If you want to fix run away government and the need to continually expand corporate earnings, you must get rid of the central bank, it's fiat currency and fractional reserve banking. Both Thomas Jefferson and Andrew Jackson were staunchly opposed to the central bank and the corporations that would grow up around it. They struggled to keep America free of the enslaving grip of the banker. Infact, the primary reason we went to war with England was because the Crown (and more importantly the Bank of England) wouldn't allow us to coin our own money to pay their taxes.
“The colonies would gladly have borne the little tax on tea and other matters had it not been that England took away from the colonies their money, which created unemployment and dissatisfaction. The inability of the colonists to get power to issue their own money permanently out of the hands of George III and the international bankers was the PRIME reason for the Revolutionary War.“ — Benjamin Franklin
However, we lost this long struggle against the international bankers once and for all in 1913 at Jekyll Island off the coast of Georgia where the Federal Reserve Act was drafted by Senator Nelson Aldrich, Max Warburg of Germany's Kuhn, Loeb & Co., J.P. Morgan who had ties to the Rothchild banking family (Bank of England) and John D. Rockefeller among others.
As long as Washington and the Fed have the ability to print the money on demand this will never get fixed. Indeed, it will eventually wipe out the middle class altogether.
Infact, the same banking interests which were behind the Federal Reserve eventually succeeded in the establishment of the IMF, the mechanism of the World Bank both founded through the Bretton Wood Agreements in in 1944 and ratified in 1946; which takes money directly out of our pockets and gives it to less fortunate nations. Case in point, Bill Clinton asked Congress for a multi-million dollar loan for Mexico in the 90's and when Congress said no, Bill simply circumvented our system and went directly to the IMF, who gladly took the money out of the pockets of the tax payers, through the printing press, and gave it to Mexico anyway. The Bretton Wood Agreement essentially makes the U.S. treasury the check book of the World Bank.
Our whole system is based on debt, not assets. You save your money you must pay capital gains taxes. You go into debt to buy a home or take out a student loan you get a tax credit.
In order for it to continue to be viable credit must be continually created and expanded, corporations must continually expand their market share and earnings and more natural resources must be converted to trash every day.
The catch with fiat currency is it is only as strong as the governement that enforces it and the faith in it by the people who carry it. It will, however, return to it's intrinsic value which is zero, as it has done time and again throughout history, which appears to be the direction it is currently moving. Most especially if Iran manages to get it's oil bourse, essentially an auction where oil will be traded in currecies other than the dollar, up and running. (The only reason the dollar is currently the reserve currency of the world is due to the agreement between the House of Saud, the OPEC nations and the U.S. that oil would only be traded in dollars. This mandated that all nations would now need large amounts of dollars to fill their oil needs.) Once that happens, the rest of the world will no longer be required to hold U.S. dollars and all that money, held in sovereign wealth funds, will come rushing back to our shores causing property values to plummet and the cost of commodities and household goods to suffer hyper-inflation. And, the holders of those wealth funds namely China, Saudi Arabia, Japan and Russia will be picking up U.S. property and corporations for cheap.
And let us not forget to mention the looming recession/depression we are facing. We saw the first signs of this back in the summer when the subprime meltdown led to a credit crunch where fund managers couldn't place a value on their funds due to defaulting homeowners in the U.S. The owners of the funds wanted to sell, but, because there was no way to value it no one was willing to buy it and so the whole process came to a stand still. All the Fed could do was throw more money at the problem. They have no ability to truly fix it. Most especially since we sold this toxic waste to the rest of the world.
The mortgage bankers, at the encouragement of our own government, invented exotic loans to keep the housing bubble inflating, they then packaged up these subprime loans in mortgage backed securities and sold them to hedge funds, pension funds, etc. The fund managers would then dice these securities up into collateralized debt obligations and sell them again to another fund manager and then that company would bundle up their CDO and sell parts of them as deriviatives and structured investment vehicles (MBS, CDO, SIVS).
Debt upon debt upon debt upon debt all based on a lousy subprime loan. And, all this to keep the credit expanding to stave of the necessary recession that we have been avoiding for MANY decades.
Alas, how could we expect anything less than people treating their homes as assets rather than liabilities and the insatiable need for credit card debt, when this type of economics is used by their own government. A government that forgot what economics were 95 years ago.
Sorry for the rant.
Tom
