January 8, 2013

When the bough breaks

the nannystate will fall,
and down will come America
liberty and all.

Although, come to think on it, you know what might stop it? If conservatives stopped being all puristy and just let DC pols play their games and run our business for us. After all, they’re the professionals. Why all the vulgar distrust?

Posted by Jeff G. @ 9:00am

Comments (16)

  1. In some respects there is less surprise, and less to be concerned with in the narrower sense of concern, that these two high-and-mighty figures Pelosi and Reid– howsoever low their own intellects may appear — would advocate tyranny, as the surprise to see that no one standing nearby as they spoke these words struck either of them a physical blow across the face. Certain brutalities seem simply necessary in order to maintain a rational world, and yet have disappeared altogether.

  2. Fiat in my world always meant “Fix it again Tony” which also seems a good descriptor of Progressive SOP with “Tony” being their messiah du jour.

  3. Pursuant Green’s mention of the madness that is the trillion dollar coin, Jesse of Jesse’s Café Américain on same:

    The platinum coin solution uses a statute regarding commemorative coins to evade that law of money. If the Treasury creates money out of nothing on its own volition, whether it be by assigning a purely whimsical value to a platinum coin, a wooden nickel, or a magic money wand, and deposits that symbolic object with the Fed, it is a game changer. It is purely arbitrary monetization.

    And that step requires debate and a proper law, if the country chooses to accept it.

    Now one might argue that this sort of overt monetization means nothing. And the MMTers have plenty of convoluted arguments why it does not matter, at least to them. And if anyone objects to their sophistry, they are ridiculed. They might say that the Fed is monetizing the debt already, and inflation has not resulted. But that is not the point. The Fed are pretending that they are NOT doing it, and are thereby maintaining appearances and some level of deniability.

    And here? Narrative and intent and the language of deception.

    But what people forget, or rather, what they would like us to forget, is that a modern fiat currency is based on the full faith and credit of the issuer, and the willingness of people in the market place to trust them, their word as contract, and the integrity of their actions.

    Trust is a funny thing. One can bend it, twist it, and strain it by their actions over time. But at some point it may break, and the parties expected to maintain that trust may say, ‘enough!’

    And trust is gone, broken. And retracing one’s steps to regain it is not a simple matter of a apologizing for and remediating their latest transgression, but a long slow climb back through what in many cases are years of continuing abuse and broken promises.

    It is good to note that when dealing with people’s resistance to accepting this monetization and artificiality of value, the MMTers quickly resort to arguments that involve the use of force, legal but even physical, in order to stifle dissent to an arbitrary monetary power.

    That is the significance of taking the step of overt monetization at will, which is what the gimmicky platinum coin solution is all about. And those who promote it best understand that this is what they are doing, and be prepared for the consequences.

    And those consequences? At this point they would be speculation, but that speculation includes the virtual certainty that, as keeps being said, that which cannot be paid shall not be paid, and within that certainty, that either outright collapse or this ever-tightening spiral downward to what amounts to a collapsed state is our future.

    Missing from the equation is merely time and pain.

  4. the Fed is monetizing the debt already, and inflation has not resulted.

    Bullshit. The little god-king’s minions may insist as much, but I prefer to believe my “lying eyes.”

  5. Correct, McGehee. A particularly concerning consequence of monetization is that the best brinksmanship wins: There is “no” inflation partly because the numbers are a lie, but partly because contraction has set in.

    The once-vaunted American standard of living is collapsing. The entire US economy owes to daily injections of massive sums among central banking.

    [W]ereas deposit creation in the days before Lehman came primarily courtesy of banks, the days since Lehman have seen the Fed in the driving seat when it comes to deposit (money) creation.


    now that you too know just who is funding the surge in deposits, and now that you too know, that bank(s) are directly taking advantage of this excess deposit pool to trade for their own account, perhaps you can ask the Chairman during his next press conference, what happens to internal bank hedge funds when the Fed starts unwinding its QE and by implications, results in a drop of at least $2 trillion in excess deposits over loans (a number which will likely rise to $3 trillion by the end of 2013, then $4 trillion by the end of 2014 and so on). But certainly ask him what would happen if instead of using excess deposits to invest in the S&P 500 (or Russell 2000 as the case may be), the banks were to lend said money out, and how far would the stock market plunge as a result.

    Because, oddly enough, there are some people who are misguided and believe that the Fed still has some capacity to tighten, or even stop expanding its balance sheet, without destroying that house of cards – the S&P500/Russell 2000/DJIA – it has so carefully and lovingly created over the past 4 years.

    Short version: The stock market is a bubble, one pumped roughly 100% higher by QE. And the markets are all we have left. Like locusts, we’ve consumed everything else. Which when you include the simple fact that this country went from an enormous wealth surplus to a literally incomprehensible amount of debt in seventy years is terrifying.

    Even the free market is Ponzied.

    Well, it’s terrifying to normal minds. To The Corporate American Empire, it’s just another day running the presses, adjusting the algos, and taking over entire sectors.

    And all of this? Politically, enabled most by the Welfare State, our largest domestic industry.

  6. the Fed is monetizing the debt already, and inflation has not resulted.


    Cripes, these people are like teenagers who think that because they haven’t died yet, they never will.

  7. I think we’re liable to transition from fiat money to Fiat money in short order.

  8. I don’t see how that’s going to work. Car parts aren’t really compact enough to carry easily.

  9. “dicentra says January 8, 2013 at 10:10 am
    the Fed is monetizing the debt already, and inflation has not resulted.”

    I just bought sub-compact car(Hyundai Elantra) for $20,000.

    health care costs are through the roof.

    Food and clothes prices are going up.

    The local theatre changed just raised food and ticket prices.

    Stamps are going up.

    Road tolls are going up.

    Maybe they need to rethink their ‘basket of goods’.

  10. Paper backs when up a buck last year.

  11. Actually, I’m glad I totaled my car when I did, because I plan to get something that should last for the next 16 years (as my last dude did).

    While my money is still worth something. Damn, it’s hard to know which goods to sink my funds into now, as opposed to watching them drain away from hyperinflation.

    Clown shoes it is.

  12. inflation has not resulted

    They stopped counting food and fuel in the inflation stats, so…

  13. Only a person who never buys their own groceries could possibly say that “there is no inflation”.

    Somehow, that would have meant you were “hopelessly out of touch with Real Americans” back when it could be used to smack around Bush the Elder, but now that such would apply to the esteemed Ivy League Wunderkind who are running things, suddenly it’s the Real American’s who are out of touch with “reality”. Silly bastards probably think we’re still in a Recession, even though all the Right People know that it officially ended in 2009. Because they said so.

  14. The Hill: Dem lawmakers say courts should resolve debt-limit standoff :

    Democrats in Congress argue Obama should not feel constrained by the 1917 debt-limit law, which the federal government is projected to hit in late February, because it conflicts with other laws.

    “The president, I think, has the authority under the Constitution and under the various statutes that are passed — if nothing is done — he must do something about paying the bills,” said Sen. Tom Udall (D-N.M.). “That issue may well go to the courts in our system.

    “He’s got two different statutes telling him different things and he can resolve — multiple statutes telling him different things — he can resolve that issue,” Udall added.

    Udall and other Democrats say Obama has the discretion to arbitrate among conflicting laws.

    Udall believes the debt limit, which was created by the Second Liberty Bond Act of 1917, clashes with landmark legislation such as the Social Security Act of 1935, the Medicare Act of 1965 and various appropriations laws that direct the executive branch to spend federal funds on an array of priorities.

    If Obama or Treasury Secretary Timothy Geithner were to suspend payment for various government programs, they would ignore Congress’s previously expressed wishes, he argues.

    Twenty-one House Democrats have signed a draft letter urging Obama to invoke Section 4 of the 14th Amendment to raise the debt limit unilaterally if Republicans demand steep cuts to entitlement programs in return for expanding borrowing authority.

  15. Why are they pushing Obama to make the power grab right now? Shouldn’t they wait ’til they have a couple more solid votes on the Court?

    House Dems. Buncha amateurs.

  16. Yes, groceries are way up, particularly meat. The artificial drop in prices caused by ranchers slaughtering the stock they couldn’t afford to feed is over.

    “Damn, it’s hard to know which goods to sink my funds into now”

    Guns and ammo. Manual farming equipment, or first-class tools of any kind, really, with a preference toward manual stuff, or items that can be adapted to run off treadle power or a jerry-built steam engine.

    If it weren’t for your faith, I’d suggest learning how to grow tobacco and make liquor.