Cambridge University 1940: During the Blitz the two most important economists of the age shared air-warden duty on the roof of King’s College – an English gentleman and an Austrian exile, personal friends but intellectual rivals. How their battle of ideas still shapes our life in society is our story. John Maynard Keynes helped the allied governments defend freedom by planning their wartime economies; Friedrich von Hayek thought government interference in the economy was a threat to freedom. Hayek v Keynes, Youtube 2011
Keynes prophetic book The Economic Consequences of Peace. ibid.
Hayek would always see inflation as an evil that corroded society and undermined democracy. The fight against inflation became a cornerstone of his economic philosophy. ibid.
Governments, said Keynes, should spend against the wind: in good times they should reduce their spending and build surpluses; in bad times like the Great Depression they should step up spending. ibid.
Now teaching at the London School of Economics Hayek feared that Keynes’ brave new world was a big step in the wrong direction. He attacked the growing consensus by writing The Road to Serfdom. ibid.
‘Economic democracy means that participants in economic institutions … decide on the policy of the institution.’ Can We Do It Ourselves? Noam Chomsky, 2015
But while political democracy dominates our societal life, there’s another order that dominates our working life. ibid.
109,609. ‘When people come to realise – we can run this ourselves – then I think we’re on a path towards a higher level of economic development.’ ibid. Roland Paulsen, Lund University
‘You have a different mentality when you are participating in a cooperative system.’ ibid. Noam Chomsky
‘It takes enormous resources just to enter their market.’ ibid. Lars Magnussen, Uppsala University
118,188. In the late ’70s banking wasn’t a job you went into to make large sums of money. It was a fucking snooze. The Big Short 2015 starring Christian Bale & Ryan Gosling & Steve Carell & Brad Pitt & Hamish Linklater & Rafe Spall & Jeremy Strong & John Magaro & Finn Wittrock & Tracy Letts et al, director Adam McKay
In 2008 it all came crashing down … but there were some that saw it coming … the giant lie at the heart of the economy. ibid.
I want to short the housing market. ibid.
It’s time to call bullshit. Every-fucking-thing. ibid. Carell
I know what you’re thinking: what the fuck is a synthetic CDO? ibid.
These people are crooks and they should be in prison. ibid. short-seller
How is money created? Where does it come from? Who benefits? And what purpose does it serve? For centuries the mechanics of the monetary system have remained hidden from the prying eyes of the populace. 97% Owned: Economic Truth, 2012
In 2010 the total UK money supply stood at £2.15 trillion. 2.6% of this total was physical cash. ibid.
Seigniorage: Profit made by a government by issuing currency. The difference between the face value of notes and coins, and their production costs. ibid.
When banks issue loans to the public, they create new commercial bank money. ibid.
‘It’s basically an accounting trick … banks create money.’ ibid. Professor Richard Werner
Between 1998 and 2007 the UK money supply tripled. ibid.
Banks are no longer restricted by how much they can lend. ibid.
‘It’s generally speaking when you have debts owned by the poor to the rich that suddenly debts become a sacred obligation more important than anything else.’ ibid. Dave Graeber, interview Democracy Now
The [indebted] country becomes a vassal state, allowing large corporations to exploit its natural resources and workforce. ibid.
The system is neither stable nor fair … The system is designed to make certain people very rich. ibid.
The banks caused the financial crisis and now the rest of us are being asked to pay for it. ibid.
Since 1971 the US dollar and the global financial system have been based solely upon faith: faith in the guardian of that currency and of that system: the American Central Bank, the Federal Reserve. As the world’s reserve currency, the US dollar is how we measure our time, our products, our self world. Ours is a system based on trust and confidence, both of which began to disappear in the Fall of 2007. Money for Nothing: Inside the Federal Reserve, 2013
According to many economists and senior Fed officials, it was the Fed itself in the eye of the storm. ibid.
In 1910 Senator Nelson Aldrich summoned New York’s most powerful bankers to an island off the coast of Georgia to secretly negotiate plans for an American central bank: Jekyll Island. ibid.
In the 1920s the Fed reached beyond its original mandate and began to use this new-found power to steer the US economy. ibid.
‘We would have the kingdom of heaven right here in the United States of America.’ ibid. Jim Grant
At Bretton Woods the US had promised to be the world’s reserve currency backed by gold. But the Fed had created far more dollars than it could ever redeem in gold. And now the US could no longer keep that promise. ibid.
For the first time in history the dollar was just a piece of paper backed only by faith in the Federal Reserve and its policies. That promise was only as good as the Fed actions behind it … The dollar lost more than half its value. ibid.
What followed was the longest economic expansion and largest stock market boom in US history. ibid.
The Trouble with Bubbles: Japan was a cautionary tale of what can happen when stock market real estate bubbles explode in a frenzy of speculation, as they did in Tokyo in the 1980s. ibid.
Greenspan’s ideology won out … The nation’s most powerful banking regulator considered regulation itself obsolete. ibid.
He quickly responded with a series of interest rate cuts to soften the blow. ibid.
‘The Federal Reserve ended up encouraging a housing boom.’ ibid. Bill Poole
The greatest credit bubble in history. ibid.
Able to borrow money for nothing and earning huge fees for lending it out, Wall Street began simply giving money away. ibid.
‘It was a Ponzi scheme connived in by federal agencies. ibid.
‘The Bernanke Fed really blew it. They didn’t see it coming.’ ibid. commentator
The Problem with Models: A bank run but one that bore relation to those of the past involving not just the banks the Fed was created up to protect but the hedge funds, investment banks and insurance conglomerate the Fed had allowed to hide from its oversight. ibid.
Everyone knows something is wrong. That it’s been wrong for a while now. But the powers that shouldn’t be keep telling us that everything is going to be just fine. (Economics & Job & Work & Employment & Wage & Unemployment) Obsolete, Youtube 49.48, 2016
The economy isn’t just down, it’s imaginary. The middle class isn’t just shrinking, it’s dying. The wealth gap is astronomical and growing … Wages everywhere except at the executive level are stagnating … ibid.
When did freedom get replaced by freedom of choice? ibid.
More and more people are losing their jobs to what has slovenly been termed ‘technological unemployment’. ibid.
A system poised for collapse. ibid.
Davos 2016: ‘World without work.’ ibid.
Up at the top we have the Central Bank. And what do they do? Money Printer Go Brrrrr! Keiser Report 3rd September 2020
In one of the most overt criticisms of the Fed we have read to date, Marey writes that ‘while the Fed’s step to make the inflation target more symmetric may benefit the average American somewhere beyond 2022, it does not really address the deeper problem with the role the Fed is playing in the US economy. It could be argued that the Fed’s policies have become part of the problem, instead of the solution’. ibid. Zerohedge online
The much deeper problem for the US economy is the asymmetric impact of the Fed policies on households and businesses. The Fed’s monetary and regulatory policies have contributed to a form of capitalism where the rewards are going to the 1% and risks are borne by the 99%. The current crisis response has made it painfully clear again that the Fed’s policies benefit high income individuals and large corporations, while small businesses and low income individuals bear the burden. While the Fed likes to see itself as part of the solution to America’s problems, it should ask itself whether it is also part of these problems. ibid.
We’re just sending this country to its death, but we don’t know what to do otherwise we’ve got to save face, right? ibid. Stacy