Aquinum's razor a theory of economics here is how the banker's game works

1/7/14 Aquinum's Razor: A Theoryof Economics: Here is how the banker's game works
aquinums-razor.blogspot.com/2011/11/here-is-how-bankers-game-works.html 1/18
Followers
Join this site
w ith Google Friend Connect
Members (24) More »
Already a member? Sign in
Blog Archive
► 2 01 3 (1 )
▼ 2 01 1 (9 )
▼ Nov em ber (1 )
Here is how the
banker's gam e
w orks
► Au gu st (1 )
► March (5 )
► Febru ary (2 )
► 2 01 0 (5 )
► 2 009 (5 )
About Me
MA N SOOR H. KHA N
I am a Pakistani
Am erican im m igrant to
the U.S. I hav e been a
U.S. Citizen since 1 9 7 8. I
am an Electrical Engineer
by training (Bachelor of
Engineering from Stev ens
Institu te of Technology --
SA T URDA Y, NOV EM BER 5, 2 01 1
Here is how the banker's game works
Here is how the banker's game works:
1) Get the government to issue some currency (cash -- paper or
reserves at the central bank -- reserves are government issued cash
central bank deposits). Government issued cash is around 5% of the
currency (money) supply. The government issued currency is put
into circulation by the government simply spending it.
2) The rest (95%) of the currency is issued by the private banks. Each
customer loan is a new bank deposit (i.e., new currency) and
increases the currency (money) supply of the economy. Note that
this newly created money (currency) is put into circulation by the
borrower spending it. Most currency (about 95% America's currency
supply) has been borrowed into existence and when bank customer
pays the loan back that amount of currency is removed from
circulation. The banking system cannot go backwards (fewer net
loans) as time moves on because fewer net loans means less currency
in circulation in the economy.
Accumulation of interest charges on outstanding loans means that
the currency supply must constantly increase even if it means giving
out lower quality loans. Think of it like a plane flying it must fly at
some minimum speed or else the plane (the banking system) will
crash (i.e., banking system collapse).
3) The bankers make dam sure that the common public does not
understand how the monetary system works meaning that the private
banks issue 95% of the currency. This is whole another topic how they
do this.
4) The system works until real economic capacity of the economy
grows and debts can be serviced and interest charges paid. Most of
the time the economy oscillates between boom (growth) and bust
(recession) because bust is needed to clear debts and start a new
lending cycle.
5) Eventually, one of these cycles goes so deep that currency supply
(and demand) falls so low that too many debts become un-
serviceable. The recession becomes a depression now.
Share 3 More Next Blog» aquinum114@gmail.com New Post Design Sign Out
Aquinum's Razor: A Theory of Economics
In-depth analysis of the relationship between money, inflation, banking, credit, and gold,
production of goods & services and other topics relating to economics.

Degree w ith Honor). I also
hav e a Masters of Bu siness
Adm nistration degree
(MBA) from the
Univ ersity of V irginia - I
w as in Top 2 0% of the
Gradu ating Class. I am
an ERP consu ltant. I w ork
as a an IT Fu nctional and
Technical Analy st. My
top fiv e fav orite historical
personalities are: 1 .
Prophet Moham m ad
(Peace be u pon him ). He
is the hu m an w hich
Allah lov es the m ost. - - - -
- - - 2 . Isaac New ton 3 .
Clifford H. Dou glas 4 .
Jam es Clerk Maxw ell 5 .
Franklin D. Roosev elt
(FDR)
V iew m y com plete profile
6) The bankers then have to decide how to "reset"the system. One
way to reset the system is to let the depression takes its course. But
of course this path is very chaotic because people lose jobs and may
become violent. Once most debts are cleared lending can start again
and the currency supply is replenished. Wars are a good way to get
initial money (currency) into an economy after a depression to get
demand going again. This is the great depression scenario.
7 ) Another way to "reset"the system is to get the government to print
too much money and spend and destroy the currency and blame it on
the government. This justifies issuance of a totally new currency
(note that hyperinflation clears debts) and the lending cycle can start
again. For example, the Argentine economic crises with
hyperinflation (1999 - 2002).
8) The banking system (as is) is setup to maximize the power and
influence of the global bankers and NOT for the maximum general
well being of people. By the way this is a global game. This is the only
system around no matter what country you are in. The global
banking cartel makes sure that no competing systems are allowed to
exist (so they might be copied and global bankers will lose power).
9) We need a currency system where money is spent into existence
and does not need to be lent into existence so the economy is never
starved of currency in circulation.
For more details on this stuff please read the following articles in
order listed below:
http://seekingalpha.com/article/209386-modern-monetary-
system-there-is-another-way
http://aquinums-razor.blogspot.com/2011/08/what-is-
relationship-of-money-to.html
http://aquinums-razor.blogspot.com/2010/07 /why-is-deflation-
and-depression.html
http://seekingalpha.com/article/210346-should-newly-created-
money-be-a-private-or-a-public-asset
http://seekingalpha.com/article/19237 5-cause-of-today-s-
economic-crises-too-much-thrift

http://seekingalpha.com/article/160269-a-radical-solution-for-
america-s-insolvent-financial-system
http://seekingalpha.com/article/146658-great-banking-confusion-
is-there-a-better-way
Mansoor H. Khan
http://aquinums-razor.blogspot.com/
Posted by Mansoor H. Khan at 7:45 PM
23 comments:
greg said...
This is a nice summary. The power of finance is really naked now,
and it is ripe with the stink of fraud. Also, finance is overextended,
and its institutions no longer able to support themselves without
the fraud, and other help. Thus the necessary co-opting of the
government. See:
http://anamecon.blogspot.com/2010/12/our-government-is-
captive-of-wealthy.html
And:
http://anamecon.blogspot.com/2010/06/that-bloated-financial-
sector.html
Will the people open their eyes, or more correctly admit to seeing
what has been before them the whole time?
For a nice video exposition of the problems with the current
system, see:
Money as Debt:
http://www.youtube.com/watch?
v=Dc3sKwwAaCU&feature=related
Or:
http://video.google.com/videoplay?
docid=-25501564537 90090544
And:
Money as Debt II:
http://www.youtube.com/watch?v=rCu3fpg83TY
(Meant to publish this here the first time!)
November 8, 2011 at 1:23 AM

George May said...
Excellent summary. The matrix is real. Y ou are only a battery to
them. They own the media. They put the population to sleep
through media monopoly. For them, the meaning of your life is to
be born and then to borrow for mortgage, borrow for
consumption, borrow for business and pay them interest for a
lifetime for money that they create out of nothing when you
borrow. It is financial slavery! Y ou work for them your entire life.
The taxes you pay mostly goes to pay interest!
Any government that does not let them do this to their people is
the enemy! Economic sanctions will be applied and when their
economy fails because of isolation, they will be pointed out as a
failure. If they don't crumble economically, then it is war that
topples them.
Google for "How do banks create money"to understand the world
wide slavery.
Entire money supply is debt. It is the principal we borrowed. But
banks demand that it is paid with interest. It is not possibleï»¿ for
every borrower to be employed at levels that enables them to
earn principal + interest. Because the interest portion is not
created yet. It is only created with more borrowing. The inflation
created by money creation of banks punishes savers and forces
more people to borrow. New money is used to pay old debt. When
we run out of borrowers, it crashes.
New money that is created in a society should belong to the
society. It should not belong to private bankers. Thus, if any
interest is to be paid, it should be paid to the people, not to the
private bankers. A solution is to require 100% fractional reserve.
Let treasury print principal + interest when a loan is made.
Principal is loaned out to the borrower. Interest portion is spent
in place of taxes. principal + interest is available to earn. When
interest is paid back, destroy it.
Current system requires perpetual debt since existing debt cannot
be paid without further borrowing. Banks can at will withold loans
and create a depression. Then they will make loans to their friends
and withold loans from competitors. When competitors who
cannot access loans go bankrupt, they are bought by the friends
pennies on the dollar. This way the banking cartel gains control of
the media and other industries. This is a ponzi scheme but when it
goes bust, they get bailed out at tax payer expense because they
have the congress and the government in their pocket.
Last but not least, if banks did not create money out of nothing
when they made loans, then home prices would be lower and
savers would afford them cash down. This is because when 30% of

the population works in financial services, the other 7 0% has to
work harder to feed the 30%. If financial services is reduced to 1%
just like farming, then they will be employed at more productive
tasks (building homes?) and the burden on the 7 0% will be
reduced.
This usury scheme is the reason why we want democracy when a
dictator goes out of line. What we have is the dictatorship of the
rich. Using their media monopoly they ensure that all presidential
candidates are on their boat. Without their blessing, nobody can
get elected to the public office!
Those of you who are defending this system really are defending
your own slavery.
No one is more of a slave than he who thinks himself free without
being so. - Goethe
Google for "How do banks create money"if you don't know about
money mechanics.
November 14, 2011 at 6:47 PM
George May said...
Here is how banks create money:
http://www.tradingstocks.net/html/banks_create_money.html
Martin Gercsak said...
Resetting the system is not that easy and the bankers don't have
that much control over it as stated. Japan is a good example how
money printing and stimulus with bridges to nowhere doesn't
help.
The credit system is based on a willing borrower and a willing
lender. The trick is to exploit the general population while they
willingly participate. But when people become pessimistic about
the future and don't want to take loans this breaks down.
Hyperinflation has nothing to do with a credit bubble. In all the
hyperinflation events in the past the government just printed
money to pay its bills. In a credit based system it's not a solution
because central banks create new money by buying IOUs and not
literal printing. There is a tipping point where central banks buy
too much worthless IOUs and the bond market panics. This results
in everybody dumping their bonds which means very high
interest rates and money supply contraction. There is no solution
other than the depression running its course. Either by a crash
(1933) or by a thousand cuts (Japan since 1989).

The bankers just do what seems to be their best short term
interest. But they are just as clueless as the general population.
Most Lehman executives lost everything they had (by taking loans
against their Lehman stock holdings). Now how stupid is that from
a risk management perspective?
Mansoor H. Khan said...
I left the following comment on Martin Gercsak blog in response to
the above comment:
Martin,
thanks for commenting on my blog.
did you read about an alternative financial system I proposed that
is NOT based on lending?
http://seekingalpha.com/article/209386-modern-monetary-
system-there-is-another-way
We do not have to live this way where our currency supply is
"borrowed"into existence where we must continually pay rent on
it (interest charges). We can simply have our government spend
currency (not lend) into the economy. We don't need to suffer
deflation (reduction of circulating currency) to "reset"and have a
disaster.
Banker's want us to live in this matrix where we must borrow our
own currency into existence. We can and (god willing) one day we
will break out of this matrix.
Mansoor Khan
I made the following comment Rodger Malcolm Mitchell's recent
very relevant blog post:
http://rodgermmitchell.wordpress.com/2011/11/16/the-idiot-
patrol-is-on-the-loose-again-hide-your-wallet-pray-for-
america/comment-page-1/#comment-97 17
Mansoor H. Khan says:
November 16, 2011 at 3:53 pm
Rodger,
Y ou should think of yourself as doing what Martin Luther (1483 –
1546) did to the Church (reformation). The global banking cartel is
just as powerful. Prominent orthodox economists are priests on
their payroll or at least too scared to speak up.

This stuff is not that hard to get. Keynesian Economics + MMT +
MS are all very clear and consistent. I find it very hard to accept
that prominent economists and president’s advisers are that
stupid.
http://aquinums-razor.blogspot.com/2011/11/here-is-how-
bankers-game-works.html
Mansoor H. Khan
I made the following comment on Naked Capitalism today:
http://www.nakedcapitalism.com/2011/11/philip-pilkington-
debunking-economics-%E2%80%93-an-interview-with-steve-
keen-%E2%80%93-part.html#comment-529666
mansoor h. khan says:
joebhed,
glass steagall and low quality lending is part of the game:
read how the game works:
Mansoor H. Khan
F. Beard made the following comment and I responded to it today:
F. Beard says:
November 16, 2011 at 7 :58 pm
Y es, inter-bank lending creates a banking system. So eliminating a
government provided lender of last resort and government
deposit insurance is essential to crushing the counterfeiting cartel.
As for the need for the public to store its fiat safely that should be
provided by the government itself since it creates fiat and is thus a
risk-free place to store it.
Reply
mansoor h. khan says:

F. Beard,
Bingo!
I can feel the countdown to cartel’s day of judgement.
Mansoor H. Khan
http://www.nakedcapitalism.com/2011/11/philip-pilkington-
debunking-economics-%E2%80%93-an-interview-with-steve-
keen-%E2%80%93-part.html#comment-5297 99
Additionally (I would like to add):
Ravand (the evil banking cartel which has stolen from the
common man for centuries) is about to get an arrow in its heart
(the arrow is modern monetary theory, MMT, knowledge
spreading through the internet).
Just like the power of the church was destroyed by the Gutenberg
printing press. The power of this evil global cartel will be
destroyed by the internet (god willing).
Mansoor H. KHan
On November 14 I made the following comment on the New
Arthurian Blog:
http://newarthurianeconomics.blogspot.com/2011/11/total-
debt-and-m1-on-2-line-graph.html?
showComment=132066197 8001#c2903812445396265918
Jim,
you are correct but only partially. Fewer net loans cannot
continue for too long unless the government continues to deficit
spend which it will not as much if the tea party republicans get
their way.
The bankers will reset the system soon since the whole idea for
them is to not let the gov issue much currency so they can issue as
much as they can and get interest income on it.
Mansoor

I am trying to get the following comment accepted on Paul
Krugman blog:
Y our Submitted Comments
Display Name
Mansoor H. Khan
Location
Maryland
Comment
Paul K.,
What are you scared of? Please speak up!
see;
http://rodgermmitchell.wordpress.com/2011/11/16/the-idiot-
patrol-is-on-the-loose-again-hide-your-wallet-pray-for-
america/comment-page-1/#comment-97 17
Mansoor H. Khan
The above comment applies to:
Mervyn King, Ben Bernanke, Y ves Smith, Edward Harrison +
Prominent Economists + President's Economic Advisors +
Christina Romer
Please take of your Dunce caps off and tell the truth!
Mansoor H. Khan
I pasted this blog entry contents on Malcolm Mitchell's blog
comments section. A commentator responded with:
http://rodgermmitchell.wordpress.com/2011/11/07 /why-dont-
the-facts-penetrate-we-get-it-why-dont-we-want-to-get-
it/comment-page-1/#comment-927 5
Pete says:
November 8, 2011 at 9:09 am
Spot on Mansoor. Y our #3 answers Rodger’s general question of
“why?”… Through a combination of mass marketing and control of

economic narratives via the corporate media and academia, all
the smoke and mirrors as well as the protecive layers of the racket
in our Govt. institutions keep the house of cards propped up. They
certainly aren’t going to give out their rentire privileges without a
struggle.
Frederick Soddy, through the application of thermodynamics,
points to the global debt-based monetary system as a perpetual
motion scheme. What happens when an unstoppable force runs up
against an immovable object?
It should be noted that per your #6, we have been in a state of
perpetual military “growth” conflict for decades now and are
currently rattling the sabers for an almost certain assault on Iran.
@Scott, I agree. The movement has already indicated a shift in
consciousness. They’ve opened up the dialogue and changed the
conversation. Evidence across the econo-blogosphere indicates
that there are quite a few smart people going down to the street
level for “teach-in” educational engagement. This is a huge step
forward to shedding some sunlight on the creditor class and how
they pull the strings. Since ‘money’ is just a social arrangement, we
can agree to change it.
Anonymous said...
Mr. Khan,
Interesting article.
"fewer currency in circulation"
should be "less currency".
Anonymous said...
Holy Quaran says it all:
Surat Al-Baqarah 27 5-27 9
Those who consume interest cannot stand [on the Day of
Resurrection] except as one stands who is being beaten by Satan
into insanity. That is because they say, "Trade is [just] like
interest."But Allah has permitted trade and has forbidden interest.
So whoever has received an admonition from his Lord and desists
may have what is past, and his affair rests with Allah . But whoever
returns to [dealing in interest or usury] - those are the
companions of the Fire; they will abide eternally therein.
Allah destroys interest and gives increase for charities. And Allah

does not like every sinning disbeliever.
Indeed, those who believe and do righteous deeds and establish
prayer and give zakah will have their reward with their Lord, and
there will be no fear concerning them, nor will they grieve.
O you who have believed, fear Allah and give up what remains
[due to you] of interest, if you should be believers.
And if you do not, then be informed of a war [against you] from
Allah and His Messenger. But if you repent, you may have your
principal - [thus] you do no wrong, nor are you wronged.
comment on NC:
http://www.nakedcapitalism.com/2012/03/michael-hudson-on-
the-federal-reserve-system.html#comment-67 6050
F. Beard says:
March 29, 2012 at 11:55 am
However, because the Federal Deposit Insurance Corporation
gave the same guarantee to depositors in private banks, the Postal
Savings System lost its natural advantage in trust. from
http://en.wikipedia.org/wiki/United_States_Postal_Savings_Syst
em
Government deposit insurance is fascist. The Federal Government
should reinstitute the Postal Savings System but this time pay no
interest (nor ever make loans).
Reply
March 29, 2012 at 12:12 pm
The check clearing has to be performed by the government.
Control of the check clearing process is what allows the private
bankers to play musical chairs with government created cash and
leverage 20 to 50 times on it.
mansoor h. khan
March 29, 2012 at 6:22 PM
JB said...
Very good summary. It is incredible how many empirical proofs
exist about all those claims. Why is it that nothing has happened
so far?
In case of Argentina, I think that point 7 describes it´s behavior
quite well. They used the easiest way and started to print money,

which in combination with fixed exchange rate to Dolar led to
complete destruction of the national economy.
Y our point 8 can easily refer to the situation in Canadian real
estate (More Regulation in the Mortgage Market), because it is
being flooded (especially in Vancouver and Toronto) by foreign
capitals, which leads to overpriced housing and has direct impact
on low and medium classes of citizens, who have to ask for insane
mortgages to be able to get a new house.
The problem can´t be solved by the reform but by complete
system change, as you suggest. But by who? They have the money
and they have the power...
April 18, 2012 at 9:49 AM
cstahnke said...
It's good to see people beginning to question the assumptions of
the current financial system. The lure of Matrix-like thinking is
wearing off among increasing numbers of people. What replaces it?
I think that will emerge over time--we need to trust each other.
There are so many good solutions to our collective problems--the
only thing that is keeping an explosion of creativity is the heavy
repressive hand of the corporate state that say nyet to any reform
that touches on the profitability of the various rackets that
involve every major sector in our economy. All this has nothing
to do with ideology but, rather, the simple fact that we are
dominated by gangsters and the MSM that they own and control.
May 26, 2012 at 2:57 PM
escrowit said...
Im still glad that the currency is getting a higher value.
May 30, 2012 at 9:58 AM
vulfix shaving brush said...
Click here for More imformation about bmvintageshaving.
July 28, 2012 at 10:51 AM
dilbertgeg said...
According to the "heart"of MMT, fractional reserve banking is a
MY TH. That's a whole crux of what Steve Keen has been arguing
with Paul Krugman about, and I had this conversation with
Warren Mosler.
Banks DO NOT create money by multiplying reserves. Reserves
are not an issue at all, up front. Reserves are reconciled with
requirements, two weeks in arrears.
That is, banks first CREATE loan agreements & deposits. Then they
look back after one week and see if their reserve account meets
regulatory criteria. Then they have one more week to get that
money into reserves.

When it comes to how much reserves are needed, ONLY
household or consumer accounts are counted. Commercial or
business accounts are not tied to reserve limits. Then there's
Greenspan's overnight "sweeps"which nullifies a lot more.
October 13, 2012 at 3:18 AM
Anonymous said...
Good insights here on the need to break out of the matrix.
Only way possible is through a SPIRITUALLY based system that
gets right down to the ROOT of the central bankers' WAR-DEBT-
TAXES-USURIOUS interlocking system.
We, Humanity, are able to do this in one fell swoop here:
http://blog.thespiritualun.org/
We welcome all.
Please contact our site Mansoor.
joana lui said...
Metropolitan safety deposit box Limited or bank safety deposit
boxes limited (‘Metropolitan’) was originally formed in 1983 to
construct and operate the Belgravia safety deposit box ,
Metropolitan’s safety deposit box facilities are strategically placed
in the inner central area of Metropolitan London. The Company is
the largest independent provider of mailbox post & mailbox post
& mailbox post & mailbox post & mailbox post , residential
mailboxes & residential mailboxes & residential mailboxes &
residential mailboxes & residential mailboxes & gold bar for sale&
gold bar for sale & gold bar for sale & gold bar for sale & gold bar
for sale , bank safety deposit boxes & bank safety deposit boxes &
bank safety deposit boxes & bank safety deposit boxes , safety
deposit box & safety deposit box this service in the United
Kingdom. The two vaults provide thousands of boxes in 16
different sizes ranging from one-foot square and two-inch high
boxes up to walk-in secure storage areas. The locations of the
vaults are in Knightsbridge and St John’s Wood.
January 12, 2013 at 11:14 PM
A comment I made on Naked Capitalism blogpost:
http://www.nakedcapitalism.com/2013/05/systemic-
malfunctioning-of-the-labor-and-financial-
markets.html#comment-12557 41
mansoor h khan says:

May 19, 2013 at 8:22 pm
Nobody,
I think it was Plato who wrote that civilizations processes along
this path:
Chaos -> Monarchy -> Aristocracy -> Democracy -> Collapse ->
Chaos
To the above model I think we should add:
Chaos leads to quest/hunger for spirituality and search for god
because life is so much more difficult in chaos.
As religious beliefs consolidate with time social order and stability
grows, scientific knowledge grows, cooperation grows,
specialization grows and a flourishing new civilization is born–>
Then:
The once a civilization grows powerful: Faithlessness grows,
selfishness increases and corruption and cheating increase leading
to collapse/Chaos again!
This is similar to what Spengler wrote in Decline of the West,
http://en.wikipedia.org/wiki/Oswald_Spengler.
That is why I believe spirituality will come back in full force post
collapse (inshallah).
Reply
banger says:
May 19, 2013 at 10:58 pm
Y es, because in this particular time there is no other way open to
the future–every other door is closed. Strictly materialist values
will not enable humans to deal with climate change–only
understanding how things are connected will enable us to deal
with the large-scale problems we face. Wonderful to know that
there are others posting who understand this.
Reply
mansoor h khan says:
May 19, 2013 at 11:11 pm
All religions think this way! They emphasize our connectedness
and individuality (and not just our individuality as the western
society has become, much too left brain oriented):
Left Brain:
1. Logical and Rational and Detailed Oriented

2. Helps us to deal with the material world (hunger, need for
water, shelter, sex, etc.)
3. Embodies Discipline (the goods and services production
process, the Judicial System, the Military)
4. Embodies physics and physical laws
5. Uses strict hierarchy
6. This is the focus of the old testament (eye for an eye!)
7 . Symbolized by the Roman Empire and focus of Greek thought
8. Symbolized by the state (as opposed to the individual!)
9. Embodies submission and compliance (Opposite of freedom!)
10. Cold, strict and impersonal (opposite of warm, flexible and
forgiving!)
11. Focuses on this life (as opposed to a possible after life!)
12. Has a difficult time with coming up with new models or
theories or ways of solving problems
13. The left brain will take a civilization over a cliff when the
civilization encounters a problem requiring adjustment to the
models executing (like a computer executes code) in the left brain
if not restrained by the more “flexible” right brain
Right Brain:
1. Creative and Imaginative and Artistic and is able to have higher
order logic and higher order rationality (dealing with the whole
picture).
2. Able to come up with fresh approaches, new models and new
theories and new ways of thinking about the natural world
3. Embodies emotion (love and hate), falling in love, patriotism,
empathy, motivation
4. Is able to increase the spirit, the desire to live, the desire to
fight, the desire to carry on
5. Is able to conceive of infinity (in time and space) and even in
power (able to conceive omnipotence)
6. Wants to procreate (one way to defeat death in a sense!)
7 . This is the focus of the New Testament (mercy, love and
forgiveness!)
8. Symbolized by the Persian Empire and focus of much of eastern
thought
9. Focuses on the individual and freedom of the individual
10. Is in control of person’s free will
11. Is able to conceive of and focus on after life
I will go a step further and say that:
It is the right brain which guides and teaches the left brain. But left
helps to keep the right nourished and healthy on the physical
level.
Read more at

http://www.nakedcapitalism.com/2013/05/systemic-
malfunctioning-of-the-labor-and-financial-
markets.html#48DOq7 yfO2QgW8Y a.99
May 19, 2013 at 11:21 PM
A comment I made on a Naked Capitalism blogpost:
http://www.nakedcapitalism.com/2013/06/why-you-should-
stop-worrying-about-central-bank-losses.html#comment-
1290162
Jim Haygood says:
June 15, 2013 at 7 :28 am
Those who rationlize institutionalized theft such as De Grauwe are
social wreckers, lending a hand to bail the banksters and scourge
the poor. ‘Progressive,’ ain’t it?
Reply
Gary says:
June 16, 2013 at 5:57 am
the only point De Grauwe made is that central banks can’t go
broke, and that fixing banks’ balance sheets doesn’t automatically
cause inflation in the real economy.
If banks were “spurred” to create another housing bubble, by
lending again to consumers, then housing prices would
presumably rise — asset inflation, securitized mortgage assets
would re-inflate.
The problem remains of the gap between consumer income vs
debt obligations.
The ethical purpose for money, recognized for a long time,
including by Lysander Spooner on Mises, is mainly COMMERCE
and FLOW. The austerity trip is that money should have a static
value or grow in value, while the real economy deflates — but
THAT is will known to cause waves of bankruptcy and foreclosure.
The history of the Populist movement in the US around
bimetalism and William Jennings Bryan, this was pushing for
inflation of the money supply in the false context of commodity
metal “fixed” money. Farmers and small manufacturers and
retailers — the 99% of that era — preferred inflation because they
HAD little savings, they had LAND and other assets. But that 99%
had something else — DEBTS taken out to expand farming and
other commerce.
Deflation during sharp Recession — now likened by Austrians to a
gradual fall in computer CPUs and memory over time — meant

Newer Post Older Post
that producers and traders were unable to sell their product for
enough money to pay their debts and investments, because of
periodic collapses of credit markets — so the difference btw
deflation vs inflation meant the difference between solvency vs
bankruptcy and losing the farm.
Q: Classical liberals like Adam Smith and T. Jefferson, did they see
primacy in Capital and Capitalists or farmers and producers?
A: The latter. Lincoln said the same thing, the source of capital is
Labor.
This was apparently widely known.
Now, Neoliberalism says the SOURCE of Labor is Capital, so
speculators and corporate raiders are praised for “creating jobs”.
Reply
June 16, 2013 at 7 :09 am
Gary,
Bankers and the creditor class rules the world. Their first priority
is to keep the usurious system in place. Their second priority is
social stability and promotion of general welfare of society.
That is why Bankers and the creditor class keeps humanity stupid
about money, banking and economics.
This problem can only be solved by “enlightenment” of the
general population with respect to economics (by the way of
Veblen, Keynes and Clifford H. Douglas and other with similar
ideas).
more at:
Mansoor H. Khan
June 16, 2013 at 7:11 AM
Post a Comment
Links to this post
Create a Link
Home
Subscribe to: Post Comments (Atom)

Aquinum's razor a theory of economics here is how the banker's game works

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Similar to Aquinum's razor a theory of economics here is how the banker's game works

Similar to Aquinum's razor a theory of economics here is how the banker's game works (17)

Recently uploaded

Recently uploaded (20)

Aquinum's razor a theory of economics here is how the banker's game works