THE INTERNATIONAL FORECASTER
Saturday, December 7, 2013
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James Corbett with Dr. Stan
James Corbett on The Power Hour
Basic Income: Bailout for the People?
By James Corbett
Have you ever seen a pile of 8 million coins? Neither had most of the residents of Bern until a group looking to raise awareness of their plan to pay a basic income to every man and woman in Switzerland dumped such a pile on the doorstep of the Swiss parliament. If their intent was to grab people's attention, they did a pretty good job.
The stunt was masterminded by Enno Schmidt, a German-born artist leading the basic income movement in Switzerland. Their aim: to compel the Swiss government to send a check for 2,500 Swiss Francs (over $2700 USD) every month to every adult in Switzerland. Sound far-fetched? Well, that pile of 8 million coins came with a petition containing 125,000 signatures, and in Switzerland that's good enough to force a national vote on the issue. In effect, the Swiss are going to be voting on whether or not they should receive a big fat paycheck from the government each month for doing nothing, no strings attached.
If this is your first exposure to this idea it might sound like total insanity, but the idea of a government-provided guaranteed income is in fact not particularly new. In the first World War a British engineer named C.H. Douglas noticed a discrepancy between the total value of goods being produced for the British war effort and the salaries, wages and dividends being paid out by the producers. Intrigued by this notion, he began a study of factories and businesses around Britain. Publishing his results in 1918, his study showed that this gap was almost universally the case. Douglas saw this from his engineers' perspective as a design flaw in the economy; more goods were being produced than people could possibly buy back with the wages they were earning. He came up with a simple idea: social credit. In basic terms, he proposed that the gap between prices and purchasing power be closed by a price rebate and dividend to be paid out to each citizen by a National Credit Office that crunches the numbers from a national balance sheet. The idea of simply providing people with money flipped traditional economic theories on its head. It was not classical socialism, which saw the democratization of the economy as worker control of industry, but a democratization of credit. Such a system would leave individuals with the freedom to direct production by voting with their dollars, some portion of which would be supplied automatically by the government.
Social credit was quickly adapted by political upstarts around the world and in 1935 the first Social Credit party was elected to the provincial government of Alberta in Canada. The Supreme Court of Canada and Privy Council in London consistently ruled against all attempts to pass social credit laws, however, and the Social Credit party in Alberta soon fell out with Douglas over strategic differences. Social Credit continued on as a political brand in Western Canada and elsewhere for decades, but the political brand bore little resemblance to Douglas' original theory and a national dividend was never implemented.
To many, the idea of money furnished by government directly to the people is still far-fetched. Social credit ideas seem like a forgotten byway of history, and the closest that many have ever experienced is the occasional one-time check like that provided by the Bush administration under the 2008 Economic Stimulus Act. But that's not to say that the idea hasn't actually been tried.
In 1974 the sleepy Manitoba town of Dauphin, home to just 10,000 people, was the scene of a radical economic experiment. Called “Mincome,” the program assured any family or individual living under the poverty line government assistance to boost their income, no questions asked and no strings attached. The experiment was conducted to find out if it was true that people would work less in an economic environment that guarantees a certain minimum level of income. Over the course of the next five years, about 1,000 families in Dauphin benefited from the scheme. Some interesting results came out of the program. Firstly, it was found that only two categories of people actually worked fewer hours under the scheme: mothers, who took more time off to raise their babies, and teenage boys, who delayed entering the workforce. Even in the case of the teenage boys, it was found that many of them used the time to continue their studies; high school graduation rates rose during the period of the study. Another surprising result: hospitalization rates fell by 8.5% during the Mincome experiment, at least partly due to reductions in hospitalizations for mental health issues. The Mincome experiment was ended in 1979, however, abandoned during the changing of provincial and federal governments in the latter half of the decade. The boxes of data collected during the grand experiment were left to collect dust in provincial records houses and were largely unexamined until recently.
So why has this history of social credit and Mincome and similar ideas been so completely erased from our collective memory? Primarily, it is because it is hard for people to wrap their head around. People have been conditioned to believe that money is something that exists in a certain finite supply and that people must toil in order to receive their fair portion of that set amount. As we know, however, this is not the way the economy actually functions. In our modern-day reality, money is a commodity that is spontaneously generated by the bankster class as debt which is owed back to themselves at interest. Understood primarily as credit (as it is in our current economy), the social and productive dimensions of money come to the fore. If it is created out of nothing and loaned into the economy, why not create it out of nothing and give it to the poor? The problem of underconsumption is solved, as there is now enough money for workers to actually purchase the items they manufacture. And the freedom of the individual to decide what they want to purchase and from whom is preserved, as is the freedom of producers to produce whatever products they want in the manner and quantity they see fit. In other words, the free market is preserved.
This is the problem with the idea of a basic income: it doesn't fit nicely into the pre-conceived categories of economic system that we are taught to work in. It's not socialism, per se. It's not the crony capitalism that we are used to in the western world, either, with giant corporations getting subsidies and handouts or “too big to fail” financial institutions getting trillions of dollars in bailouts. For us it is easier to understand a government bailout of AIG to the tune of $182 billion than it is to conceive of the government taking that same $182 billion and giving it to the people. From the 2008 Lehman Brothers collapse to today, the government has spent literally trillions of dollars bailing out banks and purchasing toxic mortgage securities (a process that continues to this day under QE3). If that money was given directly to the people, imagine what position the economy would be in today: people with cash in their pockets looking to spend on products; people with money to actually purchase the homes that they were being (illegally) foreclosed on; people with the safety and security to pursue education and retraining for higher-skilled jobs.
The funny thing is that the idea of bailing out the people instead of the banks is immediately dismissed by those on the right as some sort of communist idea. This ignores the long history of conservatives proposing similar ideas. Milton Friedman, the famed free market economist, proposed a system of negative income tax by which the poorest would be entitled to receive unused deductions on their tax returns each year. Even Ron Paul has agreed that bailing out the people would be better than bailing out the banks. As he said in the 2012 GOP debates: “If you have to give money out, you should give it to people losing their mortgages, not to the banks.”
Indeed, this is the very issue that unites so much of the anger on both the left and the right. The Tea Party movement and the Occupy movement were coming from remarkably similar positions. People are simply fed up with governments bailing out their megacorporate and bankster-connected buddies to the tune of trillions while homeowners and small business owners get turned out on the street. So why has the basic income idea never taken off amongst these groups? Is it simply the centuries-long demonization of the idea of “free money,” fed to us by the very same people who create the money out of thin air?
All interesting questions. Personally, I am not an advocate of the guaranteed income idea for the reason I am not an advocate of many so-called economic “solutions.” I don't believe that governments should be acting in the economy in any way, whether it be the regulation or monopolization of money or the creation of a central bank or the administration of a National Dividend or other guaranteed income idea. However, if you are going to have government intervention anyway, there can be no doubt that it would be infinitely preferable to have that intervention in the service of the people, not the banksters.
At any rate, we may just get to witness another Mincome-like experiment very soon if Enno Schmidt and his Basic Income friends have their way in Switzerland. I'm not holding my breath that the land of banks and bankers will go for such an idea once it reaches the stage of a national vote, but stranger things have happened. And if it does, we'll be spectators with ring-side seats to one of the most interesting economic experiments in history.
So, What’s Next?
By Bob Rinear
On Wednesday I spelled out the dangers we face when the US loses its title to the Global Reserve Currency. Well, that letter generated dozens of questions that we received, and I think they’re important enough to chat about the overall gist of them.
One question was simply “Will this hit in one day, sort of like we go to bed Friday night and wake up Monday and all the banks are closed and we’re screwed?” The answer is “no” and then “yes”. Confusing? Let me explain.
The US does not want to lose it’s title of the worlds reserve currency. It has been the single most important reason why the folks in the US have been able to live so far above their means. It has been the reason we could “borrow and spend” for the last 40 years. So they’re going to fight losing it tooth and nail. While it is inevitable, they would like the inevitable to be delayed as long as possible.
So, there’s going to be some form of a progression that takes place in “steps” as we hurtle towards the end game, which will be a complete economic collapse. I’ve told you over and over that there’s going to be a global “reset” of the worlds currencies, and I suspect they try that first before we truly blow up. This is why we’ve been allowing China to mop up so many tons of gold at a discount price for the past two years. When the reset comes, all currencies will be revalued based on the true assets of the holding country. This is why Central banks all around the globe have been buying gold since the attacks on it began a few years back. They all want to sure up their balance sheets for the new reserve currency.
Now I know that doesn’t sound attractive, but let’s face reality. We know we can’t go on forever doing what we’re doing, so something’s going to have to change. Thus we have to ask the question, how is this all going to roll out?
First off, I’m not going to tell you that I have a crystal ball and I know the precise way this all unfolds. Unfortunately my crystal ball has been in the shop for repairs, it never seems to work right. But I do think we can form some hypothesis scenario that sounds pretty close to what will probably happen. So, why are we in a situation where we’re going to lose our Global Reserve status? Because we’ve ruined the value of the currency. We’ve debased it. All the countries that do business with us are tired of holding Dollar reserves and seeing them worth less and less each year.
Job one will be for them to try and pay down some of our debts, which would reflect by our dollar actually strengthening. But there’s a problem with that. We don’t have any money to pay down our debts. Or…do we? I told you 4 years ago that Uncle Sam is looking at all the 401K’s, Pension plans, etc that are sitting idle in accounts across the land and they want it. They want it bad. They’ve hired firms to study how they can make it mandatory that you take half of that money and force you to buy Government bonds. They see those trillions sitting there and salivate over it. I suspect they’re going to get it.
So, I think that part one of the end game will be an announcement by our Administration that the World bank and the IMF has instructed the leaders of the various countries that we have to have a global currency reset/revaluation, to bring all currencies into a new valuation range. The US will NOT be the sole holder of the Global Reserve currency. No, that title will go to a basket of currencies, backed by the assets of the underlying country. But they want those assets to be fairly evenly deployed.
Because this reset will be costly, and we’re mired in too much debt to bring our currency reset value in line with other countries, they’ll announce that they are going to force everyone to buy Government securities. Just like they’ve mandated you have to buy health insurance, they’ll mandate that some percentage of your wages/savings have to go towards buying Government issued bonds.
I know that on the surface this sounds totally insane. Absolute conspiracy nut stuff of the highest order. But, how quickly they forget! Remember Cyprus?? Remember how they absconded with up to 50% of the populations savings?? That was the trial balloon, the test run. It worked. Instead of armed revolt in the street, the people remained amazingly calm as they had no access to their money for days and days, and then only limited amounts when they could get some. No riots, no shooting. The scam went perfectly.
So job one will be to try and sure up our currency by amassing all the money they can scrounge up, so that when being measured up for the “reset” we hold the highest rankings. In other words, when they pull off this global reset, they’re going to try and work all the industrialized nations into a situation where there’s not too much variance between the strongest and the weakest. But rest assured the US will want it’s position as known to be at the strongest level. They are going to want the US dollar to be “part of” the new global Reserve currency basket. Backing our dollars with the savings of 300 million people will help them do that.
But from there I think things start to unravel quickly. As I explained Wednesday, the US hasn’t had to produce and export goods to enjoy a good standard of living. We simply printed money. We borrowed with no real expectation of paying it back. As soon as the ability to print all we want is gone, it will be a very short period of time before it is abundantly clear we don’t have the capacity to produce and “earn” in the capacity necessary to keep us strong.
At that point our economy will stall out hard. We’ll be in a deep recession which rolls over to depression. Now here’s the irony of it all. Most of the world has benefited greatly by the US spending more than it had. Japan sells us cars and electronics by the literal boatload. China sends us all manner of gadgets and gee-gaws to stock your local Wal-Mart. Every major economic power from Europe, to Asia, to South America to Canada has taken in fortunes on the heels of the American Consumer spending money they don’t have.
That will stop. If we can’t print it, we can’t spend it because there’s simply not enough to go around. When the US stops spending like drunken sailors on Port leave…the rest of the world will soon find that they don’t have the internal consumption to support their economies. Japan exported 1.5 million cars to the US in 2011. Germany’s BMW and Mercedes export billions worth of cars and machinery to the US. If the US can’t afford to buy them, will their own citizens? Of course not, there’s not enough demand.
So the world will see a synchronized depression, and that is the real end game. I think it is at that point where we see the whole “one world” push for a single currency, run by a central planning agency out of Europe. That’s been their wet dream for decades on end, and that’s how I see it coming.
I think the big question is…when does this “hit?” Well the wheels of it are in motion now, but I don’t suppose we’ll see the first real actions being taken until late 2014 into 2015. I think we’ve got a year before things get desperate enough to start this. Which brings up another issue. The Fed’s been pumping 85 billion a month into the system to keep the “crash” away. But it is that very trashing of the currency that has all the nations dumping dollars. Thus, the Fed’s will have to end their QE policy at the same time we approach this “reset”. So as you can see, there’s no shortage of excitement in our future.
Let me end this by saying that I hope I’m desperately wrong. I hope that some magic bolt from deep space hits us and we figure out how to solve all our problems. But math doesn’t lie and the math says we cannot fix this mess, not with anything resembling honest truth. Sure they could make a trillion dollar coin out of the clear blue and borrow against that, but let’s face it, it would still be a man made fake. And it would fail. The world is getting tired of the fakes.
Con-Con: Dangerous Deception
By William Horning
Conservatives love falling into traps. Using the meaningless word “conservative” instead of constitutional was their first mistake. No-one knows what a conservative really is. As Attorney Michael Peroutka points, now conservative commentators like “Sean ‘Insanity” Hannity and others defend the use of terror tactics on human beings which “only a generation ago, the entire world denounced at the Nuremburg trials.” The conservatives have no fixed standard.
Fortunately, for real constitutionalists and defenders of freedom, we have a standard. It is called the Constitution. Our problems today stem mostly from not following it due to almost everyone selling out for their 30 pieces of silver: politicians, churches, educators, and of course major corporations which are encouraging the sell-out and doing everything possible to destroy the Constitution.
The latest assault on sanity comes from the current push to have an Article V Constitutional Amendment Convention historically known as a con-con for short. It is a dangerous deception being led by men with ulterior motives. They’re leading us into quicksand where the Constitution could be destroyed and replaced it with a new one.
It we want to fix the Constitution, we need to use it and follow it, not allow people without the knowledge or trust factor to tinker with it. Mark Levin has no trust factor. We do not have a deep enough understanding in America today pull off another miracle as in 1787. Back then you needed to be fluent in three languages to get into Yale.
Aaron Bollinger, one of the founders of the Sherman Institute, points out that reading the Federalist Papers is like reading at the “23rd grade reading level.” Where are we going to find enough educated people today? I recommend checking out Aaron’s and David Whitney’s work at: http://shermaninstitute.org. The Institute could be a real solution.
At that time, people understood the Laws of Nature, stated briefest form: 1. There is a creator God. 2. God gave us our rights. 3. The sole purpose of government is to secure those rights. This means establishing justice and defending the borders, not provide health care, education, housing, food, jobs, etc. Life isn’t supposed to be a SNAP.
The Founders knew a Balanced Budget Amendment was not needed, although it was one of twelve amendments originally proposed in what became ten. The proportional obligation system was supposed to take care of any problems.
The Thirteen colonies all had separate money systems, but they gave power to the Federal government to coin (not print) money and fix weights and measures. Today, States need to get back to having their own system as a backup, but few are giving the problem the deserved attention.
While the proponents of a con-con call the Article V Convention a “re-set” button, it is more likely to be a “self-destruct” button. A con-con may sound like a “cool and easy” solution to our many problems. Every ten years or so, our enemies try to slip this by the American people. We need to realize they already have a “New States Constitution” written and waiting for us – funded by the Rockefeller’s and others.
Proponents tell us the States would be able to prevent any bad amendments from getting through. They are wrong. They say we don’t trust the people. That is right. The people have not proven themselves to be trustworthy. An Article V Convention is a whole body – a sovereign entity and co-equal branch of government. Any pre-set restrictions on the convention will most likely be thrown out at the get-go as happened in 1787.
Try as they may to refute it, the process will easily open up all areas of our Constitution to revision. You will have rights unless there is a “State of Emergency”, in which case you will have none. Our representatives today do not even know how to write bills. They have to get others to write them for them. We don’t know if the State Legislature, Convention or something else will get to decide our fate.
Our electronic voting system can not be trusted as shown in Ohio where over 100% in several precincts voted for Obama. The Media obviously can not be trusted. Even the Tea Parties can not be trusted. One of the founders of the money grubbing, neo-con, and Trotskyite Tea Party Patriots group is involved with the “Citizens for Self Government” behind the con-con. Don’t get conned into supporting this group or a con-con. Think for yourself instead of being a follower.
Out churches should be helping us face our country’s problems, but they have stepped back in history to become State Churches. Churches bought into un-necessary 501 (c) (3) status and 90%+ take stolen Federal money to follow FEMA instructions in a future crisis. They defend the government grants. Pastors up to 100 years ago used to preach “Election Sermons” and much more.
The warning lights are flashing. Don’t be deceived.
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I.M.F. Proposes to Legalize "Debt-Restructuring"
By Alfred Adask for Discount Gold & Silver Trading
The New York Times reported in “I.M.F. Shifts Its Approach to Bailouts” that,
“ The International Monetary Fund, convinced that Europe erred in forcing debtor countries like Greece and Portugal to bear nearly all the pain of recovery on their own, is pushing hard for a plan that would impose upfront losses on bondholders the next time a country in the euro area requests a bailout.”
First, what does the IMF mean by the word “countries” in the phrase, “forcing debtor countries like Greece and Portugal to bear nearly all of the pain of recovery on their own”?
It means that the people of Greece and the people of Portugal are the only ones being forced to suffer the costs associated with repaying the relevant debts. The IMF implies that the words “country” and “people” are synonymous and the “people” are responsible for their “countries’” debts.
Is such implication accurate, fair or even reasonable in relation to national debts?
Who rang up the original debt? The “country” (the “people”) of Greece? Or was it the debt incurred by the government of the country of Greece? Are the “people” and their “government” one-in-the-same?
Who is the real debtor? The people of Greece or the government of Greece?
What is the legal and/or moral obligation of the people of Greece (or Portugal, or even the United States) to make good on the debts incurred by their governments—especially if those debts are unreasonable, irrational or even the based on lies?
For example, here in the United States, our government claims the “national debt” is about $17.2 trillion. But is that claim truthful? Or is the true national debt closer to $90 trillion (as claimed by Shadowstats.com) or, if we include unfunded liabilities, even over $200 trillion (as claimed by the Congressional Budget Office)?
Is the “national debt” truly the debt of the “nation” (people) or is it the debt of the national government?
Some might argue that the American people are responsible for the “official” national debt of $17.2 trillion. Maybe so. But who should be responsible the “secret” or “unofficial” debt incurred above $17.2 trillion?
In other words, if the true “national debt” is over $200 trillion, and the “official” (publicly known) national debt is $17 trillion the American people might be responsible for $17 trillion in debt, but are they also responsible for the other $183 trillion that essentially hidden from public knowledge?
Similarly, did the governments of Greece and Portugal run up excessive debts without their people’s knowledge? Is it reasonable or fair that the people of Greece and/or Portugal should be held liable for government debts which were negotiated without the people’s general knowledge or approval?
More, if the benefits of the enormous debts incurred by the governments of Greece, Portugal or the United States primarily accrued to the people of those countries, then it would be fair to require the people to repay the resulting debts. But what if the benefit of the government’s debts primarily accrued to special interests rather than the people at large of each of those countries? Should the people of each country nevertheless be held liable for the debts incurred by their governments on behalf of special interests?
I don’t think so.
Second, if the IMF is “pushing hard for a plan that would impose upfront losses on bondholders the next time a country in the euro area requests a bailout,” who are these “bondholders”?
They’re the people, private institutions and even foreign governments who loaned money to the “debtor countries” by purchasing those nations’ governments’ bonds. They are the government’s creditors.
What did the governments often do with the funds received for government bonds? They gave those funds (especially, here in the US) to private institutions (primarily banks) that were deemed “too big to fail”. These private banks were the special interests that received the primary benefit of funds received from the “bondholders”/creditors.
These “interests” are particularly “special” because they’re not required to repay the debts from which they benefited.
So, we have four different classes of persons in this story:
1) The bondholders/creditors who lend money to national governments;
2) The national governments who sell bonds to acquire funds;
3) The special interests who acquire those funds and the benefit thereof from the national governments; and
4) The common people (a/k/a the “chumps”) of each nation who will be “legally” compelled to somehow repay the bondholders (Class #1) for the bonds that were sold by the governments (Class #2) and used to benefit special interests (Class #3).
Thus, the IMF recognizes that a bail-out program that imposes government debts only on the people-chumps (class #4) is morally wrong. Therefore, the IMF is pushing for a new-and-improved bail-out program wherein the debt-burden on the people-chumps (class #4) is reduced by forcing the creditor-bondholders (class #1) to accept the loss of some or all of the funds they loaned to governments.
The IMF recognizes that it’s immoral to rob the people-chumps of Class #4. Therefore the IMF advocates that we also rob the bondholders-creditors of Class #1.
But note that the IMF does not suggest that the governments (Class #2) who actually borrow the funds, or the special interests (Class #3) who receive the benefit of those funds, should be held liable for repaying those funds.
The New York Times continues:
“Scarred by its role in misjudging the depth of the Greek recession and rebuffed in its attempt to get European governments to write down their Greek loans, the I.M.F. is advocating a more aggressive approach to debt restructuring to try to ease the rigors of German-style austerity.”
In the previous paragraph, the “European governments” are creditors (Class #1) to Greek and Portuguese debtor-governments (Class #2).
“Debt restructuring” means the legal reduction of payments due on bonds. I.e., if a creditor (Class #1) loaned $1 million to the government of Greece and that government (Class #2) got into financial trouble, the creditor could be forced by law to agree to take, say, only $500,000 as repayment for his $1 million bond. By passing new “debt restructuring” laws, governments could write off their debts whenever they liked.
“Debt restructuring” is a polite term for legalized robbery. If the debt due a creditor (Class #1) from a government (Class #2) were legally “restructured,” then the creditor would be legally deprived of some or all of his wealth and thereby robbed.
“Debt restricting” is a polite way for overly-indebted, technically-bankrupt governments to avoid paying their debts without admitting they’re bankrupt.
If bankrupt governments can avoid admitting they’re bankrupt, they can avoid suffering a massive reduction in their credit rating. So long as debtor-governments can retain the illusion of solvency and most of their credit ratings, they may still find more creditors who are fool enough to lend them even more funds. At minimum they can continue to operate as if they were a vital, solvent entity rather than a civilly-dead bankrupt.
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The New York Times used the term “austerity” to refer to the economic conditions that’ll be imposed on the “people-chumps” (Class #4) of the various nations who didn’t receive benefit of funds acquired by selling government bonds but who will nevertheless be held liable for repaying those borrowed funds. The result of imposing the bond-debts on the “people-chumps” will be higher taxes, less government services, rising unemployment, a lower standard of living and a likely reduction in life expectancy. That’s what they mean by “austerity”.
Note that while “austerity” will primarily afflict the people-chumps (Class #4) but will have little or no direct effect on the government (Class #2) or any effect whatsoever on the special interests (Class #3). The bondholders-creditors (Class #1) may not be plunged into “austerity” but will see their net worth diminished by however much “debt restructuring” (robbery) they’re required to accept by law.
Unfortunately, “austerity” is the driving force behind public demonstrations by the people-chumps (Class #4) who march in streets and sometimes toss fire-bombs at government buildings to express their displeasure at being subjected to higher taxes and a lower standard of living.
The IMF doesn’t want to tax the people-chumps so much that they riot. Therefore the IMF proposes to reduce the degree of austerity imposed on the people by “restructuring” the governments’ debts and thereby also rob the bondholder-creditors.
Lesson? Riots work. At least to some degree. If you’re a member of the people-chumps (Class #4) being over-taxed and robbed by your government (Class #2) and you riot and perhaps even threaten to harm some government employees, officers or property, government will “feel your pain” and start to rob the creditors (Class #1) as well.
Government will not “feel your pain” to a degree sufficient to stop robbing somebody. They won’t “feel your pain” enough to stop enriching the special interests who pay bribes/political-campaign-contributions to the legislators who legalize the “debt-restructuring” and other forms of robbery. Under the proposed restructuring laws, governments will merely “feel the pain” of the people-chumps enough to start robbing their bondholder-creditors.
However, robbing creditors creates problems:
“But the I.M.F. proposal . . . is encountering stiff resistance, not just from the powerful global banking lobby, but also from European policy makers, and more recently, the United States government, which is the I.M.F.’s largest financial contributor.
“Indeed, despite tough talk on both sides of the Atlantic about making bond investors [Class #1] share the cost of bailouts with taxpayers [Class #4], the world’s largest economies seem to have accepted the dire warnings advanced by investors and bankers that the I.M.F.’s proposed new approach would badly roil still-fragile credit markets in Europe.”
Ahh, yes. We dare not “roil” the “still-fragile” credit markets.
But how might this dastardly “roiling” take place?
Well, insofar as the IMF proposes to legally “restructure” the debts owed to bondholder-creditors’ (Class #1) in order to ease the plight of debtor governments (Class #2), then many of the bondholder-creditors will wake up and realize that if they lend funds to a debtor-government, the risks are high that they’ll never be repaid in full or perhaps even at all.
Thanks to legalized “debt-restructuring,” creditors won’t merely lose money to artificially low interest rates or high inflation rates—they might even lose a big chunk of their original principal to “restructuring”. I.e., if you loaned $1 million to a debtor-government, you might count yourself blessed if you recovered $500,000 and you might not be surprised if you only recovered $200,000 under “debt-restructuring”.
Given that virtually all western governments (especially the US) are debtors and technically bankrupt, once debt-restructuring were legalized, where would governments find an adequate supply of suckers to keep buying their bonds? If bond-holders could be legally deprived of their principal by debtor governments, then bonds would degrade from the status of loans to the status of gifts or even outright confiscations. If you bought a bond, odds would be high that you really bought a gift for a debtor government.
Once “restructuring” were openly legalized, bondholder-creditors (Class #1) would stop lending anything to debtor-governments (Class #2) on the long-term and might even stop lending short-term. That might mean no funds for special interests (Class #3) and therefore no bribes (political campaign contributions) for legislators.
And, surely, we can’t have that—can we?
The only option would be to raise taxes on the people-chumps—but if the people are already ready to march and throw Molotov cocktails at government buildings, that’s out.
Oh,wait! There is one more option: The debtor-government (or its friendly central bank) might simply start printing more and more paper dollars to give to the special interests. (We might call this program something like “Quantitative Easing” and claim that it would “stimulate the economy” by giving money to “special interests” that were “too big [too special] to fail”.) Eventually, those paper dollars would enter into the economy and cause significant inflation (perhaps even hyper-inflation) that would rob all of the bondholder-creditors (Class #1) and all of the people-chumps (Class #4) while empowering the government (Class #2) and enriching the special interests (Class #3).
Ta-da! Problem solved.
Better “restructuring” through inflation.
The New York Times concludes:
“‘The [IMF] has been bruised and abused,’ said Susan Schadler, a former I.M.F. economist and the author of a recent paper that argues the fund broke its own rules in lending to near-bankrupt Greece. ‘But in the end there is no trade-off between austerity and debt restructuring — you have to do both,’ she said.”
First, the people of Greece weren’t “near-bankrupt”. The government of Greece was bankrupt—it couldn’t pay its bills. The IMF loaned money to the Greek government to avoid admitting that that government was bankrupt. If the governments of Greece and then Portugal were allowed to admit they were bankrupt, the world’s creditors might wake up and stop lending to all technically-bankrupt governments. Then the whole governmental racket might collapse on a global scale.
Can’t have that.
What does Ms. Schadler mean by saying that there’s no trade-off between “austerity” and “debt restructuring”? She means that there’s some minimum amount of funds that must be robbed from somebody in order to repay most of the government’s debts. Thus, an undisclosed transfer of wealth must take place from the people-chumps (Class #4) to the debtor-governments (Class #2) to shield the governments from admitting they’re broke.
“Austerity” means that the people must be surieties for the government. “Austerity” means that the people subject to a government must accept higher taxes and a lower standard of living as a consequence of their government being technically bankrupt.
“Debt restructuring” means that the bankrupt governments’ creditors must accept losing some or all of their wealth—but without using the “B-word” (“bankruptcy”).
Who wins under debt restructuring?
The debtor governments. They raise taxes on people and legally refuse to completely pay debts owed to creditors. Governments grow more powerful by going into debt and bankruptcy at the expense of the people and the creditors.
Even bankrupt governments aren’t penniless. Governments have assets, including buildings, the marble on the walls in federal court houses, treasures in national museums and gold bars. The US government owns half the land west of the Mississippi River. Some of these government assets could be sold to pay for government debts.
Governments have employees. Employees could be fired to cut costs and apply the savings to repaying government bonds.
Government employees are often overpaid. A Rand Instituted study concluded that the average federal employee paid double he’d receive for doing the same work in the private sector. It wouldn’t be easy, but government could cut their employees’ pay and apply the savings to paying off the government’s bond debts.
Government employees are often entitled to retire after just 20 years of employment and start collecting retirement pay around the age 40. Retirement benefits might be postponed until the employees turn 65 and apply the savings to paying off the government’s bond debts.
Government employees have pension funds . . . . Well, you get the idea.
Governments have assets that could be sold or costs that could be cut to pay off their bonds. There’s no reason why the burden of repaying government bonds should lie solely or even primarily on the people-chumps (Class #4), or even on the bondholder-creditors (Class #1) and not be shared by the debtor-government itself (Class #2). If the people must accept austerity, so should their government.
And then there’s the special interests (banks; Class #3) that received funds acquired by means of government bonds. Since A.D. 2008, many of those special interests just sat on those funds rather than lend them to the people-chumps in order to stimulate the economy. So, why not tell those special interests we want that money back? Loan it or lose it, hmm? If the special interests don’t comply, charge their boards of directors with treason for robbing the American people and thereby giving our enemies “aid and comfort”. Let those high-rollers be judged by a jury composed of the people-chumps and see how many are found guilty and sentenced to be hanged.
The IMF are foolish. Don’t they understand that if we legalize “debt restructuring” now, we’ll eliminate virtually all future bondholder-creditors dumb enough to lend to government?
Can’t have that, can we?
That’s why the US government opposes the IMF debt-restructuring proposal—not because “restructuring” is bad for the people or even for the creditors, but because, ultimately, restructuring hurts governments by eliminating the future suckers on whom government has come to rely.
Of course, when the time comes for the whole house of paper-debt cards to collapse, government will restructure the debts due bondholder-creditors (Class #1) and rob them blind. (I doubt that the bondholder-creditors will, on average, recover more than 20% of the debts due them.) But that debt restructuring will be deemed “necessary” under the pretext of an economic “emergency” rather than “legal” under a pre-existing law that allows “debt-restructuring”. It will be promoted by government (and probably accepted by the people) as a shocking surprise rather than a long-term plan.
And why not?
Creditors (Class #1) who are dumb enough to invest their funds in bonds issued by overly-indebted, technically-bankrupt governments are fools. Why shouldn’t they be robbed? It’s been axiomatic for centuries that “a fool and his money are soon parted.”
If the IMF’s proposed restructuring laws are enacted, the fools and their money will soon be “partible”—and inevitably, “parted”—by law.
Obama's Rogue Agenda
By Stephen Lendman
On Wednesday, Obama addressed income inequality. He called it "the defining challenge of our time." He did so disingenuously.
Throughout his tenure, he's transferred America's wealth to corporate interests and super-rich elites. He stole it from ordinary people doing so.
Even Wall Street Journal editors said "few presidents have done more to increase inequality than he has."
Median household income fell throughout his tenure. It's 4.2% lower than when he took office. It keeps heading south.
Rich investors profited hugely. Most never had it so good. "Mr. Obama is Chief Economist of Nottingham posing as Robin Hood," said Journal editors.
He's waging war on middle America. He's destroying it on his watch. He's increasingly leaving the nation's most disadvantaged on their own. More on what he said below.
He's arguably America's worst ever president. He did what many thought impossible. He exceeded the worst of George Bush.
His rap sheet is long and loathsome. He's got three more years to extend it. Numerous previous articles explained.
One said impeaching him is a national imperative. Others said he belongs in prison, not high office.
Many explained how he wrecked the economy. He looted the nation's wealth. He handed it to banksters and other corporate crooks.
America's 1% benefitted handsomely. They did so at the expense of most others. Protracted Main Street Depression era levels persist.
Conditions increasingly go from bad to worse. Force-fed austerity compounds things. The worst is yet to come.
Obama transformed America more than ever into a kleptocracy. Gangsterism reflects official policy. High-level public and private corruption is rampant.
Wealth is disproportionately shared. Ordinary people are exploited. Washington's criminal class is bipartisan.
Democracy is more illusion than reality. Americans get the best money can buy. Diktat power rules.
Obama is thirdworldizing America. He's banana republicanizing it. He's turning it into a dystopian backwater. A race to the bottom reflects official policy.
Administration policy prioritizes wealth, power and privileged interests. It lets vital popular needs go begging. Obama's operated this way throughout his tenure.
He consigned growing millions to poverty, unemployment, underemployment, hunger, homelessness and despair. He's got more human wrecking in mind.
He wants US resources used for militarism, warmaking, and homeland repression. He wants ordinary people left high and dry.
He's waging war on hard won labor rights. He's destroying them on his watch. He commodifying public education. He's making it another business profit center.
He wants healthcare industry giants more than ever profiting from illness and disease. He wants it at the expense of universal coverage.
He doesn't give a damn about ordinary people. He wants them used and abused. He wants it globally. He wants supportive constituents exploited and neglected.
He's waging multiple direct and proxy wars. He's got more death and destruction in mind. He wants unchallenged US global dominance.
He wants all political, economic and military rivals eliminated. He supports some of the world's most ruthless despots. He wants all sovereign independent governments removed.
He wants subservient pro-Western ones replacing them. He wants America's imperium advanced. He's waging war on humanity ruthlessly.
He wants fundamental freedoms compromised en route to eliminating them altogether. He's enforcing police state harshness doing so.
He wants vital truths and full disclosure suppressed. He wants government wrongdoing left unpunished. He wants whistleblowers exposing it silenced. He targeted more than all his predecessors combined.
He wants America's most disadvantaged further deprived. He wants vital social benefits reduced en route to eliminating them altogether.
He's hard-right, neoliberal, reactionary, belligerent, pro-corporate, anti-labor, anti-populist and anti-social justice.
He believes anything government can do business does better so it it. He turns a blind eye to international, constitutional and US statute rule of law principles.
He's a moral coward. He's a serial liar. He disgraces the office he holds.
Even New York Times editors called him "The President of Inequality." What matters most to Americans is anxiety over economic hard times, they said.
Six in 10 workers worry most about being laid off. It's the highest number in decades. Since Obama took office, job security sunk to Depression era levels.
Inequality in America matches third world countries. Conditions are getting worse, not better. Obama's race to the bottom agenda bears full responsibility.
Times editors correctly said "concentrated wealth leads to more frequent recessions, higher household debt, and growing cynicism and despondency."
It's expressed in little "faith in government's ability to do anything about the problem." Intent matters most.
Inequality didn't happen by chance. It was planned. Race to the bottom policies began decades ago.
Class war reflects them. Obama is responsible for more human wreckage than any of his predecessors. His agenda remains unchanged.
His speech was long on demagogic boilerplate. It was short on promises made to be kept. Business as usual remains policy.
Obama lied claiming otherwise. His presidency reflects a trail of broken promises. He says one thing. He does another.
He's done so since day one in office. Disingenuous rhetoric substitutes for good intentions. Honesty isn't his long suit. Nor are popular interests.
He lied saying he "ran for president (to) mak(e) sure our economy works for" everyone. He called doing so the centerpiece "of last year's campaign."
In the last year alone, poverty and real unemployment rose on his watch. Half or more of all US households are either impoverished on bordering it.
Unemployment based on 1980's model is 23.5%. Fake headline numbers conceal it. Underemployment is out-of-control.
Most working households struggle to get by. Many don't earn enough to live on. They're one missed pay check away from being out of luck altogether.
Force-fed austerity remains policy. Social America is on the chopping block for elimination. Doing so is official Obama administration policy. Equality is a convenient illusion.
Obama's promise to "shore up Social Security for future generations" reflects another one to be broken. He planned doing so straightaway in office.
He targeted Medicare. He wants major changes in both programs. He wants them privatized. He wants ordinary people increasingly on their own.
He wants them responsible for their retirement income and healthcare. He wants Wall Street crooks able to rip them off more than already.
Business as usual assures harder than ever hard times. Obama's rhetoric wore thin long ago. Growing numbers know he can't be trusted. He's a con man writ large.
Promises substitute for constructive policies. "(O)ur way of life" mumbo jumbo reflects supporting concentrated wealth, power and privileged interests. Ordinary people are increasingly left out.
America is a let 'em eat cake society. Obama's agenda reflects its worst features. It's not about to change now.
Throughout his tenure, super-rich elites benefitted hugely. They got around 95% of income gains. Billionaires doubled their wealth. Much higher inflation than reported meant ordinary people lost out.
They're much worse off now than five years ago. Nothing ahead suggests positive change. Expect millions more to be impoverished before Obama leaves office.
Expect unemployment and underemployment to grow. Obama claims otherwise. "(O)ver the course of the next year and for the rest of (his) presidency, (he'll) "focus all (his) efforts" on fighting inequality, he said.
The same way he's done it for the past five years. Rhetoric substitutes for promises made to be kept.
His pathetic human misery antidote is inadequately raising the minimum wage. In inflation adjusted terms, it's lower than since the 1970s.
He supports increasing it to $10.10 an hour. Doing so would leave a family of four with one full-time working member impoverished.
Most urban ones would be deeply so. They need double or more that much to get by. Annually rising inflation increases their burden.
Obama disingenuously called for "making high-quality preschool available to every child in America."
He did so despite slashing Head Start. It's for comprehensive education, health, nutrition, and parent involvement services for low-income families with children.
Thousands were stricken from the rolls during harder than ever hard times. Expect many more left out before Obama leaves office in January 2017.
On December 3, he launched a concentrated effort to sell his Affordable Care Act (ACA). He'll continue it through December 23. It's the deadline for January 1 coverage.
Press events and social media will complement his message. He intends delivering it virtually daily. He did so in his Wednesday address.
He lied calling ACA an egalitarian program. It's a scam. It's a ripoff. It's a healthcare rationing scheme. It's to enrich insurers, Big Pharma and large hospital chains.
It leaves millions uninsured. It leaves millions more way underinsured. It flies in the face of what's needed. Universal coverage alone works.
In 2007, candidate Obama supported it. He said "affordable, universal health care for every single American must not be a question of whether. It must be a question of how."
He promised action to enact it in his first term. He lied. ACA is polar opposite what he endorsed. He proved his word isn't his bond.
His approval rating shows it. A recent CBS poll had him at 37%. Others have him hovering around the 40% level.
He may end up as low as Bush before he leaves office. Another 15 point drop will match him at around 25%. Growing human misery appears heading him in that direction.
Lincoln once said "(y)ou can fool all the people some of the time, and some of the people all the time, but you cannot fool all the people all the time."
Growing anti-Obama sentiment shows most people don't buy mumbo jumbo promises made to be broken. Maybe no one but diehards and fools will before he leaves office.