Tuesday 5 April 2016

Gaming The System

The recent (2016 Apr 04) leak of 11 million documents from Panamanian law firm Mossack Fonseca clearly reveals how dysfunctional the current capitalist system has become.

The law firm secretively assisted the super rich in multiple ways of setting up offshore accounts and funneling personal wealth into tax havens in order to avoid paying taxes. The end result of course is that governments around the globe have less revenue to spend on social benefits while the super rich continue to game the system. Meanwhile the working class and the poor have to endure austerity, hardship and diminishing social services.

Let us back up for a moment and try to reflect on the human social system and how it has become entirely dependent on the flow of money.

In all of human history, there has always existed some form of class structure. Rulers, emperors, pharaohs, kings, lords and nobles have always ruled over serfs and slaves. Later came the mercantile class, land and plantation owners, bankers, financiers, industrialists and corporate rulers.

In our modern capitalist system, serfdom and slavery continue to exist in insidious ways in the form of taxation, interest, rent and debt bondage.

Money is created by the elite ruling class through the channel of financial institutions such as banks, savings & loans and credit. Debt bondage results when debtors are unable to meet their financial obligations as a result of exorbitant interests rates and in many cases fraudulent lending practices by creditors. The super rich needs the working class to propel the production machine. They depend on the consumer class to drive their money making machine.

The rich becomes richer and the poor becomes poorer. To add insult to injury, as the leaked documents clearly reveal, the rich funnel their financial wealth to tax havens around the globe in order to avoid or evade taxes.

The bottom line is, "smart" investing in the stock market, options trading, commodities, mutual funds, hedge funds, foreign exchange, short selling, etc., is all about gaming the system.

Successfully gaming the system puts you in league with the rich elite ruling class who live in luxury on the backs of modern day serfs and slaves, the true productive unit of society.

Kingdoms, empires, serfdom and slavery have been defeated in the past. Modern capitalism will witness its death throes yet. 

If I were Prime Minister

If I were Prime Minister what would I say and do?

What is important to the people of Canada – Jobs, Jobs, Jobs!

Our greatest resource is the people of Canada. We will put working people of Canada back to work. Any able-bodied citizen of Canada who wants to work must be given the opportunity to work.

First and foremost, we will implement a basic living wage to every Canadian citizen 18-years and older. With this in place, unemployment insurance, social security and old-age benefits can be eliminated.

Every Canadian citizen has the right to healthy food, shelter, education and healthcare.

We will put Canadians working in the agricultural industry. We will increase our local food production so that we reduce our dependency on imported food and hence drastically reduce food miles, the distance food has to travel before it gets to our dinner table.

We will put our workers to building more affordable homes. Since we are blessed with an abundance of home construction materials that are renewable, we will coordinate sustainable natural resource development and extraction with our local construction industry.

We will expand our education system with free education from early childhood to post secondary education all across Canada. An enhanced educational system will bring a happier populace, reduce social tension and crime and reduce the need for policing and correctional institutions. We will be proactive rather than reactive.

With our aging population, more universal health care will be provided where it is most urgently needed. We will collaborate with the pharmaceutical industry to deliver prescription drugs and medication in a cost effective manner.

In order to drive our economy, we need a national energy plan. Such a plan will be principled on conservation and use of clean renewable energy. Coal fired power plants and nuclear generating stations will be phased out. The growth of renewable energy is the path to a future of clean energy. We will promote the known forms of clean renewable energy, wind, wave action, hydro-electric, solar and geothermal.

A solid national energy plan would be meaningless if we squander our energy supply. There must be a rational balance between our energy needs and energy wants. Towns, cities, municipalities, industrial and residential users of energy must plan with an eye on conservation. Green energy projects focused on sustainable, renewable as well as energy conservation must be promoted.

Transportation issues with increasing traffic jams and grid-lock are approaching crisis levels. Lost productivity, increasing fuel consumption and rising air pollution are all serious consequences. This can only be addressed by proper city, urban and population planning. Creating local, walk-able people-centric communities in every city and municipality would be our top priority in order to address this crisis.

Climate Change is the elephant in the room. Extreme weather is increasingly more disruptive and destructive to our lives, community and productivity. The financial cost of not tackling the problem far exceeds the cost of being proactive. The short term strategy would be to reduce our dependency on fossil fuel. In the long term we can look towards the day when all fossil fuel will be left in the ground where it belongs.

Finally, we address the significance of the financial sector in our local and global economy. Interest rates play a key role not only on the growth of the money supply but also on the growth of the economy. Our current growth imperative is not sustainable. In order to correct this, there is an urgent need for monetary reform. The Bank of Canada will return to its charter of being the lender to the people of Canada. New rules and regulations will be put into place which will direct how banks, financial institutions and lenders are allowed to conduct business. There will be in place controls and regulations in order to halt predatory lending practices.

On foreign policy, we believe that a sound foreign policy begins at home. We can demonstrate that a progressive democratic government and society works best for everyone. Our foreign policy will be principled on cooperation, mutual respect and non-intervention. Our best export to other sovereign nations is a visible working model of a truly social democratic society based on compassion, tolerance, sharing, openness and fairness.

Sunday 26 May 2013

Global financial collapse is just around the corner.

Within recent times, global productivity gains have been achieved by shifting production to Asian countries, particularly China. At its height, China's annual economic growth reached 14% in 2007 [1].

China's remarkable growth was driven by global demand for consumer products while global expansion was fueled by China's increased productivity. China has quickly come to recognize that this tightly linked synergy has a downside. It is simply not sustainable. Shifting real productivity from 1st world countries to emerging economies does nothing for consumer countries. US trade deficit has cost the US labor force 2.7 million jobs from 2001 to 2011 [2].

Central Banks in developed countries are trying desperately to keep their individual economies from sinking by pumping huge amounts of money into the system. The US Federal Reserve has committed US$2 trillion through Quantitative Easing.  The Bank of Japan has pumped US$1.4 trillion while the Bank of England has added US$560 billion to the economy. [3]

Where is all of this money going? Why is the global economy still staggering?

All the euphoria is in the global financial markets. Stock market indices in the US have hit record highs while real productivity and wages are down. Governments continue to slash and burn social programs, healthcare and environmental protection. Unemployment reaches record levels and global poverty continues to rise. All the quantitative easing in the world goes to benefit the banks and their share holders and the rich who control the government. Unionized labor and the working middle class has been decimated and the gap between the rich and poor continues to widen.

Financial markets and high flying speculation are being buoyed by quantitative easing. That is where all the money is going.

How much longer can this continue?

Two things are looming on the horizon. The global economy will continue to stagnate while governments incorrectly attempt to revive the patient with austerity measures. How long will it take before the working class gets pushed to the limits and would no longer put up with the injustice?

[1] http://www.china.org.cn/government/NPC_CPPCC_2009/2009-03/13/content_17440359.htm
[2] http://www.epi.org/news/growing-trade-deficit-china-cost-2-7-million/
[3] http://en.wikipedia.org/wiki/Quantitative_easing

Sunday 7 April 2013

Lending money at interest is a sin and a crime and must be abolished

Every textbook of economics begins with the definition of money as being the following:

  1. medium
  2. measure
  3. store
The essential function of money is to facilitate exchange of goods and services. This is the classic textbook first function of money.

The second function of money is that it is a measure of value, which if examined closely, is somewhat dubious.

Every prudent worker/producer wishes to store away a portion of his/her earnings as savings to be relied on at a future time. Money as a store of value is the third function. Whether or not savings represent any real store of value will be discussed later in this essay.

When earnings are stored as savings this has the potential to reduce the money supply. Currency becomes scarce and its value increases. The same amount of currency has greater purchasing power and can be exchanged for a greater amount of goods and services. This is deflation, the opposite of inflation. The simple and obvious solution to this is for the government or banking institution to inject more money into the system.

Since 1974, the Government of Canada has abdicated its responsibility to the Canadian public of putting money into existence. Instead, it has relinquished this authority to private commercial institutions that now create money through the issuance of loans under the fractional reserve banking system.

Two individual Canadians and COMER are confronting the global financial powers in the Canadian federal court.
The motion before the Federal Court of Canada was heard on December 5, 2012, in Toronto.
Press Release (pdf)
Amended Court Filing (pdf)
Proceedings, December 5, 2012 (pdf)

If the Government of Canada were to restore its authority and responsibility, it could direct the Bank of Canada to issue money at zero interest to municipal/provincial/federal governments for public benefits such as education, health care, social services and industrial infrastructure.

Instead, in the current monetary system, all money is created as debt on the backs of the consumer and taxpayer. Interest on loans becomes a debt to future workers and society. Furthermore, the working class is taxed in order to pay interest on public loans which is essentially the working class being indentured to the corporate state.

Consider the worker who attempts to save a portion of her income. If this money is locked away in a savings account, it reduces the money supply and creates a scarcity of money. The lending institution such as a commercial bank can put this money back into circulation by lending it out to private and public borrowers. When the worker retires she may require to make a partial withdrawal of her savings. Since not all account holders need to withdraw all of their savings at the same time, the bank can safely gamble on having only a fraction of the deposits available in cash. This is called the fractional reserve requirement of the banking system. In Canada there is zero requirement. However, a prudent banker would be well advised to maintain a minimum of 10% of outstanding loans available as cash on deposit. This is the basic principle of the fractional reserve requirement.

Let us examine this in simple terms. Imagine that initially the Bank of Canada prints money and puts into circulation $1billion. Imagine that as this money is used to trade goods and services, savers deposit 25% of this total, that is, $250million into savings accounts in various banking institutions. With a 10% reserve requirement, the banks all together can create loans totaling an additional $2.5billion. This is money created out of thin air as credit to the borrowers’ accounts.

Over time, the principal amount on the loan is repaid and the balances on individual loan accounts are reduced to zero. The problem is the interest charged by the banks on the loans. Where does the money come from to pay the interest? The interest is repaid by more loans being issued. The essential point here is that all money created in our present banking system is created as debt which will never be repaid. Our present monetary system is a system of mirrors, a pyramid scheme and a ponzi scheme. This ought to be considered criminal activity and ought be abolished.

The call for public banking

I have presented an outline of how money is created in two different systems. In the public banking system, the government of Canada through the Bank of Canada can restore its authority to create money at zero interest to be used to finance public service, infrastructure and social well-being.

In the current banking system, money is created as loans which is used to pay the interest charges which accumulate in the pockets and accounts of the banks and its shareholders. In this system, money is created out of nothing as a computerized data entry which has to keep on growing in perpetuity otherwise the system collapses. This has become a reality and only now are segments of the world population waking up to this fact.

Where is the real wealth?

At the beginning of this essay I hinted that money as a store of value is questionable. Any money stashed away as savings is supposed to represent wealth or surplus. Money gives the holder an entitlement to goods and services. In reality, money represents a burden on future workers and power to the holder over indentured labourers.

Money created as payment for interest flows back to the bankers and financial elite, the holders of power in government, business and society. When governments, businesses, individuals and the public in general assume a loan, interest charges enriches the banks. We might as well just print money and hand it over to the bankers.

Money created by publicly own banks go directly to the workers and producers of society to facilitate exchange of goods and services for the benefit of society as a whole. There is no need for the transfer of money in the form of interest charges to the banking elite.

If we abolish the practice of lending at interest we would be taking control from the banking establishment and giving it to the working class of society, the true producers of real wealth.

Saturday 9 March 2013

What do we do when the shit hits the fan?

If you think the fiscal crisis or the US National Debt of 16 trillion dollars is something to worry about then you ain't seen nothing yet.

We have a much bigger crisis coming. No. A catastrophe of epic proportions. We will witness a complete meltdown of society as a result of global warming,  financial collapse and social chaos, not to mention the geopolitical quest for world dominance.

Our present lifestyle is killing us all.

Governments, corporations, society and individuals are all to blame for this.

We are the enemy.

By 2050, we will experience extreme human pain and suffering like we've never witnessed before.

By 2100, world population will collapse to under 2 billion.

And yet no one is doing anything seriously about it. We are in denial mode. Severe short sighted thinking.

We worry about deficit, money, jobs and oil.

Wake up folks and kiss your children goodbye.

What can we do about this?
There are steps we can all take to mitigate this, spread the burden and ease the pain.

Here are positive things we can all do:

  1. Know whom you can depend on when the going gets tough.
  2. Know where your food comes from and support your local farmer.
  3. Watch where and how you spend your money and buy local.
  4. Park your car and walk.
  5. Create human scale communities.
  6. Build resilience within your community.
  7. Join or start a Transition Initiative.

"Limits to Growth" was published in 1970. We have had more that 40 years to reverse the trend towards self destruction. We did nothing and wasted 40 years.

We have passed the point of no return. So what are you planning to do for the next 40 years?

Wednesday 14 November 2012

Strikes continue against austerity measures

Strikes by the workers continue to spread across the EU, in Italy, Greece, Spain, Portugal, Belgium, France, and UK, in protest against harsh austerity measures being imposed by the governing troika, the European Union (EU), European Central Bank (ECB) and the International Monetary Fund (IMF).

Striking is one of the last actions remaining for the working class to take in order to bring social justice.
In reality, the working force can produce enough for every citizen of every country to share, feed and care for themselves and their families. The fruits of their labor are co-opted by the corporations, banks, financiers, investors and money speculators who siphon off profits and stash the money away in off-shore tax-free havens. 

And we wonder why there is not enough money to pay a decent wage?

There is one battle left to be fought – collapse of the global financial system that will wipe out all of the accumulated wealth of the ruling class.

The battle wages on.

Saturday 19 May 2012

Corporations Rule the World

The entire world is headed into three simultaneous monumental crises: financial, environmental and social. The environmental destruction, social unrest and financial collapse are all precipitated by corporate stranglehold on our governments, institutions and global monetary policies.

Guns, laws and money are all instruments of social organization and control. Whoever controls any or all will rule the world. Right now, the military-industrial-congressional-complex (MICC) has it all.

In Chris Hedges latest article, “Colonized by Corporations” (truthdig.com - May 14, 2012)http://www.truthdig.com/report/item/colonized_by_corporations_20120514 he writes,

“We have been, like nations on the periphery of empire, colonized. We are controlled by tiny corporate entities that have no loyalty to the nation and indeed in the language of traditional patriotism are traitors. They strip us of our resources, keep us politically passive and enrich themselves at our expense.”

 “Laws are written to legalize corporate plunder and abuse, as well as criminalize dissent.”

“A change of power does not require the election of a Mitt Romney or a Barack Obama or a Democratic majority in Congress, or an attempt to reform the system or electing progressive candidates, but rather a destruction of corporate domination of the political process... It requires the establishment of new mechanisms of governance to distribute wealth and protect resources, to curtail corporate power, to cope with the destruction of the ecosystem and to foster the common good.”

Our only hope to stop the MICC domination is by revolution of the masses. The Occupy protest we witness now is just a dress rehearsal of what is yet to come. We have already seen the start of this revolutionary process in the “Arab Spring” in Middle Eastern nations. We will see this eventually come to Greece, Spain, Portugal and Italy in the coming months. As the walls of the financial-corporate-ruling class structures come tumbling down, this will spread to the rest of Europe and America.

“A revolution has been unleashed across the globe. This revolution, a popular repudiation of the old order, is where we should direct all our energy and commitment. If we do not topple the corporate elites the ecosystem will be destroyed and massive numbers of human beings along with it.”  

"Insanity is doing the same thing over and over again and expecting different results." - Albert Einstein

“Go ahead and vote this November. But don’t waste any more time or energy on the presidential election than it takes to get to your polling station and pull a lever for a third-party candidate—just enough to register your obstruction and defiance—and then get back out onto the street. That is where the question of real power is being decided.”