Wars, empire, and the politics of perception

Empires always fail. Not every now and then. Always.

Wars are the primary reason for the inevitability of failure. They're expensive and lead to economic stagnation and decline.

Empires seldom need to fight the wars they do. Their wars become "wars of choice" because the empire doesn't need to fight them.

Late in the life-stages of empires come wars that are simply a veneer for occupations. From these spring insurgencies. With these, often the reason for fighting emerges after the initial invasion, to rationalize the increased use of force to combat the growing insurgency.

In every case, the push for war is driven by a constituency which benefits the most from war. If the policies of the empire are dominated by bankers, it's not by coincidence that the empire's actions cater to the interests of bankers. Likewise, if the military industrial complex carries the most influence, then government budgets will flow to those industries.

The high cost of war is a blessing for the beneficiaries of the spending, which can turn around and invest in political candidates whose war drums sound sweetest to their profit-hungry ears.

Now if you go to Groton, Connecticut or San Diego, you won't find many people clamoring for an end to the wars. That's because much of our war budget gets spent on military hardware built in those places.

Entire industries have grown up feasting on the trough of military spending, a sum which consumes over one-half of our entire federal budget when things like care for veterans and interest on past war debt are considered. In every example of a empires-gone-bust there's been a group which has profited tremendously. With our present day case, I'd look at the bankers who profited by increased government borrowing as the culprit.

The more borrowing, the more interest the borrower must pay. For holders of government debt--the bankers--the best way to increase profits is to make government borrowing more expensive.

Go back to the examples of the Austrian Hapsburgs, and Rothschild bankers of the World War I era, and you'll see vast amounts of wealth move from the public treasuries to bankers through spending on war.

In an age of fiat currency, governments can spend infinite amounts of money. Typically, this means the currency will buy less and less as time goes on. We have that example here in the US. Prices for petroleum before the 2003 Iraq war were under $2/gallon. Now they're trending around $4. Take another commodity with a fixed supply: gold. It was under four hundred or so. Now it's $1600+.

Typically bankers would protest if the purchasing power of the dollars they held would go down so dramatically. It'd be as if their assets had shrunk by one-half or one-third.

Now if the currency were redeemable in gold, or consisted of coins made of gold, the financiers of war would have no problem with more government spending. Perhaps the finite supply of gold could mean an end to war.

Modern day America has come up with a way for bankers to continue to profit even as the purchasing power of the dollar declines. They do this in a process called quantitative easing, or the purchase of government debt by the Federal Reserve. Banks borrow infinite amounts of money through the Fed's lending programs and turn around to use it to buy government debt. This keeps the Ponzi rolling.

As long as interest on the debt can be provided--whether through taxing the citizenry or additional borrowing--overspending and debasement can continue. The latter, which can be called inflation if consumer spending increases, means the dollar will always buy less and less.

Debt burdening is class warfare on steroids. Sadly, it's those who are dependent on salaries and wages, or pensions, who will be unable to increase their incomes. They'll have to bear the effects of debasement.

Like we saw in Greece, the only way out will be rigid austerity, which will dramatically cut spending. As much as we might malign Europe for its problems, we have an even bigger one here. Why? Our government is completely unable to restrain military spending. The noxious propaganda machine driving the war state has done its job too well. No politician dares to look soft on terror, or as if they're not supporting the troops. The result? Multibillion dollar submarines we don't need, vast unaudited sums spent far away, and ever-bloating budget that increases the size of government (alongside all the drones and trappings of a growing surveillance state.)

Militarism and over-expansion are the perfect methods for private bankers to increase the amount of government debt they hold, and how much interest they receive for holding it. Banking profits are a function of their cost of borrowing from the Fed, which is nearly zero. A ten year Treasury yields about 2%--not so much, so they have to buy huge sums, thereby subsidizing additional war spending alongside higher profits for their industry.

Of course none of this war profiteering makes the news: it's glazed over in scary stories about bogeymen in some faraway land who are out to get us. Given the facts, the people might discover the wars that their governments fight are not done to protect them at all, nor vital in any way to our nation's security. Instead, they are the means by which sweetheart industries increase their profits.

The politics of perception

In an age dominated by the media, it's no wonder that governments like to package their wars in a form more palatable to citizens, most of whom are too stupefied in celebrity worship and various forms of entertainment to think critically.

Ours is a culture obsessed with amassing maximum income in order to buy physical possessions.

Our society is unbalanced. Examples of gross disparities in wealth abound. Not since before the great crash of 1929 have the haves of American society has so much, and the have-nots so little.

The young today came into a world of chain restaurants and media saturation. Both parents worked, abdicating much of their children's maturation process to institutions. Time is always in short supply, as time is money, which means money consumes the time families once had to share.

Perhaps the family unit is breaking down. Perhaps the family model has always been breaking down. {One time I told a friend how things had broken down in Mexico and he confided that they had always been breaking down.}

I'm not one to judge, I'll tell you that. So many socially conservative people today want to blame a breakdown in family values. If cornered, they might defend the position by saying how gay marriage, too much television, the schools, or some other force was to blame.

The culprit for the breakdown in moral authority varies depending on who's doing the blaming. Whatever their politics, the problems never originate with the person doing the blaming--no, their children are only mad better by their parenting.

Many parents today seek to protect their children from the evils of someone else's moral misconduct. It's always someone else, an outside actor, that causes the harm and sullies the pool.

Rather than confess that they've lost control, it's easier for the predominately White reactionaries to blame the social decline on someone else, on some external force. Liberals, with all their tolerance, are a juicy target. So are regulations and bureaucracies.

Politicized, in the form of partisanship, the reactionaries' response to societal change motivates them not to improve or correct things but to go back to an America that never was and only exists in the imagination of people on the Right. You'd think that all had been perfect, just before their side lost the political war that precipitated the decline in moral values, or so they believe.

Of course there's no attention paid to the failings of their President, the one who started the unnecessary wars under false pretexts while outing an undercover agent in a time of war. No that wasn't bad. Why? Because Bush was a good guy in their eyes, a hero. He could never have done no wrong, no more than could have it been their bad parenting or mistakes that contributed to the decline in our society.

Political opportunism has Obama makes a perfect target for these people who are so troubled by the world they've seen transform so much so fast.

Gas prices too high? Blame Obama. A lack of jobs? You guessed it, Obama. It's as if there's no bad thing that can't be pinned on the President. They conveniently ignore the war of choice that's resulted in a doubling of gas prices, or the falsified intelligence for which no one has faced any reckoning.

The predominantly White cultural reactionaries have started their witch hunt. Cheered on by racists and demagogues like LImbaugh, they've convinced themselves that it's Obama that's the problem. Like the cultural decay, it's never their failure to control the evil outside influence, whether it be the TV, gays, or whatever. {See the Alternet article by Joshua Holland on how the brain circuitry of conservatives might account for this.)

Racism and reactionary behavior do blend. Unfortunately for the demographic that so likes to blame The Others, the demographic changes have swept across the land are far-reaching and permanent. A change of profound cultural significance, the increasingly non-White population doesn't see itself as the problem any more than the Whites blame themselves fro failing to adapt.

Whites are a minority now in a lot of regions. That demographic change can be disconcerting, not just for them but because of the big cultural swings in the norms of conduct among subgroups. Modern day America is a true melting pot. In an election year, race can be a huge factor shaping voting.

I don't think non-Whites will rally around a non-White candidate simply because they are both not White. I think non-Whites will rally around a non-White candidate because they're more likely to share similar political values.

* * *

Obama got into office based in large part because of his relative youth, enthusiasm, and gifted campaigning skills. If he's to win a second term, he'll need to execute his campaign as well as he did in 2008.

I wonder how much of Obama's appeal is artificial, seeded in the idea that just because he's not White, he represents change. Change did happen. Yes, good things can come from nothing more than a popular upswell, and Obama mastered that bubbling fountain quite well.

Then again, campaigns are about money. The American public is obsessed with its image of itself. If one candidate can fashion a more favorable image in the minds of the electorate, then he'll win. Why? It's not that the choice of candidate is made consciously but rather in a stream of subliminal decisions. In this respect, a process of identifying more closely with one candidate, their hero, over another, the antihero, runs in the back of the voter's mind like some antiviral program, grinding away but seldom acknowledged.

It's called the politics of identity. Whichever candidate identifies best with the voter is the one who wins the vote. Far from producing random outcomes, identity politics is a highly deliberate and controlled process. Like any formula, the variables are controlled down to the way a candidate looks, what they say, and how they say it. There's no limit to the spinning, and twisting to jockey for prime space in the subconscious of the voter.

Repeat exposure does more to shape the voter perception than does the quality of the message. Send a message frequently enough and it'll be branded, so deeply perhaps that the voter doesn't know it's there.

Take the consumer society: a company makes its brand on the consumer by broadcasting a message so many times that it brands itself as surely tot he consumers' brain as does a brand on cattle. In our consumer-driven, society, it owns us. And we, unknowingly, give up precious space in our minds for the commercial invasion. Like automatons, we buy with a false impression of choice. In fact we've decided what to buy long before we get to the store, or lift up the phone. The decision's been made for us.

Back to politics. People on the Right won't vote for Obama, and they'll do it consciously. No subconscious branding needed. They were never going to vote for him, simply because they don't identify with him. Of course they'll try and explain away their decision not to vote for Obama, to make it all sound logical. 

The Left has its indoctrinated supporters as well. However unlike the Right, the Left seems more concerned with the reasons why their candidate should win. This emphasis on the faculty of reason is perhaps one of their great Achilles' heel, since those on the Right is more prone to unify based on less ineffectual instincts like blind nationalism, or the fear of change.

Race might not be thrust forward by political analysts as the difference maker in the upcoming Election. But it is the most limiting and segregating factor when it comes to the politics of identity. The most obvious difference we have with others is the color of our skin.

Due to rising numbers of non Whites, the Right will have to contend with the politics of identity that unify Obama and people of his race--who were going to vote Democratic anyway. With our population about 14 % black, roughly that Hispanic, and 8 % now Asian, non-Whites constitute a vast voting block.

I don't think non-Whites will be able to make their choice in a vacuum sterilized of any issues of race, and they'll identify more with someone of similar race. With about 20% of the electorate White and liberal, Obama's reelection boils down to voter participation. If 100% of non-White voters vote, he'll win.

Due to demographic realities, the sustained effort by the Right to disenfranchise minority voters will continue. A Romney victory depends on it.

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Living in the techno-bubble of denial

Americans can't seem to decide just how far they want their socialism to go. Of course, no one dependent on government or its budget can accept the fact that they are the beneficiaries of a socialist system.

The fear is there. You have the utter terror of Baby Boomers afraid of losing their 401(k)s. Intolerance for market risk keeps millions of individual investors from investing in the markets.

Many are convinced, rightly, that the markets are rigged, or are slanted in favor of Wall Street insiders at the expense of the general public. And they're right--high frequency trading allows stock exchange member firms to buy and sell in fractions of a second, front-running trades sent into the exchange by slower servers. Plus you have the President's Working Group on the Capital Markets (the so-called Plunge Protection Team) at work in the shadows, likely to tap down volatility at least until the election is over.

Then there's the debt system, which has entrapped many millions into a downward spiral of declining wealth and economic opportunity. The lifestyle of the rich and famous will never be open to them, even though they spend literally years of their lives admiring celebrity.

Passivity is decimating the American dream. Americans are just content enough to accept what happens to them. It's as if the Powers-That-Be know how to provide just enough eye candy and immediate gratification to keep the masses in a media-induced slumber.

Productivity trails off, made the victim of incessant pleasure-seeking. Gaming and digital devices aim to make everything we do easier. In the end, technology decimates our interpersonal skills. It begins innocuously enough, with technology simplifying so much. In time we grow dependent on automation to accomplish more and more in our lives, often as a substitute for true reason and thoughtfulness. In this sense, it's not the technology that's the threat, but rather our overdependence on it.

It's like the scene in Children of Men, where the main character Theo Faron visits his brother, who's a party appartchik in the New World Order. At the table, his nephew fiddles incessantly on some personal electronic device, never looking up, absorbed in the present, the immediate gratification, no matter how transient or devoid of meaning the longer-term outcome. For those with money, this visual metaphor captures America today, where technology substitutes for real interpersonal connectivity. Also conveyed in the scene is how the wealthy and politically connected revel with hollow amusement in their gated and guarded citadels, isolated from the impoverished hordes outside.

Once lost, many interpersonal skills are lost forever. The next generation forgets what the one before it knew about each other, about right and wrong, and the meaning of delayed gratification and shared sacrifice. Instead, as everything in America becomes digitized, so too does our individuality. Values like shame and compassion for the suffering of others are tossed aside in the quest to attian personal joy. Rather than a grave responsibility, freedom becomes pursuit of individual joy.

As it flowers in the social media, technology may offer an alternative sense of communalism. People can truly feel sorry for one another, tweet their sympathy, then move on to the next issue. A million gifts of help, spurned on by instant Facebook campaigns, can have real political weight; look no farther than the reaction to the Trayvon Martin killing.

It's not the technology itself, but the dumbing down it invites. Instant Messaging is superficial, and invites mundane comments about meaningless stimuli. Look at cell phones themselves. Yes, they're an indispensable communications tool, unless you're Amish. But how many conversations are entirely forgettable, contribute absolutely nothing to relationships, and probably never need to be made? The presence of a new or developing technology doesn't mean our lives are made materially better.

Economically, technology enhances our productivity, yes, but only if people are actually making things. If there just tweeting endlessly, or consuming foreign-made goods, technology doesn't help the real economy near as much. Arguably, technology does offer a major source of future growth and opportunity. Yet the economic benefits of adopting new technology seem to accrue to the already educated and relatively wealthy more so than serving the cause of economic democratization.

Our lives lack the depth they once had, and we dwell increasingly in the fantasy land of ones and zeros. Can a computer capture the smell of fresh bread? Can a portrait or picture, no matter how good, replace how one feels looking at the Matterhorn, for instance? Those who tell you they know what it looks like from some digital representation are far less likely to have been there or, worse when they arrive, perhaps less prone to notice the subtle details of the mountain. Instead the experience is cheapened by the over-dependence on digital experience, which is a form far less full and textured like the real deal.

Try as we might to recreate images, or smells, or experiences, the digital experience can rarely be an adequate substitute. Yes, we can fool ourselves into believing that what we hear is the real thing, but the truth is that digital music is actually different acoustically from real music. The peak highs aren't captured in the digitization process. An analog tape, for instance, covers high range notes from Jerry Garcia's guitar in a way that digitized media can't, acoustically. The highs are outside the range of coverage. [In order to be recreated, digital files must be of a limited size. To compress data, the less-used tones are therefore excluded or otherwise manipulated in their digital expression, which is ultimately a binary system.]

To think in digital terms is limiting. In absolute terms, a binary system of zeros and ones lacks nuance. A data bit is either a one or a zero. Not in-betweens or subjectivity involved. It either is or isn't.

We're limited by the capabilities of a digital system to replace older ones. Products of the digital age are measured in how well they depict some real event. Yet in many cases, a whole set of sounds, stimuli, and sights motivates children of the Digital Age in a way as real as the real thing. Yet seldom do any of us older ones, the enablers of the technology revolution, sit down and think about the effect of using digital synthesis instead of enjoying the real thing.

Think of all the toys that we once played with. The way we lived as children was built on creativity and imagination. We had to put those skills to use and we still do, to a degree, even in a digital environment. But I'd argue one reason we have so much excess capacity in our economy is that technology has replaced reason, and the skills which we need to flourish socially are on the wane, weakened by the cocooning and atomization of lives built around technology, particularly mass media.

Many toys today are of the cheap variety. The whole idea of building things to last has been on the decline. Why care about the real thing when the digital experience is so available, and update-able, and re-creatable, and channeled to our most narrow, superficial view of ourselves, of how we take pleasure in the environment around us. Cheating our children out of the real experience will no doubt stand as one of the great crimes of the Digital Age, as bright a future as that it may have.

When not if

I'd be hesitant to put a timeframe on the end. There have been countless predictions of doom. I will say this: the markets can't grow consistently without democratization. I've praised the merits of economic democratization before; they include stock market participation and benefits for everyone in society, elevating those in the lower income categories, a phenomena which actually benefits those at the top far more than they'd likely admit.

Is the opposite true? Does un-democratization represent economic decline? It has certainly created an era of greater economic inequity. We have in our country today two Americas, one of which isn't hurting much at all as wealth coagulates at the top. The other meanwhile, collapses, an economy representative of declining incomes, home values, and lower stock market participation.

We could blame any number of factors but we need to remember it's not so much how we got here but that we're where we are. It's all well and fine to politicize things, take blaming Obama for gas prices, but partisanship is just smoke and mirrors when it comes to the economic realities that shape our world.


The Federal juggernaut rolls on. Cracks are starting to show up. I've warned for years now that our monetary system is in real danger. Our money is being created synthetically to subsidize the budget deficit. February saw the largest monthly deficit on record at $229 billion.

Herb Stein said if something can't go on forever, it won't. Remaining as the sole variable is therefore when such a monetary system might cause the economic system damage.

Our future has already been systematically sold off. the Federal Budget deficit is evidence of this trend, one that will continue until the monetary system that perpetuates the money fraud collapses. At that point, we'll face the specter of being unable to borrow. Borrowing is, after all, the basis of economic growth in this country.

Perhaps it's not so much debt that is the problem, as access to credit, which isn't the same thing. The borrowers are always there. All it takes is a creditor willing to lend. Finding qualified buyers is harder, although the lending standards necessary to qualify for a mortgage in 2006 differ greatly than those of today, meaning what was only recently qualified is in face completely unqualified now.

The money is always there. It can be conjured into existence by Grand Wizard Bernanke and his band of Merry Bankers. The quid pro quo is the sale of Treasuries to too-big-to-fail bankers and the Fed itself in exchange for basically free rates on lending.

I bet if you could borrow a billion for less than 1/10th of one percent, you'd probably be able to make solid profits, especially when a 10-year Treasury (viewed as risk-free) is yielding 2%.

This means a billion borrowed would generate $20 million per year. A paltry 2% is not enough to placate investors in the banks, which raises the obvious question of why the banks and other investors even buy the Treasuries in the first place.

The answer: liquidity. Liquidity means there's an active market always buying Treasuries, so they can be redeemed for cash in a pinch. The cash, we know from 2008-9, can simply be conjured onto the balance sheets of any entity that wants to sell Treasuries, to "inject liquidity" into the system.

The Fed has the ability to purchase the Treasuries, or other kinds of securities, from anyone. The most recent effort to stimulate demand--Operation Twist--tries to invoke a recovery in the real economy by showering our economic system with excess money. As we now know, the

Treasuries can be used as collateral to further build a Ponzi pile of derivatives.

As unfair and corrupt as control over our system by Fed and the bankers may seem, leverage manifests as an even bigger threat. MF Global, for instance, was leveraged some 40-45 times, meaning a decline of just a few percentage points in the value of one underlying security--in MF Global's case, it was Euros--will spur a cascading failure, a giant margin call.

I've read many examples of how a monetary collapse might unfold. Rather than look at a crisis as economic, it's now necessary to consider the impact on our financial economy--what I've called the doppleganger economy. As more and more of our economy shifts over into the realm of synthetic profits and always expanding piles of debt derivatives, the real economy is put at greater risk.

The collapse will likely occur as a result of systemic failure, which was the apparent reason for the massive bailouts that happened after 2008. Rather than address the systemic problems, the response was to flood the monetary system with massive dose of liquidity. This policy response continues today, as Operation Twist remains on the table.

The systemic problem is too much debt, in toto. Yet the Money Power (Financial Industrial Complex) needs an ever-growing pile of newly created money to keep the system afloat. Rather than represent a way out, the ongoing bailouts have degenerated into subsidies that have, if anything, weakened the stability of our monetary system.

Ongoing appeasement of the financial industry lobby means that much-needed change in this crucial area continues to be postponed in the interest of short-run stability. Coming from the regulatory arena, such a monkey-see-no-evil attitude is clearly a worst case scenario and investors in all forms of debt should exercise extreme caution. Not to give investment advice, but with fixed income I'm looking to shorten maturity dates and up credit quality, although judging the latter can be highly subjective and based on ill-placed belief in a eviscerated monetary system called the dollar.

It's worth remembering money only has a value because it's not being overproduced. When too much money comes into an economy, the value of existing dollars declines. It may not happen overnight, or even in a few years, but the inevitable outcome of overproducing money (whether physical or digital) is a decline in a value of that money.

The only reason the dollar hasn't declined is because of its status as a world reserve currency. For years, oil could only be bought or sold in dollars or British pounds. Then along came Saddam Hussein, who sold his oil for Euros. We know what happened to him. Very recently, Iran opened an oil bourse open to accepting currencies other than the dollar. Coincidence that we bombed Saddam and are threatening to do so to Iran?

Back to Churchill's "Equal Sharing of Misery"

Obamacare teeters on the verge of collapse. It's a major competitive disadvantage in the global economy not to have health care for all like the Chinese or most anyone else. One huge economic impact of the cost of health care is the risk associated with exiting jobs that offer health care to the uncertainty of entrepreneurship and the steep cost of insurance--if you can qualify. For a family of four, a policy paid out of pocket might cost a fifty-something, self-employed entrepreneur $2,000 or more per month.

Put at the mercy of the same people who brought you Bush vs. Gore, the corpratists will certainly win the health care debate. The outcome will be higher health care prices, unless the government simply nationalizes the whole industry, as have virtually all other industrialized nations. Once the entire industry is controlled, simply say that a knee replacement costs $30,000, and it will be so. No doctor or medical establishment will be able to make any more, or less.

Socialist? Perhaps. Than again, some industries just don't work too well in the unregulated free market capitalist system we've been forced to accept by the Larry Kudlows and Mitt Romneys of the world. Health care is one of them. The sad part is that with a stroke of a pen, and better enforcement, we could instantly provide health care for everyone in our population. But too many of us persist on in the illusion that we're not socialists, that we're not propping up the pharmaceutical industries, banks, hedge funds, Military Industrial Complex, the Prisons Industrial Complex. Everyone in those industries is so dependent on the Federal doll. If they only knew how at risk their continued subsidies are, once the dollar collapses, that is.

A simple budget impasse could cause a rapid decline in government spending. On the heels of slow growth, especially in the reaches of the economically depressed fly over, budget cuts could do a great deal of economic damage. Being in denial as to the socialist leanings of our federal system though, most Americans won't see it coming 'til its here.

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Doppleganger economy

Bernanke's testimony today on the Hill gave some reason for hope that a nascent recovery is occurring. Readers here know I've been a bear on the markets.

There's no denying hiring is making a rebound. But are we really the same economy we used to be, back before financialization of our economy began.

Financial services companies--banks, insurers, hedge funds, brokerages--comprised less than 10% of the nation's overall GDP in 1980. Today, they control a stake equivalent to 1/3 or more of our Gross Domestic Product.

Look at what's happened to the Middle Class over the intervening period: incomes stagnant after inflation. The jobs once freely available have dried up across much of the Rust Belt, victims of downsizing and industrial decline. Do jobs remain? Of course they do, but they're of the "service economy" variety, paying less and offering fewer benefits than manufacturing, which has been drained as a result of offshoring.

And many of the jobs offered in the financial services sector have been lost.

Countries in East Asian are experiencing rapid growth as they expand manufacturing. Our money flows to them as we run trade deficits.

Sooner or later, the Chinese won't work for pennies. They'll demand more dollars for their manufactured goods. A decline in the value of our dollar could bring an era of cheap imports to an end overnight.

Back home, we heard in Obama's most recent State of the Union address rumblings of trade fricition with China. The President is trying to side with voters eager to blame Asia for what are structural deficits and competitive weaknesses arising within in our economy. Stemming the flow of jobs will require revitalization of our manufacturing base. Yet the Federal government has a lousy track record of sustaining industries through federal spending alone.

As an example, Obama proposed over $50 billion to develop America's nuclear power industry. That was before Fukushima. Federal funding to keep the nuclear power industry has fostered an industry wholly dependent on direct subsidies. Good luck with that. Read Solyndra, the recipient of direct aid. Coverage of the scandal is rare exception to the mainstream media's willingness to ignore cronyism and sweetheart deals. For that, we have traditional partisanship thrusting the issue forward, based on political motives,

Many of our pending difficulties can be traced back to our excessive government spending. Like the chronic hard luck gambler, we've abused our national credit card. It's been maxed out.

Now if the rules of the game weren't rigged, then it'd be lights out. We'd be done with our reckless spending since our access to money would be cut off. As an addict, our options would be either 1) rehab or 2) denial and a life of crime or prostitution to feed our habit.

Fortunately for our debt-addicted government, there is another option: print or create money out of thin air, then give it to the Federal Reserve, which will then in turn use it to buy our Treasury bonds. In this way the government can keep going on for a little while longer. Not forever--mind you--the inflation will make an end of the system, by making the government print and create dollars at a faster and faster rate, til they've been debased.

What's the Fed got to do with it?

The Federal Reserve is tasked with a "dual mandate" to fight inflation and unemployment, but are the two goals mutually exclusive. I mean, if by some reason more people were working, wouldn't we have more inflation?

Let's not assume the two mandates can be achieved simultaneously. Being skeptical of Fed dealings is a healthy exercise, at least for people who don't readily accept what the government tells them.

At a minimum, the policy objective to reduce unemployment skews the unemployment rate. People unemployed for six months disappear from the roles. We've seen the unemployment rate drop in percentage terms even when the number of unemployed grows!

Whatever the unemployment numbers, good paying jobs are scarce. Excess wages tend to be found in the financial sector, but even there, mass firings are possible.

A pyramid, our new economy has very little need of many people at the top. The pyramid has been described as neo-feudal, where people in the lower wage brackets slave away, indebted to the hilt, while tiny numbers at the top reap limitless benefits.

It's not so much that the wealthiest in our society got there on merit, though of course market fundamentalists relentlessly plug the Horatio Alger rags-to-riches myth which is at the center of preserving the status quo.

Another symptom of a pyramidal structure is the systematic elimination of unions. A "right-to-work" wave is sweeping state legislatures across the country. The plan, executed by neo-liberals, is to so weaken the wages of the workers that they'll be unable to challenge the status quo through organized labor. God forbid the peasants lift their heads from their fields long enough to storm the castle...

It's usually the middle class that leads sociopolitical movements capable of destroying the existing order and replacing it with something more egalitarian. The rich of course want the status quo to continue. And most of the poor aren't well enough educated to lead political movements, or have the luxury of actually sitting down to think about how the world or their lives could be bettered.

What can they do?

With interest rates, it's not like Bernanke can do anything. The Federal Reserve committed to maintaining interest rates at near zero through 2014. Do they know something about the recovery that the rest of us don't? I mean, why be so sure that inflation won't be climbing?

My guess is that the Federal Reserve knows the recovery will be slow because of persistent unemployment. If the unemployed were to suddenly find jobs, there'd be a massive increase in spending and labor costs would rise. Rising labor costs are of course the number one indicator of rising inflation.

Now, it's possible interest rates could rise regardless of the Fed policy position. If owners of Treasury debt were eager to sell, the interest rates might rapidly climb.

The Federal Reserve is the number one holder of our government's debt. That won't be likely to change. The reason the Federal Reserve is the top holder of our debt is that they, as a central bank, have a limitless supply of credit.

Of course much of the money borrowed through the Fed goes to buy U.S. Treasury bonds which, combined with the interest they pay, gets fed back to the Federal Reserve and banks holding our debt.



Unlike the Chinese, Japanese , or anyone in the private sector, the Fed needn't derive profits for a Board of Directors or shareholders eager for higher returns. Instead the Fed serves the financial oligarchy governing the financial system of this country.

In addition to rewarding shareholders--banks--with dividends, banks are granted access to the Federal Reserve's numerous credit facilities. The quid pro quo is made secure, even from such eccentricities as the mortgage debt debacle, with access to infinite quantities of Federal Reserve credit.

This closed loop system has increasingly less and less to do with the real economy (RE.) Instead it serves the interests of the benefactors of the Financial Economy. Essentially the F.E. is a parasitic attachment to the mechanics of stable and orderly growth through market democratization, i.e. the maximum possible gain to the broadest segment of the economy: the middle class.

Under the new paradigm, the gains of economic growth increasingly are allotted to those with the most capital. Indeed, the imbalance between rich and poor is so wide now in this country that it may have crossed a threshold associated in history with times of great social instability, and even revolutions.


The FE hurts the RE. The FE drains capital away from where it can be invested into making real things. Instead capital goes towards speculation, and excess wages (a concept which always refers to what others get paid, not me.) The money that the Fed lends so eagerly actually just gets buried into debt securities.

The idea is that future cash flows can be monetized (turned into profit now) through a process called securitization. Once debt is bundled into marketable securities, it can be used as collateral which can then be used to--you guessed it--buy more debt.

So convoluted is the system that the total value of mortgage derivatives in 2007-8 far exceeded the value of the entire outstanding housing stock of the country! In other words, instead of the $13 trillion bailout with its myriad of Federal Reserve discount lending windows and other facilities, the government could have bought out every mortgage in America.

One has to ask why they didn't. I mean, if the assets underlying the mortgage debt are only worth $4-5 trillion, why then do the banks need to be recompensed three times as much?

The answer is obvious to me: cronyism. Turns out the same people who lend, trade, and profit from the debt securities have the most political influence in Washington. Through a process called "regulatory capture," regulators and their supervising agencies become infiltrated by lobbyists from the companies being regulated.

At one end of this, we see the Madoffs--outright thieves--who were able to sustain a Ponzi scheme. At the other end, well connected former senators like New Jersey's Corzine are able to get away with outright theft, a transfer of funds in the last days of MF Global from private customer accounts to the corporate body responsible for safeguarding them.

Then of course the response is that the MF Global funds are "unaccounted for," a euphemism for "stolen" given in the niceties of our media glitz age. And if popular fervor over the misplaced funds were to rise high enough, chances are our government will elect to refund the stolen money either through an existing (albeit underfunded) program like the FDIC, or grant it outright, essentially enabling those who stole the money to remain anonymous and unaccountable.

///

Money Power bailout fuels growing rage

"We are the 99 percent!" the chanters chantabout halfway through this video, taken in the streets of downtown Chicago. Soon the chant turns to "we got sold out...banks got bailed out." Michael Moore's reference to how the banks urged bailouts and "we bought it" during the "We Ain't Broke" speech in Madison in March echoes the same meme.

As the occupywallstreet movement rages, its momentum grows, as many have turned on the Wall Street establishment. The amount of money poured from public coffers into those of the mismanaged banks could reach over $13 trillion, when the Federal Reserve's activities are exposed.

Among the long list of recipients of Federal Reserve largesse were foreign banks, including the central bank of Libya. Why, one might ask, if the purpose of the largest bailout in history was to protect Americans, why so much help for foreign banks? Last time I check, not too many Americans--at least middle class ones--held deposits in Libya. The fruits of intervention go the investment class instead, socializing private losses with borrowed public funds.

It's important to understand how the American people got snookered. Some of their taxes (or to be more accurate, their children's taxes since this is mostly borrowed money) went to TARP, which was the direct subsidy to the banks and conglomerates hurt by the collapse in mortgage securities.

TARP was sold as a stimulus package. A good portion of TARP consisted of tax cuts which were meant to stimulate economic activity. Tax cuts aren't direct expenditures, but they do represent a loss of revenue and thus a need for more future taxation (including of course all the interest that accrues until the debt is repaid.)

Taxes and interest payments on borrowings will be used to finance the current deficit--debt spent on wars and bailouts, although the immediate impact of the latter may not be felt for some time, assuming toxic debt doesn't infiltrate the financial markets once again. Interest payments on government debt have been minimal but are set to rise, time bomb-like, consuming much more than the 7% of the budget that it currently does, with the average interest rate on outstanding government debt at about 3% currently.

TARP itself is just a tiny fraction of the total amount lent to banks and financial entities. The Federal Reserve's activities opened the spigot, allowing everyone connected to the financial establishment to borrow. The idea was to allow those in established financial circles access to as much capital as they want. Providing money virtually free of any interest meant that any borrowers in trouble could repay creditors, who were the banks at the top of the economic pyramid the Fed intended to protected. This wild feeding of debt--to reflate the debt whose value had crashed--extended even to the wives of bankers. See the Rolling Stone articel by Matt Taibbi here.

The implications of so much borrowing aren't readily grasped by average Americans. The sheer size of the entire derivatives debt bubble is over $250 trillion, a number so large none of us could scarcely fathom. We got take every bit of wealth owned by every person on the planet and not be able to come up with that much. See the post by Tyler Durden on this topic at Zero Hedge.

The cause of so much debt is the ability to leverage. Much of this borrowing is "off balance sheet," generated by trading and lending among TBTF financial entities. No direct financing is necessary with this form of shadow banking--a promise to pay is enough to keep the derivatives shell game rolling.

Under normal circumstances, the promise to pay is backed by access to nearly unlimited quantities of capital. However, should one of the players lose access to new money--Lehman--then the whole system can crash because the derivatives are based on trust. The tiny bits of over-leveraged assets which serve as an anemic tidbit of collateral offer nothing more than a token connection to the vast pile of leveraged debt tied to it.

It's important to lift up the rock and see how this insidious derivates trade, coupled with access to vast amounts of almost free capital--goes on. Leverage is essentially the piling up of debt based on other debt. One purchase of debt becomes the collateral for a second loan. The second loan can be several multiples higher than the initial amount of securities bought. In this way profits can be synthesized--generated without actually owning anything but rather through pushing piles of purely speculative, highly leveraged money around to create more synthetic, paper profits to further leverage more speculative capital, so on and so forth until the underlying collateral may be leveraged 35-45 times.

Unregulated speculation on oil is a good example of shadow banking at work. Some of my readers may have remembered the testimony of Commodities Futures Trading Association director Michael Greenberger before a Senate subcommittee a few years back bemoaning dismantling of regulatory constraints on speculation by the banks in oil futures...[ Here is a recording of an Greenberger interview. I blogged on Greenberger in two posts from 2008 and 2009. A C-SPAN interview can be found under Greenberger's C-Span bio. ]

Now with real assets, take silver for instance, there's the silver sitting there being used as collateral. So if the borrower puts up the silver as collateral, the lender can grab hold of it should the balance on the borrower's account shrink below margin requirements. (As a sidenote, Comex did increase margin requirements for the third time recently, in a move which has driven silver below $30/oz.. Some theorize the tightening margin requirements aid JP Morgan, which has a huge losing short position on the metal.)

Back to our leverage example. Banks and other financial entities with access to virtually interest-free loans found themselves able to leverage up, once freed of the regulatory shackles imposed on the industry by Glass Steagall, a post-Depression regulatory framework meant to avoid the kind of over-speculation by commercial banks we saw prior to the '08-9 collapse.


A glimpse back at the '08-09 crisis might serve to reveal the genesis of the next crisis. After all, the bad debt is still out there. Sure the Fed's outgoing spigot has refilled the depleted coffers of the banks. But the velocity of money--a key indicator of economic growth--is slow. The velocity of money is a measure of how fast it circulates: too few hands touch it, then the economy doesn't benefit.

For instance, if a millionaire gets a refund check from the government, rather than spend it by putting it into circulation, they might let it languish in a deep, dark pool of capital where it won't see the light of day. This is like the sheikhs receiving huge petrodollar deposits: the agreement was that those dollars would stay out of the U.S. and therefore not contribute to inflation.

The Fed doesn't want the money to get out there. If for instance social security benefits were raised more people would get more, spend more. Wages would be more likely to go up as a result of more economic activity, demand.

Some inflation is a good thing. The Fed has said as much. Yet recently Bernanke did acknowledge that the persistent unemployment did constitute a failure. And of course much of the reason unemployment is high is because money isn't circulating in the economy--low velocity. Then there's the $2 trillion corporations have left in cash management accounts earning next to nothing.

The Fed is tasked with reducing inflation and maximizing employment, but in the current dilemma, it's uncertain if it can achieve one policy objective without hurting the other. If enough money--and there's a lot of money out there--circulates fast enough, inflation will grow rapidly. Increasing economic activity does stimulate inflation, but the opposite--too little growth--becomes a deflationary monster--as described by George Ure--eating up the increase in the money growth, which Ure cites to be over 30% per annum. Even with so much new money emerging--in digital form--if velocity is stagnant, the economy can't be stimulated through monetary growth.


One wonders if the Fed hasn't been tasked with a third objective: maintaining a rapidly growing pile of Federal debt. If the carrying cost of so much debt increases--by having to pay more interest--then the government's fiscal situation would deteriorate rapidly, consuming ever greater portion of the budget for interest payments.

Operation Twist may be mostly about buying Treasuries to keep the deficit-running fiscal operations going forward. By keeping money from (re-)circulation, at a low velocity, the Money Power does allow inflation and prices to grow less quickly despite what would be the typically result from wild government spending we see today.

For the Fed to act as buyer of first resort makes our monetary system a Ponzi, a means of sustaining government spending through the Fed's purchase of government debt. Theoretically, new money can be added to the system by buying Treasuries forever. But the Fed's actions don't incur in isolation; the more that the Fed buys, the more evident the scope of monetization (of the debt.) Eventually interest rates will rise, either because no one other than the Fed buys our Treasuries, or because of expectations of rising interest rates due to inflation. By reducing the interest rate to zero, savers get savaged, reducing further what they might earn, especially retirees dependent on income-producing investments, as this Marketoracle article by Dan Amerman explains.


Back to the lessons not learned from the the last crisis. There's the issue of accountability. Not only did not one CEO of the major banks lose their job, there's not been a single prosecution (although the SEC did make some rumblings about suing the TBTF banks recently.)

A lack of accountability will surely encourage more bad behavior, a psychological condition called moral hazard. Why would any of the banks change their ways? If the addition of more debt brought federal relief, why would the banks shy away from taking on too much debt. So the leverage monster is back on.

So despite all the prognostications of doom, the collapse didn't come to the world economic order, or at least hasn't yet. Markets bounced back, until recently where they've become especially volatile. If one were to examine charts of the Dow and Fortune 500 earnings, things might not seem too bad at all. So why hex it, you might ask?

Well, I need look no further than the huge--and mounting pile of debt derivatives--to say that the system is at dire risk. Not all banks have participated in the crazy derivatives shadow banking system, but all banks are clearly at risk of being damaged by another inevitable collapse of their loan portfolios. The reasoning simple: by piling one debt on another, and that atop even more, it only takes one little miscalculation at the bottom of the house of cards to bring the whole banking system (and monetary system on which it depends) down.

We can see how the collapse in residential mortgage securities valuations decimated the ability of the banks to lend. Without new mortgages, there's the secondary impact of declining home prices. If homes decline in value, the banks' greatest source of collateral--mortgages--declines and so too does the credit quality of the bank. Now if the banks hadn't been encouraged to lend as eagerly during the Bush years, they might not have such a vast inventory of unsold homes nowadays, but that's history. Likewise, if banks hadn't sold mortgages to other financial entities, and kept them, they might have taken more precautions with the creditworthiness of their borrowers. Instead the originating firms quickly sold the new mortgages away, which of course encouraged risk-taking with the quality of mortgage applicants, since the originating firm need not worry about whether the loans would eventually be repaid.

Enough of the history lesson...or not? Can we ignore what happened in the past? The shelf life of history lessons for most Americans can probably be counted in months, not years. So we're clearly primed for another crisis. And the careless way we approach the accumulation of debt means we're always deeper in debt than we care to acknowledge, meaning that we will face austerity measures like the Greeks, yet steadfastly refuse to acknowledge--perhaps due to our belief in American exceptionalism-- that we could be in trouble.

From personal experience I know it, that silent creeping of debt until it metastasizes. Once we "burn through our credit" we only two choices: to repay it or declare bankruptcy. With government however, there is a third option: print it away. If the government can continue to get the Federal Reserve to buy all its bonds, it will have an inextinguishable source of financing.

The Fed meanwhile will accumulate more and more our our nation's debt. For now, the American people don't have to deal with the immediate effects of so much borrowing. Because of the ridiculously low rates, the amount of our current budget devoted to interest payments is only around 7 %. And even if the amount we're higher, it'd simply be borrowed.

I'd make the case that until the average Americans is impacted by the scale of government borrowing they will remain blissfully ignorant about it. This is like a marriage where one partner is hiding the scope of their credit card borrowings from the other. Uncle Sam keeps getting new credit cards as he maxes them out. The US public--meanwhile--doesn't get the bill so they don't know just how bad it really is--until they--like the spouse-in-the-dark--discovers theircredit score has been violated and the debt load is not Uncle Sam's problem alone, but theirs as well.

The Federal Reserve is the enabler for the debt addict, which is our government. Fedgov has grown so bloated that it must have the Federal Reserve around to feed it, like some chronically obese fat man confined to a bed. Its weight keeps growing, and it demands more. Unfortunately, the only way to keep the status quo going is to disguise the scale of the addiction and thus perpetuate the state of denial until the enabler succeeds in letting the addict die from overeating.

Obviously government can't gorge themselves to death. So which form such a collapse might take is a topic for another day, but I'd highly recommend taking steps to prepare and mitigate the consequences of a collapse of purchasing power of our money, coupled with Depression-like economic circumstances unable to be remedied through quantitative easing in any quantity.

Creative destruction offers reset at great cost

We're in a real bind now, as economic growth isn't terribly strong, yet the fiscal burdens of carrying so much debt forward will put further stress on our government's ability to stimulate the economy.

The problems we face are structural, meaning we can't expect improvement without attacking fundamental economic problems. One of these is confidence in our money. Another is the shift of industrial production overseas. Still another is real estate--as long as prices fall due to foreclosure (indicating too much house, too little income, or both) there persists too little potential for price appreciation, which was once the magic ticket for the Middle Class.

Another impediment is reestablishing trust in the stock markets--democratizing the stock market investing was a great plus during the Clinton years in particular. Now, with the average stock only being held for something like 12 seconds, the average investor is in the unfamiliar waters of predatory short-term trading. And dominance over Wall Street by hedge funds and TBTF/bonus-crazy banks mystifies the process of investing, turning it into an increasingly volatile casino with fewer and fewer players.

These structural impediments must be dealt with in order to reestablish real, sustained economic growth. Politicians can pretend changing this policy or tweaking that one will really make a difference. It can't. That's why the call them structural problems.

All the political haymaking can't amount to anything because Washington is itself the source of the problems. Look at Obama's performance, which has defied his pre-election positions on bailouts for the banks, Guantanamo, warrantless eavesdropping, Afghan escalation, to name a few.

Once a President makes it into office, their first goal is re-election, not meeting campaign promises. While making liberals happy is nice, the Clintonian effort to triangulate White House positions to appeal to the maximum wide demographic has made a reappearance. Call it neo-liberalism, the reshaping of political priorities based on profit-centered economic imperatives.

For Bush's second term, the targetted constituencies were NASCAR Dads and Soccer (security) Moms. The issue that was chosen was therefore national security, which of the two patriarchs (blue clan or red) makes you safer?

Tacking to the Right on security issues, Bush was able to succeed. Obama intends the same thing. Some disgruntled former supporters have called his Presidency Bush's third. And what are progressives supposed to do? Vote for the Republican candidate? There's no choice at all--Obama knows that--and progressive ideals are left by the side of the road, abandoned as simple smoke and mirrors meant to propel Obama into office, mangled half-truths and innuendo having served their purpose.

It's time Americans were less naive about the way their government works. We no longer have representation in Washington--it's a capital dominated by special interest groups and corporations. Money rules. The two-party duopoly and resulting lack of real choice means elections for national office are a simple veneer slapped over a non-choice between corporatist Dems and social conservatives.

Most Americans choose to not stay informed, nor participate. Apathy is no doubt a contributor. If your vote never seems to change things election after election, there's a good chance the past will repeat itself. Interminably. So many choose not to care.

With our monetary system, the price of ignorance will be quite high. People are already seeing price rises, portions shrink, or both. The number of Americans on food stamps is at a record high. Off-shoring has drained incomes and job security for the Middle Class. Boomer retirement savings are anemic. It's both sad and ironic that many from our nation's most productive and accomplished generation will be dependent on government handouts to meet minimal living standards in their old age.

It's like the final days of the Russian empire. When the USSR finally fell apart, it was the pensioners who were most hurt. Old people, retired government workers, apparatchik and the like felt the debasement of the ruble as prices in the newly formed Russian nation rose dramatically.

I'm anticipating a similar scenario like that in the future here, perhaps a situation like Argentina's about ten years ago. We certainly have ripe conditions for a radical devaluation of the dollar. Like Argentina, our government could be forced to "borrow" bank deposits in order to pay foreign creditors.

For now, the Federal Reserve is handling our government's fiscal crisis, meaning the fiscal crisis is being handled "in the family". Perhaps the Fed intends to keep on buying U.S. Treasuries indefinitely, using the dollars we let them lend back to us, with interest of course.

Now the Fed itself doesn't profit, despite the swollen balance sheet; its charter is elevated beyond the balance sheets and profit statements. It's instead the sheer volume of money that passes through their hands that presents the threat. The Fed allows our government to borrow so much--more than would be allowable without its limitless buying of Treasuries--that they've become an enabler, serving to saddle our Treasury with so much debt that we'll never be able to repay, at least not without debasing the dollar.

It's not a debt default or credit downgrade where the worst effects of dollar debasement will appear.

"The United States can pay any debt it has because we can always print money to do that," said Alan Greenspan on Meet The Press on August 7th. We can always repay--our Treasury can always print dollars up, at least --or create them electronically as only 3% of our money exists in physical form.

Inflation will be the problem. If it weren't for horrendous, unchecked unemployment--the product of the departure of so many jobs overseas--we'd be feeling it even worse. Instead prices remain lower--a lot lower--because overall demand has trailed off.

If the unemployment picture were to improve, wages and income would climb along with rising prices and demand for higher wages. These pressures would present the Fed with a threat to its mandate to reduce inflation. So the Powers That Be actually have a vested interest in seeing unemployment continue, whatever the human cost.

Now in the Fed's defense, they do have a mandate to maintain maximum employment, and this they've attempted to do by keeping interest rates low. That's what's known as a monetary policy. The Fed can try to influence interest rates but can't control them.

One reason monetary policy has limits is because of fiscal policy--control over how much our government spends--is so out of control.

As much as the budget brinkmanship failed to reign in spending in any meaningful way, I'd say it's inevitable that our currency weaken given the size of the apparently unending budget deficits. And if you think all the Republican posturing actually saved any money, you must've missed the huge savings of $7 billion in 2011 we can fawn over thanks to the Tea Party.

To make matters worse, the Republicans think we can have our cake and eat it too. Taxes have been vilified. Reduced to the lowest point in decades, Federal taxes are too low to pay our bills. The lack of tax receipts mean we must borrow. At some point even the Republicans will have to acknowledge the truth--that we're spending way beyond our means and despite all the rhetoric, they've been completely unable to reign in spending in Washington.

* * *

I wonder if capitalism is flawed. The Kondratieff cycle, named after a Russian economist, occurs every seventy years or so. Industries overuse capacity, the means of production have shifted to new countries, the means of production age and grow less efficient. Kondratieff thought that periodic busts helped restore capitalism's vitality, by forcing new creative solutions to problems plaguing the last economic cycle. Industry responds by forming modern processes that do more for less, enhancing productivity and starting off the beginning of another long cycle.

The price of gains in productivity and efficiency seem to be considerable economic pain. Maybe that's the only way a capitalist system can unburden itself of outdated and less efficient modalities. Creative destruction, so to speak.

The reality: technology makes it no longer practical to utilize as many people as we once did in manufacturing and agriculture. As an example, a few years ago Fortune 500 Company down the street put in a new, multi-million dollar machine in their factory. The total number of people needed to operate this machine: about 12.

Labor resources need to stay as nimble as possible to meet the elevated needs of high-tech manufacturing, where computer skills are vital. Paradoxically, a growing problem in American manufacturing appears to be the lack of adequately trained (technical degree or similar) working folk. This even as unemployment lines continue to grow.

Where capitalism should encourage retraining and redevelopment of resources, it seems more prone these days to reject outright those workers with dated skills. So merciless is the job environment that those unfortunate enough to be unemployed are actually being "delisted" on employment sites (see petition). Here's the e-mail fromchange.org, dated August 18th:
On Monster.com, employers are allowed to prevent anyone who is currently unemployed from applying for a job. 
It's cruel to the millions of Americans out of work -- but you can put an end to it this week. 
Kelly Wiedemer, who lost her job in 2008, has launched a campaign demanding that Monster.com ban these discriminatory ads.  Please click here to sign Kelly's petition. 
A nationwide backlash against the company, which treasures its reputation as a website that helps people find jobs, will force Monster.com to act. 
Please sign the petition today asking Monster.com to stop discriminating against the unemployed. 
Thanks for being a changemaker,
- Jess and the Change.org team
OK, so the message is clear: if you're out of work, you're on your own. The people who need jobs the most can be marginalized, like the homeless or mentally ill.

In the capitalist machinery, an individual is judged by the size of their bank account. The more you make, the more you can have. If for some reason you make less, it's because you deserve less. The message is an all-out assault on the ego: you're unemployed and deserve to be. How just like the treatment for a minority group that goes unaccepted by society. As minority group members know all too well, if you're not in the majority, your needs just aren't considered as valid. And if you fail at wage-earning, then our society judges you a failure. How binomial.

I'm disgusted by how people on the Right yearn for some mythical Ronald Reagan-esque time when all we have to do is for government to cut taxes and deregulate. Then everything will be fine once again. Well, it won't. We've burned through our credit--$14 trillion so far, with the present value of future liabilities like Medicare amounting to five times as much.

Now all that borrowing capacity has been compromised, we're left to turn to shady organized crime loansharks, otherwise known as bankers. The price of borrowing from them is that we must run our printing presses nonstop to churn out enough dollars to keep the Great American Money train rolling. This in economic terms is monetizing the debt, a process which leaves initial investors in dollar-denominated assets much poorer as newer, cheaper dollars are forced onto the economy, eventually making everything more expensive.

Hippie days here again?

Wanna cop out? Go the way of the hippies? Imagine a lifestyle today without the constant demeaning influence of things like jobs and money. I mean who needs that? What more noble ideal than to roll with the changes, liberated of concerns over superficial things--at least to the hippie--like jobs and money.

There was a real joy in touring with the Grateful Dead. I didn't see enough shows to qualify as a deadhead but did get to taste the life. Enduring the constant movement from venue to venue was really draining. Just a few concerts would drain you physically and emotionally.

I don't know how some people could continue day after day, show after show, city after city but it could be done! The lifestyle comes at quite a cost from constant indignities and logistical struggles. The reward actually comes in the little things denied this existence: peace, quiet, just stopping and smelling the roses becomes a luxury.

Perhaps freedom still waits on the open road. I've heard of a new breed of Americans who choose to live a nomadic lifestyle, searching for work from town-town. They use RVs as the modern equivalent of frontier wagons, except instead of settling westward, the "Workcampers" go in seemingly random directions in search of work.

See the alternet.org article by Michael Thornton here.

Workcampers might be an escape from the ordinary relationship between an employee and their place of work. The entire American suburb was a predecessor development even farther out of the city. Yet those migrations were matters of choice. The suburbs were more livable.

Perhaps the lifestyle of the Workcampers shows that economic necessity takes precedence in our lives. Like herds of migrating animals, they'll go wherever the work is.

This kind of lifestyle might be a free choice, like by retirees with sufficient income to survive this lifestyle. But the Workampers' state of constant motion depicted in Thornton's article work is more a matter of survival than choice.

Whatever criticisms that can be levelled at the migrant workforce, it's nothing new. During times of extreme economic stress, people from economically depressed states to move to states with brighter prospects. Gold rushes could motivate large blocks of people far into the hinterlands--all for riches. Today's modern-day equivalent is more like a travelling carny road show, and no pot of gold lies anywhere behind the rainbow just long, grueling hours for little pay.

Many 'Okkies' fled their home state of Oklahoma when the Dust Bowl of the Thirties hit. California took in many of them. If the economic equivalent of a Dust Bowl were to hit, people might pack up and move towards more appealing job localities, like lights at the end of the tunnel. Yet many of the jobs the Workampers get are of the minimum wage variety. And the more people who need lower, service-end jobs, the more challenging the hiring process and less well paying the offerings.

A community can't be built if neighbors are constantly coming and going. What of all the relationships people need to form? I guess as a Workcamper, you would make friends with those living a similar nomadic lifestyle.

Not sure how well the Workampers could reorient themselves to a particular community, much less be welcomed. As a Workamper visiting more sedentary friends, you could park your RV in the driveway like Cousin Eddie (played by Randy Quaid) in the Chevy Chase classic Christmas Vacation. (IMBD)

I've heard of rows of Rvs parking in California streets, next to the beach and so on. Something not so bad until it happens to you. It's easy to be progressive with where other people live if it's nowhere around you.

So the Workampers will always be a subgroup, with limited ties. In time, though, I guess recurring migrations could create bonds among the --literally--journeymen and women who make up their ranks. And at least it's a voluntary choice to not be bound by geography.

Some of us could probably benefit from a more mobile lifestyle. Loosen things up. Not to mention seeing more of our great nation. Best of all, by travelling we can see our surroundings a little differently, by expanding our minds.

Turning travel into a full-time lifestyle isn't easy. I guess photographers could do it. In the 19th century, newspaper publishers, for instance, would try out an area, printing as few as a single issue of their publication before moving on. Entertainers, traveling troupe might also be able to make it, though a great deal of talent might be needed to make a meager living from that career choice.

Of course there will always be the greats, who can market themselves at a premium. But they are few in number indeed.