Other than the articles I write about Frederick Soddy there are only two others I like. I am excited I’ve gotten permission from the publisher and the author to host one of these articles. Check back later today or tomorrow and it should be up. It will take me awhile to format it for the web.

The other article I like is already on this site: Frederick Soddy and the Doctrine of Virtual Wealth

“The study of Economics has never lacked its ‘heretics’ – those who, from outside the academic specialty, have often enough brought to the subject a fresh viewpoint, inspired not so much by theory as by a practical observation of the realities of trade and commerce, and a keen sense of the human element in what is otherwise a rather abstract discipline.”

BRIC Rising The GDPs of Brazil, Russia, India, and China are all rising while America, Australia, and Western Europe are slowly sinking. We’re soon to be eclipsed.

Not likely.

The BRIC countries are way behind us. They’re where we once were, and they’re traveling down the same path we travelled. Given enough time they’ll end up in exactly the same position that we’re in now: massive debt, unemployment, and low production.

It’s impossible for India or China to ever attain to anywhere near the standard of living that is possible for us, simply because they’re so overpopulated. We don’t have a physical economic problem. We have a social problem, and it’s getting worse.

With suffering the socially impossible becomes possible. What we need are monetary and economic reforms, and with them we can quickly attain to a higher standard of living and cast off our massive burden of debt.

While everyone else is full of doom and gloom, I’m optimistic. We’ve reached the end of where the path we’re on can take us, and rather than sit and wallow in the mud forever, I think we’re going to end up hopping paths and set ourselves on the right road economically.

Eddie Bauer is likely to go bankrupt. Not surprising, their clothes are ugly and expensive.

This is from Martin Hattersley. Go to the Resources page to read his articles.

Physical Wealth Versus Money

Perhaps you know of the story of the man who had a strange mental disease.

If someone wrote the word “meat” on a piece of paper, he would treat it as if it was real meat, and eat the paper.

Aren’t our economists suffering from the same impairment?!

The Money System Triggered the Bankruptcy of General Motors I have a new article published in Global Research.

Chrysler Drops 789 Dealership Agreements Judge Gonzalez overruled the objections of dealers who are being dropped. Also, the Supreme Court denied the emergency intervention of Chrysler’s creditors. The court claimed that the intervenors had failed to meet the legal standard for emergency intervention. Of course this is a lie as there is no such standard. Judges do whatever they feel like doing and then make up a rationale for their actions afterwards.

Chrysler’s creditors are asking to Supreme Court to stop the sale of Chrysler to Fiat.

Germany’s central bank is predicting the German economy will shrink by more than 6% this year.

Postscript “Our modern Capitalist system, based as it is on the profit motive and the encouragement and reward of personal initiative, has brought humankind to the dawn of an age of plenty never before known in history. At the same time the breakdown of the morally based order of the age that preceded it has allowed avaricious men, consciously or otherwise, to profit not simply as a result of the value they give to their fellow men, but by capturing for themselves the values given to all from our common association in society, whether this is expressed in terms of the value of land, labour, capital facilities, or credit.

“The issue of today is the issue of Automation, and the question of how to distribute incomes to mankind with which to buy the products of the machine, when automated production needs less and less human labour, and so distributes fewer and fewer incomes, with which its products can be bought. Traditional Capitalism, whereby people make their incomes from sale or rent of their property or their labour, and most people in practice make a living by selling their labour, can give no other answer than futile schemes to secure “full employment” by “making work” in an age where work is being done away with, and such work as is required may entail many years of specialized and expensive training.

Read the rest of this entry »

Assumed Untruths “But the economy? Now, here is a force too big even for the biggest government in the history of the world, which is the U.S. government. That’s because economic trends are embedded in the structure of the material world and operate according to laws akin to gravity. They are social laws, if you will, features of the world that operate in all times and all places, and they are generated by the implacable fact of scarcity and the need for a system of production and allocation.”

According to popular economist Lew Rockwell the laws of economics he imagines to exist are akin to the law of gravity. Right. Unlike physical scientists economists simply assume and make things up and then declare their fantasies to be iron-clad laws.

Hilariously he mentions scarcity and the “need for a system of production and allocation.” The scarcity he imagines doesn’t exist. Science and technology have vastly increased our productivity. America is quite capable of producing many times more goods than it does currently. What there is a scarcity of is the ability to purchase what we are so capable of purchasing. In other words, while he believes we suffer from physical scarcity we suffer from an artificial scarcity brought on by false economic doctrines and an unsound monetary system.

Frederick Soddy fully addresses Lew Rockwell’s claims: “We live in a world of potential abundance beyond our unscientific ancestors’ powers of foreseeing, and we have invented a method of keeping the people in poverty by juggling tricks with money on a par with tampering with weights and measures and cheating at cards. But it could not have succeeded but for the cooperation of the verbally educated economists and his imaginary ‘economic laws’ arising from the inverted importance he has given to money.”

Ireland set to go bust? “There are economic professors in American universities who think they are masters of the universe, but they don’t have any historical knowledge. I have never believed that markets are self correcting. No historian could.”

Economists always have an excuse for why their Magical Market failed to work its magic. It’s usually because the government somehow “interfered” and if not for this interference the Magic Market would have unfailingly worked it’s magic. How did we get out of the Great Depression? A really big war.

“He has also warned that in Britain he expects ‘more riots in major cities this year’ because of the economic situation and says the recent ‘drip feed’ of the peccadilloes of British MPs and their expenses is ‘just the beginning of a crisis of political legitimacy that will be played out over the next 18 months.’”

Social unrest is going to keep increasing as long as the economic problem remains unsolved.

DVD Sniffing Dog This is quite funny. Malaysia has dogs trained to find DVDs in order to help the police catch people who illegally copy and sell DVDs.

Ticktock—California Runs Out of Money in 12 Days “The state wallet is empty. The bank closed. Credit has dried up, Gov. Arnold Schwarzenegger told lawmakers in a special Tuesday morning address at the Capitol.

“‘California’s day of reckoning is here,’ he said. With no action, the state will run out of cash in 14 days. Three months after the state budget was approved, California faces a $24 billion deficit.”

It will be very interesting to see how the federal government handles this, especially because California is going to be the first of many state bankruptcies.

Economic Recovery is Wishful Thinking “The media have obviously abandoned economic reporting and instead have adopted the role of cheerleader, touting whatever good news it can find and inventing good news when none can be found. This leaves the responsibility of reporting on the economy to others.”

“The plunge in house prices has sent consumption plummeting. The problem is not consumer attitudes, as many commentators seem to believe. Rather, the reason that most homeowners aren’t buying a lot right now is the same reason that homeless people don’t buy a lot of things: they don’t have the money.”

“Happy talk will not turn this economy around. The economy needs more demand, which can only be provided by another larger dose of stimulus from the federal government. There are easy, quick and effective ways to boost the economy with additional stimulus.”

“The economy needs more demand[.]” Translation: People need to be given money in order to buy stuff so people can have jobs producing stuff. Our ability to produce remains but our ability to purchase has plummeted and hence we have a crisis. If people could afford to purchase everything industry could and did produce we’d be in clear waters right now.

The Social Credit Movement “Humankind was, and is, involved in a life-and-death struggle to become the master of the very economic, financial and industrial machine it has created to be its servant, and the stakes in the struggle are nothing less than man’s own personality and the continuation of civilizations itself.”

“[T]he breakup of the present financial and social system is certain. Nothing will stop it. “Back to 1914” is sheer dreaming; the continuation of taxation on the present scale, together with an unsolved employment problem, is fantastic; the only point at issue in this respect is the length of time which the breakup will take, and the tribulations we have to undergo while the breakup is in progress . . .

“There is at the moment no party, group or individual possessing at once the power, the knowledge and the will which would transmute the growing social unrest and resentment (now chiefly marshaled under the crudities of Socialism and Communism) into a constructive effort for the regeneration of Society.”

Snapshot “Headlines: ‘Chrysler Heads Back to Bankruptcy Court Friday’; ‘Crash Diet: GM Getting in Shape for Chapter Eleven’’ ‘Economy Sinks at a 5.7 Percent Rate in 1Q.’

“I think I may have to take over the economy. Yes, I hear you saying, ‘Fred, what arrogance, even by your vertiginous standards. You aren’t an economist. What makes you think you know anything about economics?’”

“To which I reply, ‘What makes you think economists know anything about economics? Who got us into this mess, me or economists? I have never bought anything on credit in my life, and I have zero debt. Would you rather have me running things, or economists?’”

“What makes you think economists know anything about economics?” They don’t! I cringe every time I hear one on the radio. Always they latch onto some statistic: this rate up, that rate down, and then it means blah, blah, blah. Never is there a solution. If only lip flapping could save the economy, we’d all be billionaires.

I think of them as weather forecasters (really, really bad forecasters). They say “the economy is up” or the “economy is down” or “I predict the recession will be over in 8 months.” Mostly their predictions are wrong. A weatherman is usually right. By knowing what the weather will be in advance you can take appropriate action, and avoid being caught in a downpour.  However, since you can’t trust what economists say to be accurate, there’s no value in their predictions. The hordes of economists all say contradictory things, so it’s always possible to find a few who predict things correctly. If you bet on all possible outcomes you’re sure to win. Bet on every horse in the race and you’ll pick a winner. But when nine out of ten forecasters are wrong, and you have no idea which forecaster will be right, the forecasts aren’t worth anything.

Here’s a little thought experiment. What would happen if all economists on Earth simply vanished? Would there be any negative consequences? If the farmers all disappeared we’d starve. If the mechanics all disappeared our cars would stop working. But what is the economists went away? Thing is, as far as I can tell, they don’t actually do anything useful. We’d be just fine without them. Think about it.

Nationalizing Industry The US government is buying a 60% share of General Motors. The Canadian government is buying a 12% share. That makes for 72% government ownership.

While various nitwits think letting GM be liquidated would be a good idea, it would be a disaster. Increase d poverty and unemployment would result. People stupidly yammer on about efficiency and competition. Efficiency is why we have unemployment in the first place. Higher efficiency means fewer people can do more, and hence fewer workers are needed, which means fewer jobs. If we became much less efficient more workers would be needed, and we’d have less unemployment.

Only in an insane system is the purpose of the economy to provide work so that everyone can work 40+ hours a week. The goal of the economy should be to produce the goods needed and wanted by society in abundance. With the goal of providing work efficiency gains are a loss. With the goal of producing wealth efficiency gains are a boon.

Having the government save GM is simply a band-aid to keep the economy from collapsing. It’s not a fundamental fix. Don’t forget the only reason GM is in trouble is the economic crisis. Car sales have plummeted because of the crisis. Sales have gone down not because people don’t want cars, but because they can’t afford to buy them. Without the crisis, which the government and financial system are responsible for, GM would be doing just fine.

Failure Bonuses The Canadian Pension Plan has lost 24 billion in value, despite that four of its executives received bonuses totalling 7 million. I am always confused by this. I thought bonuses were for good performance. At law firms lawyers who bill the most hours get bonuses. Why should anyone get a bonus for performing poorly? It seems financiers get bonuses simply for being on the payroll.

Financier Bonus Checklist
1. Employed by company
2. Sat in chair
3. Alive
4. Didn’t set office on fire
5. Went to meetings
6. Wrote a memo

Total Bonus: 27 million

One in eight home owners in the US are either late in loan payments or in foreclosure.

Also keep in mind that the actual student loan defaults are much greater than the reported numbers. It’s quite easy to get “forbearance” for at least two years. Forbearance is when the interest keeps racking up, but the lender doesn’t require payments because you haven’t got the money to pay. So whether you’re in default or you’re in “forbearance” functionally it’s the same. You’re not making payments. Hence, the real default rate for student loans is defaults + forbearance.

Foreign Trade “The effects of a universal currency would be, in the absence of tariffs, to reduce the working classes of all countries to one very low standard of living. The masses of mankind would be engaged in a life and death struggle for the possession of money and for the control of foreign markets, and the nation who could produce goods at the cheapest rate (in other words, the nation whose operatives could be induced to live at the lowest stage of existence compatible with their ability to produce goods) would become the most successful …”

Manipulation: How Financial Markets Really Work “Wall Street’s mantra is that markets move randomly and reflect the collective wisdom of investors. The truth is quite opposite. The government’s visible hand and insiders control markets and manipulate them up or down for profit – all of them, including stocks, bonds, commodities and currencies.”

The Depth of Corruption “Since Margaret Thatcher, British parliamentary democracy has been progressively destroyed as the two main parties have converged into a single-ideology business state, each with almost identical social, economic and foreign policies. This “project” was completed by Tony Blair and Gordon Brown, inspired by the political monoculture of the United States. That so many Labour and Tory politicians are now revealed as personally crooked is no more than a metaphor for the anti-democratic system they have forged together.”

PROGRESS

The time is ripe, and rotten-ripe, for change ;
Then let it come : I have no dread of what
Is called for by the instinct of mankind ;
Nor think I that God’s world will fall apart,
Because we tear a parchment more or less.
Truth is eternal, but her effluence,
With endless change, is fitted to the hour ;
Her mirror is turned forward, to reflect
The promise of the future, not the past.
He who would win the name of truly great
Must understand his own age and the next,
And make the present ready to fulfill
Its prophecy, and with the future merge
Gently and peacefully, as wave with wave.
The future works out great men’s destinies ;
The present is enough for common souls,
Who, never looking forward, are indeed
Mere clay wherein the footprints of their age
Are petrified for ever : better those
Who lead the blind old giant by the hand
From out the pathless desert where he gropes,
And set him onward in his darksome way.
I do not fear to follow out the truth,
Albeit along the precipice’s edge.
Let us speak plain : there is more force in names
Than most men dream of; and a lie may keep
Its throne a whole age longer, if it skulk
Behind the shield of some fair-seeming name.
Let us call tyrants, tyrants, and maintain,
That only freedom comes by grace of God,
And all that comes not by his grace must fall ;
For men in earnest have no time to waste
In patching fig-leaves for the naked truth.

—James Russell Lowell

Suburban Survivalists “Emergency supply retailers and military surplus stores nationwide have seen business boom in the past few months as an increasing number of Americans spooked by the economy rush to stock up on gear that was once the domain of hardcore survivalists.”

“‘We have no real causal understanding of the way our world works at all,’ said Markman, a professor at the University of Texas, Austin. ‘When times are good, you trust that things are working, but when times are bad you realize you don’t have a clue what you would do if the supermarket didn’t have goods on the shelves and that if the banks disappear, you have no idea where your money is.’”

People are losing faith in the system. The government only seems capable of blindly going further in service of finance. Since they refuse to make any significant reforms the problems that are building can only end in tragedy. It a shame that humans would rather suffer than think.

US Debt Clock This page has much more than the National Debt on it. Well worth a look.

California’s Day of Reckoning “With a $21 billion (£13 billion) deficit and the lowest credit rating of any American state, the choices are few and grim. California cannot hope to borrow such large sums, except at extortionate rates, which leaves the option of massive cuts in public spending – the sacking of thousands of teachers.

“California could run out of cash in a few months. Mr Schwarzenegger has already warned that 5,000 state employees face being fired. The state education budget is in line for a $5 billion cut, alongside the end of funding for parks and the closure of at least one state agency.”

Next up on the bankruptcy train after Chrysler is the State of California. It will be interesting to see how this turns out. California could end up with a federal bail out, perhaps the federal government will take over control of the state, or maybe California will actually go bankrupt. Either way, it will be interesting to see how this unfolds.

Abuse of Authority. A fan runs across the field during a Switzerland v. Portugal soccer game. The fan is caught and held down by either four security guards or policemen. It’s not clear which they are. The fan is lying docilely and one of the guards pulls out his nightstick and starts beating the fan. After a short while a soccer players jump kicks a guard to save the fan and the guards get mobbed.

Schwarzenegger Plans to Cut Welfare “Gov. Arnold Schwarzenegger is proposing to completely eliminate the state’s welfare program for families, medical insurance for low-income children and Cal Grants cash assistance to college and university students.”

At the time when people are least able to cope with cuts in services the government makes cuts. Budgets have to balance, and either the government can borrow more, tax more, or spend less. The ultimate solution is to reform the economic and monetary system, but until then people will suffer more. The decline of America continues.

More Bank Failures “Two Illinois banks with combined assets of almost $1 billion were closed by regulators, pushing the toll of failed U.S. lenders to 36 this year amid the longest recession since the 1930s.”

The government discriminates against smaller banks in favor of the big banks by bailing out the big banks and not assistig the smaller banks. By giving the big banks money the government is also giving them the funds needed to gobble up all the smaller banks. While in this recession the banks failures number less than one hundred during the Great Depression there were many thousands of bank failures. Many more small banks existed back then, which is the reason for the difference in the number of failures. Today there are fewer banks to fail, and the big banks are “too big” to be allowed to fail.

We are clearly heading towards having a single giant bank in America. I don’t believe we’ll ever reach that point but the banking system is becoming consolidated into fewer and fewer giant banks. This is good. It will make the money system easier to reform when the time comes, because banking will have become so centralized. The task will be easier, and it will give our opponent a single face.

Age 18-29 Joblessness Sky-High “I looked out over the sea of 200 down-and-outers in our church basement Saturday night as they ate a hot meal and waited for their free bags of groceries and bus passes. I especially concentrated on those in their 30s, 40s and 50s, many of whom have hardly held down a job in their adult years—living dependent, unproductive and sadly unfulfilling lives. Often, the road to these lives was paved during their late teens and early twenties when they found no hope in the job market—making continued importation of foreign workers at this moment unconscionable.”

Why We Should Banish Larry Summers “Back in 1991, Summers argued that the subject of economics was no longer up for debate: The answers had all been found by men like him. ‘The laws of economics are like the laws of engineering,’ he said. ‘One set of laws works everywhere.’ Summers subsequently laid out those laws as the three ‘-ations’: privatization, stabilization and liberalization.

“And that’s the problem with Larry. For all his appeals to absolute truths, he has been spectacularly wrong again and again. He was wrong about not regulating derivatives. Wrong when he helped kill Depression-era banking laws, turning banks into too-big-to-fail welfare monsters. And as he helps devise ever more complex tricks and spends ever more taxpayer dollars to keep the financial casino running, he remains wrong today.”

Economists love to pretend that they’re scientists and that economics has nothing to do with morality. As Soddy put it: “We live in a world of potential abundance beyond our unscientific ancestors’ powers of foreseeing, and we have invented a method of keeping the people in poverty by juggling tricks with money on a par with tampering with weights and measures and cheating at cards. But it could not have succeeded but for the cooperation of the verbally educated economists and his imaginary “economic laws” arising from the inverted importance he has given to money.”

Soddy called economists “chrematicians.” “Chrema” being Greek for money. Basically he viewed them as studying buying and selling—how to make money—and not how to make the economy function optimally. If they knew how to do that, or were interested in that, we wouldn’t have a global crisis.

I don’t think he’s been wrong about anything from his perspective. Wrong from the perspective of the national good, but not wrong from the perspective of making money for financiers and bankers and all of his buddies. He’s 100% accurate on that.

Letter From a Dodge Dealer “On Thursday, May 14, 2009 I was notified that my Dodge franchise, that we purchased, will be taken away from my family on June 9, 2009 without compensation and given to another dealer at no cost to them. My new vehicle inventory consists of 125 vehicles with a financed balance of 3 million dollars.  This inventory becomes impossible to sell with no factory incentives beyond June 9, 2009. Without the Dodge franchise we can no longer sell a new Dodge as “new,” nor will we be able to do any warranty service work. Additionally, my Dodge parts inventory, (approximately $300,000.) is virtually worthless without the ability to perform warranty service.  There is no offer from Chrysler to buy back the vehicles or parts inventory.”

Sounds to me like Chrysler is going to be getting sued by many dealers. We’ll turn the world on its head changing everything except the financial system. People purchased far more cars two years ago than they do now. The change in demand isn’t because people don’t want cars anymore. They can’t afford to buy. Perhaps if this end were addressed—if people were given more money, so they could afford to buy the goods on sale then businesses wouldn’t go bankrupt, the people would have more, and they could go back to work. Of course, because this wouldn’t profit the financial system and is contrary to the Fixed Ideas of the economists it will not be done.

Eeeeeeeeeeeeeeeek! “OK, yesterday on final into Guadalajara, at the height of the flu epidemic, indeed pandemic, predicted to be even more cleansing than the killer flu of 1918, perhaps the beginning of the long-expected plague that would eliminate mankind from the earth, no doubt to the earth’s relief, I was ready for the worst. I had read the papers, after all. I was sure there would be piles of festering corpses in the streets, such as one would expect after a Burundian election. I had read Defoe’s account of the bubonic plague in London, and knew that men with wheelbarrows would be collecting the dead. Especially with today’s littering laws.”

Shining Star: The Heart of Frederick Soddy “We live in a world of potential abundance beyond our unscientific ancestors’ powers of foreseeing, and we have invented a method of keeping the people in poverty by juggling tricks with money on a par with tampering with weights and measures and cheating at cards. But it could not have succeeded but for the cooperation of the verbally educated economists and his imaginary “economic laws” arising from the inverted importance he has given to money.”

I’ve put up a new biography of Frederick Soddy.

According to the ADA real unemployment is at 15.8%. The way the government computes unemployment statistics is fraudulent and makes the number of unemployed appear significantly less than in reality. Over half a million continue to lose their jobs each month in America.

The Labor Department reports unemployment is at 8.9%. The end of the recession is always “just around the corner.” Also, we must “wait for things to get better.” If any of these people knew what they were doing we wouldn’t have to wait and could start putting people back to work right away. However, we must wait for the “solution” of giving lots of money to banks to work its magic.

Toyota’s has its first loss since 1950. Toyota reports a 7.8 billion dollar loss for the latest quarter. Maybe the horde of morons that shrieked endlessly about how GM and Ford’s need for additional funds was caused by their own ineptitude will take note of this. The cause is the recession. People can’t afford to buy cars anymore, and those that could are scared to because they fear losing their jobs.

Bankers are corrupt. The chairman of the New York Federal Reserve, Stephen Friedman, has resigned because his purchase of Goldman Sachs stock was made public. Goldman Sachs is his former employer. It seems that all high economic policy positions in the government have been captured by former employees of banks. Shockingly, these people continue to set policies to maximize the profits of banks at the expense of the rest of society.

Practical Policies “If the State, through the Bank of Canada, were to assume responsibility for creating all of our nation’s money supply, federal government revenues would be increased automatically by some $65 billions per year, and current expenditure on National Debt charges of $33.3 billions could also be substantially reduced over a period of time. This could cover a much increased part of Government program expenditures (running in the 2007/8 year at $199.5 billion)  with a substantial decrease in taxation. In addition, the price inflation that currently is steadily taking value from the people’s savings, and is the direct result of our present system of credit creation by the chartered banks, would be eliminated. So would the possibility of bank failure caused by a “run on the bank”, and our current experiences of recession, debt and ‘poverty in plenty’.”

The U.S. Economy Does Not Exist Orthodox economists endlessly amuse me. The economists in this article have decided our economic woes stem from us thinking America has one big economy rather than thinking of it as separate cities that all have their own economies. “The sooner we reorient federal economic policies to support this “MetroNation,” the quicker we can fix the mess we’re in.” Years ago there were economists who posited sunspots as the cause of the trade cycle. The sooner we embrace our “metropolitan future” the sooner the crisis will end.

The ends economists will go to avoid questioning any of their basic assumptions amazes me. Perhaps we don’t have a sound monetary system. Maybe that is a problem, not only a problem, a really big problem. Nah, that couldn’t be it. We don’t have proper Metro Policies. The sooner we all wear tinfoil hats the sooner the crisis will end.

The article would be better titled: “Intelligence Among Economists Does Not Exist.”