Thursday, January 20, 2011

Greedy Bankers?

Some of the biggest men in the United States, in the field of commerce and manufacture, are afraid of somebody, are afraid of something.

 They know there is a power somewhere so organized, so subtle, so watchful, so interlocked, so complete, so pervasive that they had better not speak above their breath when they speak in condemnation of it.-- President Woodrow Wilson

Yesterday I said I'd try and explain how our monetary system works, and why the Chinese are becoming afraid of the dollar.  The short answer is our dollar has become based on debt.  We've allowed the creation of a monetary system that isn't based on gold, silver or even chickens anymore, but on debt.  Money is created, based on debt, when you borrow money, the money is created to loan you.. Your promise to repay the debt allows the bank or Federal Reserve to put more money into the economy.

If you have a fistful of dollars, what you really have is a fistful of someone else's debt,  If debt is repaid, the money, no longer backed by debt, becomes worthless.

The Chinese, who once considered US Dollars a safe way to back their own currency have figured this out.  As the dollar supply expands, it not only means that the dollar is worth less, it means we, collectively as a country have gone deeper into debt. That would make me nervous, and it's causing them some concern as well.  That's why they want to see the dollar replaced as the Worlds Reserve Currency..

Completely confused?  You're supposed to be, bankers and government economists wouldn't have it any-other way.  Hopefully this five part video will help clear your head.  The first three explain the problem, you can go directly from one to the next.  The last two aren't so helpful, they get into possible solutions.  The solutions are at best Utopian, instead of solving the problem, they'd simply transfer it from the current bad guys, The big banks, to a new set of crooks

Anyone who believes exponential growth can go on on forever is either an economist or like Paul Krugman, a madman-- Kenneth Bouiding, economist (I added the reference to Krugman. sorry)

My more progressive liberal readers will undoubtably jump on this, they've been talking about the greedy bankers for years.. Everyone knows that only Republicans are Bankers, right?  Dosen't this prove that all Republicans are out to destroy the middle class?

The answers are No and No respectively.

The Federal Reserve, which makes all this possible, was created under Woodrow Wilson, a very Liberal Democrat. He did express regret, after the fact.

We can credit two Democrats, Franklin Roosevelt and Lyndon Johnson for removing the requirement that dollars be backed by gold or silver.

Barack Obama, hasn't missed an opportunity to borrow money or expand the money supply, could be one reason three of the biggies, Goldman Sachs, Bank America and Citi have started slanting their campaign donations in favor of the democrats.  Last October, when Barney Franks, author of the Obama's Banking Reform Bill got into trouble trying to get  re-elected, those three banks were happy to help.

Have the Repubicans been active participants, You Betcha

So now what do we do about it, now? 



  1. Like to thank another Grumpy Member, Lewis, who actually understands economics and even economists for vetting the video, and pointing out some things

  2. Well done gents, and the answer is simply to tell the politicians that the party is over. All folks who were members of congress and their estates... Here is YOUR bill, this debt is your responsibility, now pay up!

  3. Mad, been thinking for a long time their combined estates might be a way to repay Social Security for the piliferage there.

  4. Let us not forget greedy and obsessed consumers who gorged and continue to gorge on cheap Made in China goods. Our habits should not be excluded in this story.

  5. Excellent point DFTTS. Why isn't anyone concerned with quality anymore? Folks just accept the garbage and the stores make it so easy to return the trash.

  6. Big part of the issue DFTTS, one no one wants to get into.. if we increase wages so Americans can afford to buy American, we drive up prices. Start trying to drop prices by reducing regulatory costs, and the enviromentalists will go nuts.

    Won't even mention cutting manufactuers labor costs.

    Profit margins outside of the medical and financial industries aren't that high.

    I knew a guy several years ago was buying New England Hardwoods, shipping the lumber to China, manufacturing stair railing parts in China, shipping the finished product back to the US East Coast and marketing the stuff for 20% under it's Made in New England competition.

  7. We buy more junk than any country on the planet in excessive obsessive fashion. We hunger "things" like a bottomless pit. We think when we buy in bulk at BJs or Ssm's, we're getting a deal. But in bulk, we consume too much. It was unscrupulous Chinese msnufacturers, profit-driven middlemen, and a housing development frenzy that are responsible for the toxic drywall that ended up in new homes making consumers sick.

    Grumpy - what do we manufacture? Very little, but the few around complain bitterly about being squeezed out by the Chinese. US catfish farmers are one group that comes to mind. The Chinese government manipulates their money so things are cheap, plus their workforce gets paid less but there's a boom going on in China. They are flush with money.

    Frankly, I search for stuff made in the US and buy local or US made whenever I can. I do not find the prices much different than the stores. I'd rather buy less and pay a little more, and keep American businesses thriving.

    The Chinese have made a veiled threat on precious metals, the kind needed for cell phones and computers. We shut down our mines, but I read recently of thoughts to get them up and running again. It will take time if that is really under consideration. We cannot be held hostage by other countries to oil or precious metals.

  8. I wrote a big comment and got service unavailable message. I am not going to rewrite it. Madpole makes a good point about quality, but that's not quite where I was heading. We consume more "things" than any country on the planet, much of which ends up in land fills. Toxic Chinese dry wall got into Florida homes because of a building frenzy, unscrupulous manufacturers, and greedy middlemen. They are supposed to do the right thing.

  9. Well I see my big comment did go through. SO I retire for the evening.....good night all. Talking about this gets me all riled up. I will go on strike tomorrow and buy nothing unless it was made in the U.S. somewhere.

  10. DFTTS.. Sheetrock, like lumber, oil or gasoline is a commodity. The specifications for sale in the US are standard throughout the industry. A dealer can order drywall from Georgia Pacific and have arrive on a GP Truck with United States Gypsum labels on it

    A wholesale buyer needs to buy several million square feet of the stuff, he calls 3-4 mills or brokers he's comfortable with. and deals with regularly. He's looking at price and lead time, which can vary considerably depending on a host of factors. The sellers products were certified long ago, the terms seldom change. Generally there's no discussion about specs, or where the stuff is coming from.

  11. Grumpy: There's the problem. As Madpole suggests what happened to "quality?" Who has the ethical and moral responsibility to ensure that the goods are free of stuff that will kill people? The certification process in China is not like the process in the U.S. The pressure must come from the brokers and buyers. If the stuff is bad, we won't buy it. That's the only way to pressure the manufacturers to do what is right.

  12. That's where it surprises me. The buyer seller relationships don't just happen. There's a lot of trust on both sides, that takes time develop. The new seller dosen't get the huge orders, the new customer probably won't get the best price..


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