borrowing – debt – interest

Sensible Economics

Sensible Economics on January 23, 2010

When too many powerful people have a vested interest in “economists” being confused and confusing, it is a relief to come across (on jsmineset.com) the common sense of the “Seven Commandments”of the Austrian School of Economics. The first two, as listed below, are elementary. The last five condemn five ways in which many State governments today, no doubt under political pressure, are trying to get out of obeying the first two. Here they are, each with a commentary:—

1) “Thou must earn.” With all men’s continual need to spend on food, clothing and shelter, every person, family and State must somehow earn. They can only earn by producing or providing the other members of the community (or other States) with goods or services which those others are willing to buy.

2) “Thou shalt not spend more than thou earnest.” No person, family or State can go on for ever spending more than it earns. Otherwise it must pile up debt until the creditors call a halt. Then the debt must at last be repaid, which is painful, or it must be defaulted on, which can be disastrous

3) “No State may make too many rules.” A State must make rules for the common good, but if it restricts the citizens’ productive activity by making too many rules, it will harm the common good by restricting instead of promoting that activity.

4) “No State may tax too much.” Similarly too much State taxation levied on productive activity will hinder, even paralyse, that activity, so that an excess of taxation will even diminish a State’s tax income.

5) “No State may spend its way out of a recession.” In a recession where most citizens of a State are both earning and spending less, no government can resurrect that earning and spending simply by spending more itself, because to get that extra money to spend, it must either borrow (see 2) or tax (see 4) or print money out of thin air (see 6). All three alternatives have strict limits.

6) “No State may print its way out of a recession.” Nor can a government solve a recession by fabricating extra money to spend merely by printing more and more banknotes or by hitting more computer keys, because unless there is an increase in the production of goods corresponding to the increase in the money supply, too much money chasing too few goods will force up prices until hyper-inflation can eventually destroy the money altogether.

7) “No State may employ its way out of a recession.” Nor can a Government solve unemployment merely by hiring the unemployed as non-productive government bureaucrats (see 1), or by paying out more and more unemployment checks (see 5).

However, if “democratic” peoples so adore Mammon that they keep on voting for politicians bought out by the servants of Mammon, who can they blame but themselves if these money-men take over their government? And if the result will be a living misery for the same peoples, will not the Lord God have punished them by where they have sinned? And will they have left him with any other way of making them understand that he did not give them life just for production, economics and money or even the Austrian School? Or of bringing home to them that these things are necessary in their rightful place, but that above and beyond all of them there is an eternal Heaven and an eternal Hell?

Kyrie eleison.

Christmas Cheer

Christmas Cheer on December 19, 2009

Here is some good news for Christmas, drawn from England’s “Catholic Herald” of Dec. 11: a report from the United States tells that the present economic recession is helping marriages. The recession began towards the end of 2007. In that year the divorce rate in the USA was 17.5 for every thousand married women. In the following year it was 16.9. Lessons at what Americans call “The School of Hard Knocks” are costly, but they sure teach!

“Marriage in America: The State of Our Unions 2009” is the title of the Report published jointly at the Institute for American Values, University of Virginia, by the Center for Marriage and Families and the National Marriage Project, whose director, Brian Wilcox, wrote the Report. He says that millions of Americans have adopted a “homegrown bailout strategy,” and “are relying on their own marriages and families to weather this storm.” As our new-fangled world collapses, so the old proverbs come back into their own: “Every cloud has a silver lining”; “Blood is thick and water is thin”; “There’s no place like home.”

Another piece of evidence quoted by Wilcox to prove that the economic crisis is helping marriages is the decision of many married couples to get rid of credit card debt. As reported by the Federal Reserve Board, Americans have reduced their collective revolving debt by 90 billion over the past year. Wilcox says the recession has revived the “home economy” as more and more Americans are growing their own food, making and mending their own clothes, and dining out less often: “Many couples appear to be developing a new appreciation for the economic and social support that marriage can provide in tough times.”

Husbands, behave like men, and turn to your wives for support. Wives, glory in your womanly gifts which men do not have in anything like the same measure, and lean on your husbands for strength. A man without a woman is normally a zero (yes, zero!). A woman without a man is normally even less, an incomplete zero, or an open U. But put the U as support beneath the zero, and you suddenly have 8! On the Miraculous Medal, is not the Cross of Our Lord shown resting on the M of Mary? To go through with his Passion Our Lord chose to renounce all his divine Strength. But could his humanity alone have performed our Redemption without the human support of his Mother? Never!

Not many economists have any common sense, but the few that are not living in la-la-land all see this recession getting much worse yet. Mothers, re-learn domestic skills. Fathers, re-learn vegetable gardening. All lovers of truth and reality, strengthen not only family ties, but also neighbourhood ties. It is going to be a question of survival, and our governments and media are not going to help, on the contrary, unless they seriously change direction. “Our help is in the name of the Lord,” figuring at this time of year as a powerless human baby. Yet this baby is the Almighty!

Kyrie eleison.

81 / 121 Re-Structuring

81 / 121 Re-Structuring on June 27, 2009

Tomorrow, or the day after, there is hardly a box outside of which it will not be necessary to think. In Church and world, the mentalities and structures of so-called “Western civilization” are collapsing around our ears. Still the mass of Western souls are preferring to slumber on in their audio-visual dream, but reality is closing in all the time – they may awake not before they are shackled into the New World Order.

The USA has for nearly a century acted as the shield and sword-bearer of “Western civilization.” Now its financial, economic and political power structures are melting down in a welter of greed, corruption, selfishness and dissolution slung between Wall Street, New York, and Washington, DC. However – let it never be said too often – “We the people” have only ourselves to blame. We have wanted the cause: godless materialism. Now we must live with the effects: the final breakdown of fractional reserve “banking,” of paper “money,” of democratic “politics.”

City structures are crumpling. In Flint, Michigan, original home of General Motors presently employing 8,000 local people where once it employed 79,000 and now bankrupt, local politicians are pioneering an idea to save their dwindling city: raze entire districts and return the land to nature. This idea so appeals to the Federal Government that another 50 cities have been earmarked as potential candidates for salvation by the bulldozer, including Detroit, Philadelphia and Baltimore.

State structures are failing. In California, Controller John Chiang said a few days ago that if State lawmakers cannot quickly solve California’s 24 billion dollar deficit, then next week he will have to pay State debts with paper promises to pay. “Unfortunately,” said he, “the State’s inability to balance the check-book will now mean short-changing taxpayers, local governments and small businesses.” It is easy to imagine how these will react, but it is not easy to imagine how the budget deficit will be solved.

As for our national structures, if we will not acquiesce to their being merged into the international New World Order, then surely a Third World War will be engineered to persuade us, starting with an 81/121 (a 9/11 squared)! Yet all these collapses pale in comparison with Vatican II, because it was the Catholic Church that was upholding “Western civilization.” If the Catholic collapse is not soon reversed by the Consecration of Russia to the Immaculate Heart of Mary, then one must wonder if the healthiest elements in the Church will not need re-structuring as an underground resistance movement.

Kyrie eleison.

Busted Compromising

Busted Compromising on March 28, 2009

Between the crisis of the Church, still compounding, and the economic crash now, as Americans say, “barrelling down the pike,” there is an interesting parallel to be drawn. Only those who think religion and economics have nothing to do with one another need be surprised. Both are seated in the same human beings and societies.

In both cases, according as, say over the last 300 years, man has moved further and further away from God, so he has made more and more compromises with the Truth and Laws of God and nature. But the nature of God and man and things cannot be changed, so that the moment comes when the compromising stretches too far from reality, and breaks down. That moment is today.

In economics, the founding of the Bank of England in 1694 was a major step on the way towards modern finance: central banks taking control of the money supply and therefore of the real government of the nations, by progressively replacing real deposits as the foundation of credit with fictitious credit as the foundation of “deposits.” Fake finance became global in the 20th century, and is being crashed in the 21st century to give to the money-men final control of world government. Alas, the sense of economic realities may have been lost too far back in the past for even real suffering and real riots to wrest that control from those who are masters of the mass of minds by their vile media.

In the Church, the steady diminution of the Faith over the 17th and 18th centuries gave rise to Concordats in the 19th and 20th centuries, by which the Church would renounce certain of her natural privileges in order to establish her most important rights by at least a contractual agreement with States where those privileges were no longer believed in. So it came to seem that instead of the human resting on the divine, the divine rested on the human, with the result that Catholic dogma may have remained for the 19th century anchored in God’s Truth, but when with the 20th century’s modernism and Vatican II the same shift towards man took over even Catholic doctrine, then the Church’s very structures immediately began to fall in ruins, today still piling up.

In both economics and religion, the remedy can only be to go in time forward by going back to healthy basics, and by giving up on trying to extend the series of unhealthy compromises with a world that has run itself onto the rocks. However, whereas in economics the enemies of mankind may win, in religion we have God’s own promise (Mt. XVI, 18–20) that they will not prevail over the Catholic Church. So we prepare to suffer, but we pray, especially for the Pope, with an unshakable trust in God.

Kyrie eleison.

Thrift Matters

Thrift Matters on January 3, 2009

Another brief visit to the United States gives me to think that a large part of the population, while concerned about the financial and economic state of their nation, are going about their business as though there is nothing too much to worry about. Perhaps there is not much else they can do. Perhaps it is only human to go on “eating and drinking, marrying and giving in marriage,” until the catastrophe hits (cf. Mt. XXIV, 38).

However, my own best understanding, from the commentators who make the most sense to me, is that a major catastrophe is on its way, which will go way beyond mere finance and economics. The best commentators see what stands to reason, namely that if the problem is deep and human, its roots are moral and, ultimately, religious. Let us back up with one commentator from today’s effects to yesterday’s causes (within the USA):—

Regulators and financial institutions “woke up too late” to the collapse of a pyramid of debt, partly because in its last stage it had been too profitable to them. In this last stage “liar loans” in the form of SIVs (Structured Investment Vehicles) had been invented to deal with borrowers on housing not repaying their debts. SIVs did this by packaging good mortgages with bad, and selling the packages as “investments” to gullible investors who did not do their homework. Everything seemed good until housing values fell, as they were bound inevitably to do. Then borrowers repudiated their debts, confidence cratered, investors and huge financial institutions were bankrupted, from the USA outwards to much of the rest of the world.

And why had housing in particular brought down the house of cards? Because housing, second most important part of the whole US economy, had become an investment as well as a home, and collateral for house “owners” to take out still further loans. Moreover since the 1970s, the US government had been subsidizing mortgages for people normally unfit to borrow (but who vote!), and it had been bullying lenders to make loans according to “equality” and not according to their better judgment.

Further back still, the government had set households the example (taught by the Englander John Maynard Keynes – “Tomorrow we are all dead anyway”) of living beyond one’s means, as though endless borrowing could ensure an endless increase of prosperity. Financial responsibility was made to seem a thing of the past. Such reckless behaviour on the part of the government had been greatly facilitated by the disastrous founding in 1913 of the private bankers’ Federal Reserve, enabling the government, amongst other things, to rob the mass of citizens without their realizing it, by means of inflation – five cents then bought what only a dollar can buy now.

But let us make no mistake – broadly speaking, citizens have from God the governments they deserve, especially when they are convinced that their government is “democratic.”

Kyrie eleison.

Extrarchal Cogitation

Extrarchal Cogitation on December 13, 2008

“Archa, archae” is the Latin for “box.” Thinking outside the box is not a popular activity – who wants to be shaken out of their comfortable mental routine? – but circumstances may soon force it upon all of us. It may not be a bad idea to get a little used to it sooner rather than later. Here are some considerations of an American, James Kunstler, who is not afraid to cogitate extrarchally!

The recent succession of massive bailouts by the USA government of mega-banks and mega-corporations TBTF (too big to fail), he says, is no better than injections of embalming fluid into the walking dead. Worse, the corresponding fabrication of trillions of dollars out of nothing virtually guarantees hyper-inflation in anything from six to eighteen months. But if the dollar is destroyed, how will the USA pay for imported oil? And without oil, what happens to our whole oil-based way of life?

Moreover, with the collapse of the debt pyramid, what happens to the whole fantasyland, built like most everybody’s houses and cars, on credit and debt? People will have to get back to real as opposed to virtual activity. Back to the distribution of property and growing of food as before the arrival of petro-agriculture. Back to the land, or social chaos! We must start thinking – outside the box – of alternate energies in place of oil, of production instead of consumerism, of localism in place of globalism.

Mr. Kunstler recognizes that a “zombie disease” has “eaten away our brains,” but he still puts his hope in a young generation of Americans realizing what an opportunity to rebuild is offered to us all by this meltdown, and he hopes that a revived American people will set its shoulder to the wheel. I wish I shared his hope, but the whole question is religious, and the closest that he gets to mentioning the Lord God is when he comments that “the meltdown is building straight into the Christmas holidays”!

Yet as the Psalmist says, to build the city without God is to build in vain (Ps. CXXVI). And, as Our Lord says, “He that gathereth not with me, scattereth” (Mt. XII, 30). All the suffering that lies in wait for us next year will be allowed by God for one supreme purpose, to help us to save our souls for eternity. If the collapse of our gimcrack paradise on earth merely makes us want to build a solid paradise on earth, he may have to increase the dose of suffering until we get the point.

Kyrie eleison.