Tag: economy – economists

New Year

New Year posted in Eleison Comments on December 31, 2011

And so another year closes out without the sky having fallen in. I have for decades been saying that it is falling in, for instance to a little group of people in France some five or seven years ago. Amongst them was an SSPX priest who had been a seminarian in Econe when I was a professor there in the late ‘70’s and early ‘80’s. “Your Excellency,” he said, “Weren’t you saying that 25 years ago?” But he said it with a smile, so he may have thought that one day I could be right.

Then will 2012 be the year when the sky falls in? Plenty of worldly commentators think that it could well be the year in which the world economy implodes. Certainly debt cannot keep on piling up the way it has been piling up for decades. For instance welfare entitlements are an unbearable burden on the budget of many a Western democracy, but almost by definition a democratic politician is incapable of taking the severe decisions necessary to restore fiscal sanity, because if he wants to be re-elected he cannot touch them. It has been well said that a democracy can last for only as long as the people do not realize that the cash till belongs to them.

Then is 2012 the year in which the Western democracies finally crash? Maybe. But maybe not. Many people today have a sense of some disaster looming. Surely it cannot take yet another 30 years to arrive, one says. But one has been saying that now for many years. Perhaps people are so drunk on liberalism that ever increasing doses of chaos leave them unconcerned. Nevertheless while the wheels of God grind slowly, says the proverb, they do grind exceeding small. In other words all of God’s bills have to be paid, and the day of reckoning will come, and on accounts far more serious than those of mere welfare entitlements.

This year, next year, some time, never? Certainly not never. It will come in God’s good time. The year is relatively unimportant. As Hamlet says (Act V, 2), “There is a providence in the fall of a sparrow. If it be now, ‘tis not to come; if it be not to come, it will be now; if it be not now, yet it will come: the readiness is all.” There is a Providence. There is a God, and his timing is the best of all. “Gottes Zeit ist die allerbeste Zeit,” says the German proverb.

Nor does God require of easily most of us to undertake action to attempt to hold back Church and world on their present course to destruction. I am willing to bet that many of the world’s public leaders feel in private helpless to do anything, and I wonder if even the world’s secret controllers, hell-bent on world domination, feel at all times confident that they have their game in hand. “Only I can help you now,” the Mother of God has said.

What God does require of us is to live in his grace and to trust him. When the crash comes, in 2012 or whenever, from a human point of view it will no doubt be rather unpleasant, but from God’s point of view his chastisements are acts of mercy. St. Paul quotes Proverbs (III, 11–12): “My son, reject not the correction of the Lord, and do not faint when thou art chastised by him. For whom the Lord loveth, he chastiseth.” And St Paul goes on (Heb.XII, 7–8): “Persevere under discipline. God dealeth with you as with his sons. For what son is there whom the father doth not correct? But if you be without chastisement, whereof all are made partakers, then are you bastards and not sons.”

The Catholic readiness is all, as of the wise virgins (Mt.XXV, 13). Happy New Year.

Kyrie eleison.

Necessary Child

Necessary Child posted in Eleison Comments on December 24, 2011

Constantly in the news today is the world’s financial and economic crisis, especially in Euroland. A Dutch commentator (courtfool.info) proposes for his country a classic solution: get State money out of the hands of the banksters. Christmas may seem a strange moment to consider such money problems, but the whole question is whether apparent solutions are real solutions.

Unless the Euro was positively designed as a means of forcing political unity upon the variety of European nations, it was, as a common currency for a dozen very different national economies, flawed from the start. To begin with it did enable the poorer member nations to borrow and spend, borrow and spend, while it did help the richer nations to export and lend, export and lend, but the process could not go on for ever. When the poorer countries could no longer manage even the interest on their debts, the richer countries were also threatened with the paralysis of their economies by the bankruptcy of their major banks that had made the foolish loans.

At this point the European Commission, the European Central Bank and the International Monetary Fund co-operate to provide emergency funding, in other words to solve the problem of debt by more debt! However, a condition of receiving these funds is that the hopelessly indebted countries must submit to international guardianship, which will impose spending cuts that make the national governments less and less able to rule. As for the richer governments, they too must make themselves unpopular by cutting spending, in order to cover the losses incurred by their major banks’ foolish loans, says Mr.de Ruijter.

Now comes his solution. He says it is simple. Instead of pouring dozens of billions more into a Euro that is doomed to disappear sooner or later, and instead of having the international agencies impose spending cuts, “we can introduce State money.” A State central bank will replace the present central bank which, as in almost all States of the world, is now under private control. The State bank alone will be authorized to create money. All loans will be supplied as State money. All private or non-State banks will be forbidden to create balances out of thin air, in other words fractional reserve banking will be forbidden (cf. EC 224). These non-State banks will receive a fee for their services, but they will not be allowed to charge interest.

And who will control the State bank? Mr.de Ruijter writes, “It will fall under the responsibility of the Minister of Finance, and it will be controlled by Parliament. A commission of well formed people will watch over the long term interest of the money system.”

Well and good. But, Mr. De Ruijter, who will do the forming of these “well formed” people? At what school will they learn truly to look after the common good? And what motivation will be given to them powerful enough to prevent them from being cunningly bought out by the banksters? Democracy? It is democracy that has landed Europe in its present mess!

There is only one true and complete solution: the divine Child in the Crib of Bethlehem. Happy Christmas, dear readers (and thanks to all of you that sent me a Christmas card, but thanks also to those that didn’t!).

Kyrie eleison.

Financial Solutions

Financial Solutions posted in Eleison Comments on November 19, 2011

Numbers of commentators on economic questions are presently writing or saying that the world’s financial system is on the brink of collapse. None of them are sure of the timing, but many of them predict that it will be a major collapse. Yet before the onset of the financial crisis in 2008, few people saw it coming because they were comfortable in a way of life that seemed well established and for ever moving forward. However, if these commentators are right, it is about to come off its hinges.

We should all of us be thinking what went wrong and how it should be put right. Here below are a series of practical proposals, adapted from a recent article on the website Burning Platform. One need not agree with each of them to begin envisaging alternatives to our present broken system. There are political and financial proposals. Let us begin with the latter:—

*Nationalize those banks which by being “Too Big to Fail” can hold the State to ransom. Let any consequent losses fall on the people responsible or involved, not on the taxpayer. *Re-institute (in the USA) the Glass-Steagall Act to stop banks from ever becoming so big again. *Re-institute mark to marketing accounting rules, so that banks can no longer pretend that their assets are worth much more than they are worth in the market-place. *Regulate the derivatives market so that likewise no financial entity can become so big that it can threaten to crash the entire system if it goes under (as happened in the USA with AIG). *Simplify the present highly cumbersome system of income tax, or replace it altogether with a consumer tax, and eliminate corporate tax breaks. Notice how such proposals may be explicitly financial, but they are implicitly political, because to be put into practice they would need a significant change in the political way of thinking of the people and especially of the leaders. Finance depends on politics. Here are the more obviously political proposals, which may be disputed, but they at least point in the right direction:—

*To combat the corruption of too comfortable politicians, impose term limits. To combat the corruption of elections by special interests, cut out all lobbying and lobbyists. *To cut down the power of the central bank, take away its control of the nation’s money supply. *Re-organize the States’ welfare benefits, today so draining the States’ finances that tomorrow they will be able to benefit nobody. *Re-instruct the people to go without, and to accept a lower standard of living, so that instead of spending society into oblivion, they build it by saving. *Do what can be done to replace suburban sprawl by more self-sufficient communities. *Renounce world empire so as to cut down the enormous military spending of the USA, for instance by bringing thousands of troops home from their bases all over the world.

Here again, for such proposals to be put into practice, they require great changes in the people’s way of thinking, especially in that of the leaders. Political decisions depend upon what people value more, or most. Why are we alive? To enjoy on earth, or to be truly happy for eternity? Is that an either-or question? Is there an eternity? Thus politics depend on religion, or on the lack of it. Will today even a financial crash bring anyone to their senses?

Kyrie eleison.

Delinquent Finance I

Delinquent Finance I posted in Eleison Comments on October 29, 2011

The imminent collapse of global finance, and/or the advent of global finance on the way to global government which that collapse has been designed to bring on, should be making souls think: how did we get into this mess, and how do we get out of it? If Almighty God has had no part to play in such a serious crisis, then obviously he is not serious but just a feel-good Sunday pastime. On the other hand if he is as important as once the builders of medieval cathedrals obviously thought, then neglecting him will have had a central part to play in today’s triumph of finance over reality.

Indeed one must go back to the Middle Ages to understand where today’s disaster has come from. As the Faith began to droop after the high Middle Ages, so men became more and more interested in Mammon, the other great motivator of their lives (Mt.VI, 24). Thus money, natured to be the servant of the exchange of real goods and services, was unhooked from nature to become modern finance, master of the global economy. A key step in this process, leading directly to today’s mountains of unpayable debt in all directions, enslaving the world to the visible bankers, or rather to their invisible controllers, was the post-medieval spread of fractional reserve banking.

When money serves the economy, a wise State will ensure that its total quantity in circulation goes up and down with the total quantity of real goods to be exchanged in that economy, so that its value will remain steady. Too much money chasing too few goods will mean its value drops by inflation. Too little money pursued by too many goods will mean its value rising, by deflation. Either way its changing value destabilizes all exchanging of goods. Now if banks, in which depositors deposit real money, need keep only a fraction of that real money in reserve to back a much larger quantity of paper money which they can put into circulation, then by putting too much or too little into circulation, they can play with the value of money and make fortunes by lending out cheap money and demanding back expensive money. Thus financiers can take over control from the State.

Worse, if fractional reserve banking enables banks to disconnect money from reality and fabricate it at will, and if they can charge even slight compound interest on their funny money, then logically they can – and do! – suck all real value out of an economy, reducing most depositors to borrowers and most borrowers to hopeless debt-slaves, or mortgage-slaves, taking care only not to kill off completely the goose laying the golden eggs for their benefit. The divinely inspired wisdom of the law-giver Moses was to put brakes on all lenders’ power by cancelling all debts every seven years (Deut.XV,1–2), and by restoring all property to its original owners every 50 years (Levit.XXV, 10)!

And why did Moses, great man of God and therefore man of deep “spirituality,” concern himself with such materialistic questions? Because as bad economics can turn men to despair, towards Hell, away from God – look around you, today and above all tomorrow – so good economics make possible a wise prosperity which in no way worships Mammon, but makes it rather easier to trust in the goodness of God and to worship and love him. Man is soul and body.

Moses would surely have smashed fractional reserve banking, like he smashed the Golden Calf!

Kyrie eleison.

Crisis Films

Crisis Films posted in Eleison Comments on September 24, 2011

Two interesting films have already appeared about the arrival in the USA of the financial and economic crisis which has been threatening since 2008 to undermine the whole Western way of life. Both films are well made. Both are persuasive. Yet one says the bankers are heroes while the other says they are villains. If Western society is to have any future, the contradiction deserves thought.

The documentary film Inside Job consists of a series of interviews with bankers, politicians, economists, businessmen, journalists, academics, financial consultants, etc. There emerges a frightening picture of greed and collusion in fraud at the top of American society in all these domains. Free enterprise was the justification for the financial de-regulation of the 1980’s and 1990’s, which gave to the money-men steadily more power until they were able to bring under their control all politicians or journalists or academics of influence. Thus a process of merciless plundering of the middle and working classes is still going on. The anger of the victims is building towards an explosion, but at least for the moment the money-men cannot stop gorging at the trough they have so well designed for themselves. “Greed is good. It makes the world go round,” say the banksters.

In the second film, Too Big to Fail, the dramatic events of autumn 2008 centring around the collapse of Lehman Brothers, a major New York investment bank, are re-constructed. Hank Paulson, then Secretary of the US Treasury, is shown making a classic free enterprise decision by refusing a government bail-out to let Lehman Brothers go bankrupt. But the result is such a shock to the global financial community, threatening a meltdown of worldwide finance and commerce, that Paulson with his comrades in government and with the help of all the leading bankers of New York has to persuade the US Congress to approve a taxpayer bail-out of all the big banks which cannot be allowed to fail. He just succeeds. The system is saved. The government and bankers are the heroes of the day. Once again capitalism is proved to be the marvel we always knew it was – thanks to socialist intervention!

Then are the bankers heroes or villains? Answer, heroes at the very most in the short run, but certainly villains in the long run, because it needs very little common sense to realize that, all society requiring selflessness, no society can be built on greed, meaning selfishness. In any society there will always be the haves and the have-nots (cf. Jn.XII, 8). The managers of society who have the money and power absolutely must look after the masses who have neither, otherwise there will be revolution and chaos. Of course the globalists are planning on this chaos tomorrow to give them world power the day after, but while they may propose, it is God who disposes.

Meanwhile Catholics and anybody who cares about the future should go to see both films and then ask themselves some hard questions about capitalism and free enterprise. How on earth could capitalism be saved this time only by socialism? Is government then really all that bad? Is capitalism really all that good? How can a society possibly depend on greedy men to survive? How can it have got itself into such a dependency? And is there any sign right now that anybody is asking such questions? Or is everybody’s worship of Mammon – let us call things by their name – proceeding unchecked?

Unless Jesus Christ absolves men of their sins through his priests, no post-Incarnation system of society can ultimately work. Capitalism only ever lived off the Catholicism from earlier centuries. It is today’s exhaustion of Catholicism that spells the death of capitalism.

Kyrie eleison.

Don’t Borrow

Don’t Borrow posted in Eleison Comments on July 2, 2011

The latest financial bailout of Greece, announced last week, has once more put off the day of reckoning for the European Union and maybe for the worldwide financial system, but that day is merely postponed, not cancelled. The problem is systemic. If democratic politicians want to be re-elected, they must borrow to pay for the free lunches on which they themselves have made the peoples insist, but the folly for individuals, families or nations of taking out loans upon loans cannot last for ever, and one day it comes to a crashing halt. Such peoples and politicians have today long been on the wrong road, because the decision to heap up loans is ultimately stupid or criminal.

It is stupid if the basic wisdom has been forgotten of three lines of Shakespeare, worth volumes written by professional “economists”:— “Neither a borrower nor a lender be / For loan oft loses both itself and friend / And borrowing dulls the edge of husbandry.” In other words a habit of borrowing accustoms one to not “husbanding” or looking after the resources one has. For instance, at least to begin with, money borrowed comes too easily, thus undermining the sense of money’s value and the sense of reality, for instance how hard money can be to earn or eventually to pay back. As for lending, says Polonius (Hamlet, I, 3), not only are loans often not paid back, but also if I have lent to a friend who cannot pay back, he can be too afraid or ashamed to come near me again.

However, not all lenders are stupid. A number of them are criminal, because they know that by lending money at usurious rates of interest they can reduce individuals, families and nations to poverty and slavery – “The borrower is servant” (or slave) “to him that lendeth” (Prov. XXII, 7). Certain credit cards are now paying between 20 and 30% rates of interest, yet the Catholic Church has always severely condemned usury. Usurers are criminals who destroy the fabric of society by impoverishing and enslaving their fellow men, or whole nations.

In modern times usury takes different forms, say the Popes, and this is why the whole world should now be waking up to the fact that it has let itself be enslaved by the cunning money-men, who use their money to master the media and politicians in particular, and thus buy control of an entire society giving itself over to Mammon. The question then arises, how can God have allowed such a state of affairs to come about, and how can he now be meaning to allow the immense suffering that will come with the imminent financial crash and/or World War, both of which will have been engineered by his enemies to give them, as they hope, total world power?

The answer is that he has granted such power to his enemies because their cruelty and inhumanity serve him as a scourge to be laid across the back of a world that has turned away from him, and has preferred to take Mammon for its master – you cannot serve both God and Mammon, says Our Lord (Mt. VI, 24). And God will allow a great deal more suffering in the near future, because “In suffering is learning” (Aeschylus), and in fact only heavy suffering will today be enough to enable any significant number of souls worldwide to learn that their materialism and worship of Mammon are treacherous enemies of their one true interest, the salvation of their eternal souls.

Mother of God, obtain mercy for us poor sinners!

Kyrie eleison.