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A Brady Bond Solution for America’s Economic Crisis and Unpayable Corporate Debt
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Even before the Covid-19 crisis had slashed stock prices nearly in half since it erupted in January, financial markets were in an inherently unstable condition. Years of quantitative easing had loaded so much money into stock and bond prices that stock price/earnings multiples and bond prices were far too high by any normal and reasonable historical standards. Risk premiums have disappeared, with only a few basis points separating U.S. Treasury bills and corporate bonds.

The Fed’s Quantitative Easing since 2008 plus large companies using their earnings for stock buybacks drove the prices of financial assets into a realm of unreality. The result was that markets already were teetering on the brink of fragility. Any rise of normal interest to more normal conditions, or any external shock, was bound to crash the artificial values at which financial markets were priced. The Fed’s policy was to perpetuate this situation for as long as possible by pumping in yet more credit. But at near-zero interest rates, there was little that could be done.

A close parallel to this situation was the state of Third World debt in the mid-1980s. Mexico’s announcement that it could not meet its foreign debt service was the shock that brought ugly financial reality into conflict with the assumption that somehow any government debt could be paid – even debts denominated in a foreign currency. (Mexico and other countries had denominated their bonds in dollars in order to obtain lower interest rates than bonds denominated in their own currencies would have to pay. The assumption was that export earnings would provide hard currencies with which to redeem the bonds.)

The international financial system was rescued by the issue of Brady bonds – “good” new bonds for old “bad” ones. The capital value of these bonds was still far below the original debt, but they had the virtue of setting realistic levels by bringing the debt balance more in line with the actual ability of debtor countries to earn the dollars or other hard currencies needed to service bonds denominated in foreign currencies, mainly the US dollar.

The current crisis requires a similar write-down and recognition that fictitious price levels must give way to reality at some point. In fact, we have reached the end of an illusion – the illusion that bond (and stock) prices could be sustained indefinitely simply by financial engineering, without an economic base capable of producing enough surplus revenue to justify existing bond and stock prices.

So attractive were the former unrealistic bond and stock levels that the markets are still in the “denial phase” hoping that the Coronavirus bailout may be used as an opportunity for yet further infusion of money into the financial markets. But that merely postpones the inevitable adjustment to bring financial asset prices back in line with real economic capabilities.

There certainly is a financial panic, and prices are not necessarily more realistic in a panic than they were in the bubble leading up to it. The question is, what is a sustainable asset-price level? What needs to be supported is a realistic value of stocks and bonds. Bad debts should be taken off the books, not supported in an attempt to recover the unrealistic pre-virus levels.

A successful way of coping with overpriced bonds and other debts

Our situation is similar to Third World debt in the early 1980s after Mexico triggered the Latin American debt bomb by explaining that it did not have the money to service its foreign bonds. Prices for Third World bonds plummeted as investors calculated the dollar-earning power of countries that had to export goods and services (or sell off their assets) to pay their foreign-currency debts. But their export proceeds simply could not cover the debt service that was owed.

The Sovereign Debt market was trading at such low prices that these foreign government bonds had become illiquid. Unable to obtain further credit, countries confronted by this financial state of affairs were threatened with political instability.

The Federal Reserve’s long Quantitative Easing and support of the financial markets has provided the appearance of stability. This artificial life support has been viewed as saving banks and large companies, pension funds and state and local finance from insolvency. But in doing this the Fed has been fighting what looks like a losing battle against reality. The Fed has been supporting illusory values that cannot be sustained.

The reality is that large swaths of the post 2008 corporate bond market boom have seen a proliferation of corporate bonds that cannot be paid. The fracking industry is only the most visible example. Airlines, entertainment, hotels and retail companies are facing losses that threaten their solvency.

The Fed fears a free market when it comes to asset prices. Or at least, it fears the political and economic consequences of withdrawing artificial support. Reality forced the Fed into the mid-March support and already a larger intervention has been announced. According to the New York Times, for the first time in history, the Federal reserve announced that it would buy corporate bonds, including the riskiest investment-grade debt.[1]Jeanna Smialek, “The Fed Goes All In With Unlimited Bond-Buying Plan,” The New York Times, March 23, 2020. This report adds: “Because the Fed cannot take on substantial credit risk itself, the Treasury Department backs its emergency lending, using money from a fund that contains just $95 billion. Treasury Secretary Steven Mnuchin on Sunday suggested that the new money in the Republican bill could be leveraged by the Fed to back some $4 trillion in financing.” In a March 17 statement it seems the Fed also intends to purchase stocks.

This is the “Denial stage” of the illusion that has resulted in crisis– the illusion that the stock and bond run-up could be turned from government manipulation into an actual market reality.

ORDER IT NOW

Where is this supposed to end? The Fed could buy up all the bonds – from corporate junk to state and municipal bonds as a way to prevent their prices from falling. At an extreme, this business-as-usual scenario would lead to the Fed owning the junk bond market, municipals, and a large swath of the stock market.

This could have a silver lining: having concentrated the debt in its own hands, the Fed would then have a free hand to write off the debt, privatize the companies and start all over again with a lower debt overhead. That is what China’s central bank has been doing: simply forgiving debt that is owed to itself. The Fed would swap “good” public debt (good in the sense that the government can print the money to pay) for bad (meaning unpayable) debt.

Bringing financial markets in line with reality would mean writing off a large swath of corporate debt and realizing that much corporate equity “wealth” has been created by decapitalizing corporations in stock by-backs instead of investing in the country’s productive capacity, including decent wages for workers. The American airline industry over the last decade has spent as much as 96% of its cash on stock buybacks – giving financial wealth to their CEOs and share holders rather than investing in their business. Such financial wealth, if not underpinned by real wealth, is built on quicksand, and it is now disappearing as asset markets plummet. So stock buybacks and other artificial ways to “create wealth” were “investments” that have had drastically negative returns.

To implement a rationalization of bond and stock prices bringing them in line with reality, it has to be in the interest of holders of these securities. Acknowledging that bonds are not worth as much as the price at which the Fed is supporting them will not appeal to bondholders as long as prices are artificially supported. A bond-swap (new good bonds for old bad bonds) can only be achieved in a situation where it is more realistic and less risky to have a sound good bond than a low-priced (or fictitiously high-priced) bad bond.

Therefore, the Fed should let prices sink to their “market” level without interference. The Fed is trying to support the unsupportable. By doing this, it has blocked a reasonable solution bringing financial asset prices in line with the realistic ability to carry debt.

Without the Fed’s support, bonds would need to be written down and stock prices would continue to plunge. That would prepare the ground for something like the Brady Bond solution for Third World debts in the 1980s. Latin American and other Third World bonds were selling around 25 cents on the dollar in the wake of Mexico’s announcement that it could not pay its scheduled debt in 1982. There was widespread recognition that Latin American governments couldn’t pay their bonds. That was because these bonds were denominated in US dollars, and foreign governments can only print their own currency. When they did this to throw domestic money onto foreign exchange markets to trade for hard currencies with which to pay their debts, their exchange rates plunged.[2]The situation was much like German reparations in the 1920s. (See Michael Hudson, Trade, Development and Foreign Debt).

Brady bonds addressed the problem by a swap of “good bonds for old.” The new bonds received IMF and other support, and were based on what foreign countries actually could pay in foreign exchange (mainly U.S. dollars). Bondholders could swap their old bonds, which were selling from 15 to 25 cents on the dollar, for new bonds priced higher than the market price but less than the original issue, but which at least were secure and less risky. They were “reality bonds.”

The government can organize something similar for corporate bonds after the market takes the artificial QE-added values out. However, to create a market environment for such an alternative, the Fed must let bonds and stocks fall to their natural “realistic” level recognizing that the existing debt overhead can’t be paid. Then, new “reality bonds” can be issued and the economy can start again with a non-crippling debt level. As panic will take the market price below the reality price, the new debt instruments will have higher values than the market panic prices. Alternatively, a good estimate of the real value of the bonds could be made with the debt written down to that level. If that can be done, it would avoid a panic fall to a lower level.

Banks and major creditors would have to absorb much of the loss resulting from the runup of stock and bond prices to overvalued levels. But something similar was a feature of the Brady reforms, which called for burden sharing by banks (the London club) and also governments (the Paris club) who had to provide debt relief. If the debt-writedown makes banks insolvent, they can be nationalized. When more normal conditions return, the banks can be privatized. This would also provide an opportunity to increase competition by breaking up “banks too big to fail” and to again separate commercial from investment banking. In other words, nationalization would be a way to increase competition and restore Glass-Steagall stability to the financial system.

The alternative is that we will face reality without a solution.

* Dirk Bezemer provided much help in this article.

UPDATE: Pam Martins reports that the Fed bought junk bonds AND stocks in the PDCF during the financial crisis of 2008 and thereafter. See page 27 of the GAO audit of the Fed’s programs during the 2007-2010 financial crisis located at this link.

Pam also reports that there was a raging financial crisis occurring long before there was any threat from coronavirus in the U.S. The Fed didn’t start its loans to Wall Street in March of 2020. It started them on September 17, 2019 and had plowed trillions of dollars of cumulative loans into the trading houses of Wall Street (primary dealers) five months before the first death of coronavirus was reported in the U.S. You can follow her outstanding work on Wall Street on Parade.

Notes

ORDER IT NOW

[1] Jeanna Smialek, “The Fed Goes All In With Unlimited Bond-Buying Plan,” The New York Times, March 23, 2020. This report adds: “Because the Fed cannot take on substantial credit risk itself, the Treasury Department backs its emergency lending, using money from a fund that contains just $95 billion. Treasury Secretary Steven Mnuchin on Sunday suggested that the new money in the Republican bill could be leveraged by the Fed to back some $4 trillion in financing.”

[2] The situation was much like German reparations in the 1920s. (See Michael Hudson, Trade, Development and Foreign Debt).

(Republished from PaulCraigRoberts.org by permission of author or representative)
 
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  1. Daniel H says:

    With this plan looks like the villains walk away scot free from this, with their ill-gotten fortunes and jobs, even, intact. The heavens demand justice.

    • Agree: the grand wazoo
  2. Daniel H. did not read carefully. He has mischaracterized our proposal. P.C. Roberts

  3. AaronInMVD says: • Website

    What the Fed and the US government are doing is devaluing the dollar and hoping for the best. The rumors earlier this week had the dollar stumbling a bit versus the various national pesos on the cambio boards, but today the dollar started dropping hard and the new dollars haven’t even made it off the money printer yet.

    Everyone is now stuck between a rock and a hard place. Even though the dollar’s getting devalued there aren’t any obvious safe havens that aren’t going to get swamped by everyone looking for an inflation hedge. Yesterday it seems people fled to US stocks, but it is uncertain which companies are going to survive to see Christmas no matter how much bailing occurs.

    • Replies: @Alfred
  4. Resolving the crisis by writing down debt will strengthen the dollar.

  5. Computers are made by idiots, full of bells and whistles, for fucking over chumps.

    The damn comments on this damn site time out while you’re trying to edit them. The time-out function should stop while you’re editing and start over when you hit save. But no, computer people are too stupid to understand this simple idea.

    It’s just like when I try to delete an item on my email, when I select it, the delete button moves over and the archive takes its place, and, in fast typing mode, I punch it, and thus my deletes go in the archive.

    Dumb computer stuff I just ran across in the last five minutes. Suggesting dumb computer stuff be legion.

  6. swamped says:

    “Banks and major creditors would have to absorb much of the loss resulting from the runup of stock and bond prices to overvalued levels. But something similar was a feature of the Brady reforms, which called for burden sharing by banks (the London club) and also governments (the Paris club) who had to provide debt relief”…but nothing like on the scale of re-capitalizing the gargantuan U.S. stocks & bonds market. At the commencement of the Latin American debt crisis in ’82, cumulative loans to those countries stood at about $600 billion. And many major money centers didn’t buy into Brady bonds; it was mainly smaller creditors & banks that had gotten in trouble by purchasing syndicated Latin American loans in the 70’s that clutched the lifeline of the new Brady bonds. Some of the larger creditors may even have benefited from the Baker plan which preceded the Brady plan by about five years; although the Brady plan proved more effective in the end. Even then though, some countries like Ecuador & Argentina still later defaulted on these & other new loans – while Mexico, Colombia, Philippines, etc. eventually made good on them. Many of these debtor countries were also dictatorships (or close to it) at the time; which is maybe where the U.S. is heading now too with its Baker + Brady (maybe) plans on steroids. It appears the Congress & the Fed are prepared to throw the kitchen sink at the crisis(es) this time around & keep their fingers crossed. “The alternative is that we [DO] face reality without a solution.”

  7. anon[161] • Disclaimer says:
    @obwandiyag

    Re. U.R. idiots, are you too stupid to discover that the ‘preview’ function allows you to edit at your leisure? “Fast typing mode?” Haste makes frustration.

  8. interest coverage has increased since 2008. buy backs are primarily a tax favored way to pay dividends. payout ratios haven’t increased much. “recapitalization” wasn’t very common.

    Acknowledging that bonds are not worth as much as the price at which the Fed is supporting them will not appeal to bondholders as long as prices are artificially supported.

    there is no amount they’re worth or market price under neo-liberal inverted totalitarianism. kapital owns the fed and government.

    japan has played the game longer than anyone. japanification will soon hit developing countries. go long turkish bonds.

    the reason why companies like boeing and ford have no book value, are up to their eyeballs in debt, is that they are in capital intensive industries. capital costs lots of money and american shareholders are against financing these necessary expenditures with equity and for 100% payout.

    at its high on feb 19 of about 3400, the s&p 500 was still low in comparison to what it should’ve been using the long bond as discount rate. now that so many long bonds have negative yield stock markets are incredibly cheap. the only way they could be priced correctly is if one expected dividends to fall and economies to contract over the next 30 years. given demographics this might be a reasonable expectation.

    • Replies: @Alfred
  9. Nationalize the zionist owned FED!

  10. Miro23 says:

    Pam also reports that there was a raging financial crisis occurring long before there was any threat from coronavirus in the U.S. The Fed didn’t start its loans to Wall Street in March of 2020. It started them on September 17, 2019 and had plowed trillions of dollars of cumulative loans into the trading houses of Wall Street (primary dealers) five months before the first death of coronavirus was reported in the U.S. You can follow her outstanding work on Wall Street on Parade.

    A very good set of articles. For example this one:

    The Man Who Advises the New York Fed Says It and Other Central Banks Are “Fueling a Ponzi Market”
    By Pam Martens and Russ Martens: January 22, 2020 ~

    From the article:

    Is a Ponzi scheme the right way to look at what is happening to markets as a result of the flood of underpriced loans from the New York Fed – with money it creates electronically out of thin air. The traditional term on Wall Street for what is currently happening is “distribution.” That’s when the smart money pumps up the market sufficiently to excite the dumb money to come in – thus enabling the 1 percent to “distribute” their overpriced stocks to the suckers who don’t understand the history of “distribution” on Wall Street.

    https://wallstreetonparade.com/2020/01/the-man-who-advises-the-new-york-fed-says-it-and-other-central-banks-are-fueling-a-ponzi-market/

    The polite terminology for Pump and Dump is “Distribution” with the Coronavirus Panic arriving at just the right moment to terminate the dump phase . Now the government is proposing to replace (courtesy of the US taxpayer) the $ trillions that Wall St has extracted/stolen.

    The US is being blatantly looted by its 0,1%

    • Agree: Amanda, Twodees Partain
    • Replies: @Miro23
  11. Kim says:

    Of course this is all just piffle and waffle, entirely worthless because at no point does it address the underlying facts behind why this has all happened, and why it has happened again and again and again since the early 1970s.

    I’ll offer some keywords to play with and maybe, one day, these geniuses will at last see where all of our modern wealth has come from and why, some 50 years ago, it started to appear to be going away. Ready? Here are the magic words: cheap energy; hydrocarbons.

    Now see if you can nut out what has happened these last 50 years.

    One more hint: we do not live in magic world. Our modern wealth has not come from nowhere and out of nothing. And no, we didn’t print it. Money is not the issue (although outright criminality is a big part of it, but I don’t see any nooses being tied in this essay).

    These kinds of guys, economists, are really just so blinkered and tiresome.

    • Replies: @Realist
  12. Kim says:
    @obwandiyag

    Still and all, it is a pretty great commenting system. The best that I have encountered.

    • Agree: Realist, NoseytheDuke
    • Replies: @Twodees Partain
  13. Miro23 says:
    @Miro23

    And Congress puts the US public further $ trillions in debt at record speed:

    The U.S. Senate approved a historic $2 trillion rescue plan to respond to the economic and health crisis caused by the coronavirus pandemic, putting pressure on the Democratic-led House to pass the bill quickly and send it to President Donald Trump for his signature.

    The massive legislation passed on a 96-0 vote just before midnight Wednesday after days of intense negotiations between Senate Republicans and Democrats,

    “I’ve never seen Congress move so fast to do something so large. Unfortunately, the problem may be larger and faster,” said Jason Furman, a member of Barack Obama’s economic team during the 2008 recession.
    House Speaker Nancy Pelosi praised the deal after changes negotiated between Senate Democratic leader Chuck Schumer and Treasury Secretary Steven Mnuchin over several days of marathon talks.

    “This is a classic way you write legislation in a democracy,” McConnell said after passage was assured.

    Bloomberg 26th March 2020

  14. With respect, I have to go with Daniel H. on this one.

    Like nearly all economists, the authors take the existing system as quasi-legitimate and set about the task of designing explanations, apologies, and plans for stabilizing it.

    But they never seem to grasp that it is criminal to the nth degree in both law and equity. The people who run these so-called financial institutions are robbing us all blind in fact – and they are doing so by flagrantly criminal means.

    The governments, the Courts and the bankers themselves all admit this – and the government deals with it by making a conscious policy decision not to prosecute them for objective and prima facie criminal law violations.

    The reality is that a typical mortgage security in Canada (and the US and increasingly the rest of the world) today is constructively and / or on its face (prima facie) offensive to domestic and international laws / treaties against one or more (and normally most) of falsification of an account, fraud, GAAP / IFRS-fraud, breach of trust, breach of fiduciary duty, embezzlement, constructive and actual forgery / making-false-documents, uttering false / forged documents, obtaining credit (from the issuer / pretended-borrower) by fraud or false pretence, omitting material particulars from valuable securities for a fraudulent purpose, receiving / converting payments or partial payments of interest at a criminal rate, incipient-mail-fraud and wire-fraud, laundering proceeds of crime, and racketeering / wagering.

    And all nominally justified and purportedly legitimized by disclaimers to the effect that the parties know and understand that the agreements and securities are illegal and criminal, but if such should be discovered or raised as an issue, then either (1) they simply don’t care, and / or (2) they were just kidding.

    Virtually all mortgages in Canada are leveraged and falsified by concealed and undisclosed loan-fees that are converted into principal on day-one at a criminal rate (and contrary to GAAP). The bankers then deal with the fact of the criminal law violation by putting disclaimers into the securities as follows for example:

    NOTWITHSTANDING the provisions of any Statute [any lawful Act of Parliament or of the provincial Legislatures] relating to the rate of interest payable by debtors this contract [and security] shall remain in full force and effect whatever the rate of interest received or demanded by [the Bank].

    English translation: “Screw the Crown. Screw the Parliament. Screw the People. And Screw the criminal law and the international treaties on organized crime and racketeering.”

    But it’s all ok because none of the primary two dozen or so unlawful, illegal, criminal and international racketeering / organised-crime offences are “fundamentally illegal”. In 1990 the Supreme Court of Canada committed a coup d’état against the Parliament and the People by ratifying a unanimous decision of the Ontario Court of Appeal that criminal / racketeering offences by financial institutions are “not fundamentally illegal” because the criminal law only provides for severe punishment of offenders but does not expressly state: Don’t do it.

    With all due respect to said judges – that is psychiatric-institution-level crazy. But the only people who can’t see it are the judges / former-bank-lawyers and solicitors

    Virtually all material judges to whom financial-law cases are channelled as a matter of policy are former bank-solicitors who were directly appointed by the prime ministers who are almost all former bank-lawyers and most of whom are former bank-directors.

    While I appreciate the genuine and otherwise valuable insight of the two authors into possible ways to stabilize the system – it is first and foremost a fundamentally and incurably criminal system that cannot be fixed through tinkering with details.

    These institutions are not money-lenders – they are in the credit reinsurance business. They are asset-strippers and they are asset-sinks.

    • Agree: Twodees Partain
    • Replies: @Curmudgeon
    , @onebornfree
  15. Mefobills says:

    The “new” Brady Bond monetary circuit, or monetary mechanics as it applies to the U.S. corporate bond market, and private banks is unclear to me.

    Who issues them, how do they swap, and what is the ledger mechanics? It would be nice to have a step by step from birth to each exchange on their way through the circuit and how the ledgers are impacted.

    My understanding/guessing is that the original Brady’s were issued by the Developing Countries (third world mostly) and were backed by Tbills. The objective was to get nonperforming third world debt off of the ledgers of commercial banks. Third world sovereign debt was non performing due to exchange rate difficulties. IMF and World Bank were in on the plan to help stabilize things.

    So, the third world non performing loans were swapped/exchanged for a performing Brady Bond. The Brady Bond performed because it was backed by the issuing government? and hence the taxpayers (guessing). This then off-loaded risk away from the bank, and also re-valued debt to its real level. It also performed due to TBill backing, inviting investors and fixing the capital position of banks.

    Today’s analogy would be the corporate bond market, swapping/exchanging for a Brady (after the corporate bond has been driven down to a realistic level). Who issues this new Brady (the U.S. Government?) and is it backed by TBills, and hence the American Taxpayer? Is the IMF and World Bank in on it?

    Anyhow, I’m glad monetarily astute people are thinking on solutions. The big question is if anybody in government, or the deep “financialized” state, is willing to listen and act.

  16. Mefobills says:
    @obwandiyag

    OB,

    Try writing initially in word or some other word processing software. Then…copy and paste. It is a few more steps, but it will give you spell check and all the time you need.

  17. Franz says:

    The Fed is trying to support the unsupportable.

    As typical, but they cannot get it into their heads: Debts that cannot be paid won’t be.

    Interesting we now get to treat student loans and the gig economy the way we used to treat Latin America, but what could the Masters of the Universe have been thinking? The stock market got high every time wages plunged. They are Shocked! Shocked! that when you treat your population like peons the result is loss of buying power and the freedom that comes with it.

    I hope they follow your advice, Paul Craig Roberts & Michael Hudson. If not I see a junta in the near future. Unlike the reasonable Brady Bonds, juntas can get very irrational.

  18. Why ‘buying shares’ should be part of a response to the financial crisis?

    “2. Boost share prices by buying shares directly. . . .
    Instead, Central Banks should directly buy shares, as they are also quite capable of doing: Japan’s Central Bank has been doing this for several years already. This puts money in the bank accounts of shareholders, while the shares are then owned by the Central Bank. In terms of the Central Bank’s balance sheet, this would be identical to Quantitative Easing now: the only difference would be that the assets would be shares, rather than bonds.

    This could prevent a collapse in share prices, which in turn could prevent a collapse in the banking sector—since if shares fall substantially, many banks will find that their assets are worth less than their liabilities, and they would be forced to declare bankruptcy.”
    https://www.patreon.com/posts/modern-jubilee-34537282

  19. Herald says:
    @obwandiyag

    Suggesting dumb computer stuff be legion.

    Very hard to argue with that, though some might think it was sightly off topic.

  20. Thank you for the Wall Street On Parade link.
    Should be a good source of subject headings for the “ Press” to draw from.

  21. Very interesting proposal.

    This catastrophe requires big thoughts.

    But the cast of characters in Washington does not include much in the way of bigness or creativity. Unfortunately, quite the opposite.

    Instead of an FDR, Americans have foul-mouthed oaf who reads nothing and listens to almost no one.

    In November, the blessings of American democracy will offer them the alternative of a smiling, dozy old Washington Apparatchik.

  22. @obwandiyag

    Comments system also needs to support replied to multiple commenters. Kind of annoying having to make 3 separate posts to reply to 3 separate people, especially since there is a 3 comments/article.hour limit.

    I know you can just type in the names of the commenters and their comment ID, but that means they will not get an email notifications and as such might not respond.

    Another thing that would be nice is the a ability to upload images from your computer file system as opposed to relying on links as these do not always work.

  23. Hempus says:

    The world economy is on a respiratory ventilator. What we face now is the new world order / sharia law of vaccination pope Bill Gates.

    • Replies: @Omegabooks
  24. Realist says:
    @Kim

    Of course this is all just piffle and waffle, entirely worthless because at no point does it address the underlying facts behind why this has all happened, and why it has happened again and again and again since the early 1970s.

    Yes, taking the dollar off the gold standard…one of the many stupid things Nixon did.

    Three events in an eleven year period-1965 to 1976 precipitated the down fall of the United States.

    1. Immigration and Nationality Act of 1965 also known as the Hart–Celler Act

    2. The end of the gold standard in America August 15, 1971

    3. The SCOTUS has passed down egregious decisions that abridge the First Amendment and show contempt for the concept of a representative democracy. Buckley v. Valeo, 424 U.S. 1976 and exacerbated by continuing stupid SCOTUS decisions First National Bank of Boston v. Bellotti, Citizens United v. Federal Election Commission and McCutcheon v. Federal Election Commission.
    These decisions have codified that money is free speech thereby giving entities of wealth and power almost total influence in elections.

    These three idiotic events have caused the demographic ruination of our country, the destruction of a meaningful monetary system which now uses fiat money with no intrinsic value (when a country needs more money it just prints more), as well as elimination of any semblance of equal ability to influence elections (democracy).

    • Replies: @Curmudgeon
  25. Anonymous[272] • Disclaimer says:
    @Daniel H

    Here it is, the one-way transfer of ownership from private hands to the government that can now take place because the government is owned by the same Wall Street cabal whose greed is the cause. This has been the plan in academic and Democrat circles going back to the 1990’s and will be coming for private retirement accounts next on the same bogus grounds of saving them with other government bonds unless something miraculous happens. That $7 trillion remaining in private retirement accounts must eventually be confiscated. The giveaway is that Dr Hudson knows but doesn’t say that the greatest of economic fallacies is that government bonds are a store of wealth.

    Cash must eventually be eliminated, probably on bogus hygienic grounds, and all purchases eventually regulated. Inflation, however, is the real story inasmuch as these hacks for the oligarchs posing as do-good socialists don’t want Americans to know that if only a small part of the $trillions goes chasing the anticipated reduction in the overall supply of goods on the shelves, the net effect on the people they claim to be helping will be the confiscation of their savings and stealth cut in their wages for the sole purpose of sustaining the parasites in and out of government.

    If nothing else, this latest paradigm of infinite government counterfeiting is a sleight of hand changing the nature of money itself from a somewhat reliable medium of economic exchange and store of value into a totalitarian medium of social change and confiscation of value. The Dem proposals were nothing short of a call to punish Americans for being white while vastly increasing the unmerited preferment in industry and government for blacks and Hispanics. The realistic implications are criminalizing whiteness and yet the Republicans treat it as politics and not war.

    • Agree: AaronInMVD
  26. Vanusha says:

    Thank you Dr Roberts and prof Hudson! As far as I see, when somebody writes ‘capitalism’ is the problem, commentators start attacking – ‘how dare you say capitalism is the problem’. When somebody tries to propose practical solutions that are quite revolutionary anyway, they start complaining ‘why do you try to fix the system?’. The West is the new Third World.

    • Agree: Mefobills
  27. sally says:
    @Daniel H

    this is not a use of the USA to conduct a thief of the American people, it is instead a take over by the corporate powers and their oligarch owners the entire of America .. Instead of privatizing everything owned by everybody as has been required in prior ‘take over thiefs; this one sees the corporations of impose a massive debt burden on the backs of the governed Americans and using the money for corporations to upwardly acquire government itself into the corporate ownership. Trumps bailout is a redeployment of public government in the form of privately held corporate enterprise monopolies.

    The Trump Covid_19 Corporate Tribe Gift Act allows the tribal corporate owners to use the resources of the federal reserve to pay all coming corporate payrolls, to fix the pay off the debts made in all past mistakes, and to reacquire into the corporate treasury the corporate stock now in the hands of pesky wall street investors, means that nearly all of Americans will be removed from the benefits of 6 Trillion’s of $s as the corporate empires continue their use of the nation state to abuse the humanity of the world.

    It is so easy to fix.. merely dispense with the Federal Reserve, allow government to issue non interest bearing, currency as needed to facilitate economic transactions. presto no national debt.. . I remind you this was the exact thing the constitution did.. it make the governed America people pay the British Aristocrats for the losses the American Revolutionary War caused them (the British Bankers and Aristocrats who remained in America). Clearly seen in Article VI paragraph 1 => “All Debts contracted and Engagements entered into, before the Adoption of this Constitution, shall be as valid against the United States under this Constitution, as under the Confederation. ”

    Now in 2020 Trump should probably amended Article VI, paragraph 1 to read=> “All debt incurred by a corporation that has stocks or bonds trading on Wall Street or a Wall Street recognized global stock exchange shall be entitled to force the governed people of America to fund each and every corporate need for cash by using the USA to impose on the governed taxpayer, taxes sufficient to meet the cash need by all Wall Street qualified corporation.” z,= Mind you a tax debt large enough to satisfy the cash needs of qualified corporations is unlimited because each day their needs change.

    Good article thanks

    • Agree: Desert Fox, Amanda
    • Replies: @Anonymous
    , @Miro23
  28. Let us value the Earth at one gogol being that in the known universe it’s the only gem worth living on. And based on that value let us price everything from monthly stipend for everyone and cost of consumption. Those who want to sit under palm trees and sing kumbayas let them with enough to survive but those who want to work, i.e. continue to be useful, let them have larger amounts … after all, it’s only digits in a virtual world.

  29. @Paul Craig Roberts

    Mr Roberts, your writing is clear. How are the so called “Brady bonds” not just a bailout?

    The Federal Reserve banks are working just as they were meant to. Their purpose is to transfer the wealth of the USA to the jew mob who owns it.

    This whole virus thing is the jew mob trying to stay in power after the Federal Reserve note loses world reserve currency status. They want to blame China instead of taking the blame they deserve.

    Your “Brady Bonds” idea is a definite bailout for the mob. The Fed need to be destroyed not given more power.

    • Agree: Desert Fox, Amanda
    • Replies: @Mefobills
  30. Anonymous[272] • Disclaimer says:
    @sally

    Good points, Sally. The Republicans have shown their hand by giving the Fed a free hand rather than immediately beginning a Senate investigation of its operations and claw-back of the unmerited wealth its counterfeiting has transferred to Wall Street. No economy can sustain a monopoly on capital in the hands of a banking cabal in which a third of profits are institutionally and systemically confiscated from the producers and savers to benefit the few. As Spengler foresaw a century ago, they will be granted the power of creating money out of thin air and of tricking a profit off the honest labor of mankind.

  31. Truth3 says:

    All forms of Usury are Immoral. So are all other Financial Fictions.

    Fictitious Financial Instruments should be banned.

    Derivatives need to be not only banned, but anything like them ruthlessly suppressed.

    Here’s why.

    Truth always wins in the end.

    Fictions (bonds, futures contracts, esoteric financial tools) always deceive or rob… somebody… and by extension… everybody else that is not a robber.

    Paper money too is a fiction… and isn’t even limited as paper… it’s electronic.

    Gold. Silver. Platinum. Palladium. Copper. Nickel.

    These elements are perfectly suited for all exchanges necessary for the betterment of Man.

    Let Congress go back to doing as dictated by the Constitution…

    Article I, Section 8…

    “Congress shall have Power…to coin Money, regulate the Value thereof, and of foreign Coin.”

    Article I, Section 10…

    [MORE]

    “No State…shall make any Thing but gold and silver Coin a Tender in Payment of Debts.”

    End the Fed immediately.

    Outlaw all Paper & Fictitious Money.

    Amend the Constitution to authorize Platinum, Palladium, and Copper & Nickel Coinage.

    Allow all previous coinage to remain at face value… penny, nickel, dime, quarter, half, dollar.

    Provide the US Mint all the Copper & Nickel it needs to strike new $1, $2, $5, $10, and $20 Coins. Let them Strike $12,000,000,000,000 in these denominations. Every citizen receives $36,000 in these coins.

    Provide the US Mint all the Silver it needs to strike new $50, $100, and $150 Coins. Let them Strike $2,000,000,000,000 in these denominations. Every citizen receives $6,000 in these coins.

    Provide the US Mint all the Palladium it needs to strike new $250, $500, and $1,000 Coins. Let them Strike $2,000,000,000,000 in these denominations. Every citizen receives $6,000 in these coins.

    Provide the US Mint all the Platinum it needs to strike new $1,000, $2,000, and $3,000 Coins. Let them Strike $2,000,000,000,000 in these denominations. Every citizen receives $6,000 in these coins.

    Provide the US Mint all the Gold it needs to strike new $2,000, $5,000, and $10,000 Coins. Let them Strike $2,000,000,000,000 in these denominations. Every citizen receives $6,000 in these coins.

    Coins will be distributed at designated Banks. Federal Officers will investigate thoroughly any tips by Citizens that officials are defrauding the system.

    Penalty for Fraud in this period will be extreme torture for 30 days, following by expelling to Israel, where their compatriots will gladly dress their wounds.

    Call in $500,000 US Treasury Notes & Federal Reserve Notes and Insured Bank Deposits per person (maximum), as a call on future coinage at a rate of $10,000 per year max.

    All US Citizen legitimate previous debt will be Nationalized, written down to 5% of obligation, and paid in new Coin.

    Foreign $ Holdings will be redeemed at the Governmental level only. Foreign Citizens need their Government to take their $ in exchange for their own currency.

    For Nations that received Foreign Aid, $ must be returned to the USA for destruction = Total Foreign Aid received since Bretton Woods.

    Hear that Israel?

    All those US Citizens that took a haircut in the write-down to 5% will be provided Federal Tax Credits = Haircut amount.

    The Personal Federal Income and FICA Taxes shall be abolished.

    All Futures exchanges shall be closed permanently.

    No Trade will be allowed with any Country that attempts to Game the Fictitious to True Money Changeover.

    Tariffs introduced (up to 100%) immediately on any Country’s goods or services, that is designated a “True Money Opponent”.

    • Agree: Desert Fox, Omegabooks
  32. @Timothy Madden

    Since our precious “Charter of Rights and Freedoms”, the illegal constitutional amendment foisted on Canada in 1982, the Supreme Court has become the ultimate legislator, not Parliament.
    At the time, more than one provincial Premier warned against this.
    In 1974, the Government of Canada had the government owned Bank of Canada (BOC) join the Bank of International Settlement, thereby ceding its right to control monetary policy. Prior to joining, the Government borrowed, against anticipated income, interest free from the BOC. Canada’s debt was low. Several studies have shown that in excess of 80% of Canada’s debt is directly attributable to that ceding of monetary policy.
    The Committee On Monetary and Economic Reform (COMER) filed a lawsuit in 2011 challenging that ceding monetary policy to the BIS was contrary to the Bank of Canada’s Charter. It won its case, but the decision was overturned. In 2017, the Supreme Court of Canada dismissed COMER’s “leave” (permission to appeal) application from the second judgment of the Federal Court of Appeal, claiming it was a “political matter”. Ironic that the Supreme Court, which has made several political decision, including allowing Quebec’s language laws, and striking down the country’s abortion laws, decided that it was a “political matter”. Everything is political at some level.
    Labour, and what it produces, is the basis of all wealth. Interest payments are the law of diminishing returns, just like your chances in a casino.

  33. Alfred says:
    @AaronInMVD

    Even though the dollar’s getting devalued there aren’t any obvious safe havens that aren’t going to get swamped by everyone looking for an inflation hedge

    When is the last time you looked at the exchange rates? The dollar is booming and has been booming for years. It will continue rising because of the panic in Europe.

    Imagine you are a wealthy Frenchman or German or Italian etc. Where are you going to move your money to when everyone can see that the Euro and the EU and all the European banks are doomed?

    Are you going to move your money to Japan? to China? to Russia? to Brazil? to Australia? to Canada? to India?

    There is in practical terms only one place that you can move your money to and that is the USA. As an added bonus, the USA is the only country that will not report you to the tax people back home – even Switzerland does that.

    Currency Charts: EUR to USD (10 years)

    It is so tiresome to read in blog after blog for many years the proposition that the USD is finished. Call it a day mate!

    The image below shows the Deutsche Bank share price. Since then the price has dropped another 10%. Good luck with that. It was 88 Euros 13 years ago.

    • Replies: @RadicalCenter
    , @AaronInMVD
  34. @Realist

    Yes, Nixon taking the US off the gold standard was idiotic, but what led to it was more idiotic. The reality was that the US no longer had the gold to pay the countries that were claiming it. That didn’t happen over night. While blaming him for going off the gold standard, on the advice of the Chi Cons is easy, the real reason’s are less obvious.
    https://nationalinterest.org/feature/who-really-killed-the-gold-standard-12435
    Nobody complained when FDR did it in 1933, while he confiscated all gold.

    • Replies: @Realist
  35. Here is a solution, proven from 1942-52, at the base of the Arsenal of Democracy and was that which allowed for the post war boom: Agricultural Parity!

    Agricultural Parity is still the Law, 7 USC Sec 602, and is still calculated by USDA.

    When such wealth, food, is initially priced in balance with wages and capital, then earnings are sufficient to pay wages and capital costs without going into debt to do so.

    All economics starts on the farm. If you do not agree try not eating. Hence prices of farm goods are important as regards an economy. An economy will work, by itself, if price of raw materials is enough to satisfy wages and capital of manufacturing and service sectors, that thus the producers of such raw materials might participate in purchasing manufactured goods and services without going into debt to do so.

    Pay the farmer and the town will work, and on up the line.

    Since 1952 we have allowed farmers to go increasingly without, to the expense of the entire economy, except the money lenders!

    Here is the relevant book on the subject:
    Unforgiven: American Economic System SOLD for Debt and War by Charles Walters

    https://www.acresusa.com/products/unforgiven

    Here is a 2016 Letter to President that starts with a revealing chart.
    http://www.normeconomics.org/parity_table_45-16eb.pdf

  36. Alfred says:
    @I love the smell of napalm in the morning.

    buy backs are primarily a tax favored way to pay dividends

    That is the theory. In reality, it is a way of having fewer shares representing the same assets. That should automatically bump up the share price and give the CEO and his friends much bigger bonuses for doing absolutely nothing – the value of the company (share price * number of shares) has not changed.

    More insidiously, companies borrow money cheaply in order to buy back shares and even to pay dividends. This increases the gearing of the company and when things go downhill the company rapidly goes broke. Boeing is a prime example of this “financial engineering”

    Currently, the Boeing share price is rising strongly – because of the free cash the government is giving it. Obviously, running a business successfully with real engineers is no longer a prerequisite. No need for any customers either! 🙂

    • Replies: @John Chuckman
  37. nsa says:

    Half of all equity ETFs in Japan are owned by their central bank……removing price discovery and blinding Mr. Market. Expect something similar here in the near future. Eventually, Mother Nature and Father Time will resolve the debt problem, and not some scheme concocted by financial alchemists.

    • Replies: @Mefobills
  38. Ko says:

    One thing that I can’t understand is where do the trillions of dollars that goes into the repo market originate? Where does it end up? Who is getting the money? Meaning who’s benefiting from the transactions and how does the act of giving trillions to the repo market, or Wall Street bankers affect the economy? And me?

    • Replies: @Beefcake the Mighty
  39. onebornfree says: • Website
    @Timothy Madden

    “– it is first and foremost a fundamentally and incurably criminal system that cannot be fixed through tinkering with details.”

    Thanks for this, and the rest of your comment. Basically the author is yapping/fantasizing about “putting lipstick on a pig”, nothing more.

    I find it ironic[ to say the least 😂 ] that this author [ yet another “high and mighty” socialist, just like Mr Roberts], prattles on about his supposed desire for a “free market ” for “asset prices”, [all the while keeping a straight face], and actually believes that this can occur when a government allowed/protected exclusive monopoly the [socialist]Fed , whose stated mission has been, since its inception, to continually devalue the $US to “ensure economic growth and market stability” [etc. etc. etc. blah blah blah], can actually make everything “better again “by the issuance of some kind of new-fangled debt instrument mostly backed by yet another government debt instrument, aka zero-coupon treasuries.

    As I have repeatedly pointed out on this site:

    “Because they are all ultimately funded via both direct and indirect theft [taxes], and counterfeiting [central bank monopolies], all governments are essentially, at their very cores, 100% corrupt  criminal scams which cannot be “reformed”or “improved”,simply because of their innate criminal nature.”   onebornfree

    I believe that because both of these individuals previously worked for the government, that is completely impossible for them to understand the true nature of government that you [and I] pointed out here, and that therefor it is impossible for them to ever admit to the total criminality of the entity that they are both former employees of, and from which they both might still be getting “compensation’ from, for all I know.

    And so it goes…

    Regards, onebornfree

  40. Realist says:
    @Curmudgeon

    Nobody complained when FDR did it in 1933, while he confiscated all gold.

    I did not exist at that time…or I would have.

  41. @onebornfree

    The zionist owned FED is a weapon of mass destruction aimed at America and we can not escape until the FED is shutdown or nationalized.

    • Replies: @onebornfree
  42. Mefobills says:
    @James Scott

    Mr Roberts, your writing is clear. How are the so called “Brady bonds” not just a bailout?

    I don’t see it as a bail-out. Mr Roberts comments such that he would bring the pain, by letting corporate bonds fall to their real price level. This is done by the FED no longer doing QE and swapping new money for bonds at face value.

    In fact, he is concerned that Panic would make corporate bonds fall to below their “real price level.” This is not bailing them out, but is setting a floor so that system-wide, the engine can restarted and markets can have real price discovery.

    Here are some excerpted comments from the article. Again, this is all predicated on the FED no longer doing QE type swaps.

    Bringing financial markets in line with reality would mean writing off a large swath of corporate debt and realizing that much corporate equity “wealth” has been created by decapitalizing corporations in stock by-backs instead of investing in the country’s productive capacity, including decent wages for workers.

    Without the Fed’s support, bonds would need to be written down and stock prices would continue to plunge. That would prepare the ground for something like the Brady Bond solution

    However, to create a market environment for such an alternative, the Fed must let bonds and stocks fall to their natural “realistic” level recognizing that the existing debt overhead can’t be paid.
    As panic will take the market price below the reality price,

    If that can be done, it would avoid a panic fall to a lower level.

    • Replies: @James Scott
  43. Mefobills says:
    @onebornfree

    I believe that because both of these individuals previously worked for the government, that is completely impossible for them to understand the true nature of government

    I believe that because both of these individuals previously worked for the government, and because of their highly ethical and moral character, are able to understand the true nature of the existing finance system.

    The finance system in turn maneuvers and compromises government, hence …. finance capitalism.

    Both PCR and M. Hudson are truth tellers, exposing the nuances of reality – for those of us who have the mental digits to barely comprehend what they are saying.

    Lolbertarians are apologists and dupes for finance capitalism.

    • Agree: L.K
    • Replies: @Amerimutt Golems
    , @Franz
  44. Mefobills says:
    @nsa

    Eventually, Mother Nature and Father Time will resolve the debt problem, and not some scheme concocted by financial alchemists.

    Money was invented by man. You are conflating something mystical with something man created.

    Bad logic and false thinking.

  45. KA says:

    Lindsey Graham , Tim Scott, Ben Sasse told the unthinkable sickening lies “ there is a strong incentive for employees to be laid off instead of going to work “

    Cabinet Bible study teacher Ralph Drollinger joined them in denouncing extended unemployment benefit , extended food stamp program as “ impetus to slothfulness”.

    From – Raw Story , Slate , HuffingtonPost ,

    Sick bastards . It’s no accident that they have no moral filter against killing people abroad . They are so well prepared already intellectually and morally to kill and hurt people at home .

    Almost on the same war footing , Democrats marched with them to get the corporates chestnut out of the fire ..

  46. annamaria says:

    Hail Larry Summers! https://www.rt.com/business/484170-us-healthcare-max-keiser/
    Max Keiser:

    So we have a 40-year bull market in bonds that just recently came to an end, but that’s based on people on Wall Street like Larry Summers [former US Treasury Secretary – Ed.] and others to collateralize that predictable income stream to create a Mount Everest of debt and to play games in the bond market. …

    Sick people are predictable income streams, just like prisoners are predictable income streams. And whenever you have a predictable income stream, like sick and dying people, you can use that to collateralize the bond market.

    Nurses and doctors at various hospitals and the US: “We Are Desperate…” https://www.buzzfeednews.com/article/zahrahirji/nurses-doctors-hospitals-low-masks-coronavirus

    The N95 respirators — we’re not even allowed to use for all COVID patients now. …

    Masks are in short supply. We’ve been told we don’t need to wear N95s. Instead, we’re wearing the regular procedure masks. We’re supposed to have face shields with them but honestly, only one of the two residents I’m current with has this on. …

    We’ve been very short on PPE [Personal protective equipment] for probably a month now. And it was put out by management that PPE was not for health care providers, it was for patients only. … We don’t have N95s. We’ve never had them.

    At least half a dozen employees are out sick with suspected COVID-19

    Larry Summers the clueless like Clintons, Greenspan et al:
    Twitter: Lawrence H. Summers

    @LHSummers
    Mar 21
    Thoughts at the end of a long week:
    Why can’t the greatest economy in the history of the world produce swabs, face masks and ventilators in adequate supply?

    Reply:

    The Duke
    @gmdools
    Mar 21
    Replying to
    @LHSummers
    Because we’ve hollowed out the core of US manufacturing in a search for ever lower production costs due to a singular focus on stock value, regardless of the impact on US workers who are forced to compete w 3rd world labor. Rendering our populace poorer & vulnerable to shortages.

  47. @obwandiyag

    It’s not the computer that’s dumb, it’s you.

    • Agree: MikeatMikedotMike
  48. @Ko

    It comes out of thin air essentially. Rehypothecation, the reusing of already pledged collateral to facilitate financial transactions, is a form of fractional reserve banking and at the heart of Wall Street’s corrupt shadow banking system:

    https://www.zerohedge.com/news/why-uk-trail-mf-global-collapse-may-have-apocalyptic-consequences-eurozone-canadian-banks-jeffe

    • Replies: @Mefobills
  49. I was interested to see if a clear diagnosis of the economic crisis and an obvious solution–a debt write down–could be understood by readers who make comments. A few of the comments show understanding, but I had to read to number 42 to see an understanding of what Michael Hudson and I wrote. This is extremely discouraging. It means either that the population is incapable of understanding the crisis that it faces or that very few of those who do understand spend their time venting in comment sections.

    I must say that I am amused at finding myself described in comment 39 as a high and mighty socialist.
    I must say also that I am astonished that Scott does not understand that a write down of debt is not a bailout.

    We also made it clear that a bailout in whole or part without a write down should be treated as a public purchase of the entity–a nationalization that could be

    • Agree: Agent76
    • Thanks: ChuckOrloski, L.K, SOL
  50. @Mefobills

    The Australian economist Steve Keen has been saying the same thing.

  51. To complete comment 50 which was cut off:

    We also made it clear that a bailout in whole or part without a write down should be treated as a public purchase of the entity–a nationalization that could be privatized at a later time.

    • Agree: SOL
    • Replies: @Desert Fox
  52. @Hempus

    Sharia? Bwahahahahahahahahahahahahahah! Try Noahide instead…or are Muslims more powerful than Talmudic Jewry? In your imagination, maybe….

    • Replies: @Hempus
  53. @Paul Craig Roberts

    Unless, the zionist FED is nationalized , we don’t have a snowballs chance in hell of saving America!

  54. It is nice to see an honest and rational assessment and prescription for the current economic mess.
    Thanks to Michael Hudson, Paul Craig Roberts and others who brought this necessary truth to the masses.

    The Presstitutes have been pumping blatantly dishonest crap in the media- “Coronavirus hammers stockmarket”-for weeks in an effort to sell the con.

    Many analysts have been pointing out that the big banks needed large Federal Reserve injections back in September. This crisis and overblown market were not surprises to anyone paying attention.
    The financial criminals are just trying to use a virus to con the American people.
    What else is to be expected from criminals like Mnuchin, Kudlow and Powell?
    The fact that they may actually pull this massive ‘wealth transfer’ off, aka theft, is extremely disturbing.
    If they succeed, America is over.

  55. @Curmudgeon

    I was unaware of this, thanks.

    RW

  56. Mefobills says:
    @Paul Craig Roberts

    Paul,

    You may enjoy Dillon Ratigan, where he seconds your notion.

    The amazing ability of people to not see what is right in front of their eyes. Their ability to lie to themselves.

    Why? Maybe because it is too uncomfortable – to let go of precious shibboleths?

    Also, most people in the West, have been propagandized with false narrative since birth. Statistically, it will only be a few who are able to rise above their conditioning, even when provoked by truth tellers such as yourself.

    Don’t lose faith, there are those of “us” out here who do get much of what you are saying. Keep up the good work, as pearls are not all trampled underfoot by swine.

    (I still wouldn’t mind a step by step of the Brady Monetary Circuit… the step by step mechanics. Otherwise, you are going to make me work extra hard to figure it out!)

    • Agree: SOL
    • Replies: @acementhead
  57. @Alfred

    Since my salary, and in theory my eventual pension and Social Security benefits (yeah I know), are paid in US Dollars, I hope you’re right.

    But I’m not so sure.

    Are Chinese yuan not a good option?

  58. Stock prices in general aren’t that excessive, the problem is IT growth stocks are very over-valued, and they take up a massive percentage of the share market in Anglo countries like the US and Australia. Currently, Netflix has a PE ratio of over 100, while Bank of America has a PE ratio of about 8. Part of the problem is very low interest rates, another is the modern world’s obsession with IT, and another is the difficulty western growth investors face in investing in emerging markets like China (where most of actual economic growth is occurring).

    The only practical way for ordinary western investors to invest in China is through expensive managed funds. And they haven’t been performing quite as well as low fee index funds invested in the higher performing western stock markets.

    Here’s an example of the kind of return western investors should be getting out of China:

    https://www.platinum.com.au/Our-Products/All-Products/Platinum-Asia-Fund

    • Replies: @acementhead
  59. Mefobills says:
    @Beefcake the Mighty

    It comes out of thin air essentially. Rehypothecation, the reusing of already pledged collateral to facilitate financial transactions,

    Not really or maybe?

    The Repo market is more like a pawn shop. A finance instrument of some sort is traded for cash. You are right in that the Tbills or whatever that are swapped for repo cash, may also be claimed elsewhere on another ledger – so maybe we don’t have good language for describing the action. Claiming the same thing twice, is yet another form of usury, where it doesn’t really exist in nature.

    So, repo is more of a swap of unlike kinds. Usually it is a debt instrument, or a MBS or something the FED allows to enter their ledger. Some paper finance instrument, usually a TBill is swapped for cash, and there is a time limit for the cash transfer. It used to be overnight, but is getting longer. The FED expands their ledger with a new asset (the paper) and a new liability (the cash they create).

    Sometimes you hear a repo called a loan, but it is not really a loan where new money is created by new debt instrument creation. It is not really a hypothecation event. Repo is using existing bonds, MBS or the like to swap for short term cash. The term of pawn shop loan is being extended, which indicates “troubles are afoot” in the economy.

    Mortgage Backed Securities were rehypothecations. TBTF banks took mortgages, and then tranched them into something new. So the original debt instrument -the mortgage, had some sort of new MBS paper riding on top. The new paper did not match its original DNA (the mortgage) and was changed in character, to then benefit thieves in finance. Risk was shifted from origination banks to the TBTF banks via this rehypothecation event.

    The whole money system is devilishly complex with lots of moving parts, and elements that change character. It is more like particle physics.

    Average people should not be expected to understand all of the maneuvers of the shell-and-pea crowd of finance.

    • Thanks: BlackFlag
    • Replies: @Beefcake the Mighty
  60. onebornfree says: • Website
    @Desert Fox

    “The zionist owned FED is a weapon of mass destruction aimed at America and we can not escape until the FED is shutdown or nationalized.”

    Dear DesertFox, this just in: It would make absolutely no difference if there were zero Zionists/Jews, running the Federal reserve system, it would still function in exactly the same way as it always has. Focussing on alleged Zionist control [of the Fed, or of anything else governmental for that matter] is a distraction, a mistake, a waste of your time, in my opinion.

    Furthermore, nationalizing the Fed would be a huge mistake, [no different from nationalizing anything else].

    The Fed is bad enough as it is, do you really sincerely believe that letting the exact same crooks/idiots trying to run yours and every elses lives at this time also run the Fed is a good idea? If so I have some beautiful waterfront property in the Nevada desert to sell you 🤑.

    Regards, onebornfree

    • Replies: @Mefobills
  61. @Paul Craig Roberts

    Bullshit. And no mention of structural, i.e. legal, change to the corporate form and the legal rights of the corporation, or of banking reform.

    It all sounds like Boomer normalcy bias.

    GloboHomo must be crushed before it crushes us.

    • Replies: @Mefobills
  62. Mefobills says:
    @onebornfree

    One born free, you are already making a fool of yourself. PCR is amused by you, but I am not.

    I must say that I am amused at finding myself described in comment 39 as a high and mighty socialist.

    Money’s true nature is law, and since money is used by everybody, then it is part of the commons.

    Letting a group of privateer thieves control the money power, to then self aggrandize, is something you sanction, and even propagandize for.

    Since money belongs to the commons, there are two ways to deal with this reality.

    1) You have public banks – the FED is nationalized, and remaining banks within the system are nationalized.

    2) You nationalize the money, but leave banks private. (This is my preferred sovereign way, as it keeps the government more at arms length)

    Option number 2 is where hypothecation events at private banks are forbidden. There is only one head-water for money creation, and that is Treasury.

    https://sovereignmoney.site/

    • Thanks: BlackFlag
    • Replies: @BlackFlag
  63. Hempus says:
    @Omegabooks

    Noahide are prohibitions against idolatry.
    But the dresscode while celebrating the invisible new Virus looks more like demanded by a kind of sharia law. I hope you dont mind when I described Bill Gates as the Pope of this new die cult.

  64. BlackFlag says:
    @Mefobills

    This stuff is way over my head.
    1. Can we estimate the inflation with: dividing stimulus package / money supply? E.g. 3 trillion / 30 trillion?

    2) Who loses? Is it cash and bond holders since stocks, metals, real estate, crypto roughly rise commensurately to their share of the money supply? E.g. money supply increased 10% so s&p 500 goes from 2300 to 2530.
    But that would only make sense if amount in cash and bonds equalled amounts in non-inflationary assets cause the net must be zero, no? I think cash/bonds must be way less than what I’m guessing are non-inflationary assets. So who are the other losers?

  65. @Mefobills

    (I still wouldn’t mind a step by step of the Brady Monetary Circuit… the step by step mechanics. Otherwise, you are going to make me work extra hard to figure it out!)

    Here ya go, all figured out years ago.

    But seriously there’s no need for any Brady bullshit just let the free-market solution do its job. If a corporation(or any entity, including a person) can’t pay its debts then it goes bankrupt and the shareholders lose all their stuff and the creditors get to own whatever is left.

    So as a practical example e.g. Boeing goes bankrupt then the creditors get to own it and the shareholders get nothing(and they deserve nothing because they have refused to control the criminal management). If the government considers that the COMPANY(which is NOT the original shareholders) is essential for national security then it buys the assets from the creditors. Easy peasey.

    In other matters, I have a car that is illiquid. I want to sell it but nobody wants to pay as much as I want for it, so it is illiquid. The government must give me a Brady handout

    • Replies: @Mefobills
  66. @Mefobills

    Ultimately, a single piece of property has multiple, conflicting claims on it. It’s both fraud (invalid titles presented as legitimate), and theft (the interest entailed is unjustly extracted by the banksters). This obviously can’t stand in a crisis, hence the calls by the guilty parties for the state to come to their rescue.

    • Agree: Mefobills
  67. @alt right moderate

    And they haven’t been performing quite as well as low fee index funds invested in the higher performing western stock markets.

    Yeah well there’s a reason for that. The US stock market has been vastly over-performing since the post 2000 low, circa 2003, from the sole cause of The Fed’s criminal counterfeiting.

  68. onebornfree says: • Website
    @Paul Craig Roberts

    PCR says : “I must say that I am amused at finding myself described in comment 39 as a high and mighty socialist.”

    And yet, Mr Roberts , that’s exactly what you and M. Hudson are. 😎

    Proof: PCR/MH says : “In other words, nationalization would be a way to increase competition and restore Glass-Steagall stability to the financial system.”

    This just in: Nationalization of resources, whether of banks or industries [or whatever], is a common, trademark , tell-tale “solution” prescribed by most [if not all ] socialists. Always has been, always will be.

    It’s just yet another “government can solve this- therefor government to the “rescue”” “solution”, when the stark reality is that’s it was/is government interference in the monetary production and banking system that caused the problem[s] in the first place.

    More government-to the-rescue “solutions” [such as nationalization of banks ] are nothing more than pure socialist fantasy; guaranteed to fail “solutions” that will inevitably make the current problems even worse than they already are. They always have- they always will [make things even worse].

    But of course, yourself, Hudson and others here can never even see, understand, let alone admit that simple fact of life.

    And so let us hear once again, the eternal cry of all died-in-the-wool socialist fantasists everywhere, one more time, with feeling: Mo’ gubmint , mo’ gubmint, mo’ gubmint! ”

    And so it [always] goes……”Regards” onebornfree [yawn]

    • Troll: L.K
    • Replies: @Mefobills
  69. Agent76 says:

    Jan 7, 2017 We’re ALL Debt SLAVES – Here’s Why

    The Global Debt Clock

    Our interactive overview of government debt across the planet. The clock is ticking. Every second, it seems, someone in the world takes on more debt.

    http://www.economist.com/content/global_debt_clock

  70. @Kim

    Yes, it’s the best that I’ve ever used. I’ll bet that it can handle 3 times the volume that is currently allowed.

  71. Anon[168] • Disclaimer says:
    @Paul Craig Roberts


    Jewish nonprofits already are feeling the crunch of the coronavirus-induced spending slowdown. The threat of an extended quarantine would inhibit philanthropic giving and also dry up sources of income such as tuition for religious schools and camps, said Eric Fingerhut, the Jewish Federations of North

    Jewish Federations has joined with over 100 other nonprofits, including about half a dozen Jewish groups, in pressing for a dedicated $60 billion cash infusion into the nonprofit sector

    The nonprofits also are asking that taxpayers be allowed to deduct more charitable donations from their federal income tax burden, as they could until the 2017 reforms. The bill is set to restore the line item, but only up to $300.
    “This would restore charitable incentive,” Kline said.
    The coalition is asking for the change to happen in time for 2019 tax filing, which has been extended to July 15.

    Nathan Diament, the Orthodox Union’s Washington director, said the bill extended emergency education funding to non-public schools, which he welcomed.
    “We appreciate that the Jewish day schools in our community will be able to receive financial support in these very challenging times,” Diament said.

    https://www.timesofisrael.com/what-us-jewish-groups-want-to-see-in-2-trillion-congress-pandemic-spending-bill/

  72. Mefobills says:
    @onebornfree

    And so let us hear once again, the eternal cry of all died-in-the-wool socialist fantasists everywhere, one more time, with feeling: Mo’ gubmint , mo’ gubmint, mo’ gubmint! ”

    You should watch the video I posted # 57, and let Rattigan disabuse you of your false notions.

    It is not gubmit gubmint, but instead an alliance of usurers, many of whom are privateers. And you worship privateers and free markets as if they are God.

    Keep on beating your simple one note lolbertarian drum. It only appeals to the simple minded.

  73. Mefobills says:
    @Maple Curtain

    Bullshit. And no mention of structural, i.e. legal, change to the corporate form and the legal rights of the corporation, or of banking reform

    You are right in that reform was not made explicit in their short article. The reform can be done before the nationalized entities are spun back out to be privatized. I don’t think PCR and Hudson were intending on writing a detailed treatise, but just giving an outline.

    There was more discussion on reform with regards to reintroducing Glass Steagall. When Graham Leach Blily Act subverted Glass Steagall, that allowed Wall Street Banks to push risk onto Commercial Banks. Commercial Banking is plain vanilla day to day transactions of the real economy.

    See comment 52 by PCR

    We also made it clear that a bailout in whole or part without a write down should be treated as a public purchase of the entity–a nationalization that could be privatized at a later time.

  74. Sally says:
    @Paul Craig Roberts

    A bailout <= Grandma gave little john a $10,000,000 (ten million) personal loan to start his first company. Little John put $1,000,000 (one million) in his pocket, and made a $9,000,000 down payment on a $100,000,000 cash generating hotel.. Little John borrowed from a federal reserve bank (<=a bank that creates its money its lend by book keeping entries it makes on the banks books (credit cash on deposit in Little John's account and credit due to the Federal Reserve) $91,000,000 (ninety one million was created from red hot thin air and labeled Mortgage due from Little John on hotel purchase (little John owes bank for his bank made hotel loan, and the hotel is pledge to guarantee to the bank Little John will pay off the mortgage).

    The hotel burns down, Little John had no insurance, so uncle Trump steps in, tells Federal Reserve to provide $170,000,000 million in bail out and give it out as follows
    1. to Grandma $10,000,000 (to reimburse the ten million Grandma lost),
    2. to Little John $0 million (Little John got a million out of grandma’s original loan)
    3. to the Bank $0 million (bank got $9 million in cash (down payment) from Little John and
    a $100,000,000 hotel <–debt and cost free, after bank foreclosed).
    4. to Little John $10,000,000 in new money to start over, and
    5. to taxpayers $150,000,000 ($91,000,000 principal +$49,000,000 interest) taxpayers repay the Fed for
    the loss its member bank sustained when it created the money the bank lent to
    Little John to buy the hotel the member bank now owns.

    In order to make this bailout the Treasury collected $170,000,000 million in taxes from the sucker taxpayers the USA governs. Treasury said, I know, taxpayers only have blood circulating in their bodies, but our IRS personnel are trained to force taxpayers to bleed money when they owe Taxes to the Fed.

    "a bailout [is like having the keys to printing press at the Fed. The taxpayers will be made to pay for all losses and will never be given the benefit of any earnings made by Grandma, Little John, the bank, or the federal reserve.

    8 billion humans in this earth have been squashed into 206 different territoriality defined nation states. <= the Fed is not one of the nation states, its a privately owned central bank, that loans to the central banks of the various nation states provided that nation state is capable of collecting taxes from those it governs. Its a ponzi scheme that depends on the taxpayer ability to keep the economy rolling.

    The benefactors are Grandma <=who is a private person; Little John, who is a private person; the bank which is privately owned, the Federal Reserve which is privately owned.
    The taxpayers who pay are the public side of things.

    Is this correct?

    • Replies: @KA
  75. @Daniel H

    Exactly my initial thoughts. Geeze these guys think of everything.

  76. @Paul Craig Roberts

    But, Mr. Roberts, it’s not about your proposals, which are fine. It’s about what the FED and congress are proposing. And, they never do what’s right or good for the people.

    • Replies: @ben sampson
  77. Mefobills says:
    @acementhead

    But seriously there’s no need for any Brady bullshit just let the free-market solution do its job. If a corporation(or any entity, including a person) can’t pay its debts then it goes bankrupt and the shareholders lose all their stuff and the creditors get to own whatever is left.

    The above is an example of brainwashing. Sheeple people (us) are implanted with false memories.

    If you have false memories, then it precludes thinking. It is something like a short circuit. Another method of hypnosis used by the usury crowd, is to redefine words so you don’t have language. If you don’t have language then you cannot understand. Here is a new term for you: Harvest

    Us sheeple are shorn in a Harvest.

    I describe normal debt mechanics harvesting here:

    https://www.unz.com/mhudson/a-debt-jubilee-is-the-only-way-to-avoid-a-depression/#comment-3791721

    Perkin’s in Confessions of an Economic Hitman, describes a more complex harvest scheme. For example. Mexican elite are told to convert their wealth to dollars, and hold said dollars in an offshore account. In the meantime, Mexico goes through a Peso devaluation. The Elite become Comprador’s (beholden to Wall Street Finance). Said Mexican Elite, then return to Mexican economy and buy up everything at fire sale prices. Real Wealth transfers, and society polarizes into haves and have-nots. The Mexinvasion has many authors, including the Harvest. Reality is much more complex than simple platitudes.

    I also recommend you to watch the Rattigan video I posted above @ 57. Real Assets are driven down to low prices, then those with “money” swoop in to buy it up cheap (at below the real price), and then soon after re-inflate prices. This then polarizes society.

    The harvest mechanism leads to plutocracy. Do you want to live in a country where maybe 1000 people own everything, and use their money power to own government? You do know that is a recipe for a slave plantation don’t you?

    Rattigan describes (watch # 57) what is going on right now under your nose. Taxpayer dollars are being funneled to then dispossess you of your birthright. All the assets built up by Boeing over the decades, plus all of the life energy of employees, you would have reduced in price due to an external (and maybe engineered biological crises). This then allows Boeing to be transferred in a harvest to new owners, who are plutocrats.

    Yes, the Boeing leadership are a bunch of dupes who believed everything they were taught in skooool. Our skools, especially economics departments, pass on Neoliberal economics as if it is the truth, when it is the opposite. We live in clown world…. don’t be a clown yourself and eject your brainwashing.

  78. Franz says:
    @Mefobills

    Both PCR and M. Hudson are truth tellers, exposing the nuances of reality – for those of us who have the mental digits to barely comprehend what they are saying.

    Lolbertarians are apologists and dupes for finance capitalism.

    Very much agree, and I speak as a former… well, libertarian (they seemed so less stupid once).

    What can’t be understood here is a simple formula:

    Power Table A, full of Gov’ment workers, draws up a budget.

    Power Table B, full of Private Bankers, pipes in the money to back plans of Power Table A.

    How it works matters less than the fact these things will ALL be left in the hands of Power. Not even Marx managed a system where Power disappears.

    If you insist of backing your money with gold, fine, and Power will set the price of gold. It has always been thus.

    Hudson and Roberts are offering a solution for this world, the one we already have and live in.

    • Agree: Mefobills
  79. @Curmudgeon

    I agree with your observations on the process but in a very real sense it is not the judges of the Courts who are the de facto legislators – it is the high-power financial solicitors who are exploiting the fundamental principle of contracts, being “all or nothing”.

    The financial solicitors have learned well that as long as they all commit the same crimes, the former bank-lawyers that dominate the superior courts are powerless to stop any of them without causing a cascade-failure of the whole system – and compounded by the fact that the former-bank-lawyer-judges often made personal fortunes as financial solicitors committing the same crimes.

    Further, concentrating on the crimes committed by the bankers is a form of misdirection because if you actually read and study the Criminal Code and the international treaties on money-laundering and the disposition of proceeds of crime, it is clear that the controlling minds of the legal profession (BAR) are the ringleaders or kingpins, and that their malpractice liability insurance underwriters are financially liable for the damages. The banks and bankers are in effect merely the bagmen for the actual and technical criminals who stay under the public’s radar in this area.

    Under the criminal law, every time a banker commits a racketeering offence, the solicitors who aided and abetted them to do so are committing two offences because the lawyer is a co-party to the banker’s offence, and counselling to commit a racketeering offence is itself a separate racketeering offences by the solicitors. And three offences when the solicitor is (normally) paid from the resulting proceeds of crime or conversion of the falsified securities.

    Otherwise, I am quite familiar with COMER and I agree with their policies as far as it goes. But what did COMER do here? Answer: They hired a lawyer to take their case to the same Courts and judges that are flagrantly committing sedition and covering for the technically and actually criminal system.

    In 1990 the Supreme Court of Canada refused “Leave to Appeal” the unanimous decision of the Ontario Court of Appeal that criminal and racketeering offences committed by a creditor are “not fundamentally illegal” because the criminal law only provides that offenders will be severely punished – but does not expressly state: Don’t do it.

    By refusing Leave to Appeal that decision became the law across Canada – binding on all Courts – as if the S.C.C. had made it directly – but without attracting any media attention. The Leave-to-Appeal device is itself a thoroughly political device.

  80. It’s the usual solution to seignorage – whoever controls the money supply must stop treating it like heroin and go cold turkey. Either the heroin eventually disappears by itself through hyperinflation, or the user gets it together and stops themselves.

    Problem is the users (those who benefit from printing money) don’t get the negative consequences, just the high. Print money, buy real assets like land and gold – why stop?

    A modern ‘dissolution of the monasteries’, would work, but you’d have to do more than nationalise some shell company like a bank, you’d have to take the wealth of that group of people that has been milking this for personal gain, even if just for corrupt government actors such as the Clintons.

    Otherwise they get a slap on the wrist. As if someone had murdered another, and alls the law asked of them was to ‘clean up the body and mess’. Glass Steagall would at best be a warning on the lawn saying ‘don’t murder anyone on the grass’.

    Really, the notion of corporate personhood must be rejected, as it is a veil that individual owners hide behind, using it to hide their own motivations and agencies. No group of workers, cooperating in the production of goods and services needs a corporate person to represent them.

  81. @onebornfree

    Regardless of whether they qualify as socialists, both authors are propagating a systematized delusion:

    “A “systematized delusion” is one based on a false premise, pursued by a logical process of reasoning to an insane conclusion ; there being one central delusion, around which other aberrations of the mind converge.” Taylor v. McClintock, 112 S.W. 405, 412, 87 Ark. 243. (West’s Judicial Words and Phrases (1914)).

    Their false premise is that there is something called money. In fact there is no money.

    There are promises to pay money and orders to pay money, and an accounting system that is denominated in money – but there is no money. That is the apparent paradox that the vast majority of economists just cannot seem to grasp. Assume that instead of dollars or euros or yen, we had a unit-of-account called unicorn-horns.

    There would be no fundamental change – we would still have a financial economy based on promises to pay unicorn-horns and orders to pay unicorn horns, and where everyone’s account balances were denominated in unicorn-horns – but obviously there are no unicorn horns.

    We have all been recently exposed and conditioned to the concept of derivatives as if it were some rare and exotic financial thing. But in fact all money or what passes for money is a derivative of money because there is no money.

    It is this irrational belief in money, per se, that has allowed the entrenched-money-power to plant the idea in our collective and aggregate psyches that banks are in the money-lending business when they are in fact in the credit-reinsurance business.

    Modern banks do not advance credit to nominal debtors – they obtain pre-qualified-and-secured-credit from nominal debtors. They then strip-off the security as a premium for themselves – and then return or reinsure unsecured-credit (a deposit credit) that does not cost the bank anything to create or produce. The nominal or pretended borrower then assigns that unsecured credit to the seller or vendor of the property by check. Then the bank merely agrees that it owes the vendor the purchase price.

    If the bank were loaning money, then immediately after making a $1 million loan, the bank would be financially no different after as before (except for one-day’s interest).

    But if a bank is reinsuring credit, then immediately after making a purported $1 million loan, the bank is instantaneously $2 million richer.

    It makes a difference. Currently about $250 trillion worth of difference.

    • Replies: @onebornfree
  82. Miro23 says:
    @sally

    The Wall that the US really needs is a giant one separating the state and corporations/special interests.

    Key features would be:

    – Politicians entirely funded by a government grant and by individual voters with a lowish maximum limit.

    – Politicians with votes above a certain threshold get free MSM airtime without MSM censorship and interviews carefully structured for neutrality. Also administrative and research staff at government cost.

    – Politicians have a lifetime ban on either coming from or later joining the commercial sector (no revolving door). Also strongly advised social separation from commercial groups.

    – Elected politicians and top government administrators receiving relatively high salaries directly from the government.

    – Severe penalties for corruption. Prison sentence.

    – Complete shut down of political lobbying. Illegal.

    – Government employees follow a separate lifetime career path with no corporate links and also severe penalties for corruption.

    The effect would be to make politics once more responsive to the needs of the general public ( more Democratic) and get democracy back to working the way it was intended.

    • Replies: @John Chuckman
  83. @Miro23

    Yes, but what god or messiah would install such measures in the US?

    The entire existing American power establishment has no interest in such things,

    The game is fixed. The stakes are so immense with just the military/security arm of the establishment burning through a trillion dollars a year.

    It virtually all exists to serve plutocrats and empire.

    None of those powerful people want “change.”

    The last president who actually thought he could challenge the American establishment left half his head on a street in Dallas.

    • Replies: @Miro23
  84. anon[187] • Disclaimer says:

    Nationalization means that shareholders are not confiscated but paid what the company is worth when it has to be nationalized

    • Replies: @onebornfree
  85. onebornfree says: • Website
    @Timothy Madden

    “In fact there is no money.”

    In that case you can send me all of your “no money”. My email address is at my website, write to me there and I’ll give you my paypal account so you can easily get rid of all your “no money” money. 😎

    Regards, onebornfree

  86. onebornfree says: • Website
    @anon

    “Nationalization means that shareholders are not confiscated but paid what the company is worth when it has to be nationalized”

    “Nationalization:Nationalization, or nationalisation, is the process of transforming private assets into public assets by bringing them under the public ownership of a national government or state. ”
    https://en.m.wikipedia.org/wiki/Nationalization

    Regards, onebornfree

    • Replies: @Mefobills
  87. @the grand wazoo

    No! PCR’s proposals are not fine..at least not fine for ordinary people..fine for the capitalists. PCR and Hudson are trying to save capitalism..and that is not in the inteterst of ordinary people.

    what is in the interest of the ordianry people of the world is to rise up and end capitalism and create social systems that put their collective interest firmly in place as the purpose around which the society is organized.

    and now is the time to rise and carry out such revolutionary activity. the ordinary people have no chance otherwises for this is the stage at which society changes qualitatively..at which capitalism has failed irrevocably and can no longer go on.. unless the capitalists to save themselves and make thir domination of society permanent carry through their own revolution and create BNW..the only way they can control humanity in perpetuity

    that is why the capitalists will pay no attention to PCR and Hudson at this point. they are not about plasters for sores. they are trying to cure their whole problem which is why the are involved in carrying out their own revolution..for which COVID -19 is the catalytic event. they are trying to effect full spectrum domination on global society, with our consent and cooperation.. from which will grow draconian Brave New World

    be careful people..by the time we are woken up from focus on PCR and Hudson in hopeful expectation of social relief we will be deeper into Brave New World than we ever were. it is time to put Hudson and PRC aside. the Richard Wolff Marxist economist is far more relevant and useful for the popular interest than these two, at this time, this moment in history

    it is time for the people to rise, to move to take over society. that is.. this moment is.. the last and only remaining chance for ordinary people to save themslves from the horro of Brave New World

    • Replies: @Mefobills
  88. Mefobills says:
    @onebornfree

    The entire point of M. Hudson, and PCR’s article is to prevent the stock market, and all of people’s real assets from falling TOO FAR.

    The idea is to set a price floor, so Oligarchic predators don’t swoop in and shear the sheep in a harvest.

    The Dow probably needs to fall to its pre 2008 levels (before QE juiced prices with false calories.) In other words, the stock market today does not do price discovery, something which is impossible in your false lolbertarian world view. Markets are god!

    Roberts also says this:

    We also made it clear that a bailout in whole or part without a write down should be treated as a public purchase of the entity–a nationalization that could be privatized at a later time.

    The write-down is pain the entity needs to go through to bring it back to a real price level. If the entity and the people behind it don’t take their lumps, then upon taking the public’s bailout money, entity will be nationalized. Once entity is nationalized, its books can be examined to find out how much criminal legerdemain was going on.

    Using Boeing as an example, the executive suite was borrowing cheap bank credit, and using that to buy back stocks, thus pushing stock prices and hence executive stock options. Boeing executives were giving themselves a bonus at the expense of the future. Boeing executives also diverted their cash flow into stock purchasing, rather than investing in new plant and equipment, thus screwing the future.

    A lolbertarian world view cannot account for these behaviors… man is supposed to be a rational actor with “human action.”

  89. Mefobills says:
    @BlackFlag

    Don’t worry about inflation.. velocity of money is low.

    Who loses? The idea that PCR is advocating is for malefactors to lose their false gains. Usually what happens though is that the bad guys work out schemes where they come out on top and everybody else loses.

    Rothschild… “Buy when there is blood in the streets.” We can modify it to… create pandemics or crises, so there is blood in the streets, then swoop in and buy up real assets cheap.

    Even better, let’s engineer crises to fall on Gematria days like 9-11 or 3-11. To be completely Satanic, let’s telegraph our plans in code, when we are going to do a harvest, so we are warning the sheep in advance. Too bad if the sheep are asleep and cannot recognize our warnings.


    (https://en.wikipedia.org/wiki/File:BradyBondFig.png)

    In link above, which shows the original Brady Bond monetary circuit, the banks are owed 300 million, but the bonds are worth 150 million. The banks are taking a haircut of 150 million.

    The principle is that the creditor is to take pain along with debtor. Shared Risk.

    This principle of shared risk is NOT what is happening in today’s world. A certain finance class of people are off-loading risk to the sheeple, while insulating themselves.

    Heads I win, tails you lose. The Brady Action PCR is suggesting is one where corporate bond malefactors are taking pain, being punished and taking their lumps, rather than insulating themselves, or even worse coming out on top in a neo-feudal ownership plutocracy.

    • Replies: @James Scott
  90. AaronInMVD says: • Website
    @Alfred

    Well, the Peso Uruguayo had been in a rather slow but controlled decline for some years, but it’s been gaining against the dollar all week. It is hard to recommend the Peso Uruguayo as a safe haven, but grocery shopping down here is always fun. Cheap grass fed beef versus expensive imported peanut butter…

    This sort of mass inflation is what Bitcoin was made for. Whether it succeeds here is yet to be seen, but it doesn’t look like a worse bet than anything else being traded right now.

  91. Mefobills says:
    @ben sampson

    No! PCR’s proposals are not fine..at least not fine for ordinary people..fine for the capitalists. PCR and Hudson are trying to save capitalism..and that is not in the inteterst of ordinary people.

    If you use terms like “Capitalism” and “Socialism” you are indicating brainwashing was operative.

    There are different kinds of Capitalism and different kinds of Socialism. These are not distinctions without differences, the different kinds of economy are very different.

    China, for example, runs an industrial capitalist economy, while the U.S. is finance capitalist.

    Further, all economies are mixed to some degree, which means that even finance capitalist economies have some socialism. Police and Fire Departments are socialist, where tax dollars are redistributed.

    what is in the interest of the ordianry people of the world is to rise up and end capitalism and create social systems

    You have been duped in a dialectic. This is part of the system to control sheeple people’s minds. Dialectics have two poles, and you are corralled into one side or the other.

    You have only two choices, the world is black and white, there is no nuance or middle ground! Think about it, and you will know that you have been had.

    Industrial Capitalism with some Socialist mixed economy works just fine. It is the only kind of economy shown by history to work. Keep your eye on the ball, and don’t fall into a dialectic trap.

  92. @BlackFlag

    Deflation is far more likely than inflation at this stage, that’s why the oligarchs are freaking out.

    • Replies: @onebornfree
    , @BlackFlag
  93. onebornfree says: • Website

    “No! PCR’s proposals are not fine..at least not fine for ordinary people..fine for the capitalists. PCR and Hudson are trying to save capitalism..and that is not in the inteterst of ordinary people.”

    Neither PCR or Hudson are capitalists. Nor is capitalism what they would be saving. They are socialists proposing yet more, socialist, “solutions” [i.e. more socialism via bank nationalization] , to problems caused directly by the ongoing and ever-increasing, socialization of the monetary and banking systems via the criminal [i.e. socialist] Federal Reserve centralized banking monopoly system, and all associated.

    Bottom line : they are proposing even more government intervention in the financial system to “correct” [i.e. further socialize and therefor magnify] the effects that preceding government interventions /socializations in the financial system [ via laws, and the Fed] have already caused.

    That financial system has , at this time, little to with capitalism and almost everything to do with socialism. PCR’s and Hudsons “solution” will only magnify/make worse the effects on the lives of ordinary persons such as you and I are currently experiencing.

    So, if you want further socialization of an already socialized financial system, and its accompanying inevitable, even more disastrous effects [ i.e. the elite getting even wealthier while most of humanity gets steadily poorer] , then Mssrs PCR and Hudson and their much- vaunted nationalization “cure” should be “right up your ally” 😂

    “Regards” onebornfree

  94. @Mefobills

    hahahaha. you looking to make a mess here eh! I am not interested.

    we have a situation going and I do not see a way out for the people unless they/we rise now and put an end to CAPITALISM as it exists in the west, its financialized form..its last stage that has failed irevocably in the west.

    there is no positive way out of financial capitalism..save to kill it by revolutionary popular intervention

    by and from Capitalism looking to save itself we see the surveillance state and all manner of incremental loss of popular freedom. what will complete loss of freedom look like when incremenatl loss is complete..will it be a debate between the diff kinds of capitalisms or BNW

    and how do we get back freedoms already lost and prevent BNW?

    are we living this right now or are we not..?

    and the various forms of capitalisms are not like models we chose and implemented at our leisure..they are usually evolutonary one form giving rise to the next..as this final stage of capitalism,,financial capitalism has reduced..or rather developed the stage to the 2 points or evolutionary choices we face: popular revolutionary democray or revolutionary capitalism which is BNW

    I do not write with intent that what I say is abosolute truth, gospel. I am always open because I dont know..not nearly enough, certainly not all there is to know. so crtitque is fine all of it even when it is not useful..like this isnt. what I mean is clear and I start from reality..class interest and the stage at which sciety has arrived and how we got here. we have the opposed ordinary and elitist interests combined in our evolutionary process and what it will take relative to the opposed interests for humanity as a whhole to survive from this point forward

    I am not interested in your school room at all. yu can keep that

  95. @Mefobills

    All economies are in fact “mixed economies,” including both the US and China.

    There are many possible variations in the mix.

    It is is silly and uniformed to speak of capitalist or socialist economies.

    Which is why we hear so much of such talk from the US.

    A ideologues’ paradise.

    • Agree: Mefobills
    • Replies: @ben sampson
  96. @John Chuckman

    Chuckman..an addition to the classroom. seems like I have seen that name elsweher on a by-line or several

    however, we all know what I meant, what I am talking about and what my intent is.

    both you all have offered no solution, no way out for the people..have not discussed one popular move and explained it, that may lead ordinary people out this closing in CAPITALIST vise we are surrounded by

    here is what is happening in France..how are ordinary people to deal with this which is the true nature the relations between the Governments and the people they are supposed to represent …US ! the governmenst really represent the capitalists, the big ones at the top who control society.

    you see..that there: you guys talk of many kinds of capitalism, mixed economy and all of that but one small group of financial capitalists control the USA, all f the west and dominate most of the world. stats of their wealth talk of them owning up to and more that fifty % of the worlds wealth.

    those are who are responsible for the state of affairs in Farnce realtive to the peoples health..the american stock market and ownership of the Fed and most central banks around the world that has looted every country dried up liquidity caused massive inflation and public debt..unremitting and comprehensive looting of most of the people on planet earth.

    the are Capitalists, money mongers, USURISTS!..they were ALWAYS bankers bent on looting the
    planet..seeking to controll all of it, and no threatening those countries they have not yet controil will manner of threats to their existence to wrest control over them

    and given all that you talk now of mixed economies and forms of capitalism as if in some way that is important, rather decisive, fundamentally meaningful. it means soemthng but decisive it aint. Capitalism..the big dominat systme banker controlled and directed..that is what is crucial and of what I speak.

    the ordinary people everywhere, at this time must move to eliminate that capitalism and create in its place revolutionary popular forms of organizing and developing their reality, culture, nation and people. they must create forms of governing themsles that at once addresses their material needs, yet allow for all hands to take part that pre empts hierarchical social organization of authority that makes it easy to maniplate their socieities from afar

    every cook can govern. I dont see any dam thing here but more elitist, imperial western nonsense supportive of the global status quo. but the west too is under manners currently from the capitalist stage/from the capitalists. the people of the west too are being reduced and face the same slavery the rest of the world is subject to by the empire. there is a whole lot more to come for chuckman and his sidekick…lots

  97. I missed adding the french link above
    https://thesaker.is/why-france-is-hiding-a-cheap-and-tested-virus-cure/

    this is what the Capitalists are doing to the French people..the real capitalist..the big, huge Pharma ones.

    I imagine Chuckman and the other one will have to find work at some point that will soil their hands as western culture dries up under the effects of all the looting dn technological advance applied to depopulation etc as the jobs go south as well

    the future of the USA/Canada/Europe seems unimaginably awful to me assuming the capitalist prevail. Huxley and Orwell seems to have fallen a bit short in their descriptive imagination relative to what the white western elites are really capable of. they are far worse than those 2 creative artsts came up with

    I thought the horrfic pending future or the west, more urgent every day now would have energized such as these to an extent at which trivilaities of definition would nto matter in determined drive to achive social safety for the people. these guys appears to still see them as elite and safe. they must be convinced that they have convinced those they work for that they are solid they can be trusted for all eternity

    • Replies: @John Chuckman
  98. KA says:
    @Sally

    Thanks .

    Seems a perfect good description of company’s bailout .

  99. KA says:

    When billionaire Bill Ackman went on television last week to tearfully warn that “hell is coming” and beg the White House to shut down the country for 30 days, he was knee deep in a bet against the markets that netted him $2.6 billion.

    In a Wednesday note to investors of his Pershing Square fund, Ackman said he cashed out of a credit hedge on Monday for a profit of $2.6 billion. The hedge, which he started building on March 3, cost him roughly $27 million and scored big as stock and debt markets floundered on fears of the coming pandemic — fears, critics say, that he helped stoke.”

    NY Post 25th March

    • Replies: @BlackFlag
  100. onebornfree says: • Website
    @Beefcake the Mighty

    “Deflation is far more likely than inflation at this stage, that’s why the oligarchs are freaking out.”

    Agreed [although the economic future is not written in stone, I admit].

    The worldwide demand to hold $US has increased dramatically since this plandemic got going, and the flight to the $US will probably continue to strengthen, given that it is still the majority of the world’s preferred reserve currency at this time [for better or worse].

    For example: “Foreign nations are scrambling to acquire dollars right now. And that surging demand for dollars only drives up the value of the dollar, ”

    See: “The Great Dollar Shortage”: https://dailyreckoning.com/the-great-dollar-shortage/

    Regards, onebornfree

  101. @ben sampson

    ‘I imagine Chuckman and the other one will have to find work at some point that will soil their hands as western culture dries up”

    What a rather stupid, pointless thing to say.

    I have been retired from my corporate career for more than a decade.

    And in any case, what what would my work have to do with what I say?

    Truly, as stupid as something from the Great Orange One Himself.

    • Replies: @ben sampson
  102. BlackFlag says:
    @Beefcake the Mighty

    Fine, but what I care about is *relative* wealth. Who are the relative winners/losers after the injection of 2-6T?

  103. BlackFlag says:
    @KA

    So not only are honest economic predictions notoriously unreliable but we cannot trust anybody involved to give sound advice cause they all have vested interests.

  104. Miro23 says:
    @John Chuckman

    Yes, but what god or messiah would install such measures in the US?

    it would need to be someone with enough power which would mean a dictatorship.

    It’s not impossible, since decadent failed societies like the US eventually collapse. The public search for order at almost any price. However there’s no guarantee that it would be benevolent – In 1917 the Russians got the Bolsheviks.

  105. @Mefobills

    And then they will just do it all again. Its a bailout for bad actors who deserve to lose. Kicking the can down the road has to end.

  106. @Paul Craig Roberts

    Writing off corporate debt is a bailout Paul. No matter how you slice it. All these institutions should have been allowed to die a decade ago so new institutions could have replace them. Its time to stop kicking the can down the road and tighten our belts. The USA needs hard times to build the kind of men needed for the future.

    • Replies: @Mefobills
  107. @Mefobills

    The people who have done this to the USA need to be ruined. They deserve a beheading not just a haircut.

    • Replies: @MrFoSquare
  108. @James Scott

    They deserve a beheading not just a haircut.

    LOL

  109. @John Chuckman

    thats not stupid comment..if it were definitive sure but it is not..not an insult on spec. I dont know you as you rightly point out but I know that too. it was to establish the point that all ordinary people are up against it in the capitalism you wont call by its name..all in that same boat subject to capitalist victimisation of us all..you too.. old and retired or not

    a system is in place that works a certain way and deals with everyone in that way. that system benefits unequally a certain group only, uses the rest to produce those benfits for that dominant group and class of people

    just in the past week the investment monster Ackman…Bill Ackman thats right…cried ‘ social calamity to come that will rip society apart’… to influence stock market betting by those lies he cried, that allowed him to harvest a couple of billion dollars profit just like that. Ackman knew what he was doing..that he was being completely dishonest to mislead the stock market to his profit. Ackman is one of the dominant group, only whom benefits from the system in place, that one can at best describe as capitalism and nothing else at this time.

    there are places where the finer points of Marxist analysis-dialectical materialism etc can be debated. I am not concerned to be so detailed in a forum like this..or among ordinary folk. it is way clear enough what I say all the time

    but relative to Ackman..isnt his openly dishonest behavior illegal. as far as I kow that is totally illegal behavior for which Ackman should be charged and arrested. but that dominant investment kind walked Scott free, away from clearly dishonest, manipulative illegal activity, for personal profit in the stock market

    criminal behavior yet Bill Ackman is free counting his riches from the open fraud he pulled off…not prosecuted. isnt that how capitalism treats the capitalist class?

    and Ackman is from the same group and class of people who continue to lock down america in a supposed pandemic which may be only the very routine flu that kills so many every year anyway..with no lock down

    however let me apologise anyway for the angy tone of my response generally. I hate for people to pull rank on me intellectually. that tees me off no end and that is why. no harm done and it ends well enough. I am done

    that is not mixed economy..that is the product of capitalism, the dominant systematic situationwe are all a part of, live in..that rules the world

    • Replies: @Mefobills
  110. a system is in place that works a certain way and deals with everyone in that way. that system benefits unequally a certain group only, uses the rest to produce those benfits for that dominant group and class of people

    But if the system deals with everyone in that certain way, does it not act equally on each individual? Just that people are not equal in wants or capabilities, so differentiation occurs.

    I don’t want a gold toilet seat, someone does. Why should they not work to get one? Because I want something else? I don’t want to whore myself out in our system of evolutionary autocracy, some do.

    The only reasonable argument to make here is people’s wants should not take priority over people’s needs in a society.

    But that is more akin to the middle ground of Bakunin – equality of opportunity through a universal provision of needs, and free market competition for everything beyond.

    Of course an individual could say ‘I don’t care of the basic wellbeing of my neighbour’, and to a society, that would be like a cell in my body saying ‘I’m not doing my lot for the system, just gonna use it for my own benefit’ – a cancer.

    The question is why the cancer of selfish individuality arises in a society.

    The society could be broken – just like if I smoked 40 a day, there would be more reason to declare full independence for any cell that has to deal with the effects.

    Or the individual could be broken – they may have little control over their wants, and so would not care if they affected another’s needs.

    Capitalism, in acknowledging only ‘unlimited wants, limited resources’ – Epicurianism – happily goes along with the error of endless unsatisfiable desire. It accepts the broken individual, and tells them to have at it, ‘walk on the spines and skulls of colleagues to get to the top, if you want’, as my father describes it.

    But the control and even removal of wants, materialism, requires religion (a drive for self improvement). Marxism does not really ask that of the individual, but offers to beat it into them through what it believes are good methods of and for society alone, and is willing to cleanse its population of those individuals it deems incapable.

    We are not all equal – some of us see wants as suffering, some don’t. This does not mean we have to impose our world view on others, in either direction, but we must come to a state of affairs where neither party can force themselves on another.

    The issue that is missed by capitalists is practicality, ‘limited needs, limited resources’. This is not a boundless problem, so can be – subject to conditions – solved for a society as a whole. The conditions are technological. Food, housing, education, health, defense cost 30% of GDP atm to provide universally (not means tested). In 50 years needs will account for 0.01-10%, if we get a general purpose robot. 200 years ago they cost 100%+ of GDP.

    Back then, socialism could imply communism – full state control – because all of a nation’s resources went on needs.

    Today, socialism should not be communism. Specifically because the condition that underlies 70% of the economy (unlimited wants) is unsatisfyable at the individual level, never mind at the social level.

    What is necessary is a universal economy of needs that operates by the sound socialist principle of equality, and an economy of wants that operates by the sound capitalist principle of fairness.

    And for nobody to mix the two up, like we do when we make socialism about progressive taxation (equality?!), and limit the provision of needs based on a competitive model of ‘who is the poorest’ (yes, even the corporate bailouts work on that capitalistic model – a strong rich bank does not get rescued, nothing universal there).

    Then the debate would likely be along the lines of ‘is stress and a fear of destitution productive to an individual/society’. My answer is no – fear forces you to act, less so think.

  111. Mefobills says:
    @James Scott

    Writing off corporate debt is a bailout Paul. No matter how you slice it. All these institutions should have been allowed to die

    After WW2, Nazi debt was erased, which then allowed the “German Miracle.”

    After WW2, Imperial Japanese debt was CONVERTED to new Yen, to then allow the Japanese Miracle.

    Further, Japan’s land owning Zaibatsu Feudal Oligarchy, were broken up with land reform. OH MY! The U.S. army practicing communism and land reform in Japan.

    Corporate debt can be allowed to fall and then a brady bill like device will set the floor, to prevent full collapse. The FED cannot continue to do QE and set false pricing signals.

    So Sorry! Money’s true nature is law. Man is a rent-seeker, and if allowed man will form in-groups and plutocracies will arise, to then try and control government and feather-bed for themselves.

    The U.S. is not immune from normal historical patterns, as the problem is man himself, and the U.S. is made up of people.

    Somebodies OX is going to be gored, and PCR and Hudson’s plan with Brady Bills PREVENTS (or lessens) innocent and weak people from being gored by the powerful.

    The other lesson from history, is that it usually takes King or a Tsar, and a ruling hierarchy that has some feeling for its people. The ruling hierarchy cannot be composed of self-interested people who are screwing over the population for their own self aggrandizement.

    An example: A financial Oligarchy of mostly Jews formed in Russia in the 90’s, and then started asset stripping Russia, while also maneuvering to take ownership of key industrial sectors. The Jews were “international” and self interested, and hence screwing over average Russians was perfectly OK to their way of thinking.

    The Russian “security state” reacted to these predatory thefts, and used its embedded hierarchy to take retake power and return natural monopolies back to the Russian people. Some Jewish Oligarchs played ball and payed their taxes, and then were force removed from government control positions. Oligarchs who didn’t play ball, took their gold and fled to London or Tel-Aviv, or the U.S.

    Meanwhile in U.S., the security state is allied with Deep State, which is funded by recycled Petrodollars, diverted tax dollars, and CIA drug running, etc. The FED, which is part of private banking cabal, is “international” in scope and part of international finance capitalism globo-homo.

    The U.S. is no longer a nation, but instead is an international banking construct, ruled from behind the scenes by string pullers, who are alienated plutocrats. Wall Street rules.

    To reset U.S. away from a hostile and grabbing predatory ruling elite, an elite which is “international/zionist/globo homo/finance capitalism” will take quite some doing – maybe even a global pandemic, and the crushing of petrodollar system.

    Usually these sort of scenarios include war and mass death of innocents.

    People want blood? It is better to decapitate from the top, and remove the bad guys, than create millions of corpses in war.

    It is not so easy to do.. to remove the parasites. The host can die.

    • Replies: @James Scott
  112. Mefobills says:
    @ben sampson

    I hate for people to pull rank on me intellectually. that tees me off no end

    that is not mixed economy..that is the product of capitalism, the dominant systematic situationwe are all a part of, live in..that rules the world

    It is finance capitalism. Get with the program. There are different forms of capitalism. Just saying the words “capitalism or socialism” is a head caved-in world view.

    This world view is an implanted memory, or hypnosis, or narrative, that passes as received wisdom in so-called intellectual circles. In other words, there are plenty of professors, people in neo-liberal economic circles, etc., who fancy themselves as intellectuals, who never bother to self-examine where their implanted memories come from. They have been duped in a dialectic.

    There are three kinds of markets, Elastic, Mixed, and In-Elastic.

    Finance Capitalism and Lolbertarian economics pretends the market is purely elastic (price competitive).

    Communism pretends that economies are purely Inelastic and hence must be command driven.

    All successful economies are Mixed, with mixed levels of socialism and capitalism (the right kind = industrial capitalism). A mixed economy has socialism mixed in with capitalism, and further the “capital” has been changed in its nature with sovereign types of money.

    You need to have rank pulled on you intellectually, so maybe you can disabuse yourself of implanted memories.

    Being confronted when you are wrong, is a kindness, because it diverts you off of a self destructive path.

  113. @Mefobills

    Everything you wrote is true. This is exactly why we need to let it all burn and start over. The jew hostile elite that Putin booted came from here in the first place. The jew mob only loses power when their schemes crash. We need the crash.

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