November 5, 2014
(Updated June 4, 2016)
Capitalism Needs Higher, Market Based, Interest Rates; Mercantilism Needs Government Sanctioned Low Interest Rates
The Federal Reserve confirms economic sabotage when it admits that in response to the “…financial crisis that began in 2007…”1 it reduced “…the level of short-term interest rates to near zero. In addition, to reduce longer-term interest rates and thus provide further support for the U.S. economy, the Federal Reserve purchased large quantities of longer-term Treasury securities and longer-term securities...”2 With interest on savings abysmally low, there are no available monies for net (new) long-term, highly capitalized, productive investments that depend on loans, since the expected return on the loan - based on the central bank interest rate - is too low, hence the stall mode economy of the United States, and the United Kingdom,3 Japan4 and the nations of the Eurozone,5 whose central banks also follow net (new) investment-retarding low interest rate policies.
Of course, the Federal Reserve doesn’t mention that it is the Federal Reserve itself that causes financial crises, since entrepreneurs are always on the lookout to profit from prices that are too high or too low.6
In an economy not encumbered by a central bank's interventionist policies (or any other government institution that mimics a central bank’s interventionist policies, such as the Department of the Treasury pre-Federal Reserve), when consumers want greater supplies of goods in the future they (1) save more; and (2) consume less. The monies that would have gone towards consumption instead goes towards investment. The prices of consumption goods decline, while the prices of investment goods rise proportionately, maintaining a stable price level. Then when the new consumption goods come on the market, the general price level falls, which is called currency appreciation; one can buy more consumption goods with the same currency unit.
When a central bank increases the money supply to stimulate production, (1) there is no curtailment of consumption spending by consumers; and (2) there is no demand by consumers for new consumption goods. This leads to (1) rising prices (inflation); and (2) the inevitable crash of the economy when consumption items are delivered to the market but go unsold.
Credit expansion diverts capital away from its must urgent uses. As the central bank expands credit, it lowers the rate of interest, that lower rate expressing a central bank dictation to divert capital from capital intensive (long term) productive enterprises that consumers demand, towards less capital intensive (shorter term) investment goods that are not demanded by consumers.
Interest is a function of time
In the barter economy savings = less time spent in acquiring goods for immediate consumption, so that that time can be spent creating the [capital] tools that will increase consumption in the future. For example, if a hunter-gatherer community constructed a new fishing tool (let's say a fishing net for capturing greater amounts of fish per attempt, replacing the more time consuming and less productive activity of spearing fish) it would need to spend less time foraging for food, transferring that saved time to the construction of the new fishing tool instead. Less time spent foraging for food (meaning there will be less present consumption of food) = saved time; and that saved time is transferred to the production of the new fishing net = investment/greater consumption in the future. Thanks to a sacrifice in present consumption in order to build the fishing net, our barter community can increase its future consumption of fish, resulting in a net increase of food intake, even when one factors in the time spent in repairing the fishing net, called depreciation costs in the modern economy.
If a central bank were to magically appear in our hunter-gatherer community and forced the community to build a table and chairs instead of the more urgently needed fishing net, then (1) the productivity of the community would be diminished by less consumption of food; though (2) the community would have a useless table and chairs.
Increasing the amount of money for savings is the barter economy's equivalent of saved time, and the lure for increasing one's money into savings accounts is interest. In the hunter-gatherer example above, the lure is increasing the future supply of fish. As the illustration above makes crystal clear, central bank low interest rate policies divert capital away from new productive investments towards consumption-based malinvestments.
The saboteurs within the Federal Reserve, and within the Federal government that allows for the economic sabotage, are the ideological descendants of those who partook in the failed socialist inspired and controlled pan-European revolutions that swept the continent in 1848.7 That failure thought Marxists and socialists a powerful lesson, that lesson being they couldn’t win overtly, so they adopted the tactic of infiltration of the West’s political parties/institutions.
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1. Why are interest rates being kept at a low level?
2. Ibid.
3. Bank of England says keep interest rates low for now
4. In chain reaction, interest rates fall in Europe, Japan, US
5. Ibid.
6. America's Great Depression (see Chapter 1, The Positive Theory of the Cycle)
7. Revolutions of 1848
"...Marx and Engels had changed their tactics as a result of the experience of the 1848 revolution. The vacillation and weakness of the bourgeoisie then, meant that Marx and Engels had finally abandoned the struggle for a simply democratic revolution, in favour of a permanent one, that outgrew the limits of the classical bourgeois revolution to begin the transition to socialism." --
Witnesses to Permanent Revolution: The Documentary Record
In fact, the change in tactics was inclusive of infiltration of bourgeoisie institutions, culminating, most recently, in not one political party in the West demanding verification of the collapse of the USSR, and the media's failure to alert our attention to this fact, including the alternative media. When determining whether the "former" USSR is complying with arms control treaties, what does the United States do to confirm compliance? Right, the United States sends into the "former" USSR investigative teams to VERIFY compliance, yet when it's the fate of the West that's at stake should the collapse of the USSR be a ruse, what does the United States do to confirm the collapse? Nothing!
It gets worse--the "freed" Soviets and West also never (1) de-Communized the Soviet Armed Forces of its Communist Party officer corps, which was 90% officered by Communist Party members; and (2) arrested and detained the 6-million vigilantes that assisted the Soviet Union's Ministry of the Interior and police control the populations of the larger cities during the period of "Perestroika" (1986-1991)!
The fraudulent "collapse" of the USSR (and East Bloc) couldn't have been pulled off until both political parties in the United States (and political parties elsewhere in the West) were co-opted by Moscow & Allies, which explains why verification of the “collapse” was never undertaken by the West, such verification being (1) a natural administrative procedure (since the USSR wasn’t occupied by Western military forces); and (2) necessary for the survival of the West. Recall President Reagan's favorite phrase, "Trust, but verify".
There can be no collapse of the USSR (or East Bloc nations) without...
Verification, De-Communization and De-mobilization.
The West never verified the collapse of the USSR because no collapse occurred, since if a real collapse had occurred the West would have verified it, since the survival of the West depends on verification. Conversely, this proves that the political parties of the West were co-opted by Marxists long before the fraudulent collapse of the USSR, since the survival of the West depends on verification.
The above means that the so-called "War on Terror" is a USSR & Allies-tasked operation being carried out by the co-opted governments of the West, the purpose being to (1) destroy the prominence of the West in the eyes of the world, where the West is seen (i) invading nations without cause; (ii) causing chaos around the globe; and (iii) killing over one-million civilians and boasting of torture; (2) close off non-Russian supplies of oil for export, thereby increasing the price of oil, the higher price allowing oil exporting Russia to maintain economic stability while she modernizes and increases her military forces; (3) destroy the United States Armed Forces via the never-ending "War on Terror"; the ultimate purpose of the aforementioned to (4) bring about the demise of the United States in the world, opening up a political void to be filled by a new pan-national entity composed of Europe and Russia (replacing the European Union), a union “From the Atlantic to Vladivostok"; which will (5) see the end of NATO.
Now you know how Bolshevik Russia survived in 1917; how the West "lost" China to the Communists in 1949; why the Eisenhower administration turned a deaf ear to the anti-Communist Hungarian uprising in 1956; why the Eisenhower administration in 1959 was indifferent to the Castro brothers' Communist fidelity, actually used the CIA to overthrow the Batista government; why the Nixon administration abandoned Taiwan for Communist China, and signed treaties/provided economic aid to the USSR; why the Nixon administration refused to tell the American People that over 50% of North Vietnamese NVA regiments were actually Chinese People's Liberation Army soldiers (attired in NVA uniforms), thereby (1) ensuring the Vietnam War would be lost; (2) destroying the prominence of the United States abroad and at home; (3) breeding distrust between the American people and their government; and (4) securing Communist victories in Southeast Asia. Working in the background within the political parties of the United States and Great Britain were Marxist agents doing their best to (1) ensure the survival of Communist nations when they popped up; and (2) sabotage any policies that would bring down a Communist nation. That's why after the fake collapses of the East Bloc nations and USSR there was no mandatory Western verification process to ensure the Communists weren't still in control.
Of course, the Federal Reserve doesn’t mention that it is the Federal Reserve itself that causes financial crises, since entrepreneurs are always on the lookout to profit from prices that are too high or too low.6
In an economy not encumbered by a central bank's interventionist policies (or any other government institution that mimics a central bank’s interventionist policies, such as the Department of the Treasury pre-Federal Reserve), when consumers want greater supplies of goods in the future they (1) save more; and (2) consume less. The monies that would have gone towards consumption instead goes towards investment. The prices of consumption goods decline, while the prices of investment goods rise proportionately, maintaining a stable price level. Then when the new consumption goods come on the market, the general price level falls, which is called currency appreciation; one can buy more consumption goods with the same currency unit.
When a central bank increases the money supply to stimulate production, (1) there is no curtailment of consumption spending by consumers; and (2) there is no demand by consumers for new consumption goods. This leads to (1) rising prices (inflation); and (2) the inevitable crash of the economy when consumption items are delivered to the market but go unsold.
Credit expansion diverts capital away from its must urgent uses. As the central bank expands credit, it lowers the rate of interest, that lower rate expressing a central bank dictation to divert capital from capital intensive (long term) productive enterprises that consumers demand, towards less capital intensive (shorter term) investment goods that are not demanded by consumers.
Interest is a function of time
In the barter economy savings = less time spent in acquiring goods for immediate consumption, so that that time can be spent creating the [capital] tools that will increase consumption in the future. For example, if a hunter-gatherer community constructed a new fishing tool (let's say a fishing net for capturing greater amounts of fish per attempt, replacing the more time consuming and less productive activity of spearing fish) it would need to spend less time foraging for food, transferring that saved time to the construction of the new fishing tool instead. Less time spent foraging for food (meaning there will be less present consumption of food) = saved time; and that saved time is transferred to the production of the new fishing net = investment/greater consumption in the future. Thanks to a sacrifice in present consumption in order to build the fishing net, our barter community can increase its future consumption of fish, resulting in a net increase of food intake, even when one factors in the time spent in repairing the fishing net, called depreciation costs in the modern economy.
If a central bank were to magically appear in our hunter-gatherer community and forced the community to build a table and chairs instead of the more urgently needed fishing net, then (1) the productivity of the community would be diminished by less consumption of food; though (2) the community would have a useless table and chairs.
Increasing the amount of money for savings is the barter economy's equivalent of saved time, and the lure for increasing one's money into savings accounts is interest. In the hunter-gatherer example above, the lure is increasing the future supply of fish. As the illustration above makes crystal clear, central bank low interest rate policies divert capital away from new productive investments towards consumption-based malinvestments.
The saboteurs within the Federal Reserve, and within the Federal government that allows for the economic sabotage, are the ideological descendants of those who partook in the failed socialist inspired and controlled pan-European revolutions that swept the continent in 1848.7 That failure thought Marxists and socialists a powerful lesson, that lesson being they couldn’t win overtly, so they adopted the tactic of infiltration of the West’s political parties/institutions.
-------------------------------------------------------------------------------------
1. Why are interest rates being kept at a low level?
2. Ibid.
3. Bank of England says keep interest rates low for now
4. In chain reaction, interest rates fall in Europe, Japan, US
5. Ibid.
6. America's Great Depression (see Chapter 1, The Positive Theory of the Cycle)
7. Revolutions of 1848
"...Marx and Engels had changed their tactics as a result of the experience of the 1848 revolution. The vacillation and weakness of the bourgeoisie then, meant that Marx and Engels had finally abandoned the struggle for a simply democratic revolution, in favour of a permanent one, that outgrew the limits of the classical bourgeois revolution to begin the transition to socialism." --
Witnesses to Permanent Revolution: The Documentary Record
In fact, the change in tactics was inclusive of infiltration of bourgeoisie institutions, culminating, most recently, in not one political party in the West demanding verification of the collapse of the USSR, and the media's failure to alert our attention to this fact, including the alternative media. When determining whether the "former" USSR is complying with arms control treaties, what does the United States do to confirm compliance? Right, the United States sends into the "former" USSR investigative teams to VERIFY compliance, yet when it's the fate of the West that's at stake should the collapse of the USSR be a ruse, what does the United States do to confirm the collapse? Nothing!
It gets worse--the "freed" Soviets and West also never (1) de-Communized the Soviet Armed Forces of its Communist Party officer corps, which was 90% officered by Communist Party members; and (2) arrested and detained the 6-million vigilantes that assisted the Soviet Union's Ministry of the Interior and police control the populations of the larger cities during the period of "Perestroika" (1986-1991)!
The fraudulent "collapse" of the USSR (and East Bloc) couldn't have been pulled off until both political parties in the United States (and political parties elsewhere in the West) were co-opted by Moscow & Allies, which explains why verification of the “collapse” was never undertaken by the West, such verification being (1) a natural administrative procedure (since the USSR wasn’t occupied by Western military forces); and (2) necessary for the survival of the West. Recall President Reagan's favorite phrase, "Trust, but verify".
There can be no collapse of the USSR (or East Bloc nations) without...
Verification, De-Communization and De-mobilization.
The West never verified the collapse of the USSR because no collapse occurred, since if a real collapse had occurred the West would have verified it, since the survival of the West depends on verification. Conversely, this proves that the political parties of the West were co-opted by Marxists long before the fraudulent collapse of the USSR, since the survival of the West depends on verification.
The above means that the so-called "War on Terror" is a USSR & Allies-tasked operation being carried out by the co-opted governments of the West, the purpose being to (1) destroy the prominence of the West in the eyes of the world, where the West is seen (i) invading nations without cause; (ii) causing chaos around the globe; and (iii) killing over one-million civilians and boasting of torture; (2) close off non-Russian supplies of oil for export, thereby increasing the price of oil, the higher price allowing oil exporting Russia to maintain economic stability while she modernizes and increases her military forces; (3) destroy the United States Armed Forces via the never-ending "War on Terror"; the ultimate purpose of the aforementioned to (4) bring about the demise of the United States in the world, opening up a political void to be filled by a new pan-national entity composed of Europe and Russia (replacing the European Union), a union “From the Atlantic to Vladivostok"; which will (5) see the end of NATO.
Now you know how Bolshevik Russia survived in 1917; how the West "lost" China to the Communists in 1949; why the Eisenhower administration turned a deaf ear to the anti-Communist Hungarian uprising in 1956; why the Eisenhower administration in 1959 was indifferent to the Castro brothers' Communist fidelity, actually used the CIA to overthrow the Batista government; why the Nixon administration abandoned Taiwan for Communist China, and signed treaties/provided economic aid to the USSR; why the Nixon administration refused to tell the American People that over 50% of North Vietnamese NVA regiments were actually Chinese People's Liberation Army soldiers (attired in NVA uniforms), thereby (1) ensuring the Vietnam War would be lost; (2) destroying the prominence of the United States abroad and at home; (3) breeding distrust between the American people and their government; and (4) securing Communist victories in Southeast Asia. Working in the background within the political parties of the United States and Great Britain were Marxist agents doing their best to (1) ensure the survival of Communist nations when they popped up; and (2) sabotage any policies that would bring down a Communist nation. That's why after the fake collapses of the East Bloc nations and USSR there was no mandatory Western verification process to ensure the Communists weren't still in control.
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