America has three choices in the sovereignty debate. These three choices are not very good choices either. But one is likely better than the other two.
1. America can totally succumb to the New Financial Order and let the predatory bankers win always.
2. America can assert a hollow sovereignty by supporting macho Neocons and endless war and threats of default.
3. America can seek to limit the power of both the neocons and of the new financial order through limits on war budgets, and through tough regulation of banks and through regulation of speculation.The only practical sovereignty will be achieved by this road.
So, we are going to be disappointed if we choose the Tea Party way of threats of default and endless war. While I do believe that governments that do not print their own money need to look at default as an option, rather than an austerity that is bound to destroy the fabric of society, I think that is not appropriate as a political method in the United States.
We have a situation in America where printing money is a way out, but not in excess. We are approaching excess. The populace cannot hope to recover with the massive speculation that results from easy money printing. There could be bubbles everywhere. Popping them becomes important, and popping the commodity bubble becomes the most important thing we can do for our nation.
I think that the Fed could provide liquidity without allowing speculation all the time. Onions are forbidden from being speculated upon in futures markets. While there have been more price spikes than for heavily speculated oil, the price spikes have been very brief, and the price of onions has been quite stable when settling to equilibrium. Not so with oil, which has fewer price spikes but a relentless rise in the base equilibrium price. This sort of thing could be stopped while liquidity is still in the system from the Fed.
I understand the reasons for printing money. The main reason is to keep confidence in the financial system. The second reason is to keep the US competitive in the export market. A third reason is to keep the national debt interest payments from becoming excessive. A fourth reason is to extract payments from all levels of government for interest rate swaps.
Ellen Brown has written about the damage that these interest rate swaps have had on government. They are even more prevalent than credit default swaps and the banks are making bank by not having to pay for inflation. The swaps were a hedge against inflation which is pretty tame.
But as far as MainStreet is concerned, we cannot tolerate much more easy money. It has done damage and has hurt the world consumer of last resort, the American consumer. Our production needs to increase to better match our consuming.
It would seem appropriate to have the government issue interest free dollars in a supplemental fashion, not replacing the Federal Reserve private bank, but by supplementing the bank with a relief fund. Those dollars would not be created with more interest.
I have said before that the Neocons and the new financial order bankers are presently aligned. That means that their goals, up to now, are the same. Even if they diverge, picking one over the other is like picking between a fraudster and a bully. Not much of a choice.
The third option, which lets us hold onto the most sovereignty we can, is to tolerate the bankers within reason, but to make certain they do not offer predatory loans throughout the world. Regulation is the key. Guys like Max Keiser always opt for regulation and look askance at those folks who think taking away regulation will suddenly make the bankers into good boys.Stories of bad banker behaviour, even in personal lives, continually prove to us that big bankers are not good boys.
The third option opts for peace, and not for wars of greed. Our nation has done some very bad things in order to get pipelines built for neocons and in order to get oil reserves for our oil companies who are, evidently, too lazy to go out and look for the reserves on their own.
The libertarians are supposing that if we default, and if we are plunged into a Great Depression, that demand for goods will suddenly come back, as well as loan demand. I say that is not true. It was not true in the Great Depression of the 1930’s and it will not be true in a worldwide depression.
The libertarians point to the 1921 recession, which had depression-like numbers in terms of GDP decline, as America tooled up from a wartime economy to a peacetime economy. Well, even though it was depression like, there was not a credit crisis. Credit was readily available once the machine of war became the machine of peace. So, in a credit crisis as we have now, it is not likely that we would recover as the economy did in 1921.
Interest rates were dropped by the Fed, and credit flowed quickly. Since interest rates are already near zero, that monetary stimulus that was available in 1921 would not be available in a ful fledged depression today.
If leaders listen to Mises and the libertarians, they will surely be mislead. It is perfectly consistent for me to take a position that default on our debt is wrong for America and at the same time take the position that default could be right for the Eurozone countries headed for an austerity caused depression. Since the Europeans have nations without the capacity to print money, it is a totally different situation than in the US.
If the Eurozone leaders, like Germany, are not willing to commit to Eurobonds and Euro debt, it becomes a scam even to buckle down to the Germans. What is in it for the struggling nations? Very little in my opinion.
Some could say that the Germans are trying to get folks to act responsibly. But to that I would say where were you leaders when your banks were lending massively and recklessly to the PIIGS and even northern neighbours? It is all good that countries are for responsibility, but apparently Germany wants countries to do as she says, not as she does. Without commitment, Germany’s position towards the Eurozone is a joke, and maybe even a scam.
So, with regard to the United States, we need to stop the bankers from blowing bubbles, especially in real estate, ever again. The Eurozone will stop Germany from irresponsible lending in the future if the Eurozone forces Germany to guarantee the debt. if Germany isn’t up for it the other countries are foolish to wait around for talk and promises.
Big Bankers have become, in the aftermath of the housing bubble, the root of evil in our society. They make a mess and then their men go from the Fed or from Goldman Sachs or from some other TBTF bank into government, like Tim Geithner and Henry Paulson, and they become a heroes for fixing it all. Well, they are not heroes.
So then, sound and sane world policy is to stop the new financial order from taking all sovereign power away and to seek peace in opposition to the neocons. Trusting these powerful interest groups is not possible because neither has shown that they are trustworthy.
The libertarians and the Tea Party are not to be trusted either, especially at the top levels of government. They do not have the correct responses to the bankers and the neocons and often play into their hands, which, in fact, strengthen’s their positions in the world.
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