A Depressing Budget - Paul Krugman

I think most of us believe the free market should be creating jobs, since it can create more jobs much cheaper.  Government should be getting out of the way, reining in spending, eliminating "Porculus" sized bills, letting Americans keep more of their hard-earned income, and stop inflating/stealing away our purchasing power.  That would be a nice start.

The principle issue with the Free Market Ideology is that it is completely theoretical, and has no basis in fact or experience. It's simply an ideology, and one which has failed wherever it has been attempted. Small groups of people tend to do very well, great swaths of humanity don't.

After a generation attempting to displace society at the expense of corporate investment, I believe there is no longer any appetite for "rational markets" anywhere in the world, except in smaller and smaller pockets of America. This alone makes free markets impossible - when 95% of the world is committed to some form of state imposed regulation and direction, the remaining 5% can hardly claim "free markets".

Time to move on.

Move on to what? A state run economy like the Soviet Union days?

I'm pretty certain that model didn't work so well either. That would be moving back, instead of forward.

There are limitless ways to swing the cat of complex economics. Sadly, we are bouncing from one extreme to the other, locked into a pointless two mode understanding. Until we can shake our ideological fears, there the discussion will stay.

No economy, no market, can be "free" when one industry--banking--has absolute control over the issue and distribution of money.  Finance capitalism is the exact opposite of free enterprise.  It is oligarchy masquerading as 'markets'.  He who creates the money owns and operates the markets.  For the money oligarchs, "free" means they are free to buy the world, and everybody else is free to work for them or die off.  I don't think that's the kind of world any of us want to live in.  So I'm with AeliusRomulous.  We need a better way, something other than the failing debt-based money system we have now.

"I haven’t gone through the budget proposal in detail yet. But there’s no escaping the sense that this is a tremendous comedown from the hopes of a year ago."

uh - what were you hoping for a $12 trillion dollar budget?  At what point will spending save us before it destroys us?

"we’re going to impose spending limits (which are highly unlikely to be feasible) on that little wedge off to the left...while the freeze won’t be a big deal, it will depress demand"

uh - Krugman says it amounts to nothing and then claims it depresses demand.  If it is so insig, then it only follows that the demand suppression would be insig.   What is Krugman whining about?

Hmmm - maybe he is starting to realize that Keynesion economics will not solve our problems this time around.  Not likely, he is too hard headed.  But one can hope, right?

Free markets are just terrible, it's just that all the alternatives are much worse...

WE MUST INSIST ON HAVING A MORAL AND ETHICAL BANKING SYSTEM OF THE PEOPLE, FOR THE PEOPLE AND BY THE PEOPLE--based on the principles of democracy.

Take a look at John 2:13-25--THE CLEANSING OF THE TEMPLE.

Take note that in John's Gospel this event takes place at the beginning of Jesus' ministry, not in his last days on earth, as in the other Gospels. It is apparent that this issue of having a moral and ethical banking system was so important to Jesus that he laid his life on the line to bring it about. He began and ended his ministry by cleansing the temple of the economy.

Note, also, the sequence John gives us: He begins his gospel by announcing that, even before there was anything; before there was nothing but chaos and darkness, there was the light or consciousness of God. This light, full of grace and truth was always available, even to the prophets in all lands, but it became especially clear in Jesus--the word of God in the flesh. Yes, we are free to remain in the darkness, but light, grace and truth are available to all who repent. Baptized by the Spirit of GOD Jesus gathered his first four disciples. With them and his family he attended the wedding at Cana. But then there was the   

CONFERENCE AT CAPERNAUM

Now take note of verse 12. John tells us that right after the wedding in Cana: "Jesus and his mother, brothers, and disciples went to Capernaum and stayed there a few days."

Sounds to me like they went to Capernaum, not just for an hour or two, but for a number of days. They took a lot of time  to confer with one another and make plans as to the next thing, and best thing, to do. By the way, I am willing to speculate that if Jesus' mother was involved so were so were other women.

It would be really interesting to know what was said at the conference. I am also willing to speculate that Peter and Andrew were advocates of taking violent action against the Roman oppressors.

What came out of that time together is clearly stated in John 2:13-22 "The Passover of the Jews was near, and Jesus went up to Jerusalem. In the temple he found people selling cattle, sheep, and doves, and the money changers seated at their tables. Making a whip of cords, he drove all of them out of the temple, both the sheep and the cattle. He also poured out the coins of the money changers and overturned their tables. He told those who were selling the doves, “Take these things out of here!"

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KEEP IN MIND THE FOLLOWING IS JUST A SKETCHY OUTLINE. MUCH MORE DETAILS CAN BE ADDED.

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How much do we really know about the politics and the economics of Roman Empire, including Palestine, at the time of Jesus?

Was the Roman Empire a theocracy?

The following is an excellent source of information. Reading this will give us some idea of the kind of raw power, and often corrupt power, Jesus and his disciples had to face and deal with:

http://www.unrv.com/government.php

Here is a summary: "The Roman government (in its entire history from founding to fall) was a strange mix of a democracy and a republic [Here I add: But, obviously, not for slaves--in practice, only for the powerful and privileged few.] An interesting fact is that the people of Rome took many of their ideas of government from the Ancient Greeks.

The Roman state was described as the republic (respublica) and its consuls, or chief magistrates, continued to be appointed even after the establishment of one-man rule under the empire, but in its pure form it lasted only until the beginning of the first century B.C.

At the creation of the republic, supreme power probably resided with a popular assembly, but early on the Senate became very influential, and the traditional formula, which survived for centuries, was S.P.Q.R. - Senatus Populusque Romanus - the Roman Senate and People acting together."

Now and then, the Roman emperors introduced theocratic elements into their dictatorship. Some tried to rule the religious, political and economic lives of every Roman citizen and slave. Roman coins were minted in the Temple of Juno Moneta (from which we get the word money). Juno was the wife of Jupiter, the supreme god in the Roman heaven. Obviously, the ancient military and the political dictators, in cooperation with the priests, used the ancient temples as repositories of their wealth. That is, they used the temples as banks.

JUDAISM AND THEOCRACY

For information on this, check out:

http://www.chabad.org/library/article_cdo/aid/2184/jewish/Is-Judaism-a-Theocracy.htm

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Ancient Jews were also theocrats, in the sense that there was a yearning within them for the one and true God to give his will to them. This was bound to create conflict between them and their Roman masters. And this brings up the matter of the moneychangers at the Jerusalem Temple. What do we know about their role as part of the Jewish central banking and money system located in the Temple?

The short answer is, not much. Obviously, for Jews, there was a Jewish theocractic element at play--in much the same way it was for the  Romans.

TEMPLE CURRENCY, IDEALLY SPEAKING, WAS EXPECTED TO BE INTEREST FREE

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HONEST WEIGHTS AND MEASURES

All the great prophets called for the use of honest weights and measurements. in ancient Jerusalem devout Jews, like Jesus, his family and disciples, no doubt, used interest-free and pure Temple money. It was a local and complementary community currency (CCC) in the form of gold, silver and bronze metal coins.

Keep in mind that all coins, including Temple and foreign ones went by weight, not by denomination--numbers on the coins. An ounce is an ounce, right? And, on this basis, they circulated parallel to one another.

 

But was the Temple system an honest system?

 

The Temple coins bore the stamp of the sacred temple, not the image of pagan gods like that of the Roman emperors, which were found on the Roman coins. Such images were thought of as abhorrent to pious Jews. Naturally, devout Jews expected Temple coins not be debased, like many foreign coins were. Take note of this: By the time the Roman Empire collapsed, Roman gold coins were mostly lead, dipped in gold.

 

Now use your imagination: Just like today, greedy people with criminal minds found many ways to beat the system. For example, the moneychangers were suppose to check the purity of foreign coins. How? They were supposed to melt it down--that is, render it--and make sure it was pure. But did they?

 

In addition, when they found pure metals, did they make sure it stayed that way? Just think of the temptation to debase the good coins and make money in the process. Sound like what happened in the toxic and sub-prime mortgages scam.

 

Take the time to go behind the story of why Jesus--on the day Christians call Palm Sunday--turned over the tables of the cheating moneychangers, who he called thieves--and you will get some understanding as to why he was arrested by the henchmen of the greedy, the rich and shameless. Of course they wanted to get rid of him. He blew the whistle on their scam, didn't he? And it cost him his life. Talk about wisdom, and courage!

Meanwhile, check out what THE FAMILY LIFE FOUNDATION--a registered charity is doing to spread the word. It is a GOD and spiritually-based, non-sectarian fellowship of people. It was founded in 1973 with the purpose of helping individuals and their families be holistically healthy--physically, mentally, spiritually and economically.

http://www.flfcanada.com

 
http://www.torontodollar.com

Check out what the financial writer, Hazel Henderson, has to say about the nature and function of money.

https://fp.auburn.edu/tann/hazel/index.htm

Professor Bernard Lietaer, a graduate of MIT, once worked for a central bank.

http://www.transaction.net

Tom Kennedy

is a retired teacher. He is devoting  his retirement years to educating people on a new way of looking at the creation and use of money.

http://www.cyberclass.net

“The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries.-Winston Churchill

“Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.” -John Maynard Keynes

Advocates of capitalism are very apt to appeal to the sacred principles of liberty, which are embodied in one maxim: The fortunate must not be restrained in the exercise of tyranny over the unfortunate” -Bertrand Russell

“The forces in a capitalist society, if left unchecked, tend to make the rich richer and the poor poorer.” Jawahral Nehru

With the exception of capitalism, there is nothing so revolting as revolution” –George Bernard Shaw

Fascism is capitalism plus murder.”- Upton Sinclair

The law does not pretend to punish everything that is dishonest. That would seriously interfere with business –Clarence Darrow

To expose a 4.2 Trillion dollar ripoff of the American people by the stockholders of the 1000 largest corporations over the last one-hundred years will be a tall order of business. –Buckminster Fuller

Today the tyrant rules not by club or fist, but, disguised as a market researcher, he shepherds his flocks in the ways of utility and comfort. –Marshall McLuhan

Capital must protect itself in every way... Debts must be collected and loans and mortgages foreclosed as soon as possible. When through a process of law the common people have lost their homes, they will be more tractable and more easily governed by the strong arm of the law applied by the central power of leading financiers. People without homes will not quarrel with their leaders. This is well known among our principle men now engaged in forming an imperialism of capitalism to govern the world. By dividing the people we can get them to expend their energies in fighting over questions of no importance to us except as teachers of the common herd. –JP Morgan

The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world. –Carroll Quigley

The untrammeled intensification of laissez-faire capitalism and the spread of market values into all areas of life, is endangering our open and democratic society. –George Soros

You could go on and on with these quotes, which all demonstrate the same point really, which is that the entire economic argument for that last few centuries has always been framed as a choice between 2 economic systems, Capitalism and Socialism.  Pretty much nowhere though does anyone question the fundamental role of money and how it determines wealth distribution in either system.

Money predates Capitalism and Socialism, and whatever the economic philosophy of a given thinker on these subjects is, they rarely question the need for money as a transaction medium nor do they question the validity of “saving” money either.  Money has been with Western society for so long now, with many references to it in the Bible, that for most people it is simply inconceivable to imagine a world without money.  So the arguments are almost never about whether we use money, but rather about what shape or form money should take so that it is incorruptible and a pure measure of value.  You get all the arguments about the problems with Fiat and Gold Bugs steadfastly maintaining that Gold is the ultimate standard of value and extinguisher of debt.  I can and have demonstrated in many previous threads why neither Fiat or Gold can fulfill both the functions of a commerce currency and a store of value, I won’t rehash them in this post.  The point I am trying to make is that the argument between Capitalism and Socialism is a Red Herring.  Ideologues on BOTH sides of this argument get wrapped up the economic deficiencies of BOTH systems, and as a result they cannot see the forest for the trees.

Capitalism is demonstrably inequitable in wealth distribution, and moreover it has the very nasty problem that regardless of the monetary system used, PM based or Fiat Based, the money ends up coalescing into a very few hands over a period of time, generally 50-80 years in length.  This is a direct result of the effects of compounding interest at typical rates of around 5-10%. Bigger interest rates cause the system to collapse faster, lower interest rates extend the lifespan.

Socialism has the demonstrable problem of lacking in incentive for productivity and at least historically poor choices of aggregate investment.  Of course looking back now on Capitalism, you also can see historically poor choices of aggregate investment, so its not cler anymore that Capitalism does any better a job at resource allocation than socialism does.

In developing a new paradigm that can work, as some folks on TRD look at it (read that my good friend Toby), the economy needs to be resource based, not money based. I agree with that in theory, just the practical details of establishing an RBE are very difficult in the absence of money.  Not impossible though, the main difficulties are in accurate accounting, which has to be done nearly constantly to have correct trading values between resources/commodities.  In real time, as some commodities are consumed, their trading value has to change against other commodities, which also vary in supply.  It is a Many-to-Many Relationship, which as any database designer knows is a very complex task indeed.  Money is a reductionist solution, it defines economics in a Many-to-One relationship.  The problem is that this does not reflect the real world accurately, and so our current and past monetary systems always fail because of that.

The most pressing problem we have is that the main Conduit of trading, the Money, is controlled by a very small handful of people, who use that control for their own self aggrandizement.  The very first thing that needs to be done is to remove that power and the ownership of money from these people.  Not an easy task of course, since they hold the strings of power and wil fight tooth and nail to keep it.  You really do have to wait for them to fail on their own here, which they will, but it will take some time and the failure period will be unpleasant.  However, once the current money Conduit fails, it will become quite a bit easier to make changes, at least on a local level.  The key at this point is being able to maintain a sufficient local structure in the absence of functioning money that you do not devolve to total anarchy.  That requires very active Community Building.  It can happen though, and it will happen in some places.  You can be instrumental in making that happen in your neighborhood, or you can try to hunker down in your Doomstead and fight off the Zombies.  I’d rather try to build a better tomorrow, though for sure it won’t be an easy battle.  Still, better to fight the Good Fight, even if you lose here in this plain of existence.  If you fight the Good Fight, you will Go to Glory in the Kingdom of Heaven.  Fight for EVIL here, support the Greed of Capitalism or the Sloth of Socialism, and you will Burn in Everlasting Torment in the Fire and Brimstone of HELL.  There is only one type of people who did not Fall here, who did not take the Bite out of the Money Apple, the TRIBALISTS.  We don’t value money.  We do not measure Wealth in Money. We measure it in our connections to each other. We exist to serve each other, to GIVE as much as we can to each other.  We must rid ourselves of the SICKNESS that is Money.  In the words of John Donne:

"All mankind is of one author, and is one volume; when one man dies, one chapter is not torn out of the book, but translated into a better language; and every chapter must be so translated...As therefore the bell that rings to a sermon, calls not upon the preacher only, but upon the congregation to come: so this bell calls us all: but how much more me, who am brought so near the door by this sickness....No man is an island, entire of itself...any man's death diminishes me, because I am involved in mankind; and therefore never send to know for whom the bell tolls; it tolls for thee."

RE

ONLY FOOLS LET WEALTH GO UNUSED FOR LACK OF COUNTING STICKS

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When there is work to be done and wealth to be distributed, common sense tells us we are fools to go without food, clothing and shelter for lack of an accounting system. Take a look at how a little imagination solved the problem for the early settlers of New France in 1685.  The following is from Canada's Currency Museum in Ottawa:

http://www.currencymuseum.ca/2009/10/07/4765/card-money-of-new-france-1685-%E2%80%93-1759/

Didn't the early settler's of New England do something similar using colonial scrip?

Jason: How wide spread is the following information?  Is it being totally ignored by the people who run the financial affairs of The Usa and Canada?  If they know about out, how come there are still so many people looking for employment?

Wikipedia tells us:

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Colonial scrip was not backed by gold or silver and therefore the colonies could control its purchasing power. This was similar to the "tally stick" system used by the British Empire for over 700 years. It was different from the conventional European mercantilist system of money which required governments to borrow from banks and pay interest for those loans, as gold and silver were the only regarded forms of money. Colonial scrip, were "bills of credit" created by the government, based on the credit of that government, and this meant that there was no interest to pay for the introduction of money. This went a considerable way towards defraying the expense of the Colonial governments and in maintaining prosperity. The Governments charged low interest when it loaned out this paper money to its citizens, with land as collateral, and this interest income lowered the tax burden on the people, contributing to prosperity.[citation needed]

The currency was born when a lack of gold and silver in the Colonies made trade hard to conduct, and a barter system prevailed. One by one, the Colonies began to issue their own paper money to serve as a medium of exchange to make trade vibrant. The Governments could then retire excess notes out of circulation by taxing the people, helping some colonies generally avoid inflation. Each colony had its own currency and some were better managed than others. It was banned by English Parliament in the

Currency Act in 1763.

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http://www.kamron.com/economics/people_who_opposed_the_FRB.htm

http://wiki.answers.com/Q/How_did_colonial_scrip_help_make_the_colonies_prosperous