This Is How It Will End

I was reading a great work by Reinhold Niebuhr called, Moral Man and Immoral Society, when my mind left the pages to focus on a thought. The book was written in 1932. This will help you to understand the dialogue at the time. Karl Marx with his teaching were the seeds for the Russian Revolution. Unions were still not accepted by producers and there were constant conflicts with strikes between workers and owners.  Oh, yeah, the world was in the mist of the Great Depression.
The global community did not have the instant communication that it enjoys today. Before I continue, let me digress on the last sentence. Rapid communication also allows too many people to post their opinions to which, most are diseased. These same people go to bed saying, "I want this..." and they wake up saying, "Give me that..." This is central to the theme of Niebuhr's work. There is an injustice. It is right to protest, however one must make sure the answers to the injustice does not cause a new injustice.

Debate

There was a running debate in the journals at that time between remedies for workers injustice, wages and benefits (seems like nothing changes over time) and the outcomes of those solutions. These debates were mainly between capitalist, socialist and Marxist. A German economist, M.J. Bonn agreed with many Marxism complaints about capitalism. This was rare because Bonn was not a Marx follower. This is what he wrote:
- "The capitalist world in which we live has formed the habit of conveying credit, the elasticity of which is exceedingly large, mainly into channels of production. It is still obsessed by the precapitalistic notion that consumption is an evil which represents a more or less unavoidable extravagance...Apart, however, from consumer-financing, which, after all, constitutes only a
comparatively small part of total consumption, the fact remains that production is over and over again expanded with the aid of credit derived from or built up on savings, in particular by the construction or expansion of costly plants which can turn out goods as cheaply as estimates proclaim, only if they are fully employed; whereas consumption is left to itself..."
He conclusion, "production far outsteps consumption..."
The complaint Niebuhr had was the effect. The blind self-interest of power in a world of unequal economic power.

Dear Reader, this is what I ascertained from the debate. Banking put its money into production of goods, but failed to realize the common competitive practices of the global community. Everyone was doing the same thing. Production exceeded the demand. With too much supply, prices decline. This was the world in 1932. When demand disappeared, layoffs followed. Now, the media with the backing of big money say that tariffs caused the depression. It may have had a part in the play, but the central cause was too much production caused by too much available credit from banking. Bonn had it right.

Next step...

Banking had too much credit. It needed an outlet for its money to grow because the self-interest of banking is wealth and power. The world went to war and debt multiplied. The US had over 200% debt to GDP and this was a time due to the war that production was full throttle. You may not know that the US tax rate was as high as 90% right after the war. The government made a progressive push to cut debt. This gave banking a gloomy outlook.
Then, some new ideas to stimulate the economy came into play. The G. I. Bill helped housing. It also had school loans. The demand for housing was huge. President Kennedy, a Democrat was the first to suggest a tax break for citizens. This made another big impact. By the way Kennedy also had one balanced budget and very little deficits in his other ones. His total deficits were less then the present interest on debt that we are currently paying. Another tidbit? The Republicans were fiercely opposed to his tax cuts, Now, that is their only idea for the economy.
Bottom line: the economy rolled and the consumer played a big part in the recovery. People in those days paid in cash and their dollar was strong.

Banking took notice...

Within the banking community new venues were opening up for the industry to lend money and credit. Technology added to the success of banking. The advent of the credit card was the next step. It gave banking tremendous growth. Consumption grew its power in our GDP. We began losing manufacturing jobs, but the American inventiveness grew a service industry. It grew into its present position of 70% of the economy. However, the limit of consumers to add growth to the economy was demonstrated with the last financial crisis in 2008. Banking needs the next step to maintain its power and wealth. Today, US consumer debt is at record levels at $14.5 trillion and growing which adds more risks every day. The present "work freeze" due to the virus will not only explode consumer debt, but the repetition of stimulus packages will rocket the national debt off the charts. When the dust clears, realization of the true value of the dollar could be a death knell.


Derivatives and more...

Derivatives is a train wreck waiting to happen, but that is only a tip of the iceberg. After the financial crisis, banking was forced to reexamine itself. It does not like what it saw. It needed something more than insurance of the derivative market. It fears that within each nation a backlash is coming unless they find a new way to continue the game of fiat money with endless credit to ensure their future. The debt ratio to GDP in every nation would be their choice.

Negative rates

This is banking's answer. They roll over debt into new debt, but at a lower rate. Society has not the voice to challenge their power. Citizens are disenfranchised. Banking is buying time and hoping a new option appears on the horizon. It won't! The new push for a "cashless" society is another option for banking to buy time.
Negative rates says money is worthless. They prove it by giving you less than you invested. They do not admit that they are failures. They will use their power to force new regulations, but eventually, this will awaken the masses to their crimes. The end won't be pretty. It will be more destructive than the Great Depression. When will it happen? Cannot say. Possibly, the warning signs are already present. In banking's second step for power and wealth, they have already destroyed the retail industry with consumers existing from week-to-week, paycheck-to-paycheck. Currently, we have a repo crisis that is being hidden like the Chinese tried to keep the lid on the virus. I can say this. The home team, you and I are losing late in the game. Our relief pitcher just gave up a home run to the virus. Things are not looking good. Our other relief pitcher has an ERA that is terrible like the rising bankruptcies in the US.

Our only chance is to rescind all debt owned by central banks and end central banks. Regulate all banking to a utility purpose. They don't create anything. They bleed society with usury. We need to return to a gold standard. We need a balanced budget all the time. We need to reevaluate how GDP is assessed. If the economy grew, but so did pollution, what is the real economic situation? Is this progress? Is this real growth? If you cannot service debt, you should not be allowed new debt. People, there is a beauty in stable prices. It helps stabilize family life. This is a most overlooked necessity in our nation. We lack a homogeneous society. At present, 24% of the population is in poverty. We are beginning a period of economic divide in job formation and pay. Technology advances like driverless cars, electric vehicles and the continuing retail catastrophe will further expose our society. If one thinks school shootings is a national issue, wait to you see mass civil unrest. The currency issue will cause the pot to boil over.

It is no longer an if, but when the global community forces the issue, probably through the IMF, the US dollar will lose its status as the world's reserve currency. The abrupt consequence will be severe inflation. This will be more apparent as those 24% grow older. This points to a future with one in four that could end up dysfunctional, violent and unproductive. We are not promoting the general welfare. This is why we need a stable currency. All of the Fed's policies are destabilizing. This is I always say, End the Fed!

With a strong currency, there is no inflation. People work and live their lives the best that they can in pursuit of happiness. Sadly, no candidates understands economics, the joy of peace and not letting the paranoid control our government with phony ideas like our national interest. They are war mongers and the military budget is their self-interest. Our national interest should be peace and seeking ways to maintain its presence along with promoting the general welfare. We also need a new third political party to which the cornerstone is a foreign policy of less military and no foreign entanglements. At home, government should do what is best for our workers and citizens. Even if the party fails to take a solid position in our political system, the ideas will eventually be included into the two main parties. They are smart enough to know when ideas are captured by the public.

Remember, the GPO stands for Guardian of Privilege. They only promote their general welfare. They say that they are for capitalism, but like the stimulus package, they will use socialist's subsidizing of corporations. Democrats are egocentrics. They have sold out the working class a long time ago. They have no principles. They will say anything to get elected with no real conviction in whatever they declare. It appears that by offering enough largesse, they have fooled the public again. We live in dangerous times. If our nation continues like both political parties are doing, we will lose the reserve currency status of the dollar. It would have already happened except the global community cannot agree on how to replace the dollar. The future holds a day of reckoning with all the debt that we created. It may be too late at that time to realize that self-sufficiency is the key to a stable society that seeks the pursuit of happiness.

Note: This is the most important insight that I posted on financing, especially considering, the limited space.