Debt Rattle January 22 2017
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Dorothea Lange Resettlement project, Bosque Farms, New Mexico 1935 • The Inauguration, and the Counter-Inauguration (Atlantic) • White House Spokesman
[See the full post at: Debt Rattle January 22 2017]“…. he once again is controlling the media narrative, which is focusing on a very immaterial and arbitrary issue, instead of spending time on investigative work and reporting on far more serious issues relating to Trump’s new administration.”
The news media, on purpose, is reporting on fluff.
i.e.
All news medias, not just Americans, are Not reporting any news on
serious issues,
And
All kinds of Bad things that are hitting the fan around the world.(Fluff warning) Vacation destinations are past their peak. ( Growth is not there. Decline is obvious. Beach vendors are suffering)
Mr Meijer, you said,
The role of Trump, I think, in America, must be that of a wake-up call.
OK, I think Americans are paying attention, with more than half thinking they are still having an unending, waking nightmare and the other almost-half waiting expectantly for something good to happen. So, what’s going to happen sir, and why will it be any more likely to stave off the limits to growth than what has been happening for the last 50 years?
Since there is no good answer to that question, another few are pertinent. Will the Trump “populist” movement and those similar forces gathering steam in Europe ensure that, as our global market economy continues its sputtering, all people will get a more equitable share of its declining output?
Will Trump, for example, institute massive tax increases on the rich and invest that revenue in projects that benefit poor and middle class Americans?
Will he divert large amounts of money away from defense and spend the revenue on education and job training for those that have lost their old job? Or, heaven forbid, government as the employer of last resort?
Will Trump institute an “America Last” policy and ensure that our gluttony is mitigated by sending yuge amounts of aid to the poor in developing countries around the world?
Since Trump himself has promised that he will not do any such egalitarian things, rather the reverse, why should anyone think that he is anything more than a front for the same old oligarchy-elite that wants tax cuts for themselves and evisceration of safety nets for the poor (in partial compensation for lost government revenue).
Trump says he will provide ever better health care for everyone, but rather than asking Congress to provide Medicare for all, which would actually accomplish that goal, he immediately starts dismantling our existing health care system and offers nothing to replace it with. Is that the kind to activity that has the interests of “the masses” at heart?
Last two paragraphs got cut off….
The Trump-led stampede to repeal the Affordable Care Act is such a mindless attack on the provision of health care, that it is hard to determine who he is fronting for. It’s still a real mystery to me. Perhaps others can tell me what program there is that is far better than single-payer or the ACA. Perhaps when Le Pen takes office she will find out what it is from Trump and immediately start dismantling La Sécurité Sociale.
All-in-all, I am still confused as to why people like you, Martenson and Greer, people who see the big picture and know how powerless any American president is to avert what’s coming, can work up such enthusiasm for a “wake-up call”. Wake up and do what?
I enjoyed the Alastair Crooke article posted yesterday. I was “late to the party”, in submitting my comments, so I’ll do that today.
I’ve occasionally contributed my understandings here about what it takes to bring about a prosperous national economy that isn’t subject to the cycles of booms and busts we experience today. My knowledge of what it takes to accomplish that end is not derived from anything I discovered through my own effort, but what was realized by a man named Carl Wilken (and others doing research with him), who, in the latter part of the 1930’s and early 1940’s, set out to figure out what really caused the Great Depression. Carl Wilken came from Iowa, where he farmed.
What Carl Wilken discovered, by examining the extensive national economic records kept by the United States federal government, was that whenever the income of raw material producers at the base of the national economy dropped, the whole income, or total income, of the nation dropped in constant proportion. This is what happened during the depression, and it happened in a big way. And it didn’t happen because raw material producers, especially agriculture, produced much less than they had been doing before. It happened because the prices of what they produced, or brought to market, dropped in price below their costs to produce. That loss of income, at the raw material level, cascaded throughout the whole economy, such that the nation of consumers didn’t have the income to consume their own collective production. The predictive result of such a phenomenon is that consumers choose not to buy, causing inventories to build up, or…..they will resort to borrowing, in order to consume that production.
As we know, an earned dollar looks materially the same as a borrowed dollar, except that a borrowed dollar has to be paid back (often times with a rental fee added), while an earned dollar doesn’t. So, by having to pay for yesterday’s wants and needs today, I have less money to pay for today’s wants and needs. Income growth to compensate for that, you say? Constantly having to pay for yesterday’s purchases with today’s money, will be a drag on income growth and capital growth….unless we keep drawing into the well of borrowing, which, we all know, cannot be sustained forever. I think Allistair Crooke correctly alluded to that.
What brings about an unreasonable drop of national raw material prices? It’s invariably due to speculation (commodity “gambling”), and/or a rupture of prices through imports.
So when Carl Wilken, et. al. discovered the repeatable and predictable relationship between raw material income (production times price), and total national income, he suggested to Congress that they support the prices of the main agriculture commodities at “cost of production” price levels (aka parity prices), so that there would be enough income generated, through the trade turn, to consume the production. That, in effect, would promote full production, and keep raw material producers (farmers especially) in business, as was vital during World War II. And, by protecting prices through tariffs, world prices would have to come up to our level, and our standard of living, instead of us dropping our prices to their level, and their standard of living.
Congress listened, and through the various acts they passed, made what Wilken was suggesting possible. The result was a period of prosperity to finally take us out of the depression, and even fight a two-front war, without accumulating excessive debt, which we know is the norm today.
The acts Congress passed were allowed to expire two years after the war ended. Carl Wilken and his associates tried to get Congress to make the parity laws permanent, but they would not. They passed a watered down version, that was lacking the necessary balance of parity pricing to allow consumers to fully consume the production. We then resorted to borrowing, to make up the lack of income, and have never turned back.
So, when the Trump administration claims that they can bring back prosperity, by tax cuts, increased spending (priming the pump), and reductions in regulations, I understand that they could marginally and measurably improve national income by doing those things. This might come about through money more fully flowing through the trade turn in the private sector, than what could be accomplished by government taxing and spending. However, the prosperity will not reach the level it could if raw material prices are kept in balance with costs.
How many times have we heard it stated in this forum, for example, that if oil prices fall below the cost of production, oil companies lay off people, spend less on supplies, etc., and decline to make capital improvements or expansions? That lack of proper income cascades throughout the whole economy helping to contribute to a deflationary spiral, or slowing of money velocity. These are concepts we understand well.
This is true of any raw material (agriculture, mining, forestry, fishing, recycling). So, until the Trump Administration understands that all wealth comes from the soil, and that wealth cannot be undervalued– through less than parity pricing–we will never truly or fully achieve a solvent national economy (not resorting to debt or a lower standard of living), despite any tactic they come up with to remedy our economic malaise. Their efforts, even if totally sincere, will be disappointing at best.
That’s not to say they can’t learn these things, but will they?
I have always been impressed with the people who frequent this site, in terms of their competence in understanding economics. I strongly recommend any reader of this blog to read the book Unforgiven by Charles Walters. It is subtitled–The American Economic System Sold for War and Debt. I think all of you will find it fascinating. It reports on a little known part of our economic history. The book can still be found on the Acres USA website. Charles Walters devoted much of the book in outlining the things Carl Wilken said to him in an interview Mr. Walters conducted with Wilken a short time before Wilken died.
Well, I’ve said enough for today. Best wishes to you all. I’ll gladly take comments or questions. 😃
Joe
I don’t mean “Trump as a wake-up call” as a wake-up call to Trump or what he might or might not do. I mean a wake-up call to what has led to Trump being elected. i.e. the utter failure of the previous government and the hubris of the Democratic party (and all the left/right faceless coalitions in Europe).
@ Joe and Chris
Karl Marx is relevant again. Henry Ford got it. When labor is not adequately paid, the market for products and services collapses, because laborers are also the market. An increased carve-out of the pie for capital will eventually destroy markets. Globalization and massive borrowing gave capital a large carve-out of profits, but ultimately destroyed the biggest market ever, that provided by working class Americans, Henry Ford’s workers, buying Ford cars. We are now poised for global financial reset, the second-leg-down of 2008. This happens periodically, the generation that knows nothing of collapse, manages to collapse. It happens every 4 generations. Strauss and Howe describe it. This time it’s different, because the easy oil is in terminal decline, and that is what funded the party and fed us all.
Charles Hugh Smith looks most clearly at how the left deserted labor, especially in the US, and how the betrayal led ultimately to the gutting of markets after capital scored a decisive victory.
https://www.oftwominds.com/blogjan17/collapse-Left1-17.html
Brandon Smith gives clues as to knowing the minds of our shadowy puppet masters, behind the curtains. He has a fairly good recent prediction record. He sees the touting of populist threats in the media last year, and the passing of Brexit, and election of Trump, in that context. Populism will be at the wheel of the Titanic as it hits the iceberg and sinks. Globalism will take the stage once and for all.
https://www.alt-market.com/articles/3112-how-to-predict-the-behavior-of-globalists
I don’d disagree with his analysis of reading elite intentions, shared in code with the in-crowd, but I disagree that the free-energy will exist to rebuild globalism. In “complex systems” each level of complexity imposes further costs, which have to be supported at the base level of production. As long as there is more easy-oil to pump, and more forest to fell, and more fish in the ocean, increasing complexity will facilitate more rapid consumption of the resource base, and will be supported. That was the 20th century story. The resource base is now in decline, at least the easy-oil is in decline.
Complexity in systems collapses rapidly, “Seneca’s Cliff”. When complex systems collapse, the collapse down to the level of complexity which is inherently supportable, under prevailing conditions of production. The world is in overshoot, but it is “granular”. What regions will collapse to what levels? Can any region survive without healthy local agriculture? Will we be able to plow, irrigate and fertilize enough? How long can this be done in each place? Can some places and groups actually make a transition to “sustainable civilization”? What might that eventually look like? We are the animals we have evolved to be over eons. We should consider what we are and what we can do in modest sized working groups of around 100, with some good shovels, knives, and things like that.Happy 9th Birthday. Old is 106, we must pace ourselves.
The Woman’s March was quite impressive. The patriarchs will be in great trouble if they don’t make a woman’s dollar equal to a man’s, as Alicia Keys called for.
It was a surprising show of power to pussy-grabers everywhere. The key to peaceful presence seemed to be, leave the men out. It looked a bit like Julius Caesar’s bridge across the Rhine, letting the German tribes know he had power to go anywhere. Then he took it down, because he could always build another.
President Trump has decided not to argue about the size of the turnouts. We’ll have to see how far cheer leading can go as a motivator into the headwinds of a more depleted planetary ecosystem. Envionmental debts can’t be solved by a jubilee year.
Compared to the Iraqi War protests held during the run up period, where various issue groups fumbled in front of the microphones, attempting to look united, the Woman’s March was able bring everything together and make rainbow of issues.
This is the Obama (Family) Effect. One male speaker representing a union said Donald Trump was a hell of a good organizer. The Organizer-in-Chief and family have moved on, but the empowerment remains.
President Trump’s noble rhetorical goal is to serve everyone. Constituent feedback has begun. Many of the marchers spoke of seeking political office. Hope is the vision. Change is evolutionary. Hope and change is in the house.
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