Majorityrights Central > Category: Economics & Finance

by Alexander Baron

Here is a layman’s guide to the real reason for the forthcoming cuts in public spending. Before any of us were born – 1913 in the United States and a long time before that in the UK – the governments of the “Free World” allowed a cartel of bankers to hijack our financial system. Instead of the Treasury minting coin and printing notes, and creating credit for public works to spend into circulation debt-free, the cartel would create the credit and sell it to our respective governments at interest. When credit is created at interest it is by definition irredeemable, so our governments would periodically renew these loans by returning cap in hand to their masters. As long ago as September 1921 the following was directed at the Lloyd George Government: “Does he, and do his colleagues, realise that half a dozen men at the top of the five big banks could upset the whole fabric of Government finance by refraining from renewing Treasury bills?”

If Lloyd George did, Call Me Dave doesn’t, although the boys in the Treasury do. They have obviously pointed out to him that the British Government, and indeed the governments of every European nation are now restrained by law, for example:

Overdraft facilities or any other type of credit facility with the ECB or with the central banks of the Member States (hereinafter referred to as ‘national central banks’) in favour of Community institutions or bodies, central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of Member States shall be prohibited, as shall the purchase directly from them by the ECB or national central banks of debt instruments.

Article 104(1) of the Maastricht Treaty

... from financing their deficits by printing money or by creating credit. This latter is to be the privilege of the banks, and only of the banks.

One would have thought this monopoly of credit would have been sufficient to keep the bankers in clover, but give them a cent and they’ll take a dollar; after periodic depressions including the so-called Great Depression and Black Monday in the 1980s, there came the Credit Crunch/Meltdown or whatever you want to call it. This resulted from the banks selling what Max Keiser and others have called empty boxes. Trillions of dollars disappeared into the abyss, and as the Presidential election approached, all the players, including the so-called candidate of change, bowed to a plan to “save” the economy – or save the world in the case of Gordon Brown – by underwriting with real money the debts the banks had created with imaginary money.

In effect, our governments stole this money from us; it was done without any sort of mandate, without even any meaningful consultation; the banks simply told the governments of the “Free World” what to do, and they did it, including the United States – the world’s so-called remaining superpower.

Now, because the British Government in particular doesn’t understand that it has both the right and the duty to create credit both interest-free and debt-free, it has decided to reduce the so-called deficit by cutting public spending. The pretence is being continued that the government has to borrow money from foreign creditors, and it is these creditors who are being repaid, whereas it is the banks who are being not repaid, but paid again – in short they are being rewarded for their dishonesty and incompetence.

The truth is that the real credit of this nation, of any nation, is based on the goods and services its people can supply.

Because the British Government in particular refuses to face up to this unpleasant reality, we will see cuts in public services including and especially for children, the elderly and the vulnerable, and the scapegoating of other innocent parties such as those on benefit, the “rich” (ie, smaller business people and entrepreneurs) who have real money to invest and jobs to create, and indeed anyone except the real culprits.

Huerta de Soto at the LSE, Thursday 28th October 2010

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A Majority Rights Radio presentation of a libertarian nationalist political economy and its traitors is now available. This is the winning political paradigm in the present circumstances. We can ignore, for the sake of argument, that it is also philosophically and practically superior to other political economy paradigms.

Back in December I put up a post titled Questions for Lee John Barnes.  It’s purpose was to announce an interview for MR Radio.  For one reason and another that did not take place, but it is now re-arranged for Saturday.  In a purely private capacity, of course, Lee will be discussing with me the BNP’s chances of winning one or more seats in the forthcoming Westminster election and the development of the party generally over the next four years of neoliberalism + neo-Marxism.

Last time I invited questions for Lee he promptly arrived on the thread and answered them, which didn’t do a lot for the interview that never was.  This time we’ll focus on another conversation today between Lee and myself at his blog, 21st Century British Nationalism.  The subject is economic policy and, for me, the stale, defeatist and moralistic reliance upon protectionism which pervades party thinking now, and which does not even acknowledge the fact that British industry will suffer a growing labour shortage it will be able to resolve only by competing on employment terms against, principally, the Canadian, Australian and New Zealand economies.  That is where our new workforce will have to come from.  And for that, business profitability is the key.  Wrapping the economy in cotton wool is a fundamental mistake.

Here is the exchange with Lee.  “Defender of Liberty”, by the way, is the handle he uses on his own threads:

Defender of Liberty said…

We will establish an independent body that will ‘audit’ the nations and corporations we trade with - and if nations and corporations that exploit their people, workers and natural environment are discovered then their imports will be banned.

The tariffs would be set by the audit body, and would reflect the harm being done in the nations they are assessing and the damage being caused by the corporations that are causing the problems.

Seeing as our aim is to create a re-vitalised British industrial and manufacturing base - then the imports policy will apply across the board.

Whilst imports will be banned VAT will be lowered, or scrapped, on British produced goods - thereby incentivising people to buy British produced goods.

Of course the worst offenders will be targeted first - nations such as China, India and others that use slave labour and child labour and that destroy their own or the natural environments of others eg China and the rape of Africa for resources.

Our income tax reductions are based on ;

1) leaving the EU = 15 billion per year

2) scrapping the 150 billion pounds per year EU regulatory burdens on British business which will kick start the British economy via improving productivity and competitiveness

3) scrapping the Servile State and political correctness in all its forms = around 5 billion per year I estimate

4) Re-Nationalising the NHS and banning the 1-2 million illegals in the UK accessing all public services, which means we can improve those public services, improve waiting times and deliver better services without spending a penny on them extra - as we are removing the parasites who abuse them at the moment

5) creating a manufacturing industrial base that will export goods to the world - we will develop high energy efficiency and green energy systems for export to the third world for example and develop our own coal mines and create coal fired power plants to produce electricity.

6) We will incentivise our talented British people who have white flighted to foreign nations to come back to the UK with business development grants and loans to set up new businesses to replace the foreign imports - hence producing a new economic boom.

I have one disagreement with the BNP policy on paying immigrants to leave, I believe they should not be paid a penny.

If they are here illegally then they get booted out without a penny.

All the money we have should be spent on paying our people to return - not paying people to leave as that way the money stays in the UK and is used to develop our national economy.

These are just a basic outline.

I would type more but my fingers ache.

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by Alexander Baron

On March 29, 2010, Channel 4 TV screened a so-called debate between the Chancellor of the Exchequer, the Shadow Chancellor, and Vincent Cable of the Liberal Democrats.

Although it would be true to say that at times they all made intelligent comments, observations and suggestions, especially Vince Cable, it is also true to say, sadly, that none of them really knew what they were talking about, so it was not a case of them failing to grasp the nettle, they simply had no idea there was anything to grasp.

All three acknowledged that Britain is up to its ears in debt.

On March 25, the “Daily Telegraph” reported that next year the interest on the National Debt will be £73.8 billion. That is just the interest. Where does the Government get the money to pay this interest? From tax revenues, basically, and, we are now told, from cuts in public services. To whom does the Government pay this interest? To the banks. And where do the banks get the money which they lend to the Government? They create it out of nothing, that’s where!

Up until recently this strange fact was denied by mainstream politicians, or even unknown to them, and you would have found no discussion of it outside of specialist economics textbooks or the more popular – and at times whacky – conspiracy literature.

Let’s forget about the conspiriologists for the moment, and let’s forget about economics textbooks.

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By Martin Hutchinson

Paul Volcker’s proposal that proprietary trading should be spun off from deposit taking banks is a worthwhile step in the direction of stabilizing the financial services business. However when you consider that business in detail, it becomes clear that further breakups are necessary in order to remove the excessive risks from the US economic system.

Volcker became something of a hero to the left for his sponsorship of President Obama’s bank-bashing announcement.  Indeed I was very much hoping that he could ride this new-found enthusiasm through a defeat of Ben Bernanke in his Senate confirmation vote, followed by a more or less unanimous Senate approval of a Volcker nomination to replace him as Fed Chairman. Assuming Volcker hadn’t suffered a Damsacene conversion to sloppy monetary policy while I wasn’t looking, Obama and the left would be suffering buyer’s remorse within about an hour of Volcker’s arrival at the Fed, but by that stage the deed would be done. I was practicing my Dr. Evil laugh for this eventuality, but alas it was not to be.

There are three problems with the current set-up on Wall Street: systemic risk, rent seeking and conflicts of interest. The Volcker proposal addresses the systemic risk problem to a great extent, but does not do much about the other two. For a complete solution we thus need to go further.

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Jim Giles interviewed James Bowery a couple of days ago on Radio Free Mississippi. The primary territory is the conflict between Jewish interests and the Enlightenment values of truth and freedom—conflict as exemplified by the hostility of Jews toward the laboratory of the states to found discourse on experimentation rather than argumentation. It is 1 hour 48 minutes.

A RENT-SEEKERS NIRVANA

By Martin Hutchinson

Goldman Sachs’ income from trading and principal investment rose 90% in the third quarter, while allocated remuneration per employee soared 46% to $527,000 in the first nine months of 2009. Good luck to them, but it shows once again that they and to a lesser extent the rest of Wall Street, are currently playing a different game to the rest of us. The question is, how best to restore the operation of a competitive free market.

Investment banking has changed radically over the last 30 years, and it’s not clear that either regulators or the market fully understand the modern sources of its income. Trading, a fairly peripheral activity 30 years ago, has come to dominate the investment banking income statement, with income arising for investment banks both through acting as intermediary and through “proprietary trading” for their own account.

The immense and unstoppable proliferation of derivatives is the principal factor that has brought this about. After all, total outstanding derivatives contracts at the end of 2008 had a nominal principal amount of $514 trillion, more than ten times Gross World Product. You don’t need to skim very much off the top of a pot of cream that size to make your practitioners very rich indeed. A decade ago, defenders of the derivatives revolution could reasonably claim that the economic value and risk of those contracts was a tiny fraction of the total outstanding. Today, when we have seen multiple examples of credit default swaps paying close to 100% on billions of dollars of obligations, that claim has become laughable; the fraction of risk involved in that $514 trillion isn’t as tiny as all that.

The intellectually curious must wonder what purpose all this activity serves. Defenders of derivatives and trading in general mutter the magic words “hedging” and “liquidity” and expect their questioners to fall back abashed. However there aren’t $514 trillion of exposures to hedge; indeed in a $50 trillion world economy there aren’t even $50 trillion of exposures to hedge. Hence at a very conservative estimate 90% of all derivatives activity serves nobody beyond the dealer community.

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Citizen’s dividends—the replacement of all government transfer programs with a simple cash dividend paid equally to all citizens—is the single-plank political platform that can, in the present climate, be used by a minor party to capture control of virtually any parliamentary government in the West.

The rationale is simple:  Immigrants are not citizens and they would be deprived of public benefits.  This would be immensely popular.  Moreover, it would “empower” the populace to fight for their “entitlement” to their own country in a manner far more effective than any “get out the vote” campaign. 

The response by the political parties now in power—traitors that they are—would, of course, be to fast-track “a path to citizenship” for immigrants, but they would be doing so in an economic environment far from conducive to popular apathy toward such shenanigans.

This can’t work in the United States without the take over of one of the 2 major parties because of the way the electoral system works in the US.  But in parliamentary governments, minor parties can get a foot in the door, as demonstrated by the recent EU elections.  That’s all it takes because once this idea is aired in the halls of power, it will necessarily attract an enormous amount of attention from the usual suspects:

“Isn’t this racist?  Isn’t this inhumane?  Isn’t this xenophobic?  What about refugees?  Why should immigrants pay taxes if they aren’t going to get a citizen’s dividend?”

It would be wonderfully clarifying.

As for the economic effects, I’ll simply point out what should be fairly obvious by now:  The current economic crisis is caused by centralization of wealth to the point that the populace isn’t simply impoverished, but is so deep in debt that the consumer base has collapsed.  This was caused not by “easy money policies of the central banks” but by the subsidy of wealth built into any society that protects property rights by taxing economic activity.  The would-be upwardly mobile pay the bills—not the recipients of the primary government service:  protection of unnatural concentrations of wealth.  Although it is true that this means the proper source of revenue for the citizen’s dividend would be a net asset tax on in place liquidation value—a tax that eliminates taxes on economic activity—it is not essential to political success that such a tax reform be another plank in the platform of the citizen’s dividend party.  That change would come in due course as people were empowered to fight back against centralized wealth’s capture of government.  However, once the tax reform is adopted, the populace would be very motivated to maximize the net in-place liquidation value of the nation’s assets.  They will become keenly interested in the real externalities of immigration, graphically demonstrated in places like California.  They might even start thinking other taboo thoughts about human ecology, sociology, economics and politics.