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AGelbert

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Re: Money
« Reply #165 on: May 04, 2017, 05:26:06 pm »
Quote
Wampum, ke`kwuk, squau-tho-won; all are Algonquian words for shell beads or string of shell beads. Wampumpeage is a Narragansett word for "white beads strung". Throughout northeastern America, wampum was used for jewelry, gifts, communication, historical record of important events, religious ceremonies, and trade. It was the earliest form of currency known in North America. Its value was derived from the difficulty involved in producing the cylindrical bead from both Quahog and Whelk, and the scarcity of suitable shells. White beads were made from Whelk, purple-blackish from Quahog.

The beads were produced from the inner spiral of the shells. The spiral or column must be thick enough to withstand grinding, shaping and drilling. The shells were collected along the coastal shores during the summer, and worked in the winter months. The inner spirals were cut into cylinders measuring 1/4 inch long by 1/8 inch diameter. Each bead was then smoothed through grinding, polished, drilled, and finally strung on hemp fibers or sinew. It was difficult, tedious, and time consuming work. The proportionate scarcity of the Quahog dark beads doubled their value to that of white wampum.

http://www.mohicanpress.com/mo08017.html

She sells seashells by the seashore. If she sells seashells by the seashore, how many seashore shells does she sell? This old tongue twisting pronunciation trainer underscores step one in the manufacture of Wampum. You needed a supply of a certain, special and very attractive type of Calcium Carbonate, which was limited in quantities, to begin to do WORK=ENERGY INPUT plus some ARTISTIC CREATIVITY on the seashells in order to produce a CURRENCY that was BOTH a medium of exchange AND a store of value.   

Wampum

In a barter economy, the transfer of goods and services from one party to another is hindered by the lack of liquidity of say, an animal, a bear skin or whatever. The lack of a medium of exchange that can be subdivided into small enough units for both parties to make up perceived different values in a barter transaction is the need that fosters the creation of "money" in the first place.

Wampum was initially a form of artistic expression as well as a form of communication (it was a store of value as jewelry and venerable truth through news and agreements).

However, as the quantity gradually increased and most natives agreed more or less on its value, wampum began providing the liquidity that a barter economy could not.

Consequently the Native Americans along the eastern area of North Amerca gradually adopted wampum as a currency in addition to valuing its beauty (jewelry = bling). The Natives that lived along the beach had an edge on those inland because of easy access to the raw materials.

Wampum beads  Photo: Stephen Lang (Source: AINS/NMAI)

Quote
With the influx of more Europeans in the 17th century, notably the Dutch and English, metal tools became widely available to Indians in the east.

Among these tools were slender metal drills which greatly facilitated the production of wampum. These new tools enabled the Indians to produce uniform beads more quickly and with greater ease.

Applying basic economic principles to wampum as a commodity/currency in the 17th century, it might be assumed that wampum decreased in value as its production was sped up.

On the contrary, its value remained stable.

Again applying the basic economic rule of supply and demand, though the Europeans brought tools that helped to increase wampum production, they also balanced their contribution with an increased demand for the shell beads.

http://www.mohicanpress.com/mo08017.html

Wampum is pretty and, until the Europeans showed up with metal hand tools, a good store of wealth because the amount of energy=work it took to make it as well as the amount of shells available  limited the amount of wampum in circulation.

But those metal thingamajigs the white devils brought made it EASY (LESS TIME & ENERGY=WORK) to make lots of pretty wampum (metal hand drills). This new wampum looked just as good or better than the older stuff made with less sophisticated (non-metal) tools.

At first everybody prospered. There was more wampum, and contrary to standard economic theory that when you increase the currency in circulation, you get inflation, this did not happen right away. Everybody, including the white devils  , were happy with the wampum economy.

But time passed and things changed.

Quote
As the New England colonists adopted wampum as their standard currency, incidents of fraud (wampum counterfeit) increased.

Both Indian and Englishman were known to pass off inferior or fraudulent wampum to unsuspecting colonials.


In time, regulation and a standardized measure of wampum strands was implemented. A fathom (6 feet) was the most usual measurement and instantly denoted a specific monetary value measured against English shillings, pence, pounds, and so forth.

The fact that legislation was introduced, regulations regarding wampum manufacture were set down, penalties for counterfeit or inferior quality wampum trading were harsh, and in some colonies the rejection of dark wampum for only white (though its value was greater, it was easier to counterfeit by way of dye), all illustrate how dependent the colonists and Indians were on these shell beads.

There was some fluctuation in wampum's value, as is always the case with currency, but by and large, it remained uniformly acceptable and desirable to nearly the end of the 17th century in the colonies and into the 18th century along the frontiers.

Its worth, however, was tenable. Wampum was only good as long as the Indians prized it. If or when that was no longer the case, an economic crash could occur throughout the English colonies that would have had serious consequences in New England, and subsequently, in the mother country as well.

It was this realization, along with the declining demand for fur, that moved the New Englanders to gradually phase out wampum as a currency standard. With silver from the West Indies beginning to circulate in North America, wampum was slowly being replaced by that universally valued commodity, metal coinage.

http://www.mohicanpress.com/mo08017.html

Two things happened:

1)
The colonists, who had hitherto absorbed the wampum glut by their demand for the beads, lost interest in wampum partly because they didn't require as many furs (wampum was the currency the colonists used to buy pelts). Wampum lost value as a medium of exchange as the increase in available currency took its toll.

Counterfeiting exacerbated the problem of undermining the medium of exchange value of the currency. A given piece of wampum lost purchasing power because of wampum glut AND a competing currency of coinage.

2)
The artistic value part of wampum as a store of wealth suffered as well. Any philatelist can tell you that old stamps get their "value", not from a pretty painting on the stamp, but MAINLY from their scarcity.

This was depressing. Imagine all those hours spent painstakingly making wampum and that neighboring squaw that is all thumbs can suddenly make several times as much as you can just because she has a white devil metal thingamajig to goose production! And now the white devils don't want them as much as they used to either.  :P  :(

But as you can see below, despite its disappearance as a currency, wampum survives to this day as a product of patient craftsmanship, artistry and historical communication.

Quote
It is interesting, if not ironic, to note that wampum remains valuable even today. A single wampum bead made from Quahog or Whelk, manufactured in New England coastal areas can cost up to $10! Overseas wampum is less expensive, but still demands a good price. Wampum, the first currency of the new world, has survived as a desired item long enough to be considered a classic.

But it would never regain its position as a medium of exchange/currency.

Two Row Wampum Treaty from Elder, Yvonne Thomas.pic.twitter.com/EtjkqHsG9o The patient artistry and symbolism crafted in this wampum is an example of how wampum is a store of value. 

Quote
Celebrating 400 Years of the Two Row Wampum

Vanessa Parker

May 25, 2013

In an effort to maintain a separate and peaceful coexistence, an agreement was made 400 years ago between a group of Haudenosaunee nations and the incoming European settlers who were rapidly arriving. That agreement remains valid today.

The Two Row Wampum was made with strings of wampum, or crushed shells, which were made into purple and white beads threaded onto strings, forming a belt.

]The white beads, located outside of two large purple rows of beads, represent the truth.

The purple beads are separated into two rows, one representing the canoe of the Haudenosaunee, the other representing the sailboat of the incoming Europeans.

Each row represents the separate cultures, traditions, governments and religions.

In between the purple rows run three rows of white beads. These represent peace, friendship and maintaining a sense of equality forever.
full article here:

http://indiancountrytodaymedianetwork.com/2013/05/25/celebrating-400-years-two-row-wampum-149469

What lessons can we take from the above Native American experience?

1) Money is created in order to ease the transfer of goods and services. This medium of exchange normally has the following qualities:

A. Liquidity

B. Durability

C. Portability

D. Agreed upon value per unit


2) The ENERGY it takes to create said money is directly proportional to a unit of said money as a store of value.



The extreme situation, never reached by wampum because it always took SOME skill and energy to make, is FIAT currency where it has ZERO value as a store of wealth.

The case of the US dollar is BELOW ZERO as a store of wealth because, in addition to it being fiat, the supply is growing absent any energy input whatsoever. So the dollar loses value as it sits from Fed  inflation (counterfeiting). Legal Tender Laws force the citizenry to run around trying to preserve some value in a currency that shrinks in value year after year. Many of these value chasers go for PMs, paintings, land, antique cars, Early American antique furniture, etc. They are all looking for something that meets the criteria of liquidity, durability, portability and agreed upon value per unit to a greater or lesser degree.

3) Beyond the basic biochemical needs of proper nutrition, shelter and health, human culture places a great deal of value on tangibles and intangibles outside the default requirements of human life.



Humans will always value creativity and imaginative and useful innovations that bring beauty, comfort and utility to our lives as STORES OF VALUE.

What price can you place on a song? What value does a set of verses have that took a song writer 5 minutes to write after he had dreamed them versus a painstakingly written flute sonata?

Hard to say, right? One took a lot less ENERGY than the other, both in KWhs and artistic creativity, but may have sold for a lot more money.


What about greed and other economy influencing factors? ???

The issue of greed, hoarding, the amount of currency in circulation as a trigger for consumerism or the reverse are all PRODUCTS of distortions in an economy.

Most economists espouse the view  that currency does not simply encourage certain types of behavior deleterious to an economy, but DICTATES IT.

I don't feel that way because I view money as an EFFECT, not a CAUSE. I do agree that the money supply certainly must remain in a fairly constant proportion per capita to avoid distortions.

Food will never be currency simply because, even if you could freeze dry it with solar energy and store it also with solar energy for a hundred years or so to use it as you needed it, there is only so much food you or anybody else can eat.

People want furniture, tools, culture, beauty, some entertainment, etc. A prisoner in solitary confinement goes bonkers even though he has sufficient food, shelter and health care.

Life is MUCH more than food, shelter and health.

Those who disdain precious metals as a store of wealth feel that, since gold hoarders can't eat their gold, it therefore has no intrinsic value. However, as all gold bugs have noticed, gold has the following "money-like" attributes:

A. Liquidity
B. Durability
C. Portability
D. Agreed upon value per unit

Gold bugs observe, rightfully, that the US dollar retains the above attributes by the big gun the government has called Legal Tender Laws, not by reality. This amounts to a government distortion of the value of the currency to for the benefit of the owners of the Federal Reserve Banking Cartel and the detriment (i.e. impoverishment) of the average American citizen.  Consequently they take any excess dollars in their possession and quickly convert them something besides dollars because the value of said dollars, like wampum (eventually,) after the metal hand drills were introduced by the white devils, is going down.

Gold bugs watch the Fed money supply going exponential in direct proportion to the galloping inflation the government refuses to own up to. 

This is far worse than wampum inflation because this is raw counterfeiting of fiat! People aware of this start to buy this, that and the other with those magically shrinking dollars from collector's items like stamps to maybe antique furniture to paintings to rare coins to, you guessed it, gold!

Gold is hard to counterfeit. There is a way to use nuclear physics (this is not a joke, it's the real deal!) to transmute some cheap element to gold but the energy expenditure is greater than the energy needed to mine and produced finished gold from ore. However, when fusion becomes a reality, the equation for gold may change and, it too, will go the way of wampum. Don't worry gold bugs, it may be a while yet.*

The Federal Reserve Banking Cartel realizes there are a lot people out there on to their game so they start manipulating  the precious metals paper prices (tanking them) to drive the gold bugs back to the Fed fiat fantasy of a strong dollar. 

I observed this blatant and economically disastrous distotion of currency value and, after thinking about it a while, came to the conclusion that we need something like wampum but without those hand drills or the counterfeiting dye!   My wonderful and innovative Kilowatt Hour Monetary Standard is, horror of horrors,  greeted with hardy harrs and guffaws from the gnomes of the Federal Reserve.    Harrumph! 



ANY currency that is not BOTH a medium of exchange and a store of value will be corrupted, distorted, counterfeited and generally devalued, PERIOD. 


The "tokens" or other symbols used for such currency obviously introduces DEBT because there might be a whole lot more symbols, tokens or pieces of paper with funny squiggles on them than the ACTUAL store of value represented. THAT'S JUST A DETAIL. If you can avoid corruption and insure transparency, that can be minimized.

The "fear" that hoarders are going to trash the economy by taking money out of circulation is unfounded. That's merely an EFFECT of capitalism. It has nothing to do with the concept of money per se.

This EFFECT is really quite easy to prevent. All you have to do is progressively tax wealth (NOT INCOME!) above X net worth to keep a lid on excess capital accumulation. Thomas Jefferson was in favor of that, as a matter of fact (google it!).

Once everyone is on board with a stable currency like Kilowatt Hour Equivalents, I would also eliminate the difference between earned and unearned income (capital gains) and progressively tax that too. That appropriate and fair tax structure would serve as an additional DETERRENT hoard and a guarantee that the velocity of money will remain fairly constant. 

Have a nice day.

*
Quote
Nuclear experiments have successfully transmuted lead into gold, but the expense far exceeds any gain.[7] It would be easier to convert gold into lead via neutron capture and beta decay by leaving gold in a nuclear reactor for a long period of time.   :P


http://en.wikipedia.org/wiki/Nuclear_transmutation
« Last Edit: May 09, 2017, 09:04:43 pm by AGelbert »
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if it has not works, is dead, being alone.

AGelbert

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Re: Money
« Reply #166 on: May 04, 2017, 08:39:03 pm »
From Trump to Brexit - Neoliberalism is Dying...


May. 3, 2017 6:06 pm

Economist Kate Raworth, Doughnut Economics/Oxford University's Environmental Change Institute/Cambridge Institute for Sustainability Leadership. From Donald Trump to Brexit, the evidence is everywhere: neoliberalism is dying. So how can we create an economic system that works for the 21st century?



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Faith,
if it has not works, is dead, being alone.

AGelbert

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Re: Money
« Reply #167 on: May 05, 2017, 01:01:32 pm »
Last Edit: May 05, 2017


http://www.mohicanpress.com/mo08017.html

She sells seashells by the seashore. If she sells seashells by the seashore, how many seashore shells does she sell? This old tongue twisting pronunciation trainer underscores step one in the manufacture of Wampum. You needed a supply of a certain, special and very attractive type of Calcium Carbonate, which was limited in quantities, to begin to do WORK=ENERGY INPUT plus some ARTISTIC CREATIVITY on the seashells in order to produce a CURRENCY that was BOTH a medium of exchange AND a store of value.   

Wampum

In a barter economy, the transfer of goods and services from one party to another is hindered by the lack of liquidity of say, an animal, a bear skin or whatever. The lack of a medium of exchange that can be subdivided into small enough units for both parties to make up perceived different values in a barter transaction is the need that fosters the creation of "money" in the first place.

Wampum was initially a form of artistic expression as well as a form of communication (it was a store of value as jewelry and venerable truth through news and agreements).

However, as the quantity gradually increased and most natives agreed more or less on its value, wampum began providing the liquidity that a barter economy could not.

Consequently the Native Americans along the eastern area of North Amerca gradually adopted wampum as a currency in addition to valuing its beauty (jewelry = bling). The Natives that lived along the beach had an edge on those inland because of easy access to the raw materials.

Wampum beads  Photo: Stephen Lang (Source: AINS/NMAI)

http://www.mohicanpress.com/mo08017.html

Wampum is pretty and, until the Europeans showed up with metal hand tools, a good store of wealth because the amount of energy=work it took to make it as well as the amount of shells available  limited the amount of wampum in circulation.

But those metal thingamajigs the white devils brought made it EASY (LESS TIME & ENERGY=WORK) to make lots of pretty wampum (metal hand drills). This new wampum looked just as good or better than the older stuff made with less sophisticated (non-metal) tools.

At first everybody prospered. There was more wampum, and contrary to standard economic theory that when you increase the currency in circulation, you get inflation, this did not happen right away. Everybody, including the white devils  , were happy with the wampum economy.

But time passed and things changed.

http://www.mohicanpress.com/mo08017.html

Two things happened:

1)
The colonists, who had hitherto absorbed the wampum glut by their demand for the beads, lost interest in wampum partly because they didn't require as many furs (wampum was the currency the colonists used to buy pelts). Wampum lost value as a medium of exchange as the increase in available currency took its toll.

Counterfeiting exacerbated the problem of undermining the medium of exchange value of the currency. A given piece of wampum lost purchasing power because of wampum glut AND a competing currency of coinage.

2)
The artistic value part of wampum as a store of wealth suffered as well. Any philatelist can tell you that old stamps get their "value", not from a pretty painting on the stamp, but MAINLY from their scarcity.

This was depressing. Imagine all those hours spent painstakingly making wampum and that neighboring squaw that is all thumbs can suddenly make several times as much as you can just because she has a white devil metal thingamajig to goose production! And now the white devils don't want them as much as they used to either.  :P  :(

But as you can see below, despite its disappearance as a currency, wampum survives to this day as a product of patient craftsmanship, artistry and historical communication.

But it would never regain its position as a medium of exchange/currency.

Two Row Wampum Treaty from Elder, Yvonne Thomas.pic.twitter.com/EtjkqHsG9o The patient artistry and symbolism crafted in this wampum is an example of how wampum is a store of value. 
full article here:

http://indiancountrytodaymedianetwork.com/2013/05/25/celebrating-400-years-two-row-wampum-149469

What lessons can we take from the above Native American experience?

1) Money is created in order to ease the transfer of goods and services. This medium of exchange normally has the following qualities:

A. Liquidity

B. Durability

C. Portability

D. Agreed upon value per unit


2) The ENERGY it takes to create said money is directly proportional to a unit of said money as a store of value.



The extreme situation, never reached by wampum because it always took SOME skill and energy to make, is FIAT currency where it has ZERO value as a store of wealth.

The case of the US dollar is BELOW ZERO as a store of wealth because, in addition to it being fiat, the supply is growing absent any energy input whatsoever. So the dollar loses value as it sits from Fed  inflation (counterfeiting). Legal Tender Laws force the citizenry to run around trying to preserve some value in a currency that shrinks in value year after year. Many of these value chasers go for PMs, paintings, land, antique cars, Early American antique furniture, etc. They are all looking for something that meets the criteria of liquidity, durability, portability and agreed upon value per unit to a greater or lesser degree.

3) Beyond the basic biochemical needs of proper nutrition, shelter and health, human culture places a great deal of value on tangibles and intangibles outside the default requirements of human life.



Humans will always value creativity and imaginative and useful innovations that bring beauty, comfort and utility to our lives as STORES OF VALUE.

What price can you place on a song? What value does a set of verses have that took a song writer 5 minutes to write after he had dreamed them versus a painstakingly written flute sonata?

Hard to say, right? One took a lot less ENERGY than the other, both in KWhs and artistic creativity, but may have sold for a lot more money.


What about greed and other economy influencing factors? ???

The issue of greed, hoarding, the amount of currency in circulation as a trigger for consumerism or the reverse are all PRODUCTS of distortions in an economy.

Most economists espouse the view  that currency does not simply encourage certain types of behavior deleterious to an economy, but DICTATES IT.

I don't feel that way because I view money as an EFFECT, not a CAUSE. I do agree that the money supply certainly must remain in a fairly constant proportion per capita to avoid distortions.

Food will never be currency simply because, even if you could freeze dry it with solar energy and store it also with solar energy for a hundred years or so to use it as you needed it, there is only so much food you or anybody else can eat.

People want furniture, tools, culture, beauty, some entertainment, etc. A prisoner in solitary confinement goes bonkers even though he has sufficient food, shelter and health care.

Life is MUCH more than food, shelter and health.

Those who disdain precious metals as a store of wealth feel that, since gold hoarders can't eat their gold, it therefore has no intrinsic value. However, as all gold bugs have noticed, gold has the following "money-like" attributes:

A. Liquidity
B. Durability
C. Portability
D. Agreed upon value per unit

Gold bugs observe, rightfully, that the US dollar retains the above attributes by the big gun the government has called Legal Tender Laws, not by reality. This amounts to a government distortion of the value of the currency to for the benefit of the owners of the Federal Reserve Banking Cartel and the detriment (i.e. impoverishment) of the average American citizen.  Consequently they take any excess dollars in their possession and quickly convert them something besides dollars because the value of said dollars, like wampum (eventually,) after the metal hand drills were introduced by the white devils, is going down.

Gold bugs watch the Fed money supply going exponential in direct proportion to the galloping inflation the government refuses to own up to. 

This is far worse than wampum inflation because this is raw counterfeiting of fiat! People aware of this start to buy this, that and the other with those magically shrinking dollars from collector's items like stamps to maybe antique furniture to paintings to rare coins to, you guessed it, gold!

Gold is hard to counterfeit. There is a way to use nuclear physics (this is not a joke, it's the real deal!) to transmute some cheap element to gold but the energy expenditure is greater than the energy needed to mine and produced finished gold from ore. However, when fusion becomes a reality, the equation for gold may change and, it too, will go the way of wampum. Don't worry gold bugs, it may be a while yet.*

The Federal Reserve Banking Cartel realizes there are a lot people out there on to their game so they start manipulating  the precious metals paper prices (tanking them) to drive the gold bugs back to the Fed fiat fantasy of a strong dollar. 

I observed this blatant and economically disastrous distotion of currency value and, after thinking about it a while, came to the conclusion that we need something like wampum but without those hand drills or the counterfeiting dye!   My wonderful and innovative Kilowatt Hour Monetary Standard is, horror of horrors,  greeted with hardy harrs and guffaws from the gnomes of the Federal Reserve.    Harrumph! 



ANY currency that is not BOTH a medium of exchange and a store of value will be corrupted, distorted, counterfeited and generally devalued, PERIOD. 


The "tokens" or other symbols used for such currency obviously introduces DEBT because there might be a whole lot more symbols, tokens or pieces of paper with funny squiggles on them than the ACTUAL store of value represented. THAT'S JUST A DETAIL. If you can avoid corruption and insure transparency, that can be minimized.

The "fear" that hoarders are going to trash the economy by taking money out of circulation is unfounded. That's merely an EFFECT of capitalism. It has nothing to do with the concept of money per se.

This EFFECT is really quite easy to prevent. All you have to do is progressively tax wealth (NOT INCOME!) above X net worth to keep a lid on excess capital accumulation. Thomas Jefferson was in favor of that, as a matter of fact (google it!).

Once everyone is on board with a stable currency like Kilowatt Hour Equivalents, I would also eliminate the difference between earned and unearned income (capital gains) and progressively tax that too. That appropriate and fair tax structure would serve as an additional DETERRENT hoard and a guarantee that the velocity of money will remain fairly constant. 

Have a nice day.

* Nuclear experiments have successfully transmuted lead into gold, but the expense far exceeds any gain.[7]  It would be easier to convert gold into lead via neutron capture and beta decay by leaving gold in a nuclear reactor for a long period of time.   :P


http://en.wikipedia.org/wiki/Nuclear_transmutation
Leges         Sine    Moribus     Vanae   
Faith,
if it has not works, is dead, being alone.

AGelbert

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Re: Money
« Reply #168 on: May 07, 2017, 08:54:17 pm »
Journeyman Pictures

Overdose: The Next Financial Crisis


Published on Jul 2, 2012

Overdose: The Next Financial Crisis. Award-winning documentary giving fresh insight into the greatest economic crisis of our age: the one still awaiting us.

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Faith,
if it has not works, is dead, being alone.

AGelbert

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Re: Money
« Reply #169 on: May 07, 2017, 09:35:53 pm »
The Collapse Is Confirmed! Signs Of The Imminent Economic Collapse 2017 Stock Market CRASH!


The Economist

Published on Mar 23, 2017

30 Things You Should Do To Prepare For The Imminent Economic Collapse 2017 Stock Market CRASH!

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Faith,
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AGelbert

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Re: Money
« Reply #170 on: May 07, 2017, 10:06:34 pm »
Jim Rogers It s Time to Prepare MAY 2017 will be bad for the dollar, US economy & stock market


Financial Consultants

Published on Apr 30, 2017

Jim Rogers It s Time to Prepare MAY 2017 will be collapse for the dollar, US economy & stock market.
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AGelbert

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Re: Money
« Reply #171 on: May 15, 2017, 02:44:37 pm »

https://theintercept.com/2017/05/09/puerto-ricos-123-billion-bankruptcy-is-the-cost-of-u-s-colonialism/

Puerto Rico’s $123 Billion Bankruptcy Is the Cost of U.S. Colonialism
Juan González

May 9 2017, 5:23 a.m.
Leia em português ⟶

Last week Puerto Rico officially became the largest bankruptcy case in the history of the American public bond market. On May 3, a fiscal control board imposed on the island’s government by Washington less than a year ago suddenly announced that Puerto Rico’s economic crisis had “reached a breaking point.” The board asked for the immediate appointment of a federal judge to decide how to deal with a staggering $123 billion debt the commonwealth government and its public corporations owe to both bondholders and public employee pension systems.

The announcement sparked renewed press attention to a Caribbean territory that many have dubbed America’s Greece. The island’s total debt, according to the control board, is unprecedented for any government insolvency in the U.S., and it is certain to mushroom quickly if no action is taken. Detroit’s bankruptcy, by comparison, involved just $18 billion — one-ninth the size of Puerto Rico’s.

Within days, Supreme Court Chief Justice John Roberts, acting under a provision of the Puerto Rico Oversight, Management, and Economic Stability Act (known as PROMESA), which was enacted last June, appointed federal Judge Laura Taylor Swain from the Southern District of New York to take over the Puerto Rico case. A former bankruptcy court judge who was appointed to the federal court by President Clinton, Swain famously presided over the long criminal trial of employees of the Bernie Madoff Ponzi scheme.

Few press reports on Puerto Rico’s troubles, however, have bothered to examine the deeper issues behind this crisis.


PUERTO RICO - JANUARY 01: Governer'S Place Party In Puerto Rico. (Photo by Keystone-France/Gamma-Keystone via Getty Images)

First, the colonial relationship that has prevailed between the U.S. and Puerto Rico since 1898 is no longer viable. Puerto Rico is the largest overseas territory still under the sovereign control of the United States, and it is the most important colonial possession in this nation’s history. That relationship produced uncommon profits for American subsidiaries on the island for more than a century, even as the federal government kept claiming that the Commonwealth of Puerto Rico, created in 1952, was a self-governing territory. But now, with a Washington-appointed board directly overseeing the island’s economy, and with a pivotal Supreme Court decision last year affirming that Congress continues to exercise sovereign power over Puerto Rico, the mask of self-governance has been removed.

The old commonwealth is effectively dead. Absent a huge infusion of U.S. public dollars to prop up its collapsing economy, a scenario that is nearly impossible with a Trump White House and a Republican-controlled Congress, that relationship cannot be revived. Political leaders in both Washington and San Juan, whether they like it or not, are being propelled to fashion a new political and economic status for the territory. They will have to finally decide whether to completely annex Puerto Rico as the 51st state or acknowledge that it still remains a distinct nation, with the right to its own sovereignty and independence.

Second, the impact of Puerto Rico’s bankruptcy will continue to reverberate throughout the U.S. bond market, far more than most Wall Street analysts have so far acknowledged. The PROMESA control board has warned that even with massive cuts to government services and new projected revenues from higher taxes and fees, Puerto Rico will still generate slightly less than $8 billion in budget surpluses over the next 10 years, when some $35 billion in debt service comes due. In other words, three-quarters of the debt cannot be repaid. That is not just a haircut for bondholders; it is a head-shaving, one that will send shock waves throughout the municipal bond market. After all, bonds backed by the full faith-and-credit of local government entities have long been considered among the safest of investments.

Years of court battles between Puerto Rico and contending groups of creditors are now certain. “The economy of Puerto Rico will be put on hold for years,” Andrew Rosenberg, adviser to the Ad Hoc Group of Puerto Rico General Obligation Bondholders, told the Associated Press. “Make no mistake: The board has chosen to turn Puerto Rico into the next Argentina.”


A Puerto Rican flag painted on the doorway of an abandoned building in San Juan, Puerto Rico, on May 1, 2016. Photo: Erika P. Rodriguez/Bloomberg News/Getty Images

The Debt Is Not Payable

Civil society groups contend that the plunder of the Puerto Rican people through predatory and even illegal bond deals that island politicians concocted together with top Wall Street firms will now be exposed.

Amazingly, the 23-page petition that the federal government’s own financial control board filed in U.S. District Court in San Juan reached the exact same conclusion that Puerto Rico’s former Gov. Alejandro García Padilla reached back in June 2015 — that the island’s debt is “not payable.”

In the nearly two years since García Padilla sounded the alarm, however, Washington has done almost nothing to alleviate the economic catastrophe afflicting 3.4 million U.S. citizens in Puerto Rico, except to establish the control board by enacting PROMESA.

On an island that has lost 10 percent of its population in the last 10 years, where 46 percent of the population lives below the U.S. poverty level, where the unemployment rate is more than 11 percent, and where the labor force participation hovers around 40 percent, lawmakers in Congress have kept insisting on greater austerity from Puerto Rico’s population. The reality is such dire conditions would never be tolerated among U.S. citizens in any other jurisdiction, yet they are allowed to persist in Puerto Rico.

During the past two years, the commonwealth government has sharply raised electricity and water rates. It has increased the sales tax (now a value added tax) to 11.5 percent. It has proposed ending all pensions for new workers and cutting existing benefits by an average of 10 percent. And last week, it announced the closing of 179 public schools for the coming school year. In addition, the control board has called for a $450 million cut over the next four years to the island’s 70,000-student public university.

Under the control board’s pressure, Gov. Ricardo Rosselló, who took office in January, is eyeing the privatization of the government-owned electric company, the water and sewer authority, even the public transit system. But even massive cuts and selling off public assets can’t solve the problem that there aren’t enough jobs on the island, that young people keep fleeing to the United States, and that Puerto Rico’s government is powerless to fashion its own economic and trade policy independently from the U.S.


Ricardo Rossello, governor of Puerto Rico, listens during a meeting at Puerto Rico Industrial Development Company (PRIDCO) headquarters in San Juan, Puerto Rico, U.S., on Tuesday, March 28, 2017.

Puerto Rico's economy has been contracting for a decade. Last year, almost 65,000 residents left the island, keeping pace with the previous two years, when the exodus reached the worst since at least the 1980s. Photographer: Alejandro Granadillo/Bloomberg via Getty Images

Ricardo Rosselló, governor of Puerto Rico, listens during a meeting at the Puerto Rico Industrial Development Company headquarters in San Juan, Puerto Rico, on March 28, 2017.

Photo: Alejandro Granadillo/Bloomberg News/Getty Images

For decades, Puerto Rico was important to the American economy as a center of sugar cane growing, then as a tax haven for manufacturing and pharmaceutical companies, and as a military stronghold and bulwark against the spread of communism in Latin America. But now it is no longer needed for any of these things. Most of the U.S. military bases have closed, and Congress began in 1996 to phase out the island’s tax haven status. As soon as the last of the federal tax breaks — known as Section 936 — ended in 2006, corporations started leaving and the island plunged into a recession from which it has yet to recover. For the past 20 years, a succession of island governments has been closing structural operating deficits with borrowed funds supplied by Wall Street firms eager to market its triple tax-exempt bonds to wealthy and middle-class Americans and Puerto Ricans.

Investors were especially drawn to a provision of the Puerto Rico constitution that required the government to pay general obligation debt service ahead of any other expenses, and by the fact that Puerto Rico and its public corporations were legally prevented from resorting to Chapter 9 bankruptcy, the portion of the bankruptcy code that applies to most local governments and municipalities.

Until 1978, Congress had included all the territories and possessions of the United States under Chapter 9, so Puerto Rico had bankruptcy protection until then. But between ’78 and the early ’80s, there were several changes to U.S. bankruptcy law. In 1984, an amendment was inserted into the law by South Carolina Sen. Strom Thurmond that specifically excluded Puerto Rico from Chapter 9. No reason was given. No federal policy or interest in the change was spelled out in the amendment process. By a few simple phrases in an amendment that few people noticed, Congress laid the basis for the unique situation Puerto Rico confronted last year. It was not only broke, there was no established legal recourse for it to get a court to decide how its many creditors would get paid or how much.

The PROMESA bill Congress enacted at least created a new type of Chapter 9-like process for the island. The bill stipulates that if the Puerto Rican government and the control board cannot reach voluntary settlements with bondholders, a judge can be appointed and creditors forced to accept a settlement, known as a “cram-down.”

But the law’s constitutionality has yet to be tested, and with so much money at stake the various groups of bondholders are determined to wage a titanic legal battle against it.

On May 5, for instance, Ambac Assurance Corp., one of the major insurers of Puerto Rico bonds, filed suit in U.S. District Court in Puerto Rico against the Commonwealth and the Oversight Board, and did so with uncommonly strident language:

    Sovereignty confers great power, but it does not authorize lawlessness. This action seeks to halt the latest in a series of unconstitutional and unlawful acts that have been the unfortunate modus operandi of the Commonwealth government in seeking to manage its financial and economic distress. Instead of rectifying these abuses, the Oversight Board created by Congress to restore fiscal responsibility to the Commonwealth has affirmatively exacerbated them, giving its imprimatur to an ongoing scheme of constitutional and statutory violations that can only be called theft.

Ambac has insured billions of dollars in sales tax revenue bonds, known as COFINA bonds, that Puerto Rico has issued since 2006, and the company, along with other bond insures, faces enormous losses from any cram-down.

Meanwhile, another group of bondholders who were involved in $1.4 billion of Puerto Rico’s last major general obligation bonds, issued in 2014, filed suit in New York state Supreme Court. Those bondholders, led by hedge funds Aurelius Capital Management and Monarch Alternative Capital, insist that Puerto Rico’s Constitution requires them to be paid first from all available revenues. The general obligation bondholder group, along with many civil society groups, insist that all the COFINA bonds — and they represent nearly $18 billion of the total $74 billion bond debt — were illegally issued and should not be repaid.

That’s because the Puerto Rico constitution specifically forbids debt service and principal that surpasses more than 15 percent of annual government revenues. The Puerto Rico legislature specifically created COFINA to maneuver around that 15 percent limit, and it then guaranteed the payment of that debt from sales tax revenues. But the legality of that maneuver has never been tested in court.

While the contending bondholder groups battle in the courts, the PROMESA board has now sided with the Puerto Rico government that bondholders will have to accept major reductions in payments.

“From current revenues, the Commonwealth and its instrumentalities cannot satisfy their collective $74 billion debt burden and $49 billion pension burden and pay their operating expenses,” the fiscal control board concluded last week after months of poring over Puerto Rico financial records.

And the island’s budgetary crisis “is about to worsen exponentially,” the control board warned, “due to the elimination of approximately $850 million in Affordable Care Act Funds in fiscal year 2018.” The total loss of federal health care funds, according to the board, is expected to reach $16 billion over the next 10 years. On top of that, the government pension systems are almost out of cash and will need $1.5 billion a year just to keep up payments to current retirees. Unlike municipal workers in the U.S., most public employees in Puerto Rico are not part of the social security system, so those pensions are their only retirement income.

Meanwhile, Donald Trump and Republican leaders in Congress insist there will be no bailout of Puerto Rico, no extra federal assistance to the island’s population.

They want to ignore the fact that back in the 1990s under Bill Clinton and the Newt Gingrich Congress, Washington’s leaders realized they had to take drastic measures to save the District of Columbia from economic collapse. Congress established a fiscal control board just as it has with Puerto Rico.

But that board soon concluded that DC had structural problems that required federal help. In 1997, a reform package accomplished the following: the federal government assumed the city’s debts, it took responsibility for the local courts and prisons, it increased the rate for Medicaid reimbursements to the district, and it took over the city’s underfunded employee pensions.

As a result, the district emerged from economic calamity. Today it is a vibrant and prosperous city.

Federal lawmakers will either have to provide massive assistance to Puerto Rico, or they will have to move rapidly to change the island’s political and economic status. After a century of colonial rule by Washington and decades of predatory debt from Wall Street, the bill has come due.

Top photo: Pedestrians walk past an old hotel in the Condado area of San Juan, Puerto Rico, in 2015.

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Re: Money
« Reply #172 on: May 17, 2017, 08:45:56 pm »
Dr. Richard Wolff: The Return of Progressivism Around the World


Thom Hartmann Administrator's picture
May. 17, 2017 11:01 am

Economist Dr. Richard Wolff, Capitalism's Crisis Deepens Essays on the Global Economic Meltdown/Democracy At Work. It's not just Bernie Sanders - left-wing populists like the UK's Jeremy Corbyn are on the rise all over the world. The media calls them radicals - but are they actually just old-school FDR progressives?

For more information on the stories we've covered visit our websites at thomhartmann.com - freespeech.org - and RT.com. You can also watch tonight's show on Hulu - at Hulu.com/THE BIG PICTURE and over at The Big Picture YouTube page. And - be sure to check us out on Facebook and Twitter!



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Re: Money
« Reply #173 on: May 18, 2017, 07:25:06 pm »


Puerto Rico Debt Crisis: 'A Great Depression That Doesn't End'  :(


Published on May 17, 2017

Journalist, author, and Democracy Now! co-host Juan González says the Puerto Rican debt crisis, now entering a critical bankruptcy phase, results from a legacy of U.S. colonial domination and predatory Wall Street debt.
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Re: Money
« Reply #174 on: May 24, 2017, 07:49:45 pm »

Economic Update: Rising Costs of Capitalism's Failures

Democracy at Work

Published on Apr 30, 2017
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Re: Money
« Reply #175 on: May 30, 2017, 06:01:11 pm »
Robert Reich : Universal Basic Income 

Published on May 26, 2017

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Re: Money
« Reply #176 on: May 31, 2017, 09:46:40 pm »
Richard Wolff On The New Socialism

May 30, 2017

Big Picture Interview: Economist Dr. Richard Wolff, Capitalism's Crisis Deepens Essays on the Global Economic Meltdown/Democracy At Work. It's not just Bernie Sanders - democratic socialism is on the rise all over the Western world right now. How can the resurgent left seize this moment - and the means of production?
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Re: Money
« Reply #177 on: June 07, 2017, 08:35:47 pm »
Inequality For All: A Visual Story

by Prof. Robert Reich

https://www.sandersinstitute.com/blog/inequality-for-all-a-visual-story
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Re: Money
« Reply #178 on: June 12, 2017, 02:03:30 pm »
Sunday, June 11, 2017

By William Rivers Pitt, Truthout | Op-Ed



We Are Not Broke: Trashing the Austerity Lies

Agelbert NOTE: A die hard Profit over Planet Capitalist weighs in with the typical baloney. I answer it.  ;D

didactic1  

Rivers clearly knows little about finance or business. Close the loopholes and you won't collect dollar for dollar more revenue. Assets can be sold, transferred, or converted to securities. By all means have public ownership of utilities, fuel resources, health and banking. But don't expect capitalists to turn over significant amounts of now untaxed income.


agelbert > didactic1

You clearly know little about William Rivers Pitt.

Yes, we ARE bordering on collapse. But it is due to a concentration of ill gotten profits in a tiny group of rapacious oligarchs, NOT because the money is not there.

Your "logic" has been debunked over and over. Privatization ALWAYS increases cost to society, not the other way around, as you fervently, and erroneously, believe.

The reason for that has been clearly laid out by eminent economists who do ALL the math on the costs human business activity on the biosphere we all require to live.

The "logic" of the business community is that IF a COST is not placed on exploiting the resources of the biosphere in an unsustainable (i.e. POLLUTION PRODUCING) manner, a de facto INCENTIVE exists, according to economic theory, to engage in rapacious biosphere damaging business practices. This, OF COURSE, assumes, as your economics education also seems to assume, that ethics play NO ROLE WHATSOEVER in business strategy and decisions to engage in whatever.

This is not only patently false, it is eventually suicidal in a finite resource environment (i.e. our biosphere).

ETHICS has been eschewed by capitalists like you to the detriment of, not just the rest of us, but the biosphere as well. This incredibly short sighted attempt to claim monetary PROFIT obtained regardless of Social Costs INCURRED, BUT NOT NOT PAID, is the be-all-end all of economics is sophistry at its worst. It is willful and deliberate cherry picking of what costs apply and what costs are "external". IOW, it's IRRATIONAL thinking passed off as "fiduciary responsibility to corporate profits".

This eminent economist P. Dasgupta exposes the ethical bankruptcy of this "incentive to be unethical" (Economic Theory of Income Accounting instead of the more comprehensive, BUT NOT USED, Wealth Accounting) in the following video (go to T7:29):
P. Dasgupta is answering a question asked of him at the time point I just gave you. He discusses flow accounts versus stocks and the historical reasons for it. He discusses the problems with measuring GDP.


SEE BELOW the results of Capitalist "economics" cherry picked "cost efficient privatization" over nationalization:




http://www.truth-out.org/opinion/item/40903-we-are-not-broke-trashing-the-austerity-lies
« Last Edit: June 12, 2017, 03:10:24 pm by AGelbert »
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Re: Money
« Reply #179 on: June 12, 2017, 10:10:27 pm »
Agelbert Note: A discussion about Capital (i.e. money for investment in environmental sustainability), Natural Capital, Biosphere Pollution and much more:   


Biological Extinction | Discussion #9

Casina Pio IV


Published on Mar 2, 2017
How to Save the Natural World on Which We Depend

PAS-PASS Workshop
Casina Pio IV, 27 February-1 March 2017
Leges         Sine    Moribus     Vanae   
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