Greetings, Piedmonteers! Long time. I have returned. And so forth. Yeah, so, I called MB about writing up the latest Goodles flavor, which I think is “Here Comes Truffle”. And he started screaming about a financial meltdown or something. I had no idea! How could there be a problem? Janet “listen up cause she’s” Yellen just said, “Our banking system remains sound and Americans can feel confident that their deposits will be there when they need them.” For starters, I ran that sentence through Yandex Translate, Clown Worldese to English, and … keep screaming, MB.
It’s not the end of the world. In fact, it could be the beginning of something that ushers in an age of renewal. The trick is getting there. Here follows what I hope passes for a primer on what has happened, what it means, and where we’re going.
First of all, the minutia is meaningless. It’s now too big not to fail, and failure of something evil isn’t the end nor a bad thing. Unless or until you have to personally file an FDIC claim, there’s no valid reason to pay much attention to what CBNC, FOX, or CNN are lying about. Banks and rumors of banks… Heck with it; no fear!
In 2020, I wrote this brief history of the Fed’s machinations and how they have enabled and affected US imperial foreign policy. Given what’s in progress now, that article might as well be history. It’s still worth reading, methinks.
In January, I wrote this essay on the origins, meaning, and ramifications of usury and the hideous effects of mass financialization. It’s really worth reading. Pay attention to how I arrive at a fair current minimum wage of $37.50/hr, an average single-earner income of $300K, the fact that charging usury is akin to murder, and the disdain and contempt held by Jesus Christ and His Father for usurious money lending. Pay very close attention to the cited 2014 white paper from the Bank of England, as endorsed by the Fed, Money Creation In The Modern Economy.
A few days ago, I wrote this column on the current fiasco and a loose three-step process for correcting the damage. I’m expecting a call any minute now from Joe Biden or Kevin McCarthy. Please join me in a collective holding of breath.
Two books that might also be of interest:
…And Forgive Them Their Debts, Michael Hudson (2019) (this is me, the ultra-right winger recommending the economic work of a self-proclaimed socialist - because he’s right);
Debt: The First 5,000 Years, the late David Graeber (2014) (this is me recommending the not-necessarily economic work of an anthropologist - because he was right).
As for tactical advice, I don’t have much. There are no genuine institutional safe havens of investment anymore in the US or the West at large. That is because the entire system is coming apart the way these systems always do. An account at a large commercial bank may be “safer” because the larger banks will be first in line for assistance. Small banks and credit unions may be “safer” because they have fewer incentives to do the truly horrible things that the larger banks do. A balanced portfolio maybe. Some cash. Gold or silver if you can afford it. Uh, just be yourself.
Whatever you do, pay as little attention to the financial press, the regular press, the banksters, and the political trash as you can. Everything related to the US empire is dissolving in real time. Nothing our foreign elites and their domestic lackeys say is honest, reliable, or grounded in any semblance of reality. You may have noticed that they contradict their own wild lies and idiocy day to day - sometimes in consecutive sentences. It is not your imagination: they are, in fact, just making the BS up as they go. Following it closely is as futile as following practical American politics.
From 1913 to 1944 to 1971-3 a shift was implemented, away from real money and industrial, tangibles-oriented capitalism, to financial capitalism and non-existent money. Please read my above-linked summaries about how that worked out. Debt became money. The nature of debt is destructive; as Hudson explains in …Forgive…, page 14, it is “to accrue and intrude increasingly into the economy, absorbing the surplus and transferring land and even the personal liberty of debtors to creditors”. Given enough time, the lenders will eventually own and control everything. Literally everything. Hudson’s is a chronicle of multiple civilizations, within and without the Bible, and their necessary clean wiping of debts to preserve order and life itself. The failure of a society to rid itself of parasitic debt results in something best described as “not for the best”.
Alarmingly, most of the credit issues Hudson (and Jesus, and God the Father) condemned were based on real money and actual value. It’s worse today because none of what passes for our money is real. Usury was traditionally prohibited because it was a bargain on something that did not exist. All of our money is usurious. None of it exists. It is a massive fraud that only serves those who create it while enslaving everyone else. As the BOE explained it: “Of the two types of broad money, bank deposits make up the vast majority — 97% of the amount currently in circulation. And in the modern economy, those bank deposits are mostly created by commercial banks themselves”. It’s all debt. For every dollar or pound loaned an equal dollar or pound is said to be deposited on account. Where does any of it come from? From nowhere. The money for the loans is created by the loans themselves. None of it is real. The banks get to instantly, effortlessly create money to lend, and the borrower must devote a portion of his life and labor to repay that which never existed.
Here’s how the system looks, as pictured from the National Debt Clock, Friday, March 17, 2023:
US Treasury Dollars, on the left, account for the actual, “legal” money in the system. There are less than a billion real dollars, and all of them are off-limits to the public. That’s about $2.50 per person. Ya feel rich? The ratio of real money to fake money, or to the Currency and Credit Derivatives, on the right, is roughly 1:773,000. That is statistically zero. The M2 in between is the Fed’s fake money. It consists of some $2 trillion in paper bills and coinage and a rough floating of a slight majority of Uncle Samuel’s on-books public debt. The grand expression of the value and ownership driven from the pockets of the many to the vaults of the few is in the gigantic derivatives figure.
Be mindful that $648 trillion(!) is a very conservative estimate. The number - and no one knows because it’s so big and so fluid - is plausibly more like $2 quadrillion. $2,000,000,000,000,000 in fake debt. What kinds of loans produce such an incomprehensible sum? All of them. The government debt, mortgages, student loans, car loans, business loans, and more add up to something like $100 trillion. The rest, the true “derivatives”, essentially consist of loans by and between the banks and large financial companies for sociopathic purposes. Ellen Brown beautifully and accurately summarizes the process:
The original purpose of derivatives was to help farmers and other producers manage the risks of dramatic changes in the markets for raw materials. But in recent times they have exploded into powerful vehicles for leveraged speculation (borrowing to gamble). In their basic form, derivatives are just bets – a giant casino in which players hedge against a variety of changes in market conditions (interest rates, exchange rates, defaults, etc.). They are sold as insurance against risk, which is passed off to the counterparty to the bet. But the risk is still there, and if the counterparty can’t pay, both parties lose. In “systemically important” situations, the government winds up footing the bill.