BERNANKE'S REMEDY: PUMP MORE BLOOD INTO A CORPSE, BY MIKE WHITNEY
That was then.
Credit is everything. Without credit expansion there's no recovery because there's no pick-up in overall demand. But credit growth is going backwards. The banks have tightened lending standards and the pool of credit-worthy applicants has vanished. Bank lending is off 14 per cent since October 2008. Private credit is presently decreasing at a 10.5 per cent annual rate. The situation is getting worse, not better.
From the UK Telegraph:
"Both bank credit and the M3 money supply in the United States have been contracting at rates comparable to the onset of the Great Depression since early summer, raising fears of a double-dip recession in 2010 and a slide into debt-deflation...
"Similar concerns have been raised by David Rosenberg, chief strategist at Gluskin Sheff, who said that over the four weeks up to August 24, bank credit shrank at an ‘epic’ 9pc annual pace, the M2 money supply shrank at 12.2pc and M1 shrank at 6.5pc.
"’For the first time in the post-Second World War era, we have deflation in credit, wages and rents and, from our lens, this is a toxic brew,’he said. (Ambrose Evans-Pritchard, "US credit shrinks at Great Depression rate prompting fears of double-dip recession", UK Telegraph)
Foreclosures, delinquencies and defaults are all up. Foreclosure activity is currently at 300,000-plus per month and rising. A huge shadow inventory is being kept off-market to maintain prices. The drip, drip, drip-effect of excess inventory dumped onto the market will keep housing in the doldrums for a decade. Homeowners are unable to borrow on underwater homes. Everything points to a long-term slump in spending.
Corporations are finding it harder to roll over their debt, bank loans are defaulting at a historic pace, and commercial real estate is imploding. Credit destruction is unprecedented, massive and ongoing. The capital hole is bigger than the Fed and bigger than the Treasury. It can't be plugged with liquidity alone.
For now, the government can fiddle GDP with $800 billion infusion of stimulus, but what happens when the political will for more deficit spending dissipates? What happens when foreign investors demand the Fed stop writing checks on an overdrawn account?
The Fed has fixed nothing. The banks are still underwater, output is at record lows, and unemployment is climbing towards 10 per cent. Fed chair Ben Bernanke's multi-trillion dollar rescue programs have kept a wobbly system upright, but nothing more. The economy's underlying problems are still the same. The Fed's quantitative easing (monetization) program has sent stocks surging, but done nothing to stimulate the economy. That's because equities bubbles have negligible impact on aggregate demand; there's no knock-on effect. The real economy is still flatlining while Wall Street parties on. Bernanke's plan has been a total wash.
The government cannot deficit spend forever. Eventually, GDP will have to depend on wage growth and credit expansion. Given the political and institutional bias against labor, (and opposition to wages that rise with productivity) the only way to fuel the economy is through credit growth. And there's the rub. Households have lost nearly $14 trillion in wealth since the crisis began and are in no position to resume borrowing at pre-crisis levels. Consumers are cutting back on spending and paying down debt. They have no other choice.
This is from Bloomberg News:
"Americans plan to refrain from boosting their spending even after the biggest drop in consumption since 1980, signaling concern about the direction of the economy over the next six months.
"Only 8 per cent of U.S. adults plan to increase household spending, almost one-third will spend less, and 58 per cent expect to ‘stay the course,’ a Bloomberg News poll showed. More than 3 in 4 said they reduced spending in the past year.
"Underscoring consumers’ austere attitudes, 77 per cent of respondents said they have cut back on spending during the past year, 59 percent said they have made a bigger effort to pay off debts and 48 percent have put more money aside as savings." (Bloomberg News)
Savings are up and spending is down. The economy is headed into a long-term funk; the "new normal". The Fed's sleight-of-hand programs and Obama's stimulus elixir haven't changed the prevailing downward trend. If anything, they have made matters worse. Consider this from Janet Tavakoli, author of "Dear Mr. Buffett" in an interview with Max Keiser:
"Regarding the outlook, my analysis is grim. I am not a doomsayer, I follow the cash, and so far, I’ve been correct, and the government has been wrong. Here’s the situation. We are at greater risk of a total meltdown due to a deflationary collapse than we were in 2007. After the greatest Ponzi scheme in the history of the capital markets, we’ve seen history’s greatest fiscal and monetary expansion, but it hasn’t worked. Debt levels of consumers and business exceed the capacity to repay." (Janet Tavakoli On The Edge With Max Keiser)
The Fed has done nothing to restructure the financial system so the same problems which killed Lehman and thrust the global economy into a tailspin, persist today. When the stimulus runs out and the Fed ends its $1.25 trillion purchase of (Fannie and Freddie) mortgage-backed securities and $300 billion in US Treasuries, interest rates will rise, housing prices will tumble, and the economy will nosedive. Bernanke will be forced back to the printing presses, the only hope for reversing the deflationary spiral. This will trigger the next crisis, a run on the dollar.
This is from an article by Alice Schroeder of Bloomberg News:
"In all the talk of inflation because the Treasury is printing so much money versus deflation because it may not print enough, there is one type of inflation that is rarely discussed. This is the mega-inflation caused by a sudden currency devaluation. Currency is like any financial innovation, an obligation secured by assets. When the obligation is perceived to have increased far beyond the level justifiable by the assets, which in this case make up a country’s economy, a bubble has formed......Right now, the American economy is worth less than the value implied by the market value of its obligations." (Gold Tells You U.S. Bubble Hasn’t Popped Yet: Alice Schroeder, Bloomberg)
The system crashed because it was built on the false assumption that an unregulated shadow banking system could generate an infinite amount of credit without sufficient capital. This proved to be wrong. Capitalism requires capital. The trillions of dollars in loans, complex debt-instruments, off-balance sheet operations and derivatives contracts were all stacked atop a tiny scrap of capital which eventually collapsed beneath the weight of the debt. This system (securitization) which created the mess, cannot be restored. It required a strong currency, artificially low interest rates, and credulous investors who were unaware of the inherent risks of illiquid assets. Those conditions no longer exist, nor have they for more than two years. Even so, the Fed continues to pump blood into a corpse hoping for some fleeting sign of life. This is why an even bigger crisis cannot be too far off.
The mistake was not in pumping money into the economy. The mistake was pumping it into Wall Street leeches rather than Main Street. It was also in pumping Federal Reserve Notes rather than United States Notes. It was also in pumping it into wars. It's that simple.
Take back the stolen money from Wall Street. Abolish the Federal Reserve System. Plow United States Notes (interest free) into non-war productivity. Pay off the National Debt with United States Notes. Have the federal government hire everyone who is unemployed. Train everyone in highly skilled work at no direct cost to those trainees.
Look, the government belongs to the citizens. Don't let the greedy one's dupe you into believing that government, per se, is inherently evil. It's only evil when the common people don't decide how it is to function. It's only evil when the greedy ones turn it to their advantage over everyone else's.
The Kingdom of God is afterall a government. "Thy Kingdom come" means fairness and justice comes into everyone's heart. Out with evil. In with the righteousness.
After that, if you really want to do things right, abolish money. Do everything by consensus decision at the lowest, local level but networked around the world for the best ideas.
In other words, stop being selfish.
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Tom Usher
Standing Comment, all posts and pages:
To all homosexuals and their supporters, condoners, promoters, accepters, confirmers, and the like:
Unless you have something completely new that hasn't already been refuted, don't bother. It won't show up.
Rehashing what has already been refuted is a waste of everyone's time.
I'm not interested in casting pearls before swine, giving the children's bread to the dogs, or rebuking a forever scorner.
Learn or go away: There is zero wisdom in homosexuality. Homosexuality is wrong. Nothing any homosexual or anyone else can say or do will alter it. No one needs the Bible to know it either. It's prima facie. There's no such thing as an unrepentant-homosexual Christian. There never has been and never will be. That's the way of it. If you don't like it, change.
Do site searches on the various topics concerning homosexuality to determine if your "point" has already been handled. Currently, I provide three different search methods. The "WordPress" search is still the most thorough.
The same can be done regarding militarism, capitalism, coercion, and many other main issues and themes.
TREATMENT, RUDENESS, POLITENESS, OFFENSE, TRUTH
Many times over the course of this website's existence, I've had commentators complain about how I've treated them and/or others. Much less frequently has anyone taken exception to those commentator's comments. I assume that's because for one, I appear to be holding my own.
Often, I have raised the fact that Jesus called certain people "serpents." I've often also mentioned how he cleaned the temple with whip in hand, not that he used it on anyone. It certainly doesn't say that he did, and neither was he charged with it in the kangaroo court of the serpents who ended up murdering him by proxy just for, among other wonderful things, speaking out and speaking truth.
If I say that those who are engaged in serpentine behavior are the New Testament "serpents," then why take offense at my saying it rather than standing with Jesus and me about it?
If others don't like it that I treat others or them the way I have in this regard, why don't they take it up with the serpents and/or their own consciences and God?
If I wanted to catch flies, I'd use honey. I don't want flies on this level. Human beings aren't to be on the level of flies. If the truth is bitter as vinegar, then ask yourself why and learn to taste it as sweet but not sickeningly so. Why attack the message and messenger, as the serpents did, and become a serpent by so doing?
The issue is not "name calling" on some bratty, childish level. When Jesus said "serpents," he was not being as a brat. His level was completely adult to adults and children. He dared say that the children understood the clear and plain truth before the adults who, afterall, had been abused and socialized by the serpents. He still calls adults back. Those who hear him and know his voice (truth) turn around and do the other required things together as well.
What is it for a human being to be more serpentine or reptilian than what God initially gave? What was and remains Jesus's point? What is the reptilian brain versus the vastly higher human brain with its cerebral cortex and frontal and temporal lobes and specific areas of altruistic sentiments and abilities? What are those higher areas before they are damaged, before the communication pathways to them and between them are diminished by evil that is always some form of abuse? How are those pathways reestablished or created where they never were in this fleshly life?
The snake lays its eggs. The eggs hatch. The snake parent doesn't nurture or raise the offspring. It's every snake for itself. Human parents and family are not designed to be that way. Humans hand down the learning of nurturing. Many people get better training than do others, and many people have a greater aptitude for learning and predisposition for the higher and highest virtues. Many are less abused. People can change for the better and best though, no matter where the starting point. They only can't if they don't — if they reject it.
Snakes, of course, also come in venomous varieties and in strangling varieties, etc., such that they have been attackers and even devourers of humans for eons, guilty and innocent alike.
Now, Jesus knew that most people could relate to what were, and still are, largely considered "good" parenting skills and "good" "family" relations. He regularly used those concepts to get people to consider the wider implications for the whole of humanity. He did know that many would refuse. He let them go. He didn't demand secular or false-religion legislation to rein them in with threats of violence and imprisonment. He was not and is not coercive. Even his Church is a voluntary place to be.
What he still teaches (through the written words in the New Testament and as those connect with the Old and also teaches through the Holy Spirit he definitely sent as he said he would) is, among many other things, that "good" is vastly better than has been commonly accepted and that real "family" is everyone left after all the rest have rejected the higher and highest good. He raised the standards far above the Old Testament and far above the "modern" standard.
The American Empire and the American people in general aren't even touching the hem of his garment, let alone even attempting to stand upright and side-by-side with him.
I point out that Jesus was, and is, a Real Liberal Christian. He is the one who brought back this censored truth that is the light. After he had spoken it and lived it and was murdered for doing so, the censors set about to re-censor it and did. They couldn't put it out though — couldn't completely extinguish the truth. I wouldn't be saying it now again with all credit to God, just as Jesus, if they had been able to completely block it.
I point out that each of those terms ("real," "liberal," and "Christian," along with "Church") are actually redundant terms — synonyms that are so close that they become one. The term "liberal" here is not the common usage, which common usage is a deliberate corruption of the term. There is no harm in real liberalism. There is no vileness in it. There is only beneficence. "Real" may be understood as the opposite of false-hearted, dark side, and dead of the Holy Spirit. Christian is both real and liberal in those senses. To arrive at living, doing, being those full senses requires what Jesus lives, does, and is in the highest. Finally, the Church is the whole.
Who are they who want to drag it down, censor it, work against it, lessen it, ignore it, etc.? Well, who sides with Jesus and who sides against him? Did the serpents side with him then? Do they now?
We call war-mongers "hawks." We call "peacemakers" blessed and "doves." Why do the hawks not take offense at "hawks" but do take offense at "serpents"? "Hawks" is not yet as telling to the general public, but I must tell you that all hawks are serpents. Why do some say, "Greed is good" but take offense at "serpents"? I tell you there is no difference between the selfish and the serpents. Why do people take offense at serpents when they do not take offense at homosexuality? I tell you the homosexual spirit also comes out from the dark side. It is a choice. It is harmful. Many are abused with it. Many never overcome it. Their very brain matter is transformed by it. Then they claim it is good when it remains confusion and definitely wrong and harmful.
Many arguments were put forth in support of tolerance. I understood that Jesus "tolerated," as in he did not execute wrath but rather told the truth and let the blind follow the blind (blind to the truth) into the ditch of their own making. I have watched while the movement has been corrupted into condoning what was once only to be tolerated. I have watched further while it has moved from condoning to promoting even to the youngest children to get to them before the truth does. I have seen evil at work, and I sound the alarm. I face censorship and other negative reactions for it.
As the American Empire claims to be a light to the world, it murders innocent babies by Hellfire missiles fired from predator drones controlled by armchair, video-gaming serpents in uniform. It tortures those who are not even suspects. It spies on its own without even probable cause or reasonable suspicion. It lies its way into wars for spoils and control. It neglects its poor, whom it treads down for the sakes of the superrich — for the sake of the massive flow of mammon from the bottom up (no trickledown — trickledown is a farce and always has been). All is claimed to be okay in America though — that America is headed in the right direction — because soon, even "don't tell, don't ask" will be a thing of the quaint past and homosexuals may be able to sleep together and have sex in the barracks with the "blessing" of the Empire while they practice murdering the innocent for the sake of homosexual, greedy plutocrats who own them and who, in turn, are owned by the dark-side spirit named by God and Jesus as Satan.
Whose side are you on? I speak truth to warn. I don't tell the secular government what to do other than occasionally to say what at least would be less hypocritical within their fallen, unenlightened system. I do so for spiritual reasons. What I want is the Christian Commons.
Now, if you submit a comment:
What you write here against the Real Liberal Christian Church founded by Jesus Christ will mark you in the Biblical sense unless you show that you have turned and are repenting in time to escape the damnation of your own choosing. That's the way of it. Don't be tempted by the devil to stand opposed to the call of righteousness. Overcome such evil temptation. Help others to help yet others to come to righteous behavior through-and-through.
Check out how even after reading this, people will still take it out of context and twist it to an evil end.