PLANNED CHAOS PART IV THE ECONOMY Submitted By Dee Fatouros
Economic Institutions:
Sociologists understand the economy as the set of arrangements by which a society produces, distributes, and consumes goods, services, and other resources.
First, a brief introduction to the history of the American economy:
The fledgling thirteen colonies established their independence on ingenuity, the frontier, and support from France and her allies. The United States and her national debt were born, and both have expanded seemingly without limits. However, in the years leading up to America’s sestercentennial, serious questions about the unsustainability of America’s economic practices have developed. Once the world’s leading economic superpower, in the twentieth century America assumed the role of financial capital of the world. As America’s trade deficit continues to increase, much of America’s massive debt is now controlled by China, and a transfer of power seems to be in progress. But even amidst recession, the model of the American Dream is still clinging to life. Whether America and her dream can emerge unscathed in the coming years remains to be seen. It is a complex economic question, and one that cannot be untangled from the global economy.
The Economy of Colonial America (Pre-1776)
Colonial America was a predominately agricultural economy. Even as the economy expanded over the decades of the eighteenth century, the colonies only inched toward industrialization by the year of the Declaration of Independence, in 1776.
The Constitution and Pre-Civil War Economy (1787 – 1850s)
From the writing of the United States Constitution in 1787, America’s economy saw tremendous growth. The Constitution provided a kind of “economic charter,” laying out regulation of both commerce and money by Congress. Most importantly, it opened the market of the United States territory.
The Economics of War:
The 1848 discovery of gold in California not only drew hundreds of thousands of people out West; it also shifted the balance of economic attention of the United States. By the onset of the Civil War in 1861, gold not only backed American currency, but because of its role in Northern industry, it was indirectly a primary funder of the Northern war effort. Before long, however, both the North and the South resorted to paper currency. Inflation was rampant on both sides but particularly in the South, which lacked the institutional and bureaucratic power of the North, who had both “an established Treasury and a revenue-gathering system”
Reconstruction through the Roaring Twenties (1865 – 1929):
Following the war, the South lay in economic shambles, and the slave-supported “aristocracy” was dissolved as plantations were divided up. Tenant-style farming or sharecropping became the predominant form of southern agriculture, particularly among the recently freed slaves....
Following the war, the American economy was driven by innovation and invention that spurred tremendous growth of the industrial infrastructure. In short, rapid development—and much of it a result of advances in mass production. Individual business enterprise became the backbone of the United States economy...
The 1917 War Revenue Act raised taxes while the government sold bonds to the general public and the newly founded Federal Reserve. At the time, America was clinging to a gold standard to back its currency, so avoiding simply printing additional money was meant to help preserve the standard, while preventing inflation. However, the war altered the American economy in many ways...
Following the war, the American economy was driven by innovation and invention that spurred tremendous growth of the industrial infrastructure. In short, rapid development—and much of it a result of advances in mass production. Individual business enterprise became the backbone of the United States economy...
The 1917 War Revenue Act raised taxes while the government sold bonds to the general public and the newly founded Federal Reserve. At the time, America was clinging to a gold standard to back its currency, so avoiding simply printing additional money was meant to help preserve the standard, while preventing inflation. However, the war altered the American economy in many ways...
Great Depression through World War II (1929 – 1945):
The two most influential economic events of the twentieth century in America are the Great Depression and World War II. While the precise causes of the Great Depression are both numerous and challenging to pinpoint, the economic effects were disastrous. At its peak, unemployment was nearly 25 percent of the workforce as hundreds of banks failed (about 40 percent) and hundreds of millions of deposits were lost (Ferguson 2008). In summary, after “increasingly stock speculation, the stock market crash of 1929 wiped out millions of investors and crippled confidence among business executives and consumers”
Into the Modern Era (1950s – Present):
While portions of Asia and Europe lay in literal ruins, the United States continued to grow after the war, both in population and economically. The postwar “baby boom” was one of many results of the American military returning home. Most significantly, consumer spending and numbers of consumers increased substantially. The American “middle class” became dominant...
This cursory examination of “The Fab Five,” a select group of economic theorists, can provide the financial professional with an initial template upon which to expand perspectives in terms of how money, markets, economies, and production actually work. The FP’s willingness to study economic theory, money behavior, and wall street psychology will only enhance their financial planning and decision making skills in this most challenging business. And help them make sense out of the money-mad world in which they live and work!
Adam Smith (1723-1790), a philosopher and Scotsman is considered the founder of modern economic theory. Smith had infinite faith in humanity; he believed that people would act in their own self-interest and produce the goods and services required by society as a whole...
John Maynard Keynes (1883-1946), however, felt quite differently. He advocated interventionist economic policy encouraging governments to leverage fiscal and monetary policies to allay the adverse consequences of downturns in business cycles, economic recessions, and depressions. Keynes argued that decisions made by individuals and groups in the private sector can, at times, produce negative macroeconomic results which can be mitigated by monetary measures and policy actions in the public sector...
Karl Marx (1818-1883), the founder of modern communism, provides us with a completely different perspective. Marx merges politics and economics. He contended that “the history of all hitherto existing society is the history of class struggles.” He argued that capitalism would produce internal tensions which would lead to its destruction. Just as capitalism replaced feudalism, Marx believed that socialism would in turn replace capitalism and lead to a stateless, classless society he referred to as pure communism...
Friedrich Hayek (1899-1992), a Nobel Prize winning economist, was a leading figure in the Austrian School of Political Economy. Unlike his predecessors, Hayek was more of a multi-disciplinary thinker. He was an advocate for classical liberalism and free market capitalism. He believed in limited government, due process and the rule of law, constitutionalism, and individual liberties: free markets, freedom of speech, press, assembly and religion. He considered private property rights essential to the sovereignty of the individual.
Milton Friedman (1912-2006), a Nobel Prize winning economist, specialized in consumption theory, monetary policy, and stabilization policy. Early in his career he was a Keynesian, but he never advocated wage and price controls. In fact, he has been called the first counterrevolutionary against Keynesianism. He endorsed a macroeconomic policy which became known as monetarism. He believed in a natural rate of unemployment which governments could modulate at the risk of inflation...
For further discussion of the above, go here
To view many more well known economists and their views, go here
The Economy has always had cycles. Most are not aware of what drives it or the markets. However, the collapse of 2008 made even the uninformed aware of the fact that something terrible had to have been going on to bring it about.
Theories abounded.
Crony Capitalism:
Crony capitalism is the marriage of the state and private special interests. Some people have called it corporatism, mercantilism, fascism, or even Communism.
We will call it crony capitalism.
By whatever name, it is phony capitalism.
For further discussion, go here
Crony capitalism is the marriage of the state and private special interests. Some people have called it corporatism, mercantilism, fascism, or even Communism.
We will call it crony capitalism.
By whatever name, it is phony capitalism.
For further discussion, go here
Oligarchy:
An oligarchy is when a few businesses, or even individuals, control most of the money and economic power in an economy. As opposed to a democracy, they are not elected by the people. Instead, they maintain their wealth and power through relationships with each other.
For further discussion, go here
Market Manipulation:
From Financial Market Manipulation Is The New Trend: Can It Continue?
A dangerous new trend is the successful manipulation of the financial markets by the Federal Reserve, other central banks, private banks, and the US Treasury. The Federal Reserve reduced real interest rates on US government debt obligations first to zero and then pushed real interest rates into negative territory. Today the government charges you for the privilege of purchasing its bonds.
People pay to park their money in Treasury debt obligations, because they do not trust the banks and they know that the government can print the money to pay off the bonds. Today Treasury bond investors pay a fee in order to guarantee that they will receive the nominal face value (minus the fee) of their investment in government debt instruments.
The fee is paid in a premium, which raises the cost of the debt instrument above its face value and is paid again in accepting a negative rate of return, as the interest rate is less than the inflation rate.
Think about this for a minute. Allegedly the US is experiencing economic recovery. Normally with rising economic activity interest rates rise as consumers and investors bid for credit. But not in this “recovery.”
Normally an economic recovery produces rising consumer spending, rising profits, and more investment. But what we experience is flat and declining consumer spending as jobs are offshored and retail stores close. Profits result from labor cost savings from employee layoffs.
The stock market is high because corporations are the biggest purchases of stock. Buying back their own stock supports or raises the share price, enabling executives and boards to sell their shares or cash in their options at a profitable price. The cash that Quantitative Easing has given to the mega-banks leaves ample room for speculating in stocks, thus pushing up the price despite the absence of fundamentals that would support a rising stock market.
In other words, in America today there are no free financial markets. The markets are rigged by the Federal Reserve’s Quantitative Easing, by gold price manipulation, by the Treasury’s Plunge Protection Team and Exchange Stabilization Fund, and by the big private banks.
For further discussion, go here
From This Is The Greatest Financial Market And Currency Manipulation Of All Times
A dangerous new trend is the successful manipulation of the financial markets by the Federal Reserve, other central banks, private banks, and the US Treasury. The Federal Reserve reduced real interest rates on US government debt obligations first to zero and then pushed real interest rates into negative territory. Today the government charges you for the privilege of purchasing its bonds.
People pay to park their money in Treasury debt obligations, because they do not trust the banks and they know that the government can print the money to pay off the bonds. Today Treasury bond investors pay a fee in order to guarantee that they will receive the nominal face value (minus the fee) of their investment in government debt instruments.
The fee is paid in a premium, which raises the cost of the debt instrument above its face value and is paid again in accepting a negative rate of return, as the interest rate is less than the inflation rate.
Think about this for a minute. Allegedly the US is experiencing economic recovery. Normally with rising economic activity interest rates rise as consumers and investors bid for credit. But not in this “recovery.”
Normally an economic recovery produces rising consumer spending, rising profits, and more investment. But what we experience is flat and declining consumer spending as jobs are offshored and retail stores close. Profits result from labor cost savings from employee layoffs.
The stock market is high because corporations are the biggest purchases of stock. Buying back their own stock supports or raises the share price, enabling executives and boards to sell their shares or cash in their options at a profitable price. The cash that Quantitative Easing has given to the mega-banks leaves ample room for speculating in stocks, thus pushing up the price despite the absence of fundamentals that would support a rising stock market.
In other words, in America today there are no free financial markets. The markets are rigged by the Federal Reserve’s Quantitative Easing, by gold price manipulation, by the Treasury’s Plunge Protection Team and Exchange Stabilization Fund, and by the big private banks.
For further discussion, go here
From This Is The Greatest Financial Market And Currency Manipulation Of All Times
Consider the following headlines. They may have come at an unexpected timing, in the light of the economic recovery story, but they were for sure unavoidable:
Federal Reserve Said to Probe Banks Over Forex Fixing (Bloomberg)
Deutsche, Citi feel the heat of widening FX investigation (Reuters)
HSBC, Citi suspend traders as FX probe deepens (Reuters)
Metals, Currency Rigging Is Worse Than Libor, Bafin Says (Bloomberg)
The most remarkable event of the past week was the Federal Reserve investigating whether traders at the world’s biggest banks have been rigging currency rates. According to Bloomberg, the Fed is probing whether traders shared information that may have let them manipulate prices in the $5.3 trillion-a-day foreign-exchange market for profit maximization
More here
Wikipedia also discusses the issue.
From Markets, Governments, and the Common GoodWalter E. Williams, George Mason University
As human beings we all have certain unalienable rights, as so eloquently stated in our Declaration of Independence. Of the rights we possess, we have a right to delegate to government. For example, we all have a right to defend ourselves against predators. Since we possess that right, we can delegate it to government. In other words, we can say to government, "We have the right to defend ourselves but for a more orderly society, we delegate to you the authority to defend us." By contrast, I do not possess the right to take the property of one person to give to another. Since I do not possess such a right, I cannot delegate it to government. If you're a Christian or simply a moral human being, you should be against these so-called rights. After all when God gave Moses the Eighth Commandment, "Thou shalt not steal", I'm sure that he didn't mean thou shalt not steal unless there was a majority vote in Congress. Moreover, I'm sure that if you were to have a heart to heart conversation with God and asked him, "God, is it okay to be a recipient of stolen property?" I'm guessing He would say that being a recipient of stolen property is a sin as well. Decent housing, good medical care and decent jobs are not rights at all, at least not in a free society; they're wishes. As such I would agree with most Americans because I too wish that everyone had decent housing, a high paying job and good medical care. I would go further to say that I believe one should assist his fellow man in need. Doing so by reaching into one’s own pockets to help him is praiseworthy and laudable. Reaching into someone else’s pockets to do so is despicable and worthy of condemnation.
Common Good
If the common good or social justice has any operational meaning at all, it means that there is a system of governance where the purpose of laws is to prevent one person from violating another person's right to acquire, keep and dispose of property in any manner so long as he does not violate another's similarly held rights. In other words, laws should be written to prevent force and fraud. Laws that force one person to serve the purposes of another are immoral. An extreme example is slavery. Most people agree that slavery is immoral. But what makes it so? Slavery denies a person the right to use his property (body) and the fruits of his labor the way he sees fit. Slavery forcibly uses one person to serve the purposes of another. Tragically, most Americans, including blacks, whose ancestors have suffered from gross property right violations, think it quite proper that one person be forcibly used to serve the purposes of another.
Today, our government has become increasingly destructive of the ends it was created to serve. Americans have become increasingly hostile and alien to the liberties envisioned by the Framers. We have disregarded the inscription that graces the wall at the U.S. Department of Justice warning, "Where the law ends tyranny begins." Or as Justice Louis Brandeis put it, “The makers of our Constitution conferred, as against the Government, the right to be left alone--the most comprehensive of rights and the right most valued by civilized men.”
For further discussion, go here
Federal Reserve Said to Probe Banks Over Forex Fixing (Bloomberg)
Deutsche, Citi feel the heat of widening FX investigation (Reuters)
HSBC, Citi suspend traders as FX probe deepens (Reuters)
Metals, Currency Rigging Is Worse Than Libor, Bafin Says (Bloomberg)
The most remarkable event of the past week was the Federal Reserve investigating whether traders at the world’s biggest banks have been rigging currency rates. According to Bloomberg, the Fed is probing whether traders shared information that may have let them manipulate prices in the $5.3 trillion-a-day foreign-exchange market for profit maximization
More here
Wikipedia also discusses the issue.
From Markets, Governments, and the Common GoodWalter E. Williams, George Mason University
As human beings we all have certain unalienable rights, as so eloquently stated in our Declaration of Independence. Of the rights we possess, we have a right to delegate to government. For example, we all have a right to defend ourselves against predators. Since we possess that right, we can delegate it to government. In other words, we can say to government, "We have the right to defend ourselves but for a more orderly society, we delegate to you the authority to defend us." By contrast, I do not possess the right to take the property of one person to give to another. Since I do not possess such a right, I cannot delegate it to government. If you're a Christian or simply a moral human being, you should be against these so-called rights. After all when God gave Moses the Eighth Commandment, "Thou shalt not steal", I'm sure that he didn't mean thou shalt not steal unless there was a majority vote in Congress. Moreover, I'm sure that if you were to have a heart to heart conversation with God and asked him, "God, is it okay to be a recipient of stolen property?" I'm guessing He would say that being a recipient of stolen property is a sin as well. Decent housing, good medical care and decent jobs are not rights at all, at least not in a free society; they're wishes. As such I would agree with most Americans because I too wish that everyone had decent housing, a high paying job and good medical care. I would go further to say that I believe one should assist his fellow man in need. Doing so by reaching into one’s own pockets to help him is praiseworthy and laudable. Reaching into someone else’s pockets to do so is despicable and worthy of condemnation.
Common Good
If the common good or social justice has any operational meaning at all, it means that there is a system of governance where the purpose of laws is to prevent one person from violating another person's right to acquire, keep and dispose of property in any manner so long as he does not violate another's similarly held rights. In other words, laws should be written to prevent force and fraud. Laws that force one person to serve the purposes of another are immoral. An extreme example is slavery. Most people agree that slavery is immoral. But what makes it so? Slavery denies a person the right to use his property (body) and the fruits of his labor the way he sees fit. Slavery forcibly uses one person to serve the purposes of another. Tragically, most Americans, including blacks, whose ancestors have suffered from gross property right violations, think it quite proper that one person be forcibly used to serve the purposes of another.
Today, our government has become increasingly destructive of the ends it was created to serve. Americans have become increasingly hostile and alien to the liberties envisioned by the Framers. We have disregarded the inscription that graces the wall at the U.S. Department of Justice warning, "Where the law ends tyranny begins." Or as Justice Louis Brandeis put it, “The makers of our Constitution conferred, as against the Government, the right to be left alone--the most comprehensive of rights and the right most valued by civilized men.”
For further discussion, go here
From The Financial New World Order: Towards a Global Currency and World Government
Ultimately, what this implies is that the future of the global political economy is one of increasing moves toward a global system of governance, or a world government, with a world central bank and global currency; and that, concurrently, these developments are likely to materialize in the face of and as a result of a decline in democracy around the world, and thus, a rise in authoritarianism. What we are witnessing is the creation of a New World Order, composed of a totalitarian global government structure.
In fact, the very concept of a global currency and global central bank is authoritarian in its very nature, as it removes any vestiges of oversight and accountability away from the people of the world, and toward a small, increasingly interconnected group of international elites.
As Carroll Quigley explained in his monumental book, Tragedy and Hope, “[T]he powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences. The apex of the system was to be the Bank for International Settlements in Basle, Switzerland, a private bank owned and controlled by the world’s central banks which were themselves private corporations.”[71]
For extensive discussion, go here
For the sturdy of mind, this link contains many charts and graphs dealing with macro trends.
We have heard over and over that there is a huge disconnect between Main Street and Wall Street. By now, the economy should have rebounded as well for the populace as it has for stockholders.
Cronyism, oligarchy and market manipulation have all played a part in the sabotage of the recovery for the much heralded, (and disappearing) middle class. In the end, the economy is a major social institution that must be manipulated, weakened, and undermined for the creation of a global currency and single world government.
Such an occurrence might seem palatable to a weary, struggling, and thoroughly demoralized populace yearning for stability. A global political and financial order will initially result in stability, but will surely end up with a totalitarian system with no place for humanity to seek refuge from from the jackboot on its neck.
Original source
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Suggested Reading...
Planned Chaos, Part III, The Attack On Our Religious Institutions
Planned Chaos--The Relentless Undermining Of Our Social Institutions Part Two
Planned Chaos--The Relentless Undermining Of Our Social Institutions Part One
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