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David Stockman, who helped Reagan establish supply side economics (aka grand theft) as the norm in America's economy in the Eighties, has a new book out that explains at great length what a mistake all that was. In his actual text, he tries to place the blame further back in time, on the Roosevelt administration, but it's largely a specious argument.

It would be more accurate to place the turning point on the Powell Memo of 1970. That's when lying, propaganda, and its consequent thefts became purposeful and predatory in our banking and business community.

Every book can be summarized in one sentence. War and Peace, for example: "It's about Russia." David summarized his financial tome on John Stewart's Daily Show as, "The world could get along just fine without Goldman Sachs."

He went on to talk about separating investment banking from commercial banking ("super Glass-Steagall"). What he is really putting across in his book is the hollowness of our modern dollar, and how it got that way.

Our US currency is the world's reserve currency, which makes it special everywhere. But it is just trust, in the end. And we should be worried about that trust. Follow me over the squiddly-doo and see how things stand.

Historically, currencies arose after credit, which is simple handshake trust between members of the same tribe or adjoining tribes.

Once neighbors are long-accustomed to trading chickens for buffalo hides they move on to “you plow my field in the spring and I’ll give you grain next fall.”

Later they decide that clam shells or shiny metal in weighed amounts will be a measure of these trust arrangements, even spanning generations.

Eventually they decide that pieces of paper with numbers on them will be a measure of these trust arrangements.

Quite naturally (given human nature), wiseguys in politics, banking and other criminal enterprises quickly learn to feed like vampires on this trust, learn to inflate the value of the paper currency and outright steal it without restraint.

This predatory grand theft inevitably gets entirely out of hand, forcing working people to smoothly move back to the previous trust arrangements that worked for them before the wiseguys made the fiat currency hollow.

Black market exchanges of goods, services, labor and other handshake arrangements of every kind abound in our current economy — a real measure of the necrosis of our fiat currency. “Catch me if you can” is the economy of the unemployed and unemployable. Life doesn’t end after 99 weeks of unemployment checks. Life may be little more than “three hots and a cot” but life goes on. With a lot less paperwork, too.

We are well past the point where the Federal government could cancel all taxes and fees whatsoever, and simply print more money to cover the “loss in revenue.” Our fiat currency only operates at this point as a plausibly legal means of continuing to separate things of value from the 99% and transfer them to the 1% and their enablers.

Logically, a very, very few people will eventually end up “owning” everything of real value through this continuing “grand theft via fiat currency” system, including the water and air and even personal rights to do this or that.

It will be Orwell’s world: “. . . imagine a boot stamping on a human face – forever.” Everything is pointing in that direction.

Or, everything fiat will fall down before we get there.

The very, very few will find it harder and harder to keep the many from actively taking back whatever they need to live, and letting the wealthy eat their paper money for dinner.

Sisyphus always has a real hard time with those last few feet.

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Comment Preferences

  •  Tip Jar (7+ / 0-)

    "The rule of the wise must be absolute . . . rulers ought not to be responsible to the unwise subjects." ~ Professor Leo Strauss

    by antifa on Mon Apr 08, 2013 at 08:46:01 PM PDT

  •  well ... life doesn't go on if you develop a (2+ / 0-)
    Recommended by:
    NotGeorgeWill, antifa

    serious medical condition.

    in that case, this being the land of the free and the home of the brave, you will just die.

    To put the torture behind us is, inevitably, to put it in front of us.

    by UntimelyRippd on Mon Apr 08, 2013 at 09:39:12 PM PDT

    •  Quite so . . . but (1+ / 0-)
      Recommended by:

      just as someone who sees family members die wrongful deaths under the influence of a Hellfire missile from an American drone flying over their sovereign nation never finds love for America,

      an American who sees a family member die without medical care taken from them so corporate bottom lines and Wall Street speculators can be even richer than ultra-rich never finds love for America either.

      Theft of this kind breeds revolution as surely as Hellfire missiles.

      "The rule of the wise must be absolute . . . rulers ought not to be responsible to the unwise subjects." ~ Professor Leo Strauss

      by antifa on Mon Apr 08, 2013 at 11:01:52 PM PDT

      [ Parent ]

  •  You don't state a claim (10+ / 0-)

    Your diary doesn't make a lot of sense.  You cite Stockman and say that he thinks the world doesn't need Goldman Sachs.  Duh.  But what does that have to do with the rest of the story?

    Supply Side bullshit had two major concepts.

    1)  Deficits are okay because they cause growth which causes more revenue which closes deficits. This is Keynsianism and is true in a recession, false at other times.

    2) The way for 1 to happen is by cutting taxes on the rich, not by spending on society at large.

    Of course point 2 was the whole point, cut taxes.  But now we have a Democratic president and a depression, and Keynsianism is the obvious answer, but the Banana Republicans want Obama to "fail", so they are sabotaging the economy.  Thus they deny point 1 and demand point 2 anyway, accompanied by massive austerity cuts on the 99%.

    I'm under the impression that Stockman is really calling for more austerity. Not sanity.  Am I wrong?  Did he really change sides, or is he just playing a different card from the same old deck?

    •  Stockman is calling for a return to the gold . . . (4+ / 0-)

      standard, which did wonders for the world economy in the run up to the Great Depression.

      Yes, the value of a dollar is based on trust -- trust that the Fed is transparent about the amount of actual money in circulation and the size of the money supply, trust that the U.S. government will be around, and so on.

      But the idea that a gold standard embues the fiat money with some magical "real" value isn't really accurate either.  Yeah, we could conduct trade in some other physical commodity, but it wouldn't be a very efficient way to conduct commerce.

    •  Rentiers. Rentiers. (5+ / 0-)

      "Supply side" economics is a bastardization of Keynes, and of Adams' "Wealth of Nations." It leaves out entirely a class of persons born into incredible wealth, who live their lives without labor or other contribution to society, merely custodians of capital who collect tolls on every kind of economic activity.

      If these rentiers are not included in the daily accounting of our economy, and their standing wealth taxed or nationalized and returned to circulation regularly, the economy locks up into huge pools of standing, inherited wealth. Usually found offshore.

      "Supply side" economics was wordplay in the Eighties, and it is wordplay now. The bastards who trumpeted it then and extol it now are conscious liars. Numbers don't lie -- it is theft on a grand scale.

      Stockman is also lying when he calls for the gold standard as some kind of solution, and when he calls for austerity. Both are based on the myth that sovereign government budgets are no different than household budgets.

      They are totally different.

      Government deficits represent the money available to the population. If there were no government deficit, there would be no money in circulation. A balanced budget is great for a family on Main Street, but a balanced budget is a depression for the sovereign nation that achieves it.

      "The rule of the wise must be absolute . . . rulers ought not to be responsible to the unwise subjects." ~ Professor Leo Strauss

      by antifa on Mon Apr 08, 2013 at 11:09:56 PM PDT

      [ Parent ]

      •  Two excellent points (0+ / 0-)

        I'd rec that twice if I could.  Once because you brought up rentiers, who are the real beneficiaries of the economic changes wrought since Reagan and Stockman came in.  And second for pointing out that the deficit is where money in circulation comes from.  The mainstream media do not point that out; they still have fantasies of yellow commodities, which make no sense.

        Historical point:  During the gold era, finances were not stable.  Spain's conquest of Mexico brought much gold to Europe, leading to inflation, not prosperity.

    •  In the article from the NYT a week or so ago, (2+ / 0-)
      Recommended by:
      geordie, K S LaVida

      Stockman certainly called for more austerity (as well as a return to the gold standard). He has not changed sides at all and isn't even really pulling out a different card as far as I can tell. He thinks the New Deal and the Great Society programs are the cause of our economic problems and wants a social welfare net for only the very few, most destitute people.

      You can't scare me, I'm sticking to the Union - Woody Guthrie

      by sewaneepat on Tue Apr 09, 2013 at 05:35:01 AM PDT

      [ Parent ]

  •  Actually, it would appear that (2+ / 0-)
    Recommended by:
    DBunn, antifa

    social currencies preceed currencies in general and the idea that we bartered before we spent is a myth as well. I'd recommend Graeber's Debt.

    Money is an effect, not a cause, and it is being used to separate have's, in the sense of actual possession of things (such as land, resources, etc.), from have-not's, the rest of us who are being forced into a newer form of slavery, but slavery nevertheless.

    As long as the love of money exists, the have's will find plenty of have-not's to do their dirty work, be it in the form of private security, police or military.

    My real question is, however, which "last few feet" does Prometheus have such a hard time with?

    None are so hopelessly enslaved as those who falsely believe they are free. -Johann Wolfgang von Goethe

    by achronon on Mon Apr 08, 2013 at 10:10:22 PM PDT

    •  Pretty sure it's supposed to be Sisyphus (3+ / 0-)
      Recommended by:
      antifa, achronon, sewaneepat

      The guy who had to roll a rock up a hill.

      Not sure though, what any of this has to do with either Sisyphus or Prometheus.

      •  My apologies. It was Sisyphus I had in mind. (2+ / 0-)
        Recommended by:
        achronon, LucyTooners

        The rock Sisyphus forever failed to roll up hill is like the ultra-rich robber barons of today trying to ultimately own and control and collect tolls from every single human being, in every kind of economic activity.

        That is the "boot on the human face" they intend to achieve, and it looks possible with all the high tech surveillance and weaponry in their hands nowadays.

        But it won't work. The further into austerity and poverty you drive any populace of humans the less they have to lose by taking you and yours on, live or die.

        It needn't even come to that. All it needs is to reveal and ridicule the rich, and refuse to use their money, and take over or build your own factories, and ignore them.

        Let THEM eat cake made of trillion dollar notes.

        "The rule of the wise must be absolute . . . rulers ought not to be responsible to the unwise subjects." ~ Professor Leo Strauss

        by antifa on Mon Apr 08, 2013 at 11:56:26 PM PDT

        [ Parent ]

    •  Graeber said we share freely before we trade (1+ / 0-)
      Recommended by:

      Any sane tribe looks after its members without much consideration of debt.

      Trade and barter is where we start keeping track of favors done and gifts given that are expected to be returned in due course.

      When it comes to regional or national or global trade, some agreed upon physically valuable currencies appear. Gold, pepper, spices, have all served. When the industrial world grew beyond any one physical currency serving as money (no physically valuable  currency can move fast enough to keep up with modern economies), fiat money came to the fore.

      Theft of it, and inflation of it for purposes of theft, have grown rampantly since the establishment of a private consortium of bankers to print debt instruments and issue them to the nation in the name of Congress and the Treasury. Jekyll Island, 1913.

      Since then, each dollar, in each transaction it partakes in, provides a cut to the private consortium who issued it as a debt instrument.

      The Treasury could issue green dollars with no debt attached. Andrew Jackson did it, and Lincoln did it. Just provide green dollars in the amount needed so that the people of the Republic have enough to buy and sell at the pace their productivity allows. To hell with bankers taking or believing they have the right to a slice off the top.

      We now have unknown and hidden rentiers holding something like $32 trillion of inherited and hoarded wealth hidden offshore, untaxed and untraced, nor is our government all that eager to go after it. Ask Attorney General Holder about it and see.

      That money is supposed to be circulating within our nation, looking after our infrastructure, our people, our defense, our environment, our education, the quality of our lives.

      Instead, the richest of the rich (and their servants and followers) are intent on hoarding ever more, forcing austerity on all Americans until our lives are like something George Orwell described.

      The last few feet Prometheus has trouble with? Getting the population to accept and keep accepting austerity. Look at the headlines around the world. All it takes is the price of flour to go beyond the reach of the common man and governments topple. Mass strikes in England. Mass demonstrations in Spain.

      Americans will eventually do the right thing and nationalize the banks, and all the stolen wealth. All of it. America's ultra-wealthy sit atop the richest nation in human history, with the biggest collection of arms and technological killing prowess in human history, and they think they can dominate the globe economically and militarily and keep the American populace under the gun as well.

      They won't get that rock to the top of that hill. Why? Because they are actively hollowing out everything it means to be a free American by hollowing out our Constitution and changing this from a land of laws to one ruled by rich and powerful men alone.

      No empire in human history ever stood long once it reached this point. It's hollow. It's gone.

      "The rule of the wise must be absolute . . . rulers ought not to be responsible to the unwise subjects." ~ Professor Leo Strauss

      by antifa on Mon Apr 08, 2013 at 11:36:35 PM PDT

      [ Parent ]

  •  So the one sentence summary of the book... (3+ / 0-)
    Recommended by:
    Bob Love, antifa, killjoy

    ... Is David Stockman is right about a few things, horribly wrong about many others.

    His book says that crony capitalism is wrong, along with supply-side. It also says that the New Deal needs to be rolled back and a balanced budget is an imperative.

    No, you can't fix stupid. You OUTNUMBER stupid. -Wildthumb, 1/10/2013

    by newinfluence on Mon Apr 08, 2013 at 10:21:20 PM PDT

    •  David Stockman wrote a Huge book (3+ / 0-)
      Recommended by:
      jayden, kickbass, happy camper

      because he needed to beat all around the Mulberry bush. Then back around the other way. Then he beat the bush itself and slapped the monkey while he was at it.

      It goes on and on excusing and apologizing for economic conditions and practices and trends he had a major part in setting into motion. Without the decency of an abject apology, either.

      You did not hear me say he is right about anything. He wrote his book to keep himself in the news, a pundit and commentator on economic history. Could lead to a gig on TV or some income on the lecture circuit.

      He never said or did anything right or accurate about America's economy and he never will. He is in it for David Stockman, and doing his very best to sling propaganda around with the best of them.

      What you do not hear from his writing, and will never hear, is the idea of America looking after Americans. It is all about achieving unbelievable economic growth so we can be the greatest, richest nation in the world.

      You see the neocon agenda there, do you not?

      There are tribes of genuinely Stone Age headhunters in Borneo who have the common sense to look after their own people. Americans who value global empire at any price could use some of that common sense.

      "The rule of the wise must be absolute . . . rulers ought not to be responsible to the unwise subjects." ~ Professor Leo Strauss

      by antifa on Mon Apr 08, 2013 at 11:45:38 PM PDT

      [ Parent ]

  •  Another blah, blah, blah. (2+ / 0-)
    Recommended by:
    achronon, happy camper

    The gold standard is the WORST thing we could possibly do in a depression.  Try printing money on that one.

    Boehner Just Wants Wife To Listen, Not Come Up With Alternative Debt-Reduction Ideas

    by dov12348 on Mon Apr 08, 2013 at 10:53:55 PM PDT

    •  Printing money AND GIVE IT TO PEOPLE (0+ / 0-)

      The problem we have right now is the fed keeps printing money (increasing the money supply) but then giving it to people (banksters) that take it to Wall Street for more gambling.

      Send every american $10K especially if we tell folks they can't put it in the bank...

      •  The problem is that we are printing money and (0+ / 0-)

        not getting anything for it.  If you give it to the people, they will spend it on cheap Chinese shit.  If you create jobs with it and those jobs give us something real, it educates our children, it improves our infrastructure, it lowers our dependence on fossil fuels, then the deficits don't matter.  If we waste it on the stock market or printing money to save the worthless banks and investment houses then it is a dangerous deficit.  All deficits are not created equal.  

        •  Sure someone should do something smart, (0+ / 0-)

          in the absence of that, just give people free money. It really doesn't matter, at this point in time, whether the stuff people buy is made in China or down the street. To get an economy moving, you have to start the economy moving. People buying things, putting money in motion, is what creates demand, that creates jobs, that puts more money in motion.

          So SHOULD the government spend more on building roads, fixing bridges, and water systems, installing broadband everywhere, sure. Will they, of course not, because that makes sense.

          •  Then just giving people money does not have any (0+ / 0-)

            long term benefit except in China but it does create a deficit which we will have no long term way of paying for.  Give people jobs that matter and it will  create long term demand and heal the economy.  

            •  Ahh, the "paying for it" worry (0+ / 0-)

              If the Fed prints money and gives it to you, what's to pay back? The Fed makes money, that's their job.

              As for $ going to China, thats just plain wrong. Most economic activity in the United States is, not surpringly, in the United States. The beneficiaries of US economic well-being are primarily Americans.

              In 2012 the US GDP was ~$16T, our trade deficit was ~$540B.

              •  Then all deficits are fictitious in your (0+ / 0-)

                estimation so why bother to keep track, why bother to tax, just let the FED print money and see if our creditors will accept our currency without a serious fiscal policy.  Better yet, instead of the FED printing money just give everyone a printing press and let them go to town since it doesn't matter(in your universe).

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