money

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.

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.

Third Position

Third Position on January 17, 2009

When I am out driving somewhere in unknown territory and I come to a fork in the road, and I take the road to the left and it turns out to be a dead end, and I take the road to the right and it turns out to be a dead end, then unless I give up going anywhere, will I not turn back to the last previous fork or junction and look for any other road than the one I just came down?

To save “capitalism” in the USA, the outgoing Republican Administration has resorted to such a massive degree of Government intervention and control as to resemble more and more closely a “communist” government. And, just before the incoming Democrat Administration comes in, it gives all the appearances of resorting to the same “communist” solution for the “capitalist” problem. But ever since the fall of the Berlin Wall in 1989, has not Communism been evidently a loser? In which case do not both Administrations resemble the motorist who turns from one dead end to another?

Of course just as diehard Communists will claim that “true” Communism was never given a fair trial, so many believers in “Capitalism” will today claim that only abuses of the system are forcing it to morph into Government control. But just as the worst horrors of Communism do not contradict, but follow from, its basic principles, so, given poor old human nature, was not free enterprise Capitalism bound to morph into that finance Capitalism now obliging the Governments to take over?

After all, cannot Capitalism, named from capital – money – be defined as a maximizing of freedom for all citizens to make as much money as they will and can? And how could that not end in the stronger devouring the weaker until they become TBTF: too big to fail?

Then in what direction might one look for a third road, leading to neither implicit nor explicit atheistic materialism? How about the Sermon on the Mount? – “You cannot serve God and Mammon . . . Seek ye first the kingdom of God and his justice, and all these things (economic goods) shall be added unto you” . . .(Mt. VI, 24, 33). But who wants the solutions of 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.

Money-Men Supreme?

Money-Men Supreme? on November 1, 2008

There is a fascination in reading commentaries on the ever-evolving crisis of global finance. How much more do the commentators tell than they say, of a natural order being violated and taking its revenge! Yet nobody seems to know how the crisis will play out – except the master violators?

To get a glimpse of that natural order, it may be necessary to step back a few centuries. Let us briefly for our purposes define (1) religion as man’s relations to his God, (2) politics as his social relations to his fellow-men, (3) economics as the art of distributing goods between producers and consumers, and (4) finance as the art of handling money. Then the natural order is that as money exists to facilitate the exchange of goods essential to any society, so finance should serve economics. And as the State is ultimately responsible for the well-being of all its citizens, especially those most in need of protection (Leo XIII, “Rerum Novarum”), so the material goods of economics should come under the common good of politics. But politics can only adjust and ensure the common good of all men in any society if it is properly understood what man is here on earth for, and so politics should come under the true religion.

However, modern times, especially since Protestantism, have step by step turned this natural order upside down. England is a clear example. Firstly, politics in the persons of Henry VIII and Elizabeth I, etc., virtually stamped out the true religion of God in England. Then within a hundred years the Bank of England was founded, the world’s first central bank, and the English government and people were off in pursuit of economics and the wealth of nations. But having made free enterprise sacrosanct meant freedom for the major money-men to gobble up the minor money-men, and so free enterprise capitalism turned progressively into the finance capitalism now reigning supreme, not only in England but all over the world.

Thus what we can observe today is both politics and economics vainly struggling against this overthrow of their natural priority over finance. To clean up the mess created by the financiers through derivatives in particular, the politicians are resorting to huge bailouts by the State, in a desperate effort to keep money circulating. On the contrary old-fashioned economists are appealing for a return to free enterprise, as though the mass of today’s citizens do not want to be nannied by the State.

But when the most decent of politicians and economists themselves believe in little but money, how can they possibly get their necks out of the noose prepared for them by the Masters of Money? These most likely think – by means of a slipknot around Vatican finances? – that they have the Lord God himself on a leash! Little, literally, do they know. Poor things!

Kyrie eleison.

Giga-Shenanigans

Giga-Shenanigans on October 18, 2008

Without pretending to be any kind of an expert on matters financial or economic, I have for over a year now been following with a keen interest the evolution of the financial crisis that burst upon the global scene in the summer of last year, 2007. One could guess that it would have an impact on all of our daily lives, and also it seemed to be the beginning of that massive reality check which a number of us have long since seen coming.

As to our daily lives, a recent article on CREDIT CARDS made good sense. It said, get rid of them! The crisis consists essentially in mountains of debt, piled up over tens, even hundreds, of years, and which must be paid back or defaulted on. Now credit cards are an all too easy way of running up debt, and the rates of interest to be paid on them are often sheer usury. Unless one is very disciplined in their use, they should be torn apart and thrown away, and debit cards should be used in their place, if necessary. St. Paul says, owe nothing to any man, except charity (Romans XIII, 8). The Old Testament says, the debtor is slave of the creditor (Proverbs, XXII, 7).

As for the grander question of a global reality check, many things are not clear in what is happening, because the hidden paymasters of the media make sure that we never get the complete truth on their television or in their newspapers. What their lies will not twist, their half-truths and omissions will conceal. They are an “operation of error” (II Thess, II, 10).

However, a few things seem clear. Firstly, the recent 700 billion dollar “bailout” in the USA is a mere drop in the bucket compared with the problem to be bailed out – a mountain-range of 1.4 quadrillion (thousand thousand thousand thousand million) dollars’ worth of worthless debt hanging upon “derivatives” (highly complicated financial instruments of many kinds, whose value derives from other assets). Secondly, only by fantasy and greed can so many money-men over the last 20 years have chosen to deal, or let themselves be tricked into dealing, in such worthless paper, that its collapse now threatens the global economy.

But it is absurd to imagine that the world’s top money-men did not foresee the danger. The evidence abounds that they deliberately created the danger, so that to avoid losing all our goodies in a global collapse we would come begging to them to impose on us their global police-state. We have worshipped Mammon. Now Mammon is poised to enslave us.

Kyrie eleison.