monitoring the abyss

How gullible are people anyway? Oh, yeah. Right. I knew that. But, in any event, let's examine the fallacy within the fallacy. The full court press that says "we're broke, so we're firing the teachers, ending Social Security, etc., etc."

Hahahahahahaha.

...

And people most harmed by all this rhetoric actually buy into it. Why, AZ just passed a law where you can shoot illegal immigrants on sight, or some such nonsense. But didn't I read that the Goldman-Sachs-types were getting their arsenals together because they thought the public might start shooting at them? AZ apparently found the wrong target.

Well, that is the whole point of government, isn't it? Create a distraction so the public doesn't notice where their interests really lie?

Of course, I digress within a digression. Let's get back to the point here.

I have repeatedly discussed the vast over-productivity of human beings, which allows the ongoing legalized theft inherent in any monetary system. Of course, if we make a "gentlemen's agreement" that we will arbitrarily exclude 20 percent of the population from jobs, over-productivity will inevitably go down. But that has a side-benefit: We then have a 20% untapped buffer of human resources!

So, we have the interesting scenario in which economists who are "thieves-lite" continue to assure us that deficits don't count and that we can (and must) keep pumping money into the system until we reach full employment; that we can do so without risk of inflation. The argument side-steps the reality that IT MAKES A DIFFERENCE WHERE YOU INJECT THE MONEY. In contrast, thieves-lite pretend that it makes no difference where you inject the liquidity, you just have to keep injecting somewhere.

At the same time, their "opponents" claim we need to balance the budget.

Now, arguably, balancing the budget would have the effect of withdrawing currency/liquidity from the marketplace, causing further unemployment and damaging the economy worse that it already is. Oh, beautiful tension of dichotomies.

But if we are to balance the budget (as states are required to do but the federal government is not) then where do we do the "balancing?"

And therein lies what I have referred to as the fallacy within the fallacy. Because the arguments of each side are disingenuous by virtue of the complete lack of discussion as to WHERE the funds will be injected, or FROM WHERE they will be withdrawn.

The proponents of both sides seek to perpetuate the same circumstance that we presently have -- and that is, wholesale transfer of national wealth to the mega-wealthy.

As I have discussed in previous posts, money is a fiction. Responsibly managed it can both increase productivity and allow those with their hands on the levers of power to transparently extract considerable "tribute" from those who use their currency. (Irresponsible management leads to systemic meltdowns ...)

Given that this is the case, the proponents of greater deficits show us that we can instantly solve the budgetary problems of the various States by injecting capital directly into the State governments, allowing them to fund such incidentals as Education and Public Welfare. Upon doing so, the money instantly generates jobs (or at least prevents the loss of jobs) and does precisely what needs to be done to fix the staggering monetary system -- and that is to put everyone to work and also to stem the transference of natural resource wealth to the already mega-wealthy.

Unfortunately, as the states do not have the power of their own currency, they can't themselves do this. So, the thieves in D.C. remain in control. (Which is not to suggest state legislatures are by any means scrupulously honest, just lacking in tools ...)

We can take the same argument and apply it to budget balancing. If the budgets are balanced by eliminating such things as corporate and banking bailouts; along with eliminating wasteful spending on irrational weapons systems and meaningless wars, then we will accomplish the same task of maintaining employment and social services, while stemming the transfer of resource wealth to the already mega-wealthy.

Why is this so? Because it DOES MATTER where the currency/liquidity is pumped into the economy. Or alternatively, where money is pulled OUT of the economy. What matters is not the number of dollars held by any individual or entity, but the comparative percentage of currency that individual or entity holds. If we simply give each person one additional dollar for each dollar he/she already holds, we have not altered the relative pro rata share of money, so the transaction has no impact. Money handed exclusively to banks and giant corporations REDUCES the pro rata share of money each other person is holding, reducing his/her buying power. Money handed directly to workers/consumers INCREASES their pro rata share and buying power.

Money in the hands of working people generates immediate demand. It puts them to work, generating immediate additional productivity. It enables them to compete for purchase of resources (ie, oil, food, minerals, land, etc.) Money injected into Banking Institutions and Mega-Corporations has the opposite effect. The argued concept is that the banks are a neutral conduit who will put the capital into the hands of businesses, who will create jobs. And, the banking industry will extract a "fair" profit for acting as a conduit. But, as we have seen, the banking industry has gone from 7% of the GDP or whatever to 40% or more. Which is to say, the concept of what constitute a "fair" profit has shifted significantly.

More to the point, the banking industry and giant corporations are not "neutral." This capital starts in a highly concentrated form in just a few hands, and rather than flowing to "finance jobs" flows instead to monopolization of natural resources and creation of investment "bubbles." It does not "create jobs," because in fact it takes more and more raw materials out of the reach or ordinary working people.

It's important to understand that bankrupt governments that cannot afford social services are not some accident of nature, but result of intentional philosophical choices. As I've noted, the tax system works solely as a wealth transfer mechanism from poor to rich. Governments at all times have the ability to operate without any tax whatsoever, by merely utilizing the inherent windfall available in issuance of currency and monetary policy, so long as the public will accord that currency full faith and credit for debts and monetary transactions.

If you think this is NOT true, just consider that the US budget does not now and has not for decades had any relationship to tax revenues. The "power of the purse" does not prevent a single war expenditure (much less cause any debate as to whether the US can afford to invade and occupy countries around the world). Completely insolvent banks can be bailed out with trillions of instantly manufactured dollars that have no relationship to real or imagined tax revenues -- indeed, the decisions actually reduce the tax revenues by increasing unemployment and decreasing overall national productivity by significant factors. Giant corporations can instantly become wards of the federal government, followed by a pretense of loan "repayment" representing nothing other than a reshuffling of government provided bailout funds.

And yet, paltry billions for education and social programs cannot be found anywhere because we "don't have the tax revenues."

It's important to understand these are policy decisions and that these policy decisions are sold to the public on the basis of analogies to household and small business budgets. The public buys these arguments because (a) they aren't paying attention; and (b) since they can't themselves print money, there is a ring of authenticity.

Though I say only, "ring of authenticity," because the disparity between "trillions for failed banks" and "not even paltry billions for education and social security" should on the face of it reveal the untruthfulness of the arguments. The obvious question should have been, "if we have no money for education, where did you get the money for JP Morgan Chase and Citicorp? And similarly, "So, why couldn't you have given the banks $1 trillion less (give or take) and thereby have fully funded all of our floundering social programs?"

Or, if the banks were be bailed out after knowingly and fraudulently investing in "liar's loans," why not actually make the payment to the banks reflect as a "repayment" on the underlying defaulting loans? It would be the same money either way -- in the one instance you bail out both the individual and lender counterparts to the liar's loan, in the other instance, only the lender. Again, it is entirely a policy decision to bail out ONLY the financial institutions, and not a financial/economic decision.

The bottom line is simple -- congress believes national wealth should flow to a small "elite" group of individuals. Progressives blame "big business" and the failure of "regulation"; while tea partiers blame "government. This schism is self-defeating, as they are essentially both correct, inasmuch as big business and work with particular synergy toward the transfer of wealth upwards. Breaking this synergy -- either by some return of ethics to the system of governance or by reducing its power -- would arguably improve life for the vast majority. Water does not, after all, flow uphill without active intervention. Nor does money.