Actually, I feel grateful to the America I knew and the accomplishments of my ancestors. So it is with sad revenge I refuse to buy and sell into our present chaos. Buffett is a clown and stingy- see Rose. A friend's husband bought Buffett's used wallet at an auction for 40 grand, I think. To what purpose?
On Oct 17, 2:15�am, "\"Lone Wolf\"" <[EMAIL PROTECTED]> wrote: > The American dream, when the US with 6% of the world's population > consumed 50% of the world's commodities is over. The foundations on > which the dream was built-- the power of US industry and its banks > are > no more. The US is a tattered absurd caricature of its former > self, as the institutions upon which is rose collapse one > after the other like a house of cards > > On Oct 17, 3:03�pm, "M.A. Johnson" <[EMAIL PROTECTED]> wrote: > > > > > Good and Bad CreditbyFrank Shostak > > Posted on 10/16/2008 > > On Wednesday October 8 the Federal Reserve, European Central Bank, and four > > other central banks lowered interest rates in an emergency coordinated bid > > to ease the economic effects of the financial crisis. > > The Fed, ECB, Bank of England, Bank of Canada, and Sweden's Riksbank each > > cut their benchmark rates by half a percentage point. Furthermore, China's > > central bank lowered its key one-year lending rate by 0.27 percentage > > points. According to a joint statement by the central banks,The recent > > intensification of the financial crisis has augmented the downside risks to > > growth and thus has diminished further the upside risks to price stability. > > Some easing of global monetary conditions is therefore warranted.The Fed's > > decision brought its benchmark rate to 1.5%. The ECB's main rate is now > > 3.75%; Canada's fell to 2.5%; the U.K.'s rate dropped to 4.5%; and Sweden's > > rate declined to 4.25%. China cut interest rates for the second time in > > three weeks, reducing the main rate to 6.93%. One day earlier the Reserve > > Bank of Australia had lowered its policy rate the cash rate by 1% to 6%. > > Only a day earlier Federal Reserve Chairman Bernanke announced that the US > > central bank is ready to intervene in the commercial paper market. The Fed > > will now buy commercial paper issued by corporations meaning the US central > > bank will make direct loans to corporations. > > It seems that Bernanke is ready to push trillions of dollars to keep the > > monetary system alive. > > Bernanke is of the view that a major reason for the Great Depression of > > 1930s was the failure of the US central bank to act swiftly to revive the > > paralyzed credit market. By "swift action," Bernanke means massive monetary > > pumping. > > The Fed chairman continuously reminds us that at least he has learned the > > lesson of the Great Depression and will make sure that the error that the > > Fed made then will not be repeated again. > > At theconferenceto honor Milton Friedman's ninetieth birthday, Bernanke > > apologized to Friedman on behalf of the Fed for not pumping enough money to > > prevent the Great Depression:Let me end my talk by abusing slightly my > > status as an official representative of the Federal Reserve. I would like > > to say to Milton and Anna: Regarding the Great Depression. You're right, we > > did it. We're very sorry. But thanks to you, we won't do it again.(Milton > > Friedman and Anna Schwartzwrotethat the key factor behind the Great > > Depression was the failure by the Fed to pump large doses of money.) > > Central-bank policy makers have said that the key for economic growth is a > > smooth flow of credit. For them (in particular, for Bernanke) it is credit > > that provides the foundation for economic growth and raises individuals' > > living standards. From this perspective, it makes a lot of sense for the > > central bank to make sure that credit flows again. > > Following the teachings of Friedman and Keynes, it is an almost-unanimous > > view among experts that if lenders are unwilling to lend, then it is the > > duty of the government and the central bank to keep the flow of lending > > going. > > For instance, if in the commercial-paper market lenders are not there, then > > the Fed should step in and replace these lenders. The important thing, it > > is held, is that various businesses that rely on the commercial-paper > > market to keep their daily operations going should be able to secure the > > necessary funding. > > Will the increase in money pumping by central banks unfreeze credit > > markets? Experts believe that this will do the trick. If the current dosage > > of pumping won't work, then the central bank must continue to push more > > money until credit markets start moving again, so it is believed. > > It is true that credit is the key for economic growth. However, one must > > make a distinction between good credit and bad credit. It is good credit > > that makes real economic growth possible and thus improves people's lives > > and well-being. False credit, however, is an agent of economic destruction > > and leads to economic impoverishment.Good Credit versus Bad CreditThere are > > two kinds of credit: that which would be offered in a market economy with > > sound money and banking (good credit); and that which is made possible only > > through a system of central banking, artificially low interest rates, and > > fractional reserves (bad credit). > > Banks cannot expand good credit as such. All that they can do in reality is > > to facilitate the transfer of a given pool of savings from savers (lenders) > > to borrowers. To understand why, we must first understand how good credit > > comes to be and the function it serves. > > Consider the case of a baker who bakes ten loaves of bread. Out of his > > stock of real wealth (ten loaves of bread), the baker consumes two loaves > > and saves eight. He lends his eight remaining loaves to the shoemaker in > > return for a pair of shoes in one week's time. Note that credit here is the > > transfer of "real stuff," i.e., eight saved loaves of bread from the baker > > to the shoemaker in exchange for a future pair of shoes. > > Also, observe that the amount of real savings determines the amount of > > available credit. If the baker had saved only four loaves of bread, the > > amount of credit would have only been four loaves instead of eight. > > Note that the saved loaves of bread provide support to the shoemaker, i.e., > > they sustain him while he is busy making shoes. This means that credit, by > > sustaining the shoemaker, gives rise to the production of shoes and > > therefore to the formation of more real wealth. This is a path to real > > economic growth.Money and CreditThe introduction of money does not alter > > the essence of what credit is. Instead of lending his eight loaves of bread > > to the shoemaker, the baker can now exchange his saved eight loaves of > > bread for eight dollars and then lend those dollars to the shoemaker. With > > eight dollars, the shoemaker can secure either eight loaves of bread (or > > other goods) to support him while he is engaged in the making of shoes. The > > baker is supplying the shoemaker with the facility to access the pool of > > real savings, which among other things includes eight loaves of bread that > > the baker has produced. Note that without real savings, the lending of > > money is an exercise in futility. > > Observe that money fulfills the role of a medium of exchange. Hence, when > > the baker exchanges his eight loaves for eight dollars, he retains his real > > savings by means of the eight dollars. The money in his possession will > > enable him, when he deems it necessary, to reclaim his eight loaves of > > bread or to secure any other goods and services. There is one provision > > here: that the flow of production of goods continues; without the existence > > of goods, the money in the baker's possession will be useless. > > The existence of banks does not alter the essence of credit. Instead of the > > baker lending his money directly to the shoemaker, the baker lends his > > money to the bank, which in turn lends it to the shoemaker. > > In the process, the baker earns interest for his loan while the bank earns > > a commission for facilitating the transfer of money between the baker and > > the shoemaker. The benefit that the shoemaker receives is that he can now > > secure real resources in order to be able to engage in his making of shoes. > > Despite the apparent complexity that the banking system introduces, the act > > of credit remains the transfer of saved real stuff from lender to borrower. > > Without the increase in the pool of real savings, banks cannot create more > > credit. At the heart of the expansion of good credit by the banking system > > is an expansion of real savings. > > Now, when the baker lends his eight dollars, we must remember that he has > > exchanged for these dollars eight saved loaves of bread. In other words, he > > has exchanged something for eight dollars. So when a bank lends those eight > > dollars to the shoemaker, the bank lends fully "backed-up" dollars so to > > speak.False Credit Is an Agent of Economic DestructionTrouble emerges > > however if, instead of lending fully backed-up money, a bank engages in > > fractional-reserve banking, the issuing of empty money, backed up by > > nothing. > > When unbacked money is created, it masquerades as genuine money that is > > supposedly supported by real stuff. In reality, however, nothing has been > > saved. So when such money is issued, it cannot help the shoemaker, since > > the pieces of empty paper cannot support him in producing shoes what he > > needs instead is bread. But, since the printed money masquerades as proper > > money, it can be used to "steal" bread from some other activities and > > thereby weaken those activities. > > This is what the diversion of real wealth by means of money "out of thin > > air" is all about. If the extra eight loaves of bread aren't produced and > > saved, it is not possible to have more shoes without hurting some other > > activities activities that are much higher on the priority lists of > > consumers as far as life and well-being are concerned. This in turn also > > means that unbacked credit cannot be an agent of economic growth. > > Rather than facilitating the transfer of savings across the economy to > > wealth-generating activities, when banks issue unbacked credit they are in > > fact setting in motion a weakening of the process of wealth formation. It > > has to be realized that banks cannot relentlessly pursue unbacked lending > > without the existence of the central bank, which, by means of monetary > > pumping, makes sure that the expansion of unbacked credit doesn't cause > > banks to bankrupt each other. > > We can thus conclude that, as long as the increase > > ... > > read more �- Hide quoted text - > > - Show quoted text - --~--~---------~--~----~------------~-------~--~----~ Thanks for being part of "PoliticalForum" at Google Groups. For options & help see http://groups.google.com/group/PoliticalForum * Visit our other community at http://www.PoliticalForum.com/ * It's active and moderated. Register and vote in our polls. * Read the latest breaking news, and more. -~----------~----~----~----~------~----~------~--~---
