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Stimulus and Catastrophe

Hurricane Sandy shows the difference between bank lending and debt-free government spending. The former is destroying us. The latter can save us. Banks and the U.S. government both create money from nothing. This difference is that banks create money as loans. Thus, bank money is debt. Government money is issued debt-free. The following post is paraphrased from an article whose source is given at bottom…

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Hurricane Sandy was the stimulus that nobody wanted. It took a terrible toll in lives, homes, and dreams, but it will spur the kind of government spending we should have had all along. There will be jobs (at least for a while) in construction, repair, road work, and so on. 

This "accidental stimulus" is a reminder that the things which nurture us as human beings are also sound economic principles, namely the bonds of community, a sense of social responsibility, and caring for one another.

Our nation prospers most when we care for one another. We do best economically when we use our government as an expression of our better selves. Disasters like Hurricane Sandy makes it easier to see the purpose of government – namely to make our collective power more effective.

Unfortunately it always takes a tragedy to make us see the common good, and the common sense, so that we'll fix what's broken. We always pay a high price to come together as a community, when we should have been a community all along.

In her book A Paradise Born in Hell, Rebecca Solnit writes movingly about the human communities that formed after the San Francisco earthquake, the Mexico City earthquake, 9/11, and Katrina. “When all the ordinary divides are shattered, people step up to become their brothers’ keepers. This purposefulness and connectedness bring joy even amid death, chaos, fear and loss. If we could understand this at all times, then our sense of what is possible would change.”

When survivors respond to the needs of the victims all around them, they find meaning and purpose in their own lives. They experience fulfillment in banding together for their mutual well-being. Isn't this how societies should always work?

(COMMENT: Ideally yes, but this is how life usually is...)

ECONOMICS

The same principles apply to economics. We prosper most when we look after each other.

(COMMENT: “No! That is socialism! It is EVIL!”)

Free-market ideologues claim that greed and selfishness leads to the betterment of all. But economics itself, from the days of Adam Smith and even earlier, has emphasized the importance of both individual and collective action. Adam Smith first raised the idea of the market's "invisible hand" in The Theory of Moral Sentiments, but he also spoke of the human need to serve others.

"How selfish soever man may be supposed," Smith wrote in that same work, "there are evidently some principles in his nature that interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it."

The father of modern economics said it himself: Money isn't everything.

God's Stimulus

A friend's email asked if the hurricane was God's way of saying we need more stimulus spending. I responded that God must be a Keynesian, because any objective analysis of what happens shows that Keynesian economics works. Of course, no God would waste human lives in order to send an economic policy memo.

The principle of "catastrophe as stimulus" was confirmed by research into the economic after-effects of the earthquakes in Kobe Japan, Northridge California, Tangshan China, and Spitak Armenia, as well as floods in China and the United States. There is always a short-term boost to the economy, followed by increased prosperity.

(COMMENT: Assuming, of course, that there is debt-free government spending. Too often, however, bankers descend like vultures on the scenes of catastrophes, creating money out of nothing, and handing out loans that shackle everyone with compunding debt, making the situation permanently worse. Sometimes the bankers even engineer disasters they can exploit, such as famines.)

That's one reason why studies by the International Monetary Fund and others predicted that Japan would see GDP growth after Fukushima. Dr. Samuel Epstein notes that Japan's GDP growth exceeded expectations in the wake of the disaster.

(COMMENT: “Community spirit” is not enough. As social beings, we need money as a medium of exchange. For true recovery, the government must hand out money as a gift, i.e. debt-free.)

The growth would have been even greater if Japan had weaned itself off nuclear power sooner -- and spending on alternative energy sources in earlier years would have avoided Fukishima, and would have provided Japan with much-needed economic growth in the years before Fukushima.

Shelter From the Storm

Some estimates put the total cost of Hurricane Sandy's damage at $20 billion, whuch may sound like a lot of money, but it's less than the $29 billion the Federal Reserve put up so that JPMorgan Chase could acquire Bear Stearns during the 2008 financial crisis -- and it's a tiny fraction of the estimated $16 trillion lost because of that crisis.

(COMMENT: The government can create $20 billion with a computer keystroke. As noted above, however, bankers flock to catastrophes, handing out loans in order to increase their debt tyranny. They create this loan money from nothing, and they bribe politicians to let them get away with it. Meanwhile the masses bless this theft by insisting that politicians are truthful in saying the US government had a “deficit crisis,” and a “debt crisis.” The U.S. government has neither. The true debt crisis public debt slavery to the banks. There is no mathematical necessity for this. The purpose is simply to increase the gap between the 99% on one hand, and the 1%, the bankers, and the politicians on the other.)

That $29 billion Fed expenditure to JPMorgan Chase was made in secret. When money is spent to rebuild from Hurricane Sandy, it will be spent in the light of day. Roughly $10 billion of it will come from insurance payments, while the rest will come from other sources -- including the U.S. government. Very few people will object to the expense.

(COMMENT: People don’t object to government spending when there is a natural catastrophe. They only object to government spending after the catastrophe has been cleaned up. They only object to government spending when bankers intentionally create a catastrophe – in which case the masses beg for even more debt from the private bankers. Because, you see, the government has a “debt crisis” and a “deficit crisis.” (Not.) Regarding insurance, the US government can create money from nothing. Why then must we rely on private insurance companies that charge high premiums, and which try to avoid paying when we file a claim? Why can’t the government back all losses? No money would come out of anyone’s pocket. On the contrary, everyone would have more money, since they wouldn’t have to pay for insurance policies.)

Invisible Catastrophes

Some catastrophes are man-made, like the financial crisis. Why don’t we react the same way we are reacting to Hurricane Sandy? That financial crisis brought devastation to far more families, millions of whom are still struggling with lost jobs, underwater homes, and shrinking paychecks.

(COMMENT: Yes, but man-made financial crises greatly increase the power of the bankers, politicians, and the 1%. It’s the American way.)

A study conducted for the American Society of Civil Engineers estimated that it would cost $2.2 trillion just to bring our nation's crumbling infrastructure up to current engineering standards.

(COMMENT: No problem. With a mere computer keystroke, the government can create $2.2 trillion debt-free, without borrowing it from anyone. However, bankers, politicians, and the 1% don’t want you to know that. Meanwhile the masses defend the lies, thus defending their slavery.)

This week we looked with horror at the devastation Hurricane Sandy brought to the shores of New Jersey. But why do we look away from our crumbling schools, roads, and bridges?

(COMMENT: Because national decay increases the power of the 1%, while impoverishing the 99%. This is “God’s will.” Hooray for America! Blessed is the nation whose god is money.)

One catastrophe happened overnight. The other is occurring in slow motion. But if we don't fix that collapsing infrastructure, according the Engineers study, we'll lose even more money than Sandy's going to cost us.

(COMMENT: Under bank tyranny we all run on a treadmill, producing nothing but profits for the bankers.)

The Engineers study concludes that we lose $710 per motorist every year because of unnecessary traffic delays. That's $78.2 billion every year.

(COMMENT: This helps the bankers get richer, if they are authorized to lend money for infrastructure repair and maintenance. That includes the bankers' purchase of bonds.  The bankers themselves don’t care about a crumbling infrastructure. They are above that.)

Then there are the costs from substandard aviation facilities, dams, reservoirs, hazardous waste, parks and recreations, railroad, mass transit ... each of them a loss of human time, ability, and freedom.

(COMMENT: And each of them a gain for the bankers. Every need or misfortune is an opportunity for bankers to create money out of nothing, and lend it at interest. The government likewise creates money from nothing, but without interest, and mainly uses it for things like wars, bailouts, Social Security, and running federal agencies. People have no problem with this government spending. They even accept the fact that the government creates its money from nothing, debt-free.  What they object to, and where they close their minds to the facts, is any suggestion that we use government spending to make average people's lives better. )

If our leaders could find the political will to rebuild our damaged infrastructure, they'd create millions of jobs - and end the millions of everyday catastrophes playing out in homes across the nation. And if they could find the political courage to give our young people a decent education, hundreds of thousands more would follow. Every young person who can't afford a college education is a tragedy, too.

(COMMENT: For that, we would need the government to create more debt-free money out of nothing, and dole it out. Of course, this is “impossible,” since the bankers, politicians, and the 1% claim that we have a “government debt crisis” and a “deficit crisis.” We hear this lie a thousand times a day. And almost everyone believes it!)

The Ties That Bind

It shouldn't take a disaster to make us do what's right, economically as well as morally. And yet it always seems to.

(COMMENT: We can’t blame only the bankers, politicians, and 1% for this. For the lies to have power, the masses must choose to believe them. The liars are enemies, but average people who defend the lies are traitors. And that is most people out there.)

Maybe someday that will change. Every year on New Year's Day, we're told, a senior Buddhist priest in Japan writes a single word of calligraphy which is intended to reflect the spirit of the people that year. After the tragedy of Fukushima the priest wrote the character for kizuna - or "bond" - to symbolize the bonds of community that formed thoughout Japan in the wake of Fukushima.

(COMMENT: Too bad there’s not enough of a “bond” for volcanic, earthquake-prone Japan to give up nuclear power altogether.)

Disasters happen in every age and every lifetime. Another Buddhist monk, priest/poet Soen Nakagawa, wrote these lines in the ruins of Tokyo in 1945: "... and the capital, which disappeared like a dream, will again be born like a dream."

(COMMENT: Or re-born into a nightmare of bank debt.)

The dream of rebirth is formed from the bonds of community. And the bonds of community are formed by the perception of tragedy.

(COMMENT: They are also formed by group-think, and by the herd mentality, which is the source of banker power.)

If we could see the millions of tragedies happening all around us, each and every day, those bonds would be much stronger than they are today. Maybe soon our eyes and our hearts will learn how to see them. When they do, the broken bonds will form again. Then the real recovery can begin. And maybe someday, if we're lucky, we'll be able to forge those bonds without any tragedies at all.

(COMMENT: Someday. Maybe. Anything is possible.)

Source

 

Comments

Here’s another way to look at it. There are only four ways you can get money from any retail bank. (Investment banks are more complex.) 

(1) Draw out money from your own account (your own deposits)
(2) Cash a check that someone has given you
(3) Take a bank loan.
(4) Get capital gains from some investment, such as a CD.

There are only 5 ways that retail banks can get any money

(1) Get deposits from customers
(2) Take a loan from another bank
(3) Issue a loan, and collect payments on it
(4) Receive a check or computer credit from the government, or from someone as payment for services rendered.
(5) Receive a transfer of funds from some non-retail branch of the overall banking firm.

For the U.S. government, there is only one way it gets money: namely, use its computer keyboard to create money out of nothing, and then credit the accounts of recipients. This is called “government spending.” Government money does not actually exist until it is spent (i.e. until someone’s bank account is marked up or augmented upon receiving a government credit).

So if you receive a $500 Social Security check from the Treasury, and you cash it, then your own bank account is marked up by $500. Voila: the government has created $500 from nothing. No lending or interest is involved. Is the Fed involved? Yes, but only as an accountant. The $500 is not a loan from the Fed, or from any other bank. It is an interest-free dispersal from the government.

And where does the government get its money? Once again, all together now…

N.o.w.h.e.r.e.

Those who think the U.S. government borrows its money (or gets it from taxes) do not understand how the system works. They are drinking the kool-aid passed out by politicians.

People like Bill Still need to lay off the kool-aid. There are plenty of economists that speak the truth and explain the facts. I have mentioned them in past posts.

For the U.S. government, there is only one way it gets money: namely, use its computer keyboard to create money out of nothing, and then credit the accounts of recipients. This is called “government spending.” Government money does not actually exist until it is spent (i.e. until someone’s bank account is marked up or augmented upon receiving a government credit).

I've yet to see any evidence whatsoever that this theory has any merit. It simply does not fit with the empirical evidence.

I've yet to see any evidence whatsoever that this theory has any merit. It simply does not fit with the empirical evidence.

The empirical and objective facts and evidence are right in front of you, but you cannot see them, and you cannot be reasoned with, since you are blinded by emotion. You are motivated by ideology, not by logic. I was the same way when I first learned of the truth. Like you, I insisted that the USA did not have monetary sovereignty; only the private banks did.  I insisted that all money came from the Fed as a loan. I thought of money as a physical thing that existed in limited quantity. I thought that inflation was caused by “printing too much money.” I thought that when a bank issues a loan for $500k, then $500k worth of currency is moved. I thought the US government ran on tax revenue, plus the sale of T-bills. Like you, I was brainwashed by politicians’ lies. I thought the US government had a “debt crisis” and a “deficit problem.” I could not understand why professors and economists like Michael Hudson, Warren Mosler, L. Randal Wray, Stephanie Kelton, and many others disagreed with me. My position seemed so obvious to me. I corresponded with Michael Hudson and Warren Mosler. I mentioned Ellen Brown. They said Ellen is correct about some things, but mostly she is flat wrong.  I did not like that. In my frustration, I thought them arrogant. I thought they were defending the bankers, when in fact they want to overthrow the bankers, as I do. Once again we see that we have our greatest and most heated arguments not with those who flat disagree with us, but with those who mostly agree with us. Political revolutions are the same.  The greatest violence tends to not be between the revolutionaries and the reactionaires, but between various factions of the revolutionaries who basically agree with each other.

There are several blogs and web sites of these economists that I could refer you to for your own study, but this is useless when emotion rages. Many of the reader comments at these blogs exhibit the same emotion-based rejection that you do, and that I did for a while. It took me almost four months to finally put my emotions aside, and realize that these professors and economists were totally right, and I had been wrong. I was me who had been arrogant, because of my blindness and frustration. When I saw the truth, everything fell into place. It is all very simple. It had been in front of me all along. The emperor has no clothes.

Last Monday I ordered four books from Amazon that explain the truth about money mechanics in greater clarity.  It costs me $92.00. Today is Friday and they have not yet arrived. Whenever the books do arrive, I could read them and write posts that summarize them, but this again would be useless. Most WUFYS readers have no interest in this topic, and those that do are blinded by emotion, just as I had been at one time, and you are now. The mechanics of this blindness are identical to those that maintain the belief in the Jewish holo-hoax. The blindness is purely emotional and ideological. And when we are emotional, anyone who points out that our blockage is emotional makes us even more emotional. We are all the same in this regard. It is human nature. I was no exception.

We can laugh at people who worship the holo-hoax or the war on terror, or people who once thought that that the cure for disease was blood-letting, but all of us go through similar phases in our understanding. 

The moral of the story is that whether it is the holo-hoax, helio-centrism, medicine, national finances, or any other topic, you cannot wake anyone up while they are emotional. You can only plant seeds that (in some people) will sprout in the future when people eventually calm down. Until that time, people who are still in the emotion phase will falsely regard you as an arrogant idiot (as they do me, and as I did with several economists). Socrates was sentenced to death. Ignaz Semmelweis was tortured and locked into an insane asylum, where he died. Tycho Brahe initially rejected part of Copernicus’ heliocentrism, but when Tycho later saw the truth of it, Tycho caused so much anger that a fellow nobleman challenged him to a sword duel that cost Tycho part of his nose. Kepler then rejected Tycho’s findings, but when Kepler later saw that Tycho was correct, Kepler was rejected by his own teacher. Galileo and Descartes then rejected Kepler. When Galileo later saw that Kepler was correct, Galileo was put under lifelong house arrest by his fellow “scientists” in the universities who favored Aristotelian cosmology. (It was Aristotle, not the Bible, who said the sun orbits the earth.) In our own day, people have been imprisoned for questioning the Jewish holo-hoax. 

The pattern has persisted through the ages. First we dismiss the truth. Then we ridicule it. Then we attack it. Finally we accept it, claming that “I knew it all along.” We can laugh at this, and think people are fools, but we are all fools in this regard. We all pass through phases in our understanding. This is human nature. Therefore, if I call you stupid, then it is I who am the stupid one, for I have been where you are now. Did you believe in the holo-hoax as a child? I did. If I claim that people who believe in the hoax are fools, well, I too was a fool, and I doubtless remain a fool about other topics. That’s life.

One other thing. These economists I mentioned above. When I argued with them, and they grew tired of going over the same topics again and again, they started saying things like, “Enjoy the learning process.” I didn’t like that. I was annoyed. I thought they were arrogantly dismissing me. But I kept thinking about what they explained. When I eventually saw that they were correct, I felt foolish. However I console myself by remembering that we all go through this same cycle with regard to many different topics.

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