Nomi Prins says how the central banks created money out of thin air when they did quantitative easing but the banks and corporations used much of the money to buy back their shares and raise asset prices rather than invest in their businesses, or society. Now one day all this money will need to be repaid, says Nomi, and so society will be burdened with more austerity. Nomi also says that the next crash will be much worse than the 2008 one.
I was on a conservative site the other day and the site owner blamed the Democrats for the 2008 crash because he said they forced Freddie Mac and Fannie May to lend money to poor people so they could buy a home, which, he added, distorted the market. So, now you have the God market again, which, it seems, you can't buck even if people go hungry, or have nowhere to live. Anyway, if this is true about the Democrats forcing Freddie Mac and Fannie May to lend to poor people, did the bankers - who denote enormous sums of money to the Democratic Party - get this policy through so they could make a killing knowing they would get bailed out? We know the Democrat Party is owned.
Nomi Prins, journalist and author of Collusion: How Central Bankers Rigged the World, talks to journalist Chris Hedges about how central bankers “overstepped their traditional mandates by directing the flow of epic sums of fabricated money without any checks and balances.”
Cringe, cringe, cringe. How can you possibly call a government protected racket like central banks and their associates which create funny money out of thin air "the market" or better yet, "the God market"????
ReplyDeleteFurther, the process of creating funny money out of thin air is that savior of all saviors, MODERN MONEY!!!
Your entire "argument" rests upon the gross distortion of plain terms, words and language.
I think you might have read it wrong, Rob, so I joined the last two paragraphs up to hope make it a bit clearer.
ReplyDeleteThe conservative site owner said that the reason for the 2008 crash was down to Democratic Party policy of forcing Freddie Mac and Fannie May to lend to poor, non credit worthy people so they could buy a home. He said this distorted the market. You see, to him the market is God that can never be bucked. I wasn't referring to the 'God market ' where central banks create money out of nothing, which isn't the market, but a force outside of the market.
Republicans seem to be emotionally unable to accept the fact that their God WAR is funded with fiat money. If the populace had to pay cash for wars in real time, there might be fewer wars.
ReplyDelete“Nomi Prins says how the central banks created money out of thin air when they did quantitative easing but the banks and corporations used much of the money to buy back their shares and raise asset prices ”
ReplyDeleteWell then she is doesn’t know what she is talking about....
Ask her then why Deutschebank is currently failing? When ECB is still doing 10s of billions per month of QE?
Go ask her....
According to her DB should be on Got it made boulevard buying shares back and their bank assets should be skyrocketing... why then are they failing?
https://twitter.com/business/status/1014742459807608832?s=21
ReplyDeleteNice chart of DB going straight down the toilet....
I know ... I know.... “neoliberal conspiracy!!!!”...
How can you possibly call a government protected racket like central banks and their associates which create funny money out of thin air "the market" or better yet, "the God market"???? Bob Roddis
ReplyDeleteHow can you call requiring fiat to be needlessly expensive anything but a racket, Roddis?
Are you too dim to realize that HOW and for WHAT fiat is to be created is what is important, not what it's made of?
One point in favour of QE, which has consisted mainly of central banks creating new money and buying government debt, is that as argued by Warren Mosler, Bill Mitchell and me, it would be best if there was no government debt at all: i.e. if ALL such debt was converted to base money. Put another way, there is much to be said for not reversing QE at all, and in fact CONTINUING with it. Milton Friedman also argued for a "zero government debt" regime.
ReplyDeleteHow can you call requiring fiat to be needlessly expensive anything but a racket, Roddis?
ReplyDeleteAre you too dim to realize that HOW and for WHAT fiat is to be created is what is important, not what it's made of?
What could you possibly mean by "expensive"? When money is "expensive", a penny is worth 97 cents. Housing is not priced out of the reach of average people.
Plus, I know why fiat is created. There's a bullsh** story created by the .1% that claims the economy will grind to a halt without it. There's not a shred of evidence or logic to support that claim or that the market leads to perpetual unemployment. The real purpose of fiat money is to allow the theft of purchasing power from those left holding the existing money to those getting the new money before it has a chance to raise prices and dilute the value of the currency. That's called Cantillon Effects. Duh.
Plus, by creating an unsustainable price, investment and capital structure with fiat emissions, the government can pull the plus on the fiat bubble at any time, then blame "the market" and further increase its control and ability to loot for the benefit of the .1%. Be proud.
You should consider this Bob, I started out believing in Austrian Economics and did so for a long time. I've read Rothbard, Mises, Gary North, etc. and spent decades at Lew Rockwell, as my favorite site. Why? Because the current system is certainly unjust - that's a no-brainer. So I know your arguments before you present them, understand them well but nonetheless reject them because the Austrian "solutions" are as unjust as the current system and arguably much worse because they, for just one example, require the punishment of innocents to "purge the mal-investments."
ReplyDeleteAnd the Austrians don't even understand banking either as evidenced by their constant cries of "hyperinflation" and by their complete bafflement at negative interest rates given their "Interest is the time value of money" theory.
“I spent decades at Lew Rockwell, “
ReplyDeleteOMG.... I can’t believe you people even exist...
1. I see NO EVIDENCE that Mr. Anderson has any familiarity with any basic Austrian or libertarian concepts. Most specifically "prices as information", the "socialist calculation problem", the "false unsustainable prices of fiat money" or "Cantillon Effects".
ReplyDelete2. There is nothing within the above listed concepts that would predict how much price inflation will result from a particular amount of fiat money dilution. X amount of observable price inflation does not necessarily result from X amount of new funny money.
3. I've never been one warning about imminent hyper-inflation. I didn't think there would be a great deal of inflation after the 2008 crisis. It's always a slow process so that the people being looted of purchasing power can't follow the process. I do note however, that the price of fast food (which I eat about every 21 days) seems to have doubled in the last few years. I used to be able to get out of Taco Bell for a little over $3. Now the same thing costs almost $6. Add in the great increase in property prices and other assets held by the affluent. That's a great outcome for the poor and powerless, all to solve a problem that does not exist.
4. Finally, Mr. Anderson apparently supports the endless waste of resources and the rape of the environment to support endless malinvestments that will collapse in any event later than sooner causing even more destruction and misery than if cleaned out sooner. However, he is basically admitting that the current process exists to just sustain for a little longer that which is unsustainable in the long run.
I see NO EVIDENCE that Mr. Anderson has any familiarity with any basic Austrian or libertarian concepts. Most specifically "prices as information", the "socialist calculation problem", the "false unsustainable prices of fiat money" or "Cantillon Effects". Bob Roddis
ReplyDelete"prices as information"
Of course they are. But who says prices, including wages, should be measured by a money supply whose growth does not, for instance, keep up with population growth? So that those with money, typically the old, may command INCREASING amounts of young labor via falling wages?
And who says that those who do nothing but, proverbially speaking (Mathew 25:14-30), bury their money in the ground be able to free-ride on the activity and risk-tasking (investment) of others via falling prices? Is that a recipe for progress or for stagnation?
"socialist calculation problem" [Hayek]
Oh, so the only alternative to Austrian Economics is to be a socialist? And btw, requiring that fiat be needlessly expensive (e.g. made of or backed by gold) is not libertarian but fascist.
"false unsustainable prices of fiat money"
The boom-bust cycle is not inherent with fiat since the supply of (inexpensive, as it should be) fiat need never decrease nor fail to increase as it should. Instead the boom-bust cycle is a result of government privileges for private credit/debt creation - including implicit privileges such as the failure of monetarily sovereign governments or their Central Banks to provide fiat accounts and transactions to all citizens.
"Cantillon Effects"
Cantillon suggested that inflation occurs gradually and that the new supply of money has a localised effect on inflation, effectively originating the concept of non-neutral money.[62] Furthermore, he posited that the original recipients of new money enjoy higher standards of living at the expense of later recipients. from https://en.wikipedia.org/wiki/Richard_Cantillon
Which is why I advocate that all new fiat creation beyond that created by deficit spending by the monetary sovereign for the common welfare be by equal fiat distributions to all citizens in the form of a Citizen's Dividend - which all citizens would receive simultaneously.
libertarian concepts
A true free market in private money REQUIRES that government shall only accept and use its own inexpensive fiat as money otherwise the taxation authority and power of government is misused to benefit private interests.
4. Finally, Mr. Anderson apparently supports the endless waste of resources Bob Roddis
ReplyDeleteNot at all since my preferred private money form is common stock which, among many other advantages, ALLOWS but DOES NOT REQUIRE growth as does credit/debt creation for usury* or even genuine lending for usury (since not all interest is consumed or invested but some is itself lent for even more interest or simply hoarded risk-free). Nor would I ever allow the monetary sovereign to sell its inherently risk-free debt for any, given administrative costs, non-negative yield nor pay any non-negative interest for fiat account balances at the Central Bank or Treasury except for a reasonable individual citizen exemption of, say, $250,000 per citizen or so since SOME risk-free, completely liquid savings are legitimate for initial capital formation as well as emergencies and every day spending.
and the rape of the environment Bob Roddis
Inexpensive fiat, in itself, has minimal impact on the environment while, for example, fiat consisting of or backed by gold, especially if combined with 100% private banks with 100% voluntary depositors (since that would vastly increase the demand for fiat as opposed to the demand for bank deposits) would, in itself, greatly incentivise all forms of gold acquisition/production however injurious to the environment (e.g. mercury pollution in the Amazon jungle region from wildcat miners). And for what? So the gold can be reburied in central bank vaults or wasted as needlessly expensive coins? Or to stupidly limit fiat creation by tying it to something as arbitrary as the mining rate of gold? As if God somehow ordains that the mining rate of gold shall always be optimum for economic growth? Or that the owners of gold mines, being the first to receive new fiat, should "enjoy higher standards of living at the expense of later recipients." [Cantillion effect]
to support endless malinvestments that will collapse in any event later than sooner causing even more destruction and misery than if cleaned out sooner. ibid
That argues for 100% private banks with 100% voluntary depositors/creditors** and that requires that all citizens be allowed to use fiat in convenient, inherently risk-free account form at the Central Bank or Treasury itself and that in turn requires that fiat cost no more than is necessary (e.g. to prevent counterfeiting and accidental loss).
However, he is basically admitting that the current process exists to just sustain for a little longer that which is unsustainable in the long run. ibid
While one might logically expect that the bust phase of any boom-bust cycle created by 100% private banks with 100% voluntary depositors/creditors** shall purge all true malinvestments and none other, how can the same be said of banks that are not 100% private with 100% voluntary depositors/creditors? Or of a bust triggered by the abrupt removal of government privileges for banks?
Then how much less logical is it to expect that the bust phase of any boom-bust cycle of (or the abrupt removal of government privileges from) our current heavily privileged banks with depositors that are largely involuntary except for government subsidies such as deposit insurance may not do grave harm instead of a healthy though painful purge?
*per the Bible's definition of usury, i.e. any positive interest rate.
** So that the liabilities of the banks toward the non-bank private sector are genuine, not sham, liabilities - thus subjecting banks to genuine market discipline.