Phil,
This is a wonderful piece!
I recommend you have an editor clean it up,
then submit it for publication somewhere.
Best, Michael
Reason Magazine? I would be happy to edit.
Marcy
--- In lpsf-discuss@yahoogroups.com, "Dr. Michael R. Edelstein"
<dredelstein@t...> wrote:
Phil,
This is a wonderful piece!
I recommend you have an editor clean it up,
then submit it for publication somewhere.Best, Michael
From: "ricochetboy" <philzberg@e...>
To: <lpsf-discuss@yahoogroups.com>
Sent: Tuesday, July 26, 2005 4:43 PM
Subject: [lpsf-discuss] Re: Rep Ron Paul, a national treasure>I guess I am going to have to give you the full montie on the
busted
> economic system and why I see it that way. I'm not quite above the
> weather health wise so I will just start. Taking all your
> statisticaat
> face value things look great. They damn well should .We have gone
> through one of the longest credit expansions in history, and most
> massive worldwide. The hugh influx of liquidity after thestock
> market
> crash and 911 has drien interest rates to historic lows, Yes
things
> better be good.As Warren Buffet famously said, of the trillions
in
> liwuidity used to prop up the economy over the last few years,
Give
> me
> a trillion dollars, and I'll show you a party too." the problems
> fester under the radar now.The millions of elderly savers
strugling
> on
> very low interest rates and social security checks with shrinking
> real
> purchasing power. The disappearance of saving in this country, as
> people know that saving is a ticket to confiscation by inflation.
> Fifty percent of new jobs in California over the last two years
are
> real estate related. Real estate is not a producing asset.
> Ultimately
> residential real estate is a big consumer item. Acouple was
evicted
> on my block from thier 2500 a month apartment. The unit will go up
> for
> sale 1.5 million. The taxes alone will approcimate the rent that
can
> be gotten from the property. Speculation gone wild. Oh but this
time
> it is different this is San Francisco, California, USA. They
aren't
> making more. Go ahead , buyer, sign right here. To me the lesson
> here isnobody knows any history. What about the South Sea Bubnle
or
> the Missippi. Both the result of the faith based money schemes of
> Louis thw fifteenth and his Scottish banker John Law. Government
> sicce
> the beginning of history have tried to create money out of thin
air
> to
> pay for debts and wars.Throughout histoey, the latest scheme would
> be
> new, modern , and foolproof. The scheme always ended in tradgedy.
> That
> is the lessson of history. Those who do not learn the lessons are
> doomed to repeat it. Even gold and silver are not foolproof. The
> Spainish exploited so much gold and silver out of South America
that
> they affectively became the worlds money supply. No worl was done
by
> the Spinish ruling class for centuries. In fact, some
manufactruring
> was jbannned in Spain. The result was the moral decay of Spain and
> it's untimate economic decline. Germany had a large foreign debt
as
> a
> result of WWI, The authorities began the cycle of inflationto ease
> this debt, but continued it to prevent deflationary collapse. The
> result was hyper inflation, the complete destruction of civil
> economy,
> and the rise of Hitler. Had the fed chose to devalue the currency
> and
> inflate in 1929, a similar inflationary fate may have ultimately
> resulted. But the fed stood fimrm. In previous booms and busts
> throughout the 19th century, the busts were alway short livedEvery
> boom and bust was xaused by some type of government credit
expansion
> scheme.The depression dragged on because Hoover and Roosevelt took
> measures to prevent wages and prices from falling. As a real
estate
> anecdote,to the great depression, the Empire State Building,
> completed
> soon after the crash, was not fully leased until 1955.
> the Bank of England issued it's first paper note in 1694. the
crown
> was in dire finacial straits. The bankers got together and agreed
to
> loan the crown gold in exchange for restricted right to issue
paper
> notes in luie of Gold. Thus the modern central bank was born. the
> rates charge3d the crown were near usurous, but the king was
> desperate. At times later in history the notes were forbidden to
be
> redeemed. Britain left the gold standard in the earl thirties.
> Fractional reserve banking, even when done within the limits of
law
> is
> in fact fraud. Murray Rothbard lays it out eith crystal clarity in
> his
> tinybook 'what has the government done to our money" He
hypthisizes
> a
> llarge and reputable grain storage company. The company stores a
> common graded commodity in large quantities throughout the
midwest.
> Lets say Winter Wheat number one. As a farmer you can deposit a
> hundred tons of winter wheat 1 in his earehouse and get a
> certificate
> in rreturn.Because the warehouse is reputable and has been for a
> long
> time, you can trade that receipt as if it was the whet itself. The
> buyer of the certificate is confident that he can go to the
> warehouse
> and demand the wheat at any time and that it will be there.The
> certificates are liquid, thay are trustred, they are portable, and
> with some approprite record keeping safeguards, they are durable.
> In
> other words, reliability and honesty of the issuer have given
these
> certificates attributes of money.Now the problem comes in when the
> warehouse chain is taken over by the harvard MBA grandson of the
> founder. He looks at the company records and sees that in the last
> hundred years the warehouses collectively have never been
completely
> empty. In fact they have never beeen less than 20 percent full. Hw
> figures, since his warehouse recipts sell like cash, why sot sell
an
> extra twenty percent of fraudulent receipts. Who will ever know.
He
> still has an extra ten percent buffer frem a one hundred year
> history.
> No waay are people ever gonna come for that last twenty percent.
And
> soe prints receipts for twenty percent of all the wheat on deposit
> in
> his warehouse. He sells the receipts and pockets the cash. He
makes
> interest on the extra cash for many years. The phantom extra
supply
> of
> wheat suppresses the price for many years, screwing the other
> holdets
> of wheat certificates, encouraging consumption, and discouraging
> production. Ultimately thisdownard price pressure combined with
some
> external weather events causes a significant drain at the
> warehouses.
> A rumor gets started that the warehouse has printed more receipts
> than
> there is wheat.There is a run on the warehouse. The last peope
there
> are left holding worthless receipts. Thousnads of farmers and
bakers
> are ruined by the fraud. The Harvard MBA meanwhile has flown to
> Barbadosand is eventually given a last minute presidential pardon.
> Banks do the same thing. They are allowed to lend out more money
> than
> they actually have on hand. If everybody does not come at once for
> thier money, it seems like an ok practice. But just like the poor
> wheat farmer, the person holding old cash has the value of his
cash
> diluted by the new cash that is fraudulently created. the
> depreciation
> of old csh by the creation of new cash is called inflation.The
> benefit
> goes to all the harvard MBAs who can crete the new cash and thier
> friends who receive ans manipulate the New Cash, the MandA
bankers,
> the mortgage brokers and all the first receivers of bew bank
credit.
> Interestingly, all new money creation is done by the New York Fed
> and
> the New York Fed and the new York Fed Alone. The Federal Open
Market
> Committee does all it's operation through the New York member
> banks.Isn't it great that all that money stil can't guaranteethe
> Yankees first place. But according to the New York State
> Treasurer,Manhattan residing employess of New York banks and
> brokerages collected over 22 billion in year end bonuses in 2004.
> It's
> all legal, but it is still really frud. And the money is stolen
> through the dilution effect of inflation. It might not be showing
up
> as price inflation now, but it will. For now the Chinese and other
> far
> east nations are importing the inflation with the walmart example
I
> gave yesterday. But for how long can we sustain a 6 percent of gdp
> trade deficit.
>
> When you have a debt based currency, credit expansion is the way
you
> increse money supply normally. After the massive expansion of the
> last
> two decades, total US debt on the consumer,local state and federal
> level exceeds I believe 360 percent of GDP. This is an historic
high
> and exceeds the levels in 1929.
>
> Hyman Minski was a nice jewish sort of socialist economist at my
> college, Washington University, in St Louis. I wasn't aware at the
> time, but in economic circles he is a pretty famous guy, I think
he
> might even have gotten a nobel prize. Basically his whole theory
> could
> have been made by the corner pot dealer. When things get real
> tight,
> ain't much you can do. And if you keep fixin people when they's
> tight,
> they just get tighter. Or has he said it, as debt levels increse,
> consumers and businesses have less choice and are are more
> constrined.The economy as a whole becomes more rigid.Choices
> disappear. His other thepry is famously summarized in his immortal
> words...stability leads to instability. This is perfectly
> demonstrated
> in the real estate boom and stick market echo boom. By stabiliaing
> the
> markets with credit expansion after the tech bubble burst, the fed
> has
> fed the illustion that real estate never goes down, and
revitilized
> the assumption that in the long run stocks always go up.
Unrestrined
> speculation has been the result. I'll wait for you to challenge
that
> assertion before I nail that one home.
>
> Why do I hate fractional reserve banking with such a deep passion.
> In
> part because I greww up in Baltimore, and I have seen it go from a
> solid blue colar town to miles of desperate living with a few
> pockets
> of Yuppiedom. The blue collar jobs are gone. How long the credit
> bubble can keep the finacial paper pushers employed, and how long
> the
> government can keep writing medicare and NIH grants for the
largest
> employer, Johms Hoplins, is an unknown. The other event was more
> personal. My father was and is reckless withmoney. My mother was a
> careful saver.She ran the household and kept the family afloat
with
> her job as the Baltimore and Eastern Shore rep for Scholastic
> magizines. Oh how she would love thier coup with Harry Potter. She
> saved, early and often and relentlessly. She always looked for the
> highest interest. In the mid eighties, she had most of her money
in
> Old Court Savings and Loan. the bank was chartered by the state of
> Maryland and all deposits were insured by same. At thesame time I
> used
> to like to visit real estate open houses during the boom of the
mid
> eighties. I went with my buddy harvey to visit a condo
overlooking a
> gas station parking lot accross from my high school. The condos
were
> one or two bedrooms poorly constructed and selling in the 120k to
> 175
> k range. At the ttime, a really primo house in a good
neightborhood
> wass selling in the same range. Something was very very wrong.
You
> would have to be out of your mind to buy this junk at those
prices.
> IAt the time I figured something was fishy, and I was nust
> beginning
> to study Austrian economics, so I figured ther was something fishy
> with the bank who financed the project, but I could not figure out
> what. Meanwhile, like our wheat warehouse after a bad storm,
rumors
> began to circulate that Ols Court Savings and Loan was bankrupt.
My
> mother was reluctant to join the lines at the bank as she had the
> quint Rooseveltian notionthat all we had to fear was fear itself.
As
> late as thursday afternoon she could have simply written a check
at
> Marland national. But she waited. By Monday the bank was closed
and
> no
> checks were being honored. The State of Maryland took the assets
of
> the bank, held them for seven years, and once the accumulated
> interst
> made up the principal shortfall, the principle was returned. Seven
> years without interst. Basically a fifty percent haircut. Wnough
for
> her to have died in comfort and for dad to not have to struggle in
> his
> old age. Unlike every single crook caught up in the federally
> insured
> savings in loans, the Marland bankers served hard time. One of the
> priciples, Gerry Cardin is sort of related, and I saw him at a
> family
> funeral. He drove up in a white rolls royce convertable, and made
a
> point of making sure everybody knew he was signing the guest book
> with
> a fifty thousand dollar pen. None of the federal crooks, including
> all
> the Keating Senators, John Glenn and Jeb Bush, none served jail
time
> because the jury could not be shown a victim. The hundreds of
> billions
> in losses were just tacked onto the national debt. In the case
> ofNational Banks the Fed buries the losses on it;s balance sheet
and
> we all pay for it in inflation. Jerry Cardin's cousin, Ben Cardin
is
> a
> deeply mainstream Democrat and the inside favorite to succceed
Paul
> Sarbanes, the wqually clueless mainstream Democrat, Oxford
educated,
> who sat on the denate banking and finance committee and gave us
our
> recent finance reforms that are feeding the zombie treasury buying
> and
> smothering risk taking in corporate America. Oh, BTW, at the heart
> of
> the Enron Scandal and the worldcom scandal and the bankruptcy of
> Global crossing and almost every other corporate scandal lie the
New
> York Banks. In Enron's case a memo surfaced between two bankers, I
> think Chase, who wrotw words to the effect... Wnron loves these
> loans
> because they can hide them from thier analysts and auditors. Can
> you
> say smoking fraud gun. Yet no indictments. It seems the staff of
New
> York Fed Banks are immune from prosecution. It took the Cal State
> Retirement system lawywer to finally get some decent money out of
> Morgan-Chase and City, I think 4 billion each. Didn't budge the
> stocks.Still no indictments.
> I want to live in a society where honesty, integrity, hard work,
> competence, knowledge and sincerity, along with foresight and
wisdom
> are valued and rewarded. The present monetary system punishes
decent
> pwople and rewards fraud artists and gamblers. Aynn Rand said it a
> lot
> better than I through the words of John Galt. Wven Alsn Greenspan
> had
> a few chice words.
>
> The Constitution rewuires taht the States accept no thing in
payment
> except gold and silver coin, and reserves for congress the right
to
> coin moey. The supremes have abdicated responsibility by never
> ruling
> on the Constitutionality of the Fed, especially after Nixon
> abrograted
> the gold clauses printed clear as day on the money. Am I angry,
damn
> right I am angry. I saw a glimpse of the real United States of
> America
> in my late fifties youth, before all the monstrosities of Mr.
> Toosevelts and Mr. Johnsons invention couldwreck thier full
havoc. I
> will try to channel my anger, but I will never accept the staus
quo.
> Freedom can yield a much more happy, prosperous, and peaceful
> world.All this misery and strife is not unavoidable. We can have a
> better world, and certainly a better country. The blueprint is
> sitting
> there under glass, enshrined on Pennsylvania Avenue, but ignored
up
> and doen the same boulevard. Wouldn't it have been great if on
911
> the president or the real leader, the vice president, had thought
to