This Crony Capitalism Even Makes Me Want To Redistribute Wealth

[Brant Gaede]

There are a lot of US dollars held abroad as bank reserves and everyday usable currency. Many more dollars are held in the form of debt instrument obligations of the US government. These dollars can't came right back to the US for they've already come back. Let's say China has 1 trillion US dollars and 2 trillion US government bonds. When those bonds were purchased they became a dollar credit in US government accounts and spent. For the latter to come back to the US and "explode" the economy they would have to be redeemed apropos various maturity dates by the US government--there are relatively minor exceptions such as using the open market, but massively using the open market would destroy the value of the instruments--which would merely issue new bonds, literally to itself if it had to as it is doing right now, BTW, and use the money to pay its own bills and that's the money being created, but it's only one buck for one. It is not the 8-1 dollar creation of fractional reserve banking. For that you need loan demand, mostly from the private sector, and it's lacking. The international worth of the dollar comes from its use in buying and selling commodities, especially oil, and lack of a good alternative currency and how various central banks badly need to protect its value to keep their own currencies afloat. The yen, eurro and pound cannot begin to compete with it. How can this cycle be broken? US dollars can be used to buy gold and other assets like US companies and real estate. The country can be sold piece by piece to foreign buyers, people and entities.

--Brant

[Brant Gaede]

The video is both interesting and silly. A country's wealth? A lot of it's not even in this country so why is it its wealth? If 1% has X amount of wealth then how can it also be the country's unless the country owns 100% and is free to parcel it out to political favorites? So who's complaining? Lackeys of the country seaching for moral sanction of taxes through envy with specious reasoning for looting.

--Brant

[Michael Stuart Kelly]

Brant,

Things like credit instruments with China are only a snowflake on the tip of the iceberg.

Before the first Bretton Woods agreement after WWII, the default currency for international trade was either the English Pound (major slice of this market) or the French Franc (minor slice). After Bretton Woods, the USA dollar took their place.

This means if a company, say, in Portugal decides to do business with a company in South Korea or Bangladesh, their contracts will be in USA dollars--not the currencies of these respective countries.

For this to work, there has to be a hell of a lot of dollars lying around all over the place--dollars that are not accounted for in the USA internal market. You only need a fraction to keep it going (a concept similar to fractional reserves banking--and you work it through currency exchanges), but still... We're talking about gobs and gobs and gobs of dollars.

Why do you think they made the euro? The European bigwigs wanted back in this game. For international trade, the euro took the minor slice role, and the dollar is still the overwhelming major slice.

Mull that over for a while and see what you come up with. I'm talking specifically about the internal USA economy. What happens if the USA loses it's privileged place as the world's international trade currency? Where do you think the dollar holders all over the world--the ones with these gobs of unaccounted for dollars--are going to go to spend them?

It's not good...

They're obviously going to spend them where dollars are accepted as currency. If the only place left is inside the USA, that's where they are going to come.

Now think about the implicati... nah... don't think about that. It's too depressing...

More recently, I have read that some countries have been trying to impose their own currency in their international trades, but there has only been limited success for that.

Like I said, I've abandoned keeping up with this stuff. I'm out of the loop for more recent developments. I can only say from a broad picture perspective that Obama is swimming with sharks out there and he is screwing up royally.

Michael

[Dglgmut]

The video is about static wealth, not income or living standard. This means there are a lot of people way over on the left, on the "poor" side of the chart, who we're supposed to feel sorry for, who have extremely high income. They are on the left of side of the chart because they spend about or above 100% of their income, so they accumulate little or no wealth. It is perfectly fine that a lot of people are over there. Fairness does not require that this or that quintile have any wealth at all.

Likewise, there are people on the right side of the chart who inherited and work a farm and live much more modestly than some of the clowns on the left side of the chart previously mentioned.

Today's wealth distribution may well be perfectly fair. Before saying it is spread too much to the right side of the chart, or not enough to the right side, I would first need to know what a fair distribution is. Abstractly, that would be whatever distribution arises in a free market. But we don't have a free market. We do have some crony capitalism, which argues for "too much to the right side." But we also have regulations and taxes, which suggest "not enough to the right side." My guess is that a free market would yield a skewing of wealth to the right side of the chart about comparable to what we see today, probably more so.

Capital accumulation is good. When one person has $311 million of assets, he is unable to burn through a significant share, so the vast majority of it stays invested and contributes to the expansion of capital spending with resultant increases in productivity and living standards. If that $311,000,000 were $1 in every American's pocket tomorrow morning, you would see an expansion of 7-Eleven's lottery ticket sales.

Good points. Thanks.

[Jon Letendre]

Cutest about the video is the presentation of the distribution which 92% of Americans regard as "fair." Using the provided figures, 311 million Americans and $54 Trillion of wealth, a flat ("socialist" in the video) distribution gives each American about $180,000. The "fair" distribution, which 92% of Americans support, cuts the wealth of the first two quintiles in half, to about $90,000. Well, 311 million Americans includes every man, woman, and also every infant, toddler, elementary, middle and high schooler. Spending below one's means and investing take time—how much wealth should we expect five year olds to have? Just look at the chart to find 92% of American's feeling on the matter: He should be worth about $90,000.

The top thing to keep in mind about these wealth and income stats is that they tell us nothing at all about the standard of living of the individuals. Maintaining zero wealth is really quite easy, and is not made any less easy by high income. All one must do is spend about all of one's income as one goes.

Poverty statistics are another one to look out for. "Poverty" and "poor" are precisely defined by sociologists, yet always presented as meaning "shitty life we should wish upon no one." In fact, they mean "getting an income that is half or less than the national median." In 2213 there will be people with only one fusion reactor in their basement, only one star-hopper in their port, only one automatic hair-bun-tying 'bot, all because their income is 49% of the national 2213 median. It's already sad, isn't it?

[Brant Gaede]

Michael, one country does business in dollars with another--Portugal and South Korea--they are trading goods and/or services. The dollars used are equivalent to letters of credit and may in fact be only that. In the overall, general international scheme of things once the economic transaction is completed the dollars return to the banks. If one country has an imblance of dollars--too many--it can go and exchange them for US T-Bills. By exporting its inflation the US drives up food and other commodity-based costs world-wide. If your income is $2/day and you spend half on food you can starve if you have to spend $1.50. The US is indirectly causing world-wide starvation amongst the poorest of the poor.

--Brant

[Michael Stuart Kelly]

If one country has an imblance of dollars--too many--it can go and exchange them for US T-Bills.

Brant,

Or it could simply bring its dollars over to the USA (through various artifices, banking and otherwise--including front groups) and buy up land, buildings, companies, patents, licenses, political candidates and politicians (oops)...

Sound familiar?

Need I go on?

Michael

[Brant Gaede]

I already said that. (26)

--Brant

[Michael Stuart Kelly]

Brant,

Kinda.

But there is a premise where you and I seem to disagree (I'm not sure).

You seem to be limiting the issuance of USA dollars to things we can scrutinize. So essentially it means the USA issues dollars or dollar instruments from here inside the USA, sends them out and then someone later brings them back. (Let me know if I understand that correctly.)

I am looking from another angle. Through the mechanism of the eurodollar, there is a crap-load of dollars out there that we simply don't know how they got there. I didn't find the procedure for how they were (and are presumably still being) issued back when I was messing with this stuff, This was when I was asking the emperor has no clothes kinds of questions to bankers, politicians, etc., and getting gobbledygook jargon answers that led nowhere.

I was able to come across some underground kinds of reports that there have been dollar printing plates set up in other countries (Iran was one, believe it or not, but that was back in the Shah's day). I am not able to vouch for their truthfulness. but, if I remember correctly, the people who issued them were former USA officials. Also, I remember seeing some foreign banks in foreign countries authorized to extend loans in USA dollars backed by nothing but bank bonds, but I didn't understand the bond game well enough to ask the right questions.

So my point is that it's not a matter of bringing dollars back--ones that were sent out. It's a matter of flooding the USA market with currency that has no issuance accounting on it at all--and by the flooders buying up our stuff with it to boot.

Back then I came across some monkeyshines with eurodollars through what are called correspondent accounts. These are bank accounts in banks in the USA held by foreign banks from foreign countries. The foreign banks simply pumped their dollars into the USA through wire transfers from abroad. The Senate had some hearings on them for money laundering and so on and there were some crackdowns. Then I stopped reading about it as I moved away from this field. But some of this stuff is on the Senate's website.

Michael

[Brant Gaede]

The dollars can come flooding back to this country along with the exported inflation. Don't save dollars. Save sundry assets. Stock in a company is an asset, but don't leave it with the broker for if you do you don't own the stock, only a claim on the stock. It's important to buy it cheap and at least ten different companies. Etc.

--Brant

[dennislmay]

The dollars can come flooding back to this country along with the exported inflation. Don't save dollars. Save sundry assets. Stock in a company is an asset, but don't leave it with the broker for if you do you don't own the stock, only a claim on the stock. It's important to buy it cheap and at least ten different companies. Etc.

--Brant

The wealthy are dumping stock to become liquid right now, what they always do just before a crash so they can come back in and buy everything at 10 cents on the dollar and become much much wealthier.

Dennis

[Brant Gaede]

That's the time to buy it cheap.

--Brant

10 cents on the buck is an exageration--I hope

[dennislmay]

That's the time to buy it cheap.

--Brant

10 cents on the buck is an exageration--I hope

There was a recent discussion on the Glenn Beck show that some experts are predicting the DOW down to 1,500-2,000 soon - Beck is thinking within a year. The Über-Rich are dumping now so it might not be long. Nothing is supporting the current stock prices but the continual printing of money.

That would of course signal an immediate Depression larger than the Great Depression but you can't borrow 40-46 cents of every dollar for long.

Dennis

[Brant Gaede]

Fear sells TV shows and Beck only knows what he is talking about by happenstance.

>That's the time to buy it cheap.

--Brant

10 cents on the buck is an exageration--I hope

There was a recent discussion on the Glenn Beck show that some experts are predicting the DOW down to 1,500-2,000 soon - Beck is thinking within a year. The Über-Rich are dumping now so it might not be long. Nothing is supporting the current stock prices but the continual printing of money.

That would of course signal an immediate Depression larger than the Great Depression but you can't borrow 40-46 cents of every dollar for long.

Dennis

[dennislmay]

Fear sells TV shows and Beck only knows what he is talking about by happenstance.

Happenstance?

: a circumstance especially that is due to chance

And chance favors the prepared - however they happened to become prepared.

Dennis

[Samson Corwell]

The dollars can come flooding back to this country along with the exported inflation. Don't save dollars. Save sundry assets. Stock in a company is an asset, but don't leave it with the broker for if you do you don't own the stock, only a claim on the stock. It's important to buy it cheap and at least ten different companies. Etc.

--Brant

The wealthy are dumping stock to become liquid right now, what they always do just before a crash so they can come back in and buy everything at 10 cents on the dollar and become much much wealthier.

Dennis

Out of interest, Dennis, is that because it is a precursor to a crash or does it have some hand in accelerating a crash as well?

[dennislmay]

The dollars can come flooding back to this country along with the exported inflation. Don't save dollars. Save sundry assets. Stock in a company is an asset, but don't leave it with the broker for if you do you don't own the stock, only a claim on the stock. It's important to buy it cheap and at least ten different companies. Etc.

--Brant

The wealthy are dumping stock to become liquid right now, what they always do just before a crash so they can come back in and buy everything at 10 cents on the dollar and become much much wealthier.

Dennis

Out of interest, Dennis, is that because it is a precursor to a crash or does it have some hand in accelerating a crash as well?

They are printing money faster than the value being taken out by the few who will be liquid when it comes time to buy the stock back. The crash is going to happen once the insiders decide they are sufficiently liquid and their funds protected to come out well ahead on the other side of the crash.

Dennis