates.
While you can spend debt, it doesn't reduce underlying inequalities. Only wages and benefits (With some help from reduced cost of goods and services) do that.
Everything else - abso-fucking yeah. The bastards.
Well North Sea oil gave the government the opportunity to spend more on something new. And up to the moment of peak production - 1985 - the UK was still getting less unequal. Quite how you allocate the good influences from the bad is up to you I guess.
I don't remember the money lending - my salary doubled twice in 4 years after which I still was barely being paid more than the new trainees - so I was hardly maxxing out my credit card.
I'll repeat we should only count and monitor the wealth of the bottom 75% of the pop. The rest doesn't matter in the least - they are all doing well. If trickle down works (it doesn't) then it would show up in the bottom 75%. So stop counting the bit that doesn't matter.
It seems to me that what you are talking about is an economic system which we once had in America, say circa 1875. There was no Federal Reserve or Income Tax, and yet... and yet even back then there were major financial disruptions, what were called back then, "Panics". But these were caused, AFAIK, by the banks. As Lord Acton pronounced, solemnly “The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks.”
Although you do recognize that we have a fraudulent monetary system, and that's throughout almost the entire world, except for a few that still need to be bombed to bring them under control, you don't see that as the root cause, which it is. I can see why, if we take the way you make/made your money into consideration. Not trying to be cynical, just telling how it is. Sincerely hope you'll make much more, especially by educating people via substack etc.
Anyway, we can go back centuries, but all (financial) crises, wars, plandemics and so on, have always benefitted "the happy few" or as we called them in ancient times, the money changers. That's not a coincidence, as it is initiated, instigated, staged and/or created by them. Over the centuries they became much more sophisticated in it, by delegating the dirty work to economic hitmen, the IMF, Worldbank, WTO, secret services, NGOs and/or US troops.
As a trendwatcher you know the money supply has exploded over the last decades and in particular post 2008 and 2019 - the plandemic was indeed yet another financial (repo) crises "sold" by yet such another globalist entity called the WHO. This in order to once again steal trillions of taxpayers' dollars to fill their pockets and cover up for that bankrupt system. An unsustainable speculative financial system based on derivatives backed by hot air, that is no collateral, "worth" at least 20 times the global GDP. Making money with computer entries, a parasitic system draining the energy and funds of the productive working class. Or in other words, there's, at least in most western countries, no value adding, that is productive economy. Again, that's no coincidence, because the renewal of the financial system is due, for them to stay in control. To gain total control by introducing digital currencies, connected to digital IDs.
I wrote "most western countries", because until recently there're some industrial power houses like Germany. The US's and most of Europe's citizenry have deliberately, already been transformed to consuming, bread and circus, popcorn eating Netflixers. In the US and apparently now in the EU as well through Nato's 5% GDP, compensated by "investing" in the military industrial complex. A complex, and I keep repeating myself, again, that fills the same deep pockets by handing over your wallet and/or giving up your live as canon fodder. That (Germany) must and is being destroyed to reign in their digital concentration camps, in order to create an impoverished public willingly accepting their digital "solutions", food stamps and UBIs.
Btw., in 2019 at Jackson Hole, Blackrock officially said goodbye to "fractional reserve banking" and took over from central banks, by, once again strategically bailing out and "going direct" (at your expense), for them and their institutional investment friends to gain trillions of dollars, now effectively controlling most of the western world.
That's why, out of the top of my head, 600 billionaires saw their net worth grow by $3,2 trillion, causing havoc to the mom and pop stores.
And yet, there's no single reason to put private bankers like the Fed, in control of money issuance, that is printing (digital) currency out of thin air, because Treasury can do it themselves against no interest. That that doesn't happen globally, tells you who's in control.
"And yet, there's no single reason to put private bankers like the Fed, in control of money issuance, that is printing (digital) currency out of thin air, because Treasury can do it themselves against no interest".
If one goes back in time to the years just before 1913, didn't we see that the primary reason given by Morgan, Warburg, et al. for creating a central bank was to prevent the regularly occurring financial panics. I have never understood how those panics occurred. Although I suspect once again it was the banks.
Everything you see "out there" has been created by printed money, i.e. by money created out of thin air. The total amount created = the total amount of debt does not equate to trillions but to quadrillions and can never be straightened out or repaid. A completely new reset is required on the basis of proper "householding" principles the extent of which is unimaginable.
Alex; a complication of your model is that the US, and nearly all Western economies, are NOT "Saving". They are instead borrowing like mad.
Using your model (The map is not the territory; I know. :) ), in theory such a system COULD pay down the state debts, as therefore there is more economic activity that should strictly be generated in that closed system.
The obvious answer is that the state instead of funding the people, are instead funding the private corps and billionaire mega-wealthy, who are removing the 'investment from debts' from circulation, into their tax-evading bank offshored bank accounts.
I never knew Hayek was so hot! Perhaps her most ardent admirer, Thatcher, was a secret lesbian! ;)
Very clever depiction of Hayek! I suddenly want to study more of his work.
I didn't know he was so pretty. Oh, is that sexist?
He just looks better without his mustache and a little lipstick.
Look more closely....is that beauty? Or ...lipstick on a ....
I was wondering if this was a hilarious mistake by a clueless assistant or Alex having a laugh.
The trans issue just wont stop raising its head....
“More than 100 years ago, Lord Acton wrote: “The issue that has swept down the centuries, and which will have to be fought sooner or later, is the people versus the banks.””
Brilliant minds Geo! (see comment)
This lays it all out in a way that’s hard to refute. The debt curve can’t be flattened, not because politicians are lazy or greedy (although sure, some are), but because the system itself demands it. Fiat currency plus fractional reserve banking is like a treadmill that only speeds up the longer you're on it. Whether it's red or blue in charge, they’re both strapped into the same machine.
That whole bit about the deflationary gap? Spot on. People instinctively know “saving is good,” but on a macro level, unless those savings get reinvested fast (and wisely), the whole economy starts starving for cash.
And yeah, we’ve been sold this illusion of choice between “capitalist” and “socialist,” but as you say, the system steamrolls everyone down the same path. You will get government expansion, you will get debt, and the only real variable is whether that money flows through Boeing and Raytheon or through food stamps and health care clinics.
At the end of the day, unless we overhaul the actual plumbing of the system (money creation, credit, and the whole fiat game) we're just arguing over the color of the curtains in a house with termites.
"People instinctively know “saving is good,” but on a macro level, unless those savings get reinvested fast (and wisely), the whole economy starts starving for cash."
Is this why Von der Leyen said that for the Commission’s re-armament program of Europe, the people’s "unused savings" will be utilised, and she was referring mainly to people’s deposits in bank accounts? She stated on X: "We'll turn private savings into much needed investment."
I guess we 'The People" can save voluntarily and allow that money to be invested, or the government will intercede and do it for us.
Problem is when government chooses how savings will be invested (wars/military armaments/biowarfare preventative (jabs) measures, etc.) that people say 'NO' and try to take back their savings for a different use.
Then government (doing whatever the hello they want) goes ahead and prints and devalues your savings whether you like it or not.
Either way, "The People" lose, either by savings being manipulated, or devalued.
I had to laugh at that Leyen comment. As if the peoples bank saving weren't mostly already being utilized by the banks for other loans. I dont live in the EU but I truly wonder how many people look at Von der Leyen and see a person of intelligence.
But Paul, isn't savings how capital is created?
Fractional Reserve Banking is a bit of a myth as proven by Richard Werner.
Commercial banks have a licence to invent money at no cost to lend at interest.
I'd love to run my personal budget like a government, just raise the debt ceiling as I please! somebody will pay for it, not me!
Alex: Please grab a copy of Dr. Stephanie Kelton’s book, “The Deficit Myth,” and acquaint yourself with MMT. Our entire concept of money is currently fraudulent.
Magic Money Tree.
William, I'm pretty sure Alex knows all about MMT.
Yes.
In the 1970s when I did my Economics A-Level we were taught that the economy suffers from Stag flation - High inflation & low growth, and that therefore the Phillips curve trade off between unemployment and inflation wasn't working.
After 3 state funded years at University I was a Bond Trader on the London Stock Exchange. I cut my teeth arbitraging Big 98s against the Long Gilt future (Treasury 15 1/2 % coupon 1998 gilts).
But gradually the Economists got it right, Inflation fell, growth was maintained or grew and the coupon rate on bonds fell from 15 and a half to almost zero.
Hurrah - perhaps. Inflation and low growth has been replaced by low inflation and higher growth. Magic.
But... I stopped being a bond trader and took an ordinary job. I learnt about Wealth Inequality. In particular I discovered that Inequality had fallen and fallen constently from the extremes of the 1930s to the mid1980s and then completely reversed itself to 1930s levels since.
Indeed during the rapid growth of 1980s onwards, real GDP had doubled but median Income per head had gone up only 10%.
All this low inflation high growth had done nothing for Most of the population. Whereas decades of stagflation had done wonders for the many at the expense of the few. (No wonder the elites hated it ).
It isn't surprising and Alex's article has already laid out the differences.
In the 1970s deficits were to created pay benefits to the poor. And what do the poor do with more money - They Spend IT. How awful, and inflation results.
By the 1990s the Laffer curve was accepted by all. Use Deficits to cut taxes on the rich and we get growth! All the money goes to the already rich - so no one spends it (except on ever more expensive housing and investments). Zero inflation - Perfect. QE is even better - pure asset price pumping with no impact on the cost of eggs or farmers labourer wages at all.
Socialist Stagflation is vastly superior to capitalist growth and low inflation for most people.
In a sensible world we would adopt what I would call 75% GDP. The wealth created for the bottom 75% of the population. I think the top 25% can take care for themselves, it would be difficult to challenge this on any democratic grounds where the targeted minority is the top quartile in earnings. Only improvements on "75% GDP" per head should be targeted, and rewarded by re-elections.
In that period there were also two large macro effects: the rape of the former USSR and its resources and people; and the discovery of North Sea oil that supercharged the City of London (And the related Clintonite deregulation of banksters).
To agree with your main point, circulation of currency/wealth can be related to the flow of blood - anyone whose blood pools in one place, such as the 'head', will soon die.
Money pumped in at the lower extremes will circulate through the system, creating economic growth *Every time* the currency changes hands. If it circulates enough times before being stored as 'savings', it can actually pay for its own creation.
Pumping it to the already wealthy so that it *immediately* goes into savings, as you say "Reduces inflation" - but does bugger all for the economy or population.
Well quite, and tax cuts for the rich guarantees the money is going somewhere it won't be spent - which of course is perfect.
The rape of the USSR was mid-late 1990s by which time the world had already pro-rich.
We were told in school in 1970s that North Sea oil and gas would peak in 1985, and amazingly I look back and see we were not lied to for once.
https://obr.uk/docs/C4_C.jpg
https://obr.uk/box/the-evolution-of-north-sea-oil-and-gas-receipts/
So yes North Sea oil helped reduce inequality a little, but still only the tail end of a 50 year run. But from memory (and I was there) it was deregulation that supercharged the City of London not oil. City salaries were probably the first sector where premium salaries for a few went through the roof, and then every profession followed in the 1980s. Nowadays a School headmaster earns 6-8 times that of an ordinary teacher. then it would have been twice. (and that is the state sector).
Oil & Gas production actually peaked in 1999 not 1985 but revenues did peak in the late 80s in real terms per your link.
I joined BP in 1978 and was paid one of the highest graduate starting salaries around. The company couldn't recruit enough engineers. By the late 80s that had all changed though and the banks in the City were sucking in talent and paying huge salaries. I agreed it wasn't oil revenue that supercharged the City.
My ONLY disagreement with that is that N.S.O. "reduced inequality"; like you I was there too, and I can clearly recall the sudden massive increase in legal usury - you couldn't move past the letterbox without a new influx of letters begging you take on a new credit card, HP, 'catalogue goods', or overdraft. All at "Low low" deregulated usurious rates.
While you can spend debt, it doesn't reduce underlying inequalities. Only wages and benefits (With some help from reduced cost of goods and services) do that.
Everything else - abso-fucking yeah. The bastards.
Well North Sea oil gave the government the opportunity to spend more on something new. And up to the moment of peak production - 1985 - the UK was still getting less unequal. Quite how you allocate the good influences from the bad is up to you I guess.
I don't remember the money lending - my salary doubled twice in 4 years after which I still was barely being paid more than the new trainees - so I was hardly maxxing out my credit card.
I'll repeat we should only count and monitor the wealth of the bottom 75% of the pop. The rest doesn't matter in the least - they are all doing well. If trickle down works (it doesn't) then it would show up in the bottom 75%. So stop counting the bit that doesn't matter.
That is an amazing make-over of Freidrick Hayek!
It seems to me that what you are talking about is an economic system which we once had in America, say circa 1875. There was no Federal Reserve or Income Tax, and yet... and yet even back then there were major financial disruptions, what were called back then, "Panics". But these were caused, AFAIK, by the banks. As Lord Acton pronounced, solemnly “The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks.”
The Money Masters... https://www.youtube.com/watch?v=AOk3wBuQNcE&t=4s
There's not such a thing as a free market.
Although you do recognize that we have a fraudulent monetary system, and that's throughout almost the entire world, except for a few that still need to be bombed to bring them under control, you don't see that as the root cause, which it is. I can see why, if we take the way you make/made your money into consideration. Not trying to be cynical, just telling how it is. Sincerely hope you'll make much more, especially by educating people via substack etc.
Anyway, we can go back centuries, but all (financial) crises, wars, plandemics and so on, have always benefitted "the happy few" or as we called them in ancient times, the money changers. That's not a coincidence, as it is initiated, instigated, staged and/or created by them. Over the centuries they became much more sophisticated in it, by delegating the dirty work to economic hitmen, the IMF, Worldbank, WTO, secret services, NGOs and/or US troops.
As a trendwatcher you know the money supply has exploded over the last decades and in particular post 2008 and 2019 - the plandemic was indeed yet another financial (repo) crises "sold" by yet such another globalist entity called the WHO. This in order to once again steal trillions of taxpayers' dollars to fill their pockets and cover up for that bankrupt system. An unsustainable speculative financial system based on derivatives backed by hot air, that is no collateral, "worth" at least 20 times the global GDP. Making money with computer entries, a parasitic system draining the energy and funds of the productive working class. Or in other words, there's, at least in most western countries, no value adding, that is productive economy. Again, that's no coincidence, because the renewal of the financial system is due, for them to stay in control. To gain total control by introducing digital currencies, connected to digital IDs.
I wrote "most western countries", because until recently there're some industrial power houses like Germany. The US's and most of Europe's citizenry have deliberately, already been transformed to consuming, bread and circus, popcorn eating Netflixers. In the US and apparently now in the EU as well through Nato's 5% GDP, compensated by "investing" in the military industrial complex. A complex, and I keep repeating myself, again, that fills the same deep pockets by handing over your wallet and/or giving up your live as canon fodder. That (Germany) must and is being destroyed to reign in their digital concentration camps, in order to create an impoverished public willingly accepting their digital "solutions", food stamps and UBIs.
Btw., in 2019 at Jackson Hole, Blackrock officially said goodbye to "fractional reserve banking" and took over from central banks, by, once again strategically bailing out and "going direct" (at your expense), for them and their institutional investment friends to gain trillions of dollars, now effectively controlling most of the western world.
That's why, out of the top of my head, 600 billionaires saw their net worth grow by $3,2 trillion, causing havoc to the mom and pop stores.
And yet, there's no single reason to put private bankers like the Fed, in control of money issuance, that is printing (digital) currency out of thin air, because Treasury can do it themselves against no interest. That that doesn't happen globally, tells you who's in control.
"And yet, there's no single reason to put private bankers like the Fed, in control of money issuance, that is printing (digital) currency out of thin air, because Treasury can do it themselves against no interest".
If one goes back in time to the years just before 1913, didn't we see that the primary reason given by Morgan, Warburg, et al. for creating a central bank was to prevent the regularly occurring financial panics. I have never understood how those panics occurred. Although I suspect once again it was the banks.
Everything you see "out there" has been created by printed money, i.e. by money created out of thin air. The total amount created = the total amount of debt does not equate to trillions but to quadrillions and can never be straightened out or repaid. A completely new reset is required on the basis of proper "householding" principles the extent of which is unimaginable.
Alex; a complication of your model is that the US, and nearly all Western economies, are NOT "Saving". They are instead borrowing like mad.
Using your model (The map is not the territory; I know. :) ), in theory such a system COULD pay down the state debts, as therefore there is more economic activity that should strictly be generated in that closed system.
The obvious answer is that the state instead of funding the people, are instead funding the private corps and billionaire mega-wealthy, who are removing the 'investment from debts' from circulation, into their tax-evading bank offshored bank accounts.
I never knew Hayek was so hot! Perhaps her most ardent admirer, Thatcher, was a secret lesbian! ;)
Photo of Hayek is when he was young — before his sex operation and change
😂
Funny Hayek!!!!!
Friedrich Hayek looks much younger and attractive in the photo of conservative economists 😂😂😂
We need a graph of debt over GDP — as perhaps more relevant