William K. Black once again points out the obvious in:

Why Covering up Fraud Losses Impairs Economic Recovery
Part One:
The Unbearable Lightness of the Accounting Cover Up

While Mr. Black does an excellent job in explaining significant aspects of our current situation (and I do recommend you read it for that alone) it still seems somewhat naive to me. Over at the Market Ticker, Karl Denninger, picks up the chorus and makes a few of the implications very explicit.

I recommend you read Mr. Denninger as well. But the guy who puts a different spin on all of this is Eric deCarbonnel of MarketSkeptics.com, who just launched a new blog called The Final Fraud In The US Ponzi Scheme. He plans on charging for access to his big report but you can figure out most of it from what he gives away.

For me, the take away point is that the bankers are in many ways stooges, patsies and fall guys for the government. Just as certain as the big money makers will take the blame, government will slip by most people as the real puppet master behind the impoverishment of the United States people.

The recovery helped the .01% of the United States financial elite avoid making good on its bad bets and it will be the financial elite who will be further vilified in the eyes of the general public. The Obama and Bush administrations are being written off as politicians for hire, mercenary media manipulators and Wall Street whores.

Please notice: in all of this no one in mainstream media mentions government itself.

Government, played as a tag team match with the Republican and Democratic Parties on one side against industrial and agricultural workers on the other, is a rigged game. Government makes the rules and when it looks like they still might lose government changes the rules.

The government recently made enough changes to the rules to make further criticism of the government risky business. Governments come attached to nations, governments are the hidden price of nationhood.

The solution to the problems of government lies in our need to identify with nationality. Once, most people thought it OK to kill for God.

Now we see that it is not OK to kill for God any more, especially if you call God, Allah. But you really cannot get away with killing for God even if you are Christian.

You can only get away with killing in the name of a nation. That is what the Middle East conflict is really all about.

Religions are no longer approved receptacles for our group psychotic decisions. Only nations bare that stamp of approval.

No longer sacrificing children and slaves in the name of an offended God, we now sacrifice children and citizens in the name of an offended national sensibility.

The largest part of our mining, refining, manufacturing and polluting goes not to meet our needs for food and shelter. Most of it goes to satisfy our group psychotic decisions.

The same goes for the financial services industry. And the government runs it all, one way or another.

Until people overcome their need to destroy the earth in order to more efficiently sacrifice their children and fellow adult human beings we have likely prognostications. For one, it seems that an exhaustion of resources combined with reduced livability of the planet as a whole does slow down business as usual.

And slowing down business as usual will mean its end. Eventually.

What replaces it is anyone’s bet. Will the human race finally overcome its need for blood sacrifice in its group psychotic decisions?

Will that mean we can stop destroying the planet, yet?

Will individuals overcome their need to join in group psychotic decisions in the first place? Stay alive for the exciting answer.

And watch out for the fallout from those group psychotic decisions out there all those other people are making.

The research behind a follow up to last month’s Money post grew past expectations. The history of the U.S. since 1934 involves complex and complicated financial creativity that appears challenging to break down in to understandable units.

I will persevere. IMHO, this history represents a significant force bearing upon our society.

Also, a follow up to First Four Steps To An Online Business is in the works. A hint: it all revolves around the capacity to produce content.

But recently, two revelations seem to have hit me in the head simultaneously. They both involve revealing limits of control and expanded freedom.

First, meditation upon the idea that maybe the universe we live in proceeds as a stochastic process, as opposed to a deterministic one, presents new understandings of the universe to me. For a moment, think about how a non-deterministic universe would work.

If one could no longer say, for example, that action “A” always caused consequence “C”, then how would things happen? Well, for a clue, stochastic processes are central to probability theory.

So, you may be able to affect the probable outcomes of a specific situation but not absolutely determine them. You may be able to shift the odds and make one thing or another more or less likely but never be assured of a “sure thing”.

Sound familiar?

1. Nothing for certain,
2. everything ultimately unknown and in a universe proceeding as a stochastic process,
3. unknowable.

How about all the plans of mice and men?

All of a sudden, a world of anomalous events may come out of the closet. And this says nothing about magical thinking.

Correlation was never accepted as causation by dogmatically deterministic mainstream science. But now the entire idea of causation seems out the window.

Activities once condescendingly dismissed as magical thinking have been proven to have a noticeable, but difficult to quantify, affect on situations. Mental causation proves to be a tough sell but mental influence appears to be another issue all together.

Remember, in a stochastic process causation seems out the window. Mental causation becomes a non-issue, misdirection and an example of the illogical straw man fallacy.

In a stochastic process there could never be blame. Nothing and no body could ever be found at fault.

Sure, someone could influence an environment modifying probabilities to favor certain outcomes, even pull the trigger themselves, yet still not be the cause of any specific outcome.

How would it change your life if you understood beyond a shadow of a doubt that everything, even your next breath and the very next beat of your heart, was no more certain than the results of a roll of the dice? Well, needless to say, the theological implications alone are staggering.

I could go on and on about where this particular revelation has taken my thoughts but I need to mention the second revelation. It concerns the psychological dimension and once again challenges the limits of control with the potential for expanded freedom.

I will get around to writing something about that, too, maybe.

Money

Money

Money requires specific understanding. A trap lies waiting by assuming that a common sense understanding of money represents reality.

“There is no evidence of a society or economy that relied primarily on barter.” Marcel Mauss in ‘The Gift: The Form and Reason for Exchange in Archaic Societies’

Instead, non-monetary societies operated largely along the principles of gift economics.

“When barter did occur, it was usually between either complete strangers or potential enemies.” David Graeber in ‘Toward an Anthropological Theory of Value’

Commodities were likely used as the first form of money, such as  gold, silver, copper, rice, salt, peppercorns, large stones, decorated belts, shells, alcohol, cigarettes, cannabis and candy. It seems that money emerged to facilitate exchanges between “complete strangers or potential enemies.”

Commodity Money

is similar to barter in use and commodity money provides a simple and automatic unit of account for the commodity being used as money. A unit of account is a standardized measurement of market value.

A unit of account is a necessary prerequisite for agreements that involve commercial debt. To function as a unit of account, whatever is being used as money must be:

• Divisible into smaller units without loss of value, for example, precious metals can be coined from bars, or melted down into bars again.
• Fungible: one unit or piece must be perceived as equivalent to any other, which is why diamonds, works of art and real estate do not work as money.
• Verifiable as to specific amounts. For example, coins are often made with ridges around the edges, so that any removal of material from the coin (lowering its commodity value) will be easy to detect.

Representative Money

stands in direct and fixed relation to a backing commodity, while not being composed of that commodity itself. Representative money consists of token coins or certificates that can be reliably exchanged for a fixed quantity of a commodity.

Paper representative money or banknotes were first used in China during the Song Dynasty. Banknotes were first issued in Europe by Stockholms Banco in 1661.

Under the gold standard, the value of money derived from gold in bank vaults, not government credit. If, for example, the United States of America government defaulted on its debt under the gold standard, the value of the dollar and much of the financial system would remain intact.

The United States Department of the Treasury seized physical control of the nation’s gold reserves in 1934, with the Gold Reserve Act. All of the United States’ monetary wealth was secretly transferred to vaults under the control of the United States Department of the Treasury.

United States Department of the Treasury is the nation’s largest debtor. The 1934 Gold Reserve Act put the United States Department of the Treasury in control of money.

That is like putting a pedophile in control of childcare when we are the children.

The government benefits three ways from using money debasement to create inflation:

1. Inflation erodes the real value of government debt. The government repays with dollars worth less than the dollars they borrowed, which immediately transfers wealth from investors in government debt directly to the government.
2. Inflation swells federal tax receipts due to “tax bracket creep” as incomes are pushed into higher tax brackets with no increase in purchasing power. Inflationary appreciation of business inventories is taxed as profit.
3. Most importantly, money debasement itself levies a hidden “tax” on holders of money, such as people who keep savings accounts.

The 1934 Gold Reserve Act revalued gold (= debased the dollar) from $20.67 to $35.00 per ounce and accomplished all of the above along with much, much more. The United States Department of the Treasury took the control of the nation’s gold and spent it, leaving nothing but United States Department of the Treasury IOU’s backing the dollar.

“To act as a store of value, a money must be able to be reliably saved, stored, and retrieved – and be predictably usable as a medium of exchange when it is retrieved. The value of the money must also remain stable over time. In that sense, inflation by reducing the value of money, diminishes the ability of the money to function as a store of value.” N. Gregory Mankiw (2007) in “2″ Macroeconomics (6th ed.)

The role of money as a store of value that requires holding it without spending conflicts with its role as a medium of exchange that requires it to circulate. Apparently, the United States government encourages money circulation by continuously practicing money debasement.

The pain of taxes – increases - even as Congress declares tax cuts. As long as politicians maintain central control of the money supply, we are all impoverished.

In this environment one must either make investments that return a higher yield than the rate of government money debasement or immediately purchase hard goods known to be valued widely by other people. Any other strategy will, over time, devalue what you were paid for your work to make you, for any practical accounting purposes, a slave.

An example of making a high yield investment would be investing in your own on line business that generates an on going cash flow. Examples of widely valued hard goods include quality tools and firearms.

Fiat Money

or fiat currency is money whose value is not derived from any intrinsic value or guarantee that it can be converted into a commodity. It has no value except by government order or fiat.

The government declares the fiat currency (contemporary notes from the Federal Reserve System) to be legal tender, making it unlawful to not accept the fiat currency as a means of repayment for all debts, public and private.

Commercial Bank Money

is created through fractional-reserve banking, the banking practice where banks keep only a fraction of their deposits in reserve and invest the remainder. Commercial bank money differs from commodity money and fiat money in two ways

1. it is non-physical, its existence is only reflected in the account ledgers of banks and other financial institutions
2. risk that the deposit cannot be reclaimed upon demand if, for example, the financial institution becomes insolvent because demands upon deposits exceeds both the reserve and the value of the investments

The worthless home mortgages now held at fictional values make all the major banks, along with most of the smaller banks, technically insolvent and the FDIC does not have enough to cover the difference. This was all perpetrated with government oversight, aided and abetted by legislating away regulations.

A few insiders (at Goldman Sachs it seems) well understood the inevitable consequences, transferred their risk to unregulated financial instruments and then sold them to mutual funds and sovereign governments around the world including Portugal, Ireland, Italy, Greece, Spain and the United States of America. This was all perpetrated with government oversight, aided and abetted by refusing to legislate regulations.

Banksters will be blamed but make no mistake, this was a government operation from illicit beginning to the revolting end. The banks, by themselves, never could have pulled this off while governments have proved capable of debasing money without banks throughout history.

from the
United States Department of Labor
Bureau of Labor Statistics
Productivity and Costs, First Quarter 2010, Revised

“Nonfarm business sector labor productivity increased at a 2.8 percent annual rate during the first quarter of 2010, the U.S. Bureau of Labor Statistics reported today, with output rising 4.0 percent and hours rising 1.1 percent.”

Good for corporations and what about workers?

“Unit labor costs in nonfarm businesses fell 1.3 percent in the first quarter of 2010, as the 2.8 percent increase in productivity outpaced a 1.5 percent gain in hourly compensation. Unit labor costs fell 4.2 percent over the last four quarters, as the 6.1 percent increase in output per hour over that period outpaced a 1.6 percent rise in hourly compensation.”

Work harder, get paid less.

The pay you receive is what you spend, that is the economy.  If you are paid less, then you are able to buy less with your wages, that is fundamental.

This makes short term corporate profits look good, but with less income you cannot buy what others produce and in the long term this results in corporations either having to

1. cut prices (deflation) which damages profitability or
2. end up with unsold inventory (priced above the cost of production) or
3. fail.

The government monetary policy is not sustainable. In fact, the government monetary policy appears to have hit its limits.

The only thing now keeping the government monetary policy going is the still (apparently) wide spread belief that other people will continue to accept the United States dollar in trade for goods and services. In reality, the last person to accept it, loses.

Get your money working or get it into durable hard goods. A thoughtful balance between the two would appear a wise decision.

“You may be a construction worker working on a home,
“You may be living in a mansion or you might live in a dome,
“You might own guns and you might even own tanks,
“You might be somebody’s landlord, you might even own banks

“But you’re gonna have to serve somebody, yes indeed
“You’re gonna have to serve somebody,
“Well, it may be the devil or it may be the Lord
“But you’re gonna have to serve somebody.”

from Gotta Serve Somebody by Bob Dylan

The United States government spends 11% of the GDP (gross domestic product) beyond what they obtain through actual taxation by borrowing it and blowing it.  If they stop that, the GDP instantly contracts by at least $1.5 trillion and all the economists scream

“DEPRESSION!”

While all across America people seem to embrace the ill conceived concept of

“I got mine, now screw you.”

People “got theirs” by ignoring the ugly truth that most of what The Federal Government does is unconstitutional.

The handouts and profitable insider contracts from the The Department of Education and the Department of Agriculture, Medicare, Medicaid, Social Security – all unconstitutional.  The government’s policy of spending counterfeit money to buy off blocks of voters created an unsustainable system.

These corrupt United States government agents and their business partners in crime built this unsustainable system on undeliverable promises. The massive efforts to obscure reality while perpetuating the frauds inevitably led to the debasement of money, all money, on a global basis.

Debasement lowers the value of money, causing inflation.

The widespread unnecessary pain, suffering and death afflicted upon virtually all peoples caused by callous efforts attempting to satisfy insatiable greed betray a disturbing lack of morality. No one acquired the resources and knowledge required to pull off these multinational scams and remained ignorant of the catastrophic human cost.

These corrupt United States government agents, their constituents and their business partners in crime ritually observe, in fact if not in name, the worship of:

The Lord Of Battles

A god that demands horrific human and animal sacrifices. A god of war and gore, pure and simple, invoked as

• El-Shaddai of the Jews
• Ra-Hoor-Khu-It of the Egyptians
• Ares of the Greeks
• Mars of the Romans
• Wotan of the Teutons
• Him Who Is Not to be Named

Holy war and ritual bloodshed, the earliest and truest form of faith, religion and worship. This is the god promoted by all fundamental religious groups.

This god tells us humanity is trapped in a universe manipulated by anti-human forces.

We appear enslaved by a master who is our nightmare and herds us and butchers us like sheep. The great shepherd, the “keeper of the flock”, turns out to be a bloodthirsty demon.

Those who worship this god get government agents like this:

”If you tell a lie big enough and keep repeating it, people will eventually come to believe it. The lie can be maintained only for such time as the State can shield the people from the political, economic, and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State.”
Joseph Goebbels, Adolph Hitler’s Minister of Public Enlightenment and Propaganda

The Hidden Variable

• Implicate Order for David Bohm
• Information for Jack Sarfatti
• Consciousness for Evan Harris Walker and Nick Herbert
• God of (Baruch) Spinoza for Albert Einstein
• Deus sive Natura for Baruch Spinoza
• The Odic or Odylic force, Od, Odyle, Önd, Odes or Odems, for Baron Karl Ludwig Freiherr von Reichenbach of the Vitalists
• Qi
• Orgone
• The Astral Plane
• and many others

If personified, this god encourages us to

1. Be More Tolerant
2. Love Each Other More
3. Do Something Concrete and Practical About Suffering and Injustice

Which all seem well summed up by the Golden Rule.

Now, we have the Gulf Oil Disaster.

Now, we have Israel shooting up pacifists in International waters.

Now, I am through commenting on this type of thing and moving on to other things. The willingness of people to allow this all to pass indicates how small of a minority I belong to regarding my point of view.

From here on out, I will write about setting up business on the Internet. An understanding of raw material economics seems essential to orientating oneself in today’s financial environment.

Those who worship the Lord of Battles champion monopolies and relentlessly seek to take product from the producers. Making your product directly available to consumers seems both necessary and highly challenging.

The alternative is slavery in one form or another, slavery to those who worship the Lord of Battles. Ultimately, it is up to you whose altar your product graces.

The conditions for the next United States Civil War were created by the victors of the first United States Civil War, the corporate elite and their political agents. At issue are rights established with The Declaration Of Independence.

The Declaration Of Independence is truly a magnificent document much superior to the United States Constitution, a severely flawed compromise in comparison that ultimately legalized the corporate take-over of the United States Of America. The key phrase of The Declaration Of Independence is

“That whenever any Form of Government becomes destructive of these ends,
it is the Right of the People to alter or to abolish it,
and to institute new Government”

“These ends,” being, of course, “to secure these rights,” which are “endowed by their Creator,” making them “certain unalienable Rights, among these being Life, Liberty and the pursuit of Happiness.” It was specifically stated

“That, Governments are instituted among Men,
deriving their just powers from the consent of the governed.”

The government established with respect to The Declaration Of Independence was terminated in 1861 when 11 states exercised their rights, declared their secession from the United States and formed the Confederate States of America, also known as “the Confederacy“. Both Buchanan’s outgoing administration and Lincoln’s incoming administration rejected the legality of secession, considering it rebellion.

Rebellion is only possible in the face of the arbitrary will of another person.

Slavery consists of being “subject to the incessant, uncertain, arbitrary will of another man.”

~ John Locke, Second Treatise of Civil Government

The rejection of the legality of secession was also the rejection of the legality of The Declaration Of Independence. The first Civil War was foremost a war to unite the states under a single government controlled by the corporate elite with the ending of slavery a political weapon used more to keep Great Britain out of it than any high and mighty purpose.

The African-American slaves were “freed” to live under the corporate controlled government instituted in defiance of The Declaration Of Independence. Previously, the United States government had existed De jure and since then it has existed De facto.

Without the freedom to exercise the Right to alter government or abolish it and institute a new one, everyone finds themselves to be “subject to the incessant, uncertain, arbitrary will of another man.” Without the freedom to exercise the Right to alter government or abolish it and institute a new one, everyone finds themselves to be a De facto slave.

The De facto government of The United States Of America passed laws legitimizing itself. The De facto government of The United States Of America has been on a global rampage ever since.

1867

Midway annexed

1890

Wounded Knee Massacre

United States Census Bureau announced the disappearance of a contiguous frontier line for the first time in United States history

1893

The Kingdom of Hawaii was under the rule of a sugar plantation cartel, which in 1887, with the full support of the United States Of America, instituted a constitution that eliminated  the possibility of native Hawaiian self-government.

This constitution became known as the “Bayonet Constitution” because it was backed with the overt threat of military action, “gave all Americans and Europeans, even non-citizens, the right to vote” while denying it to the majority population.

The author of the Bayonet Constitution was attorney Lorrin Thurston, an agent of the sugar cartel. Thurston imposed himself on the Hawaiian government as its interior minister then used that position to plot the overthrow of the kingdom, which was consummated in January 1893.

1898

Hawaii annexed

1899

After smashing the forces of Spain the United States of America annexed Puerto Rico, Guam, and the Philippines. This meant fighting the Republic of the Philippines, a conflict that became a three-year-long counter-insurgency war.

1900

American Samoa annexed

1903

“Big Stick” diplomacy begins

U.S. instigated “uprising” separates Panama from Columbia and then Panama leases canal zone to U.S.

1917

U.S. declares war against Germany

Virgin Islands annexed

1941

U.S. declares war against Japan

1947

Trust Territory of the Pacific Islands, captured from Japan, administered by U.S.

1948

NATO formed, the Cold War begins and the Bill of Rights severely compromised to combat the “Communist Menace”

1950

Korean War divides country and installs U.S. puppet government in power to this day

1954-1962

Congress terminates more than 60 Native American tribes as political units

1955-1975

Vietnam War divides country and installs U.S. puppet government

1959

Hawaii admitted as a state to escape international pressure to restore Hawaiian autonomy

1980

“War on Drugs” begins, erodes Bill of Rights, jails 1/5 of young African-American men and continues to this day

1991

Gulf War is first U.S. reduction of a regional power

2001

“War on Terror” begins, negates the Bill of Rights and continues to this day

invasion of Afghanistan

2003

invasion of Iraq

2008

Global financial crisis and recession as working people (producers) are forced to bail out corrupt bankers and their government enablers (expropriators)

There are many other examples and I invite you to list yours in the comments. The key elements remain the same in example after example as resources are stolen, key individuals deceived and entire peoples are first economically debased and then killed off by introduced diseases, malnutrition, starvation and finally military action as a coup de grace.

“What’s happening in my country is also happening in your country…. You don’t even know it, but you’re the Indians of the 21^st Century, and that’s very sad.”

~ Russell Means, Indian Activist and Facilitator of the newly created Independent Republic of Lakota

The pattern set by the post-1861 De facto United States government regarding its treatment of indigenous North American people was

• repeated around the world by the United States government and continues to this day
• studied and admired by Adolf Hitler who repeated the pattern in his treatment of Gypsies, Jews and intellectuals
• repeated by Zionist Israelis in their treatment of the Palestinians

and is now being repeated upon the domestic population of the United States Of America.

So what is to be done?

You could quit. Quit being complicit to everything wrong that is going on.

Quit going along with it all. Simply stop helping it all happen, wherever you can.

Object to what is going on. Stop funding the system.

Stop working for psychopaths. Quit your jobs and go do something else to keep yourself alive.

Go do anything else. Just do not keep supporting the system.

Your life will become more challenging when you face up to your true responsibilities in life. Your life will also become immensely more satisfying.

“Each gesture of this sort, taken individually, seems as evanescent as a snowflake. But an avalanche begins as nothing more than a particularly large gathering of individual snowflakes that somehow found their way to the high ground.”

- William Norman Grigg February 26, 2010

The Next Civil War will be between producers, those who work to earn their own way and prosper through their own efforts, and expropriators, those who survive by taking from others with governments as their agents.

You do not want to be in the middle of this!

Already many United States citizens view government administrations that enrich their business cronies at citizen expense not as opponents but as enemies. The escalation of entitlements is not sustainable and when it inevitably ends so will any remaining public support.

Until that time, productive people who take responsibility for their own lives and well-being are seeing the fruits of their labor taken from them along with their independence, freedom and rights, endowed by their Creator, certain unalienable Rights, among these being Life, Liberty and the pursuit of Happiness.

Being enmeshed in the system increases your risk of becoming a victim. Do not be a victim.