Apr 122013
 
 April 12, 2013  Posted by at 12:23 pm Finance


A report published Thursday by the real estate industry in the Netherlands states that the average home price is now 18% lower than it was at the peak in 2008, while detached homes lost 20%-25% (March 2013 YoY prices fell 6.8%, says Eurostat). A separate, earlier, report estimated that 20% of homes, or over 1 million, are now underwater.

Today's report comes hot on the heels of a study issued Wednesday by a government commission, which took a full year to prepare and 121 pages to explain what went wrong in the Dutch housing bubble, and what should be done now to correct it.

The core problem is simple: from 1995 to 2008 home prices more than tripled (rose 200%+). Hence, if we round off to a 20% drop from peak levels, or 60% from 1995 levels when prices were a third of what they were in 2008, there's still an increase of about 150% from the starting levels that needs to be dealt with. We can discount for, and let's be generous, perhaps 50% for overall price inflation, but that still leaves us with a 100% increase, which is quite a bit more than the 60% absorbed so far.

This means that, seen from the 2008 peak perspective, a 20% price fall has been completed, and another 33% drop is needed to get back to where it came from. Some may cite reasons why prices should remain elevated, but that smacks too much of the "this time is different" argument; one might as well argue the opposite. A main point raised is that demand outstrips supply, but demand is not what people want; it's what they will be able to afford. And the Dutch economy is shrinking.

Well, you see the problem by now, of course: like many other nations, the Dutch today feel quite strongly that they have suffered enough already, and someone somehow needs to revive the housing market. But like everyone else, the Dutch wish to wish away the problem of the not yet corrected part of the pricing model. In their case, they want 200% (1995+100%) to be the new normal (a.k.a. the new black).

Not surprisingly, the government report says that A) all parties are to blame, and B) the government needs to get more involved, i.e. make sure loans become available for people who now can't get them, a.k.a. people who are not the most likely prime candidates to buy a home that's still some 33% overvalued. Though, admittedly, sucking in those last remaining suckers would prop up moribund builders, agents and lenders for a while longer. Whether that's a government's task is at the very least highly questionable (obviously, other countries, including the US, work on similar resuscitation efforts).

The most hilarious I've seen to date coming out of the Netherlands (a good second was:" build more homes"!) is the proposal for the government to artificially raise home rents so people will be more likely and tempted to buy a home. An act which, incidentally, has recently been stripped of its most flagrant artificial incentives.

Incentives like the 105%-110% mortgages offered by lenders to everyone who could fog a mirror, but more than that, the main one, a very generous mortgage interest deductibility system, which at some point had people believe they would be stealing from themselves if they didn't buy a home. The more you borrowed, the better off you were. The Dutch government stood by and did nothing (except count the extra tax revenue). And now a government committee says everyone's to blame, not just them. Incompetent inglourious lying basterds.

Throughout the western world it's been an active collaboration of the governments and the banks and the real estate industry and the builders. For private parties, it's just a nice one-off windfall (if you're the boss). But if tax rates remain the same, tripling home prices are such a windfall for any level of government that it's really worth it to encourage the madness where and whenever you can. It doesn't get more predictable than that. And neither does the follow-up: with prices, but especially sales, dropping off a cliff, tax revenue falls, and since there's nothing as addicted to anything as a government to taxes, services and benefits go out with the bathwater. But only after all lenders have been made whole (Dutch banks have mostly been nationalized) with the – largely future – tax revenues of the home buyers and their unborn progeny.

It's a very simple story really: this is a widespread tale of western societies transforming themselves into pyramid schemes; or perhaps we should say one big global Ponzi scheme. And these Ponzi things collapse, and there's nothing anyone can do to "fix" that: the poisoned chalice must and will be emptied to the last drop. Only, the politicians – legally – have their hands in everyone's pocket, so they can throw around trillions of dollars and euros to hide the process of the plunging system for as long as it lasts. That's where we're at right now.

And it's not that all of these folks have evil minds; the intelligence level of politicians in the Netherlands approaches zero as much as it does in other western countries. The issue is that the entire system has blinders on, the blinders of ever-lasting growth economic "education", and of when you have none, do what you can, sell your grandma if you must, to return to growth ASAP. A few who understand it could be labeled evil; the rest are all blinded by the lights of power. And at best completely useless when it comes to governing a society that is not growing rapidly and happily.

They can think in only one dimension, and that one-dimensional thinking can in the end lead to one end only: complete and utter disaster. It's everything on red every time and every day, and that's not how the world works. Every time black comes up is, for these people, nothing but another reason to put it all on red again next time. A surefire recipe for mayhem. But it's all they have ever learned.

Still, don't take my word for it. Christoph Schult and Anne Seith laid it out quite well in Der Spiegel last week:

Underwater: The Netherlands Falls Prey to Economic Crisis

"Underwater" is a good description of the crisis in a country where large parts of the territory are below sea level. Ironically, the Netherlands, widely viewed as a model economy, is facing the kind of real estate crisis that has only affected the United States and Spain until now. Banks in the Netherlands have also pumped billions upon billions in loans into the private and commercial real estate market since the 1990s, without ensuring that borrowers had sufficient collateral.

Private homebuyers, for example, could easily find banks to finance more than 100% of a property's price. "You could readily obtain a loan for five times your annual salary," says Scheepens, "and all that without a cent of equity." This was only possible because property owners were able to fully deduct mortgage interest from their taxes.

Instead of paying off the loans, borrowers normally put some of the money into an investment fund, month after month, hoping for a profit. The money was to be used eventually to pay off the loan, at least in part. But it quickly became customary to expect the value of a given property to increase substantially. Many Dutch savers expected that the resale of their homes would generate enough money to pay off the loans, along with a healthy profit.

More than a decade ago, the Dutch central bank recognized the dangers of this euphoria, but its warnings went unheeded. Only last year did the new government, under conservative-liberal Prime Minister Mark Rutte, amend the generous tax loopholes, which gradually began to expire in January. But now it's almost too late. No nation in the euro zone is as deeply in debt as the Netherlands, where banks have a total of about €650 billion in mortgage loans on their books.

Consumer debt amounts to about 250% of available income. By comparison, in 2011 even the Spaniards only reached a debt ratio of 125%.

The Netherlands is still one of the most competitive countries in the European Union, but now that the real estate bubble has burst, it threatens to take down the entire economy with it. Unemployment is on the rise, consumption is down and growth has come to a standstill. Despite tough austerity measures, this year the government in The Hague will violate the EU deficit criterion, which forbid new borrowing of more than 3% of gross domestic product (GDP).

It's a heavy burden, especially for Dutch Finance Minister Jeroen Dijsselbloem, who is also the new head of the Euro Group, and now finds himself in the unexpected role of being both a watchdog for the monetary union and a crisis candidate.

Even €46 billion in austerity measures are apparently not enough to remain within the EU debt limit. Although Dijsselbloem has announced another €4.3 billion in cuts in public service and healthcare, they will only take effect in 2014.

"Sticking the knife in even more deeply" would be "very, very unreasonable," Social Democrat Dijsselbloem told German daily Frankfurter Allgemeine Zeitung, in an attempt to justify the delay. It's the kind of rhetoric normally heard from Europe's stricken southern countries. The adverse effects of living beyond one's means have become apparent since the financial crisis began. Many of the tightly calculated financing models are no longer working out, and citizens can hardly pay their debts anymore. The prices of commercial and private real estate, which were absurdly high for a time, are sinking dramatically. The once-booming economy is stalling.

"A vicious cycle develops in such situations," says Jörg Rocholl, president of the European School of Management and Technology in Berlin and a member of the council of academic advisors to the German Finance Ministry. "Customers have too much debt and cannot service their loans. This causes problems for the banks, which are no longer supplying enough money to the economy. This leads to an economic downturn and high unemployment, which makes loan repayment even more difficult."

The official unemployment rate has already climbed to 7.7%. In reality, it is probably much higher, but that has been masked until now by a demographic group called the ZZP. The "Zelfstandigen zonder personeel" ("Self-employed without employees") are remotely related to the German model of the "Ich-AG" ("Me, Inc."). About 800,000 ZZPers currently work in the Netherlands. [..] (ED: at a working population of maybe 10 million.)

The Dutch have long been among Europe's most diligent savers, and in the crisis many are holding onto their money even more tightly, which is also toxic to the economy. "One of the main problems is declining consumption," says Johannes Hers of the Netherlands Bureau for Economic Policy Analysis (CPB) in The Hague, the council of experts at the Economics Ministry. His office expects a 0.5% decline in growth for 2013. Some 755 companies declared bankruptcy in February, the highest number since records began in 1981. The banking sector is also laying off thousands of employees at the moment.

Because of the many mortgage loans on the books, the financial industry is extremely inflated, so much so that the total assets of all banks are four-and-a-half times the size of economic output.

The main problem seems to be that the entire westworld economic system is based on belief alone. The Netherlands has become a society built entirely on delusion, and it's by no means the only one.

Recently, 80-year old Dutch somewhat-euro-sceptic right wing statesman Frits Bolkestein said that within 5 years, Germany, Holland et al should and would introduce a second currency besides the Euro. He was adamant France could not be part of it: "they're broke!". It seems to me, so is Holland. It must be an increasingly lonely time to be Angela Merkel.


The above made me think of a nice song by a nice name for a band: "Do you believe in the Westworld?" by The Theatre of Hate. Yup, from the Thatcher days; and please also do read  this brilliant Russell Brand take on Maggie. By the way, the BBC right now debates whether it should play, in its weekend charts show, the Wizard of Oz song "Ding Dong, The Witch Is Dead", which has shot up the charts after Thatcher died.

 



The yellow sun was setting in tombstone

The citizens were gone, but not to their homes

By a freak a coin in the piano made it play

But only the wind and the dust heard it say

Do you believe in the Westworld?

From the south on a wind in walked a cowboy

The saloon was dry but his guns were well oiled

Somehow he remembered when he kissed his wife

And when he said goodbye

But that was before the circus with the bear arrived

Oh the bear it roared as the gun was fired

Then the cowboy turned the gun on himself as he sang

"No-one's alive"

Do you believe in the Westworld?

 


Home Forums Dutch Delusion: Europe's Core, She Rots Some More

This topic contains 0 replies, has 0 voices, and was last updated by  Raúl Ilargi Meijer 6 years, 5 months ago.

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  • #8388

    A report published Thursday by the real estate industry in the Netherlands states that the average home price is now 18% lower than it was at the peak
    [See the full post at: Dutch Delusion: Europe's Core, She Rots Some More]

    #7391

    ted
    Participant

    How does the FED in the U.S unravel its purchases? Do they have to sell them back and if they do who would buy them and why? This will have the effect of shrinking the money supply? What is left for the FED to do? Why don’t they just print money and drop it out of helicopters instead of buying mortgage back securities…

    #7392

    Livedeadcat
    Participant

    Insufficient invective.

    #7393

    Ken Barrows
    Participant

    ted,

    That’s a good question. Is the FED paying interest to holders of the mortgage backed securities (MBS)?

    I don’t see why the FED has to sell, but what happens if the security matures? Most of the Treasuries the FED acquires won’t mature for a long time.

    If the MBS matures, though, the holders deserve a payment according to its terms. Up until now, the FED has created something out of nothing (but close to cash) in exchange for some collateral, however bad. I have no idea, but maybe the FED can sell some U.S. Treasuries (UST) to pay the MBS holders. After all, the FED was (and still may be) selling UST last year during “Operation Twist.”

    The FED doesn’t just drop money out of helicopters (i.e. put cash in everyone’s bank account) because that would be much too equitable. And not as good for “special” banks.

    #7394

    Gravity
    Participant

    Growth consists in the value of life appreciating.

    #7395

    p01
    Participant

    OT: US has raised DefCon to 3 very silently.
    Couple that with the yellow metal’s incipient crash, next week looks like a good candidate for popcorn week.

    #7396

    Ken Barrows
    Participant

    ted,

    My answer was awful. The truth, I think, is that the FED holds the asset, the MBS or UST. I read that the FED remits interest payments to the Treasury. If it gets interest from the MBS it holds, I don’t know what happens. So now I think the FED can hold to maturity and do nothing. I mean that FED doesn’t hire a collection agency, does it?

    I think the only thing that can prevent the FED by stopping this is an exogenous factor. I think it’s clear the FED causes or tries to cause “inflation.” (I know the Automatic Earth definition, more or less.) If QE causes a high oil price to hit corporate profits, then it might stop.

    What’s really funny, though, is that QE is the greatest upward redistribution of income in US History and Obama is presiding over it! Margaret Thatcher would be proud.

    #7398

    gurusid
    Participant

    Hi Illarghi,

    Throughout the western world it’s been an active collaboration of the governments and the banks and the real estate industry and the builders. For private parties, it’s just a nice one-off windfall (if you’re the boss). But if tax rates remain the same, tripling home prices are such a windfall for any level of government that it’s really worth it to encourage the madness where and whenever you can. It doesn’t get more predictable than that.

    Damn right!

    Telegraph, Ian Cowie:

    Budget 2013: why tens of thousands of homeowners will pay 40pc tax for first time after they die
    Tens of thousands more homeowners will be caught in the higher rate tax net because of a sting in the tale of Budget 2013. But, if it’s any comfort, those affected may never know about it because they will begin paying 40pc tax after they die.

    How so? Because the Treasury papers confirm that the starting point for Inheritance Tax (IHT) is to remain frozen for another five years. So, by 2018 the threshold for this fixed-rate 40pc tax will have been unchanged for a decade.

    Bear in mind that many homes which nobody would describe as mansions are worth more than the £325,000 per person nil-rate band for IHT. Plenty of other properties, particularly in the south east, are priced above the point at which couples’ assets become liable; £650,000.

    Still more are likely to do so after the Chancellor’s £15.5bn boost to mortgage availability has taken effect. When easier credit increases demand for an asset in fixed supply, the consequences for house prices are as inevitable as they are obvious, which is why builders’ and estate agents’ share prices surged this week.

    Add to that:

    Lana Clements, Yahoo:
    From £17,000 to £3 million: The home that turned into a family fortune
    A Chelsea home is now worth nearly 200 times as much as when it was bought in 1967.

    When a couple bought a London home to raise a family in 1967, they couldn’t have guessed that by the time they hit retirement, the house would be the equivalent of winning the lottery.

    Soaring property values have seen the Chelsea townhouse bought for £17,000, rocket to a value of £3 million.
    The average house price in the sixties was £4,000, so the home was still expensive at the time it was bought.

    (average would be for a 2-3bed, this one was 6 bed)

    And you can see where that credit hyper expansion went! :silly:

    L,
    Sid.

    #7399

    rapier
    Participant

    I am a bit confused about this boards structure. I am answering in regard to Fed operations.

    The confusion about how the Fed conducts it business is perhaps understandable, to a point.

    Firstly the Fed buys existing Treasury paper, and now MBS, and in the distant past other forms of interbank notes, and pays for them not with money printed as paper bills but by allowing the creation of a bookkeeping entry, a deposit, in the sellers account. So it is not printing money but rather creating bank deposits.. These transactions are called Open Market Operations.

    The Feds balance sheet, ie it’s portfolio of securities it buys, is called the System Open Market Account, SOMA. The SOMA is the foundation of what is called the Base Money Supply. When the Fed buys securities it is adding money or that tricky but apt word liquidity to the financial system.

    The Fed only deals with its Primary Dealers who are the worlds banking giants and near giants, and even the occasional criminal operation like the now dead Countrywide. Since the sellers are the banking giants or the customers of the giants for who the banks act as agent the deposits must instantly or soon be reinvested it in other financial securities. (They are not buying from Joe Sixpack who goes out and buys a car and case of beer thus boosting the economy) Inevitably stocks are part of this mix and the Feds various gigantic QE operations are directly causal in the stock market run up since March 09 as a result.

    When the Fed sells its held securities it is withdrawing money, liquidity, from the system. (a thing the system cannot abide now, details below)

    The Fed traditionally purchased only short term securities. It rarely sold them back to market. Starting in 08 the Fed began huge purchases of longer term Treasury paper, and various other total crap paper, and MBS. Before that a $5 billion Open Market Operation was big and its total portfolio of paper, the SOMA, was around $800 billion, after being in operation since 1913. It is now around $2.6 trillion. In 2010 the Fed pretended that it was going to start to unwind its holdings, ie, sell and shrink its porfolio, ie reduce the SOMA. Why it pretended it was going to do that I cannot say. At any rate by mid 10 the markets were under stress so instead of selling they began more QE.

    There is some odd confusion about, well I don’t know how to characterize this

    “If the MBS matures, though, the holders deserve a payment according to its terms. Up until now, the FED has created something out of nothing (but close to cash) in exchange for some collateral, however bad. I have no idea, but maybe the FED can sell some U.S. Treasuries (UST) to pay the MBS holders. After all, the FED was (and still may be) selling UST last year during “Operation Twist.”

    The Fed in this case is the MBS holder. Just as it is the holder of the Treasury paper it buys. As the holder of the securities it is the one who receives the interest payments and principal repayments. As bonds, and notes, are payed off in increments the money is remitted by the Fed to the Treasury. So yes it is a circle (jerk) of sorts, ie the Treasury pays the interest due on the Treasury paper held by the Fed. The Fed the turns around and give it back to the Treasury.

    In the case of MBS, QEIII or QE2.5, is dedicate to reinvesting the interest and principal payments of MBS to the purchase of new MBS, thus not allowing the SOMA to shrink.

    As the Fed is buying $80 billion a month of new Treasury paper under QE4 this dwarfs the amount of maturing Treasury paper in the SOMA so SOMA continues to grow. The Fed will never never ever be able to shrink the SOMA now. Well so say I and others. It may never in any forseeable future be able to let it even stay level.

    I am sure this all will more confuse than enlighten.

    #7400

    Ken Barrows
    Participant

    Your explanation is much better than mine. I look at the process of a whole lot of double entry bookkeeping, but it doesn’t create tangible wealth. What it creates is even more excess claims on real wealth.

    Now TPTB declare that this policy will create more wealth (or imply it in a cloudy way). I don’t get it, though. You’d have to believe that the primary dealers are wealth creating institutions.

    If the primary dealers had the skill to make loans to wealth creators, then one could make that argument. But they don’t, do they? If they lend at all, they lend to a business that is trying to get the tapped out consumer to spend a little more money. And so the Ponzi continues.

    #7401

    rapier
    Participant

    I am sorry I do not want to hijack this thread. Still what the Fed does in its Open Market Operations, ie. money printing, has to be understood to understand a crucial part of Nicole’s points. The point about debt.

    We all, or most of us hear that money today is debt, and we shake our heads in agreement, but it doesn’t sink in. The part that doesn’t connect in peoples minds is the existence of the balance sheet or what that represents.

    “Just double entry bookkeeping” isn’t just a game, a trick, a ruse. It is the entire basis or our economic and now monetary system. If the books don’t balance, ie Equity=Assets-Liabilities then an error, or fraud, has occurred.

    Now there is no room here to describe the stupendous fraud involved in the entire system. Oddly, to its credit, the Fed keeps honest books. It’s assets are the SOMA. Its portfolio of Treasury securities. When the Fed credits the sellers bank account with dollars for the assets it buys those assets are understood to be the ‘backing’ for the money. Get it. They are not printing money for nothing. The give out the money in return for a real asset. Thus their books balance.

    Now the amounts or now the way it conducts its business through the giant banks is debased but the accounting is correct. The money created is ‘backed’ by its assets.

    It is that the money flows mainline into the financial system to be hypothocated and rehpothocated and sliced and diced thus claim upon claim is made on a tiny sliver of assets. Thus the books don’t really balance, unless everyone pretends the loan underlying the loan underlying the loan is money good. 100% sure to be repaid. A pretense that can be maintained as long as a bid for the paper can be found. Thus the worlds central banks are ‘printing’ furiously in order to supply the liquidity to maintain a bid under the markets. What they failed to do with MBS in 07-08 leading to a momentary collapse, freeze up, of the entire system. Why. Because the assets were suddenly understood to be no good. What was on the books as $1 went to 50 cents and then, functionally to zero when no buyers could be found.

    I hope this is getting through. The debt paper when it trades freely at near full price has the quality of money. It is fungible. Liquid. Money good. It is a store of value.

    Oddly it is the Modern Monetary Theory boys who are calling for the ultimate debasement of the money. For they say forget about SOMA. Forget about assets backing the money. They say money has only an exchange function. It doesn’t need a store of value function. They say let the Fed burn its Treasury bonds so the government doesn’t have to repay. Perhaps but I doubt it. Somehow, some way, somewhere, a consensus will always develop about what the basic store of value, of wealth is. If it isn’t money what might it be?

    Sorry I run on and probably made a few mistakes. Anyway it behooves everyone to think these thing through over and over and over again until you understand, you really get, that debt is money. If debt defaults then money, liquidity, disappears.

    #7402

    davefairtex
    Participant

    Ok, I know you’re all secretly wishing you had a CHART to tell you what’s really going on in the Netherlands. So here it is! The only sad part of the tale is, I don’t have data for the loans going back any further than 2003, so we can’t see as clear a correlation with debt and property values as we’d like.

    Still, you can get an idea of the size of the property bubble (blue line, right axis = residential property prices), and how much popping it has done to date. Since this is Ilargi’s article, I’ve given him his property data going back to 1995. He likes his bubbles as large as possible! Kidding Ilargi.

    The Netherlands is actually one of my “property bubble” cases on my eurozone property page.

    https://mdbriefing.com/eu-rpp.shtml

    #7406

    ted
    Participant

    I don’t mean to hijack this thread either….Thanks rapier for clarifying a few things…I am just trying to understand governments actions….do they believe what they are doing will work or are they just buying time to see if they can fix this plane mid air before it crashes.. or is it more sinister than that…

    Thank you so much for addressing this as it is like trying to learn chemistry without knowing the basic pricipels. I really am astonished at the actions of the FED and very few people questioning this…it is unprecendented actions no? What I am trying to fathom is how we won’t get in the same situation as 07–08 at the end of this summer and then what will be the actions of the FED and other governments..Seems like printing money and massive bailouts again…the FED will have to give the U.S government massive amounts of money to pay out its debt obligations—therby creating inflation rather than deflation that Nicole talks about and strenghing precious metals rather than weaking them…
    Again I don’t mean to seem like I don’t care about Europe it is just that I hear a lot of people saying well what happens in Europe does not matter because the U.S economy is picking up and that will eventually transfer to the rest of the world and that is just not so…I know a lot of people with PHD’S that think this as well so it is not just the general public that is ignorant as to what is going on….. I remember the good ole days in 06 when a billion dollars used to be a lot of money,,, now it is just chump change… Thanks again for your explanations on this subject..TED

    #7408

    TheTrivium4TW
    Participant

    Hi All,

    I like that folks are now going after the energy source of all that is evil… the schooling system that denies education, the endless lying and war mongering, the drug running, the money laundering, the gun running, the prison complex, the pesticide food, etc…

    All those are symptoms – the root cause needs to be identified before it can be addressed. Same with the nature of the root causes mechanisms that allow it to do what it does.

    Soome people think the Fed is “printing money” when they hand over $45 billion cashola to the mega banks and then take their $45 billion MBS at par when it is really worth $15 billion.

    That claim is true, but only temporarily. At some future point, the disparity will be recognized and the $30 billion loss will need to be paid (likely an even bigger loss by the time that point comes around).

    Warren Buffet and his overlords want the public to pay for those debts – and they don’t promote politicians on their media and finance their compaigns for nothing.

    Money is debt, by defintion, save coinage (tiny fraction of money outstanding), and this QE process merely hides this for a time.

    More money for the inner party who run the inner party debt money con artists…

    More debt for the people who don’t understand the debt money con…

    Hence, my effort to “wake people” up the inner party con.

    A picture is worth a thousand words, that’s why these documented charts are so important (feel free to print out and hand out or email to anyone who might be interested in knowing the details of how society is being defrauded):

    Debt Money Tyranny
    https://www.keepandshare.com/doc/4768883/debtmoneytyranny-6-1-pdf-60k?tr=77

    Weapons of Mass Debt
    https://www.keepandshare.com/doc/3324744/wmdebt-graph-3-79k?tr=77

    One can not “kick the can” on an exponential debt growth system forever. The system operators know this, but they won’t tell the public.

    Why? They are competing against the public for multiple claims on limited resources… and the less the public knows, the more they get for themselves.

    Think of it as “Financial Darwinism.”

    Some might find the slide presentation created by the operators of TheTwoFacesOfMoney.com of value (not everybody learns the same way):

    https://www.thetwofacesofmoney.com/index.php/Site/SlidePresentation

    #7409

    TheTrivium4TW
    Participant

    On a previous article’s thread, someone posted and asked me to stop posting quotes because doing so was associated with an appeal to authority logical fallacy.

    This is a misrepresentation of the essence of an appeal to authority logical fallacy.

    If I made a claim based solely on the authority of someone based on their quote, then I’d be quilty of that fallacy.

    I don’t do that. I post text, I post data, I post charts, I explain my logic, I address all questions and engage in honest debate – even updating the terms I use when it is pointed out that my current term is insufficient to proper communication. When RE pointed out that “Debt Dollar Tyranny” was a subset of “Debt Money Tyranny,” I updated the term.

    I really like adding the quotes, on top of the plethora of the data and logic that I apply to reach my conclusions, because it shows that many of these issues are essentially timeless and not novel at all.

    When I post quotes, they are the decorative icing… not necessary, but a nice addition for beautification purposes. The cake and the main icinig are the data and logic I share that leads to my conclusions.

    Therefore, I will continue to post quotes when they are appropos to the topic at hand.

    Now, if someone has a problem with my data or logic… let’s discuss that instead of building a straw man logical fallacy about the use of quotes being necessarily related to appeal to authority logical fallacy.

    #7410

    TheTrivium4TW
    Participant

    A way to view our current economy that most probably have never considered is this:

    A bank’s widget, or product, is debt. An ice cream shop sells ice cream, a tire shop sells tires, a bank sells loans (debt).

    Now, if every solution in the economy was more ice cream, which of the above would you conclude likely exerted control over the government?

    Also, and pay attention here, the legal corporate mandate to “maximize profits” can be restated thusly, “maximize the sale of banker widgets.”

    That’s right – “profits” consist of money that was created by debt issuance.

    “The Borg” is here and we all work to maximize “banker widgets” for the primary benefit of the private international banking cartel – and we don’t even know it!

    Even employees who are out to maximize their paycheck are, in essence, maximizing banker widgets because their salary was created by debt… the more salary, the more debt had to have been created, all else being equal!

    The government isn’t sovereign, by definition, for the same reason a child isn’t sovereign – s/he’s dependent on the parent for money and has to obey the parent are else his/her access to resources could be cut off by the parent who controls the money.

    Napoleon elucidated this principle quite clearly…

    “When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes. Money has no motherland; financiers are without patriotism and without decency; their sole object is gain.”
    ~Napoleon Bonaparte

    The Bible codified this principle thusly…

    Proverbs 22:7 – “The rich rule over the poor, and the borrower is slave to the lender.”

    Now, I’m not saying this is true simply because Solomon or Napolean said it was true, rather, it makes perfect sense.

    A sovereign nation doesn’t rely on a private international banking cartel to define its money as debt and issue the currency and credit and control its Federal Reserve front corporation (under complete, 100% private control).

    Whose interests does the Federal Reserve serve? The interests of those whom control it – isn’t this obvious? Isn’t self interest taught as something that is good? Isn’t it a foundation of Economics, right along with egocentric cost / benefit analysis?

    No sovereign nation would all Debt Money Tyranny to be inflicted upon it and no sovereign nation would allow private interests to criminally blow the world’s largest credit bubble so it could pop and destroy the economy of the country….

    Debt Money Tyranny
    https://www.keepandshare.com/doc/4768883/debtmoneytyranny-6-1-pdf-60k?tr=77

    Weaponsof Mass Debt
    https://www.keepandshare.com/doc/3324744/wmdebt-graph-3-79k?tr=77

    I provide the mechanism in chart format. I provide the law. I borrowed Denninger’s chart so the reality can be juxtaposed to the law and proven to be a criminal act.

    Why did Solomon know what almost nobody today knows, several thousands of years later with compulsory schooling?

    Anyone interested need only research John Taylor Gatto’s work and his podcasts.

    The financial oligarchs run the government, just as insider Carroll Quigley claimed they had set out to do.

    “There does exist, and has existed for a generation, an international Anglophile network. I know of the operations of this network because I have studied it for twenty years and was permitted for two years, in the early 1960’s, to examine its papers and secret records. I have no aversion to it or to most of its aims and have, for much of my life, been close to it and to many of its instruments. I have objected, both in the past and recently, to a few of its policies … but in general my chief difference of opinion is that it wishes to remain unknown, and I believe its role in history is significant enough to be known.”
    ~Carroll Quigley, Tragedy and Hope, Chapter 65

    Here is an Harvard, Princeton, Georgetown, Presidential mentor insider, claiming to have studied this group for 20 years, claiming that it is a secret organization that he thinks shouldn’t be secret. Otherwise, he’s buddies with this crowd.

    Read what he has to say, don’t just trust one quote. That’s why I posted the link to the entire 1350+ tome!

    Chapter 19 is a good place to start:

    https://real-world-news.org/bk-quigley/07.html#19

    Some selected quotes from Chapter 19…

    “In addition to these pragmatic goals, the powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole.”

    “It must not be felt that these heads of the world’s chief central banks were themselves substantive powers in world finance. They were not. Rather, they were the technicians and agents of the dominant investment bankers of their own countries, who had raised them up and were perfectly capable of throwing them down. The substantive financial powers of the world were in the hands of these investment bankers (also called “international” or “merchant” bankers) who remained largely behind the scenes in their own unincorporated private banks. These formed a system of international cooperation and national dominance which was more private, more powerful, and more secret than that of their agents in the central banks. This dominance of investment bankers was based on their control over the flows of credit and investment funds in their own countries and throughout the world.”

    If Bernanke has no power and the “investment bankers” had all the real power, of course the Federal Reserve will be used to benefit the interests of the “investment bankers.”

    Quigley published that in 1966.

    How accurate a statement was it? Are “investment bankers” being wiped out like everyone else when they deserve it a billion time more? No, they are being coddled and protected… by a front corporation engineered to do exactly that, according to Quigley – who says he had access to their secret documents.

    Or was it a lucky guess?

    Read it and make your own *educated* judgment.

    #7412

    davefairtex
    Participant

    Triv –

    If you don’t go for my “an appearance of an Appeal to Authority” concept, that’s perfectly ok with me. I was simply trying to humbly suggest a way for you to communicate your important message more effectively – with more power, if you will – and I tried to put it in language you might appreciate. Clearly I did not succeed in doing this. I’ll try once more.

    It is still my opinion that a large number of quotes in an article tends to obscure meaning rather than illuminate, and it conveys the feeling (to me at least) that the author feels he needs help from elsewhere to make his point. This isn’t up for debate – it’s how I feel. Clearly you feel differently, and that’s ok! Nobody will ever “win” this debate, because its just two opinions. (I only make this point because it appears that you do view this as a debate that can be won rather than just two people’s opinions)

    To my mind, a room full of 100 items on 10 tables makes it more difficult to actually see and appreciate any one item. That same room, with 1 item on 1 table – that 1 item really stands out. Sometimes, less really is more. But I have friends that have a room with 10 tables full of 100 knicknacks. Not my style, but perhaps it is yours.

    Perhaps – to put it in your language – a bit of icing is a tasty accent, but a whole lot of icing makes everything taste like icing. And the more quotes I run into in an article, the quicker I zone out. Now that’s just me, but is that really the effect you are looking for?

    Again, my opinion. This is the last time I’ll mention it! I’m really just trying to help, and I recognize its all just based on my opinion. Apologies if I have offended.

    #7415

    p01
    Participant

    TheTrivium4TW post=7124 wrote:

    No sovereign nation would all Debt Money Tyranny to be inflicted upon it and no sovereign nation would allow private interests to criminally blow the world’s largest credit bubble so it could pop and destroy the economy of the country….

    Trivium, the problem here is that the beloved economy cannot function without debt. It shouldn’t be so hard for someone to educate himself about this somewhat overlooked detail.
    There’s NO economy without some kind of slaves (future generations via debt, or real slaves in sweatshops).
    Even Mr. Fire, Brimstone & Orkin Men you mentioned, has absolutely no problem with this arrangement as long as his longs & shorts suck some wealth from present and future slaves. Only when the dollar/debt tyranny conduit fails to bring the yield in already full precious pocketssess, then it’s all piggies, tyrants, Illuminati, and the “bring the guillotines” cry!

    #7419

    william
    Participant

    Just how close is North America walking to the debt edge. Take a look at

    https://www.youtube.com/watch?v=CqmAiBBDZ8c&feature=share

    Canada just announce bail in legislation to allow banks to confiscate depositors money legally. Now it makes more sense because there doesn’t exist even 10% of funds necessary to do another USA bailout if 2008 happens again. We don’t have another few trillion and don’t have a method of creating it.

    If the US has no ability to rescue itself than Canada is so bleakly defended that it will in many respects go down with the ship.

    #7420

    gurusid
    Participant

    Hi William,

    Wow he said it (Richard Duncan) “debt deflation death spiral” if credit expansion ceases. (33secs in) Have these guys been reading TAE? Oh, no, he wrote a book called the “New Depression”. Though when they (Peter Schiff) then go on to say that it is the fault of the unemployed people and people employed in non productive ways… you know in things like ‘health care’ you realise they still haven’t got a clue… :whistle:

    L,
    Sid.

    #7421

    gurusid
    Participant

    Hi Rapier,

    I am a bit confused about this boards structure. I am answering in regard to Fed operations.

    Yeah its a bit of a pain. If you don’t already know and for others – if you click the ‘reply’ button in the post you want to reply to, then after submitting your post, click the indented or the threaded button in the menu at the top of the page, it should resemble a more logical layout (like this post). Of course if you want to have an in depth discussion on any subject, you can start your own subject by clicking the New topic button. Hope this is of some help,

    L,
    Sid.

    #7423

    Gravity
    Participant

    p01 post=7129 wrote:

    Trivium, the problem here is that the beloved economy cannot function without debt.

    To me it seems, the monetary problem is not that debt functions as asset in the economy to fuel investments, but that the money supply has become a debt liability, so that debt saturation in all sectors of society prevents new money being created to pay off the interest on the old, or to beget investments, rendering the monetary system intractably insolvent and the economy incapable of expansion.

    That this situation of debt saturation may have been deliberately designed with malice aforethought by the exploiters of the money supply is another matter, but even if so configured by accident, its still a conundrum. Much of the embedded debt can never be repaid this way. Loans are mathematically certain to default, annihilating the credit supply, and public assets pledges as collateral are consolidated towards powerful private interests.

    #7438

    jameslambton
    Member

    Is all Debt EVIL? No of course not, as previously noted societies cannot function without debt, some monetary, some social. The obvious has been stated over and over again here and elsewhere, the fundamentals of the “western” economies is all wrong, most of us are living an untrue economic reality financed on debt – national, state, provincial, municipal, city, town and individuals, almost all of us. So what sort of debt is not evil or dangerous to society? Anything that is supported by a substantial portion of equity and will be productive. A very simple example of this, is my friend Sol, hard working, smart, and wily. He wanted to develop a small trailer park, for real folks to live affordably, including himself. He had taken his savings and owned the land, but had only that as equity no more cash. He couldn’t get approval for subdivision without infrastructure in place, namely septic systems. A friend of a friend introduced him to a site services contractor who was slow on work and understood how a real economy worked. What he offered was to do the work, and wait for payment, until the first trailer was installed and paying rent, then Sol could pay him back as his income came in. Over time these two entrepreneurs provided affordable housing, provided work for the contractor and his crew, purchased materials from various suppliers and provided Sol with a place to live and an income. None of which would have happened without a small amount of debt and a large amount of equity. How to fix our existing problems? It seems obvious to me, declare bankruptcy, rewrite our financial rules, require all significant debt be supported by a substantial amount of equity and that the debt be useful and productive in itself, otherwise why have it? The reality won’t be nice for many people, the real economy will be real, or another way to put it, is that our existing economy will shrink substantially and we won’t be able to live the way we are today. If we do this in a planned, methodical way, nobody needs get hurt on the way down, inconvenienced YES, work harder YES, annoyed almost certainly, but not hurt! Of course this isn’t going to happen, so get ready for the only option left.

    #7553

    Gravity
    Participant

    ♫ Zwaartekracht is een recursief algoritme.

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