Monster Message, 4.5.2011

Monster Message, 4.5.2011

If by the end of 2010 the federal government continues ad hoc public spending programs to create jobs, the United States will find itself deeper in debt, less able to repay it, and no more competitive on the world stage than before, in fact likely less so. – Eric Janszen

I have finished ‘Aftershock‘ and am now re-reading Eric Janszen’s
The Postcatastrophe Economy: Rebuilding America and Avoiding the Next Bubble.

Although I agree with ‘Aftershock’ authors’ analysis of a multiple bubble economy popping and putting pressure on lateral bubbles causing them to break and drag the economy farther down, I do disagree with their assessment that there will not be violent civil unrest in the streets. Wisconsin is only a prelude to what will happen when the US dollar collapses and ‘Peggy the Moocher’ finally figures out that there isn’t free ride. Please Google ‘Rodney King’ and ‘OJ Simpson Trial’.

On the other hand, Mr. Janszen’s theory of two totally separate economies, the FIRE economy (Finance, Insurance and Real Estate) based on debt and interest, and the real productive economy we live in is much more spot on in it’s analysis. The FIRE economy is collapsing and the productive economy is being sucked dry by the government to prop it up.

A small excerpt protected by the Fair Use clause of the US Code:

The FIRE economy, which was based on financial engineering, capital gains from inflated asset prices, and other nonproductive financial schemes and tended for decades by special interests, grew to great heights and shaded a once vibrant economy below, an economy based on production, savings and investment.

The FIRE economy also depended on a steady stream of cheap credit and oil, for without it credit-financed consumer spending cannot rise; purchasing power would be sapped by household expenditures on heating fuel and gasoline, and by borrowing at high rates of interest. The solution was to inflate the purchasing power of the U.S. dollar, the currency used for oil trade by the United States and its trade partners, depreciating the price of oil in the process, and to tap into our trade partners’ so-called excess savings.

The FIRE economy is an umbrella term that incorporates the whole dysfunction of the American political economy that has resulted in FIRE industries capturing our government. The same dysfunctional system also produced, among others:

  • the military-industrial complex that heavily influences foreign policy;
  • the credit-industrial complex that layers economic rents, such a interest payments and fees, on every economic activity, from education to health care, and punishes savers with taxes and rewards debtors with tax deductions;

Those are just two of a long list of special interests that control our government, and I highly urge my readers to get this book from the library and read it as it gives some valid proposals for getting the productive economy back on it’s feet and the FIRE economy where it belongs; a supporting role instead of sapping every single iota of lifeforce out of this country.

I will be posting a longer article on both of these books and the GOP’s attempt to get people used to the idea of austerity with trillions of dollars of spending cuts in order to keep the US dollar alive and the FIRE economy with it.  Don’t get me wrong, $21 billion, $33 billion, $61 billion AIN’T ENOUGH when a trillion is 1000 billion.  My thinking is going way beyond spending cuts to how we, as a people, disentangle ourselves from the Fed, the government, and the FIRE economy in such a way that does not create paupers of us all.

(H/T MT for the book.)

Paul Ryan understands the financial tsunami that is about to hit us. I’m just not sure his proposal is going to achieve the best results for the time, effort, and money invested.  More on that later also.

Paul Ryan – Years of Empty Promises

What Is A FIRE Economy?

I had the privilege of being gifted Eric Janszen’s, ‘The Postcatastrophe Economy’ featured below which outlines the private and public debt components of the FIRE (Finance, Insurance, Real Estate) economy that has collapsed and crippled this country. Yes, Obama and his team are working to re-inflate the very industries that are strangling the ‘productive economy’ and average Americans. (No Surprise There).

I have not yet finished the book, but I urge my readers to either purchase it or hit your local library as it is a must read which outlines the steps Americans need to take to establish a ‘new American industrial economy’ that does NOT have FIRE as it’s cornerstone. There appears to be dovetailing into Catherine Austin Fitts’, ‘The Looting Of America’.

An excerpt (Page 9):

In the end, the problems that this book described all come down to the result of thirty years of influence peddling and the capture of our government by special interests, especially by the finance, insurance, and real estate industries. Sales of their main products result in debt that produces a steady stream of revenue from interest payments and fees for themselves but saps the income of every productive business and hardworking wage earner, hospital patient, and student in the United States. An economy dominated by FIRE collapsed, nearly taking the productive economy with it. Yet the seeds of our economic recovery survive, and it is these that we must nurture to grow our economy back. Finance will return as well — to a constructive role in support of the productive economy rather than as the dominant generator of jobs and money in the economy.

One of my favorite lines:

The entire economic system has been glued together by one profound fantasy: Finance can substitute for production, and credit for savings.

(H/T Michelle)

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