Posted on 03/16/2023 5:00:37 AM PDT by MtnClimber
Money is all theoretical… until it’s not. Paper money is bad enough, as France learned under the tutelage of the rascal John Law in the early 1700s. The nation was broke, exhausted by foolish wars, and heaped under unbearable debt. Monsieur Law, a Scottish genius-wizard (the Jerry Lewis of political economy), landed in Paris, cast a spell on the regent Duc d’Orléans, set up a magic credit engine fueled by dreams of untold riches-to-come burgeoning out of the vast, new-found lands called Louisiana up the Mississippi River, and modern finance was born!
The stock-and-money schemes known as the Mississippi Bubble soon ruined France and put finance in such a bad odor that the word “banque” could not be used in polite society there for a century to come. Monetary inflation became a thing for the first time since Roman days — a much easier trick with printed paper banknotes than with silver coins — but the effect was the same: the evaporation of “wealth” (which is what money supposedly represents). At the height of the crisis, trading in gold was criminalized, though that was so easily worked-around due to sheer custom and habit that the Crown had to re-legalize it. The frenzy from start to finish lasted only a few years, but the nation was set on the path that would eventually lead to revolution. Law ended his days dolefully running card games in Venice.
Likewise, the creaking polity called the USA in our time spawned many new incarnations of John Law as it transitioned from being “the arsenal of democracy” — you know, making real things — to a land of make-believe, where unicorns galloped over rainbows conjured by computer magic and utopian wishes of equity, diversity, and inclusion. The overhang of previously amassed wealth kept those dreams going long after we discontinued the rough and messy business of making stuff, and thereby generating real wealth. But now a klaxon blares, signaling the end of dream-time, and the nation wakes up in a ramshackle house with the floor giving way under the bed.
The rot was plain to see in the banking architecture built on US treasury paper (bills, notes, bonds) as rising interest rates undercut the price of all the debt paper issued previously at lower rates. And this was the collateral that banks generally held the depositors’ money in. So, when it became necessary to declare a problem with the balance sheet, and cash had to be raised to cover it, the treasury paper could only be sold at a loss, liabilities exceeded assets, word got out, depositors rushed to secure the money in their accounts, and that was all she wrote for yon bank, in this case, Silicon Valley Bank, the first to crumble.....
These banks were most concerned with increasing their ESG score by doing stupid things. And they won stupid prizes.
The banks thought they were monopolizing the market for themselves.
Agree,
Just one small correction, IMHO-
Original reads: ““wealth” (which is what money supposedly represents)”
Should read: Money represents human time.
Anything with a price on it, is trading human time. As the saying goes, “time is money.”
An example: If you were the last man alive, and a mountain of 12 trillion dollars were piled up outside your home, what would it do for you? Would it feed, power, clothe, protect, entertain you? If old, would it push your wheel chair down the aisle of the hospital, do a medical exam on you, mow your lawn?
***Money is an abstract concept representing human time.***
It works better than bartering.
However, modern financial/monetary systems allow for massive fraud by government, i.e. where they essentially steal and intentionally create inflation when they spend far more than they really have.
these banking problems are simply a consequence of Bidenomics and stupid bankers ...
banks across the globe have fallen into the Biden Trap©, namely having invested massive new depositor monies into massive amounts of near-zero interest-bearing securities during the time Biden gave away trillions of dollars for free, but now the resell value of the securities are way underwater because the Federal Reserve tried to halt the runaway inflation caused by the trillions of free Biden dollars by rapidly raising interest rates, thus devaluing all previous interest-bearing securities, AND causing said bank depositors to withdraw massive monies with a few clicks of the keyboard to seek the higher interest rates of new interest-bearing securities ...
massive bank depositor withdrawals after the deposits have been spent to buy securities that are now underwater if sold creates a liquidity crisis causing bank failure ...
see “A Wonderful Life” for an example of a bank failure caused by panic and illiquidity ...
“However, modern financial/monetary systems allow for massive fraud by government, i.e. where they essentially steal and intentionally create inflation when they spend far more than they really have.”
****************
One of the worst aspects of this is that they steal from future generations, leaving the burden of debt payment largely to them.
As Kamala would say the gears on the money printers go round and round. You know, like on a school bus.
In the passage of time!!!
LOL! Perfect.
In may ways she is the poster child for what’s wrong with the country.
We’ve been in “Idiocracy” since 2008. With a brief reprieve under President Trump but a whole lotta trouble caused by Left.
President Camacho would be an improvement over Obama and Biden.
Well, the good news is that World War III (inside 2 years) will make Joe a War President. So........
With Kamala on deck.
I expect them to issue an EO designating Brawndo for crops.
It would pretty much fit right in with a lot of their policies.
Not sure if that’s really so long term with inflation.
They’re just f#c$ing people over in the present. When the government inflates its way out of debt, they pretty much just screw all those people they made promises to today: bonds, social security/federal/military retirements, Veterans compensations... Sure, they are still giving them face value of what was promised, but that simply isn’t worth as much anymore, and the raise in cost of living is delayed and not keeping pace with the actual inflation.
Where the long term damage is IMHO is in what we call a public education today, infrastructure (in particular energy and transportation), and many of these dysfunctional/unproductive behaviors we are advocating, even subsidizing that we will not easily shed ourselves of. We have massive government waste in redundancy (FBI, DEA, Federal Marshals, ATF...), with government agencies which accomplish nothing (Department of Education, TSA, etc.) or are even economically destructive (EPA, EEOC...). But that’s just my stinking opinion.
The Left took a wrecking ball to the country and they “successfully” dumbed it down.
Hard to imagine how much worse it will be two years from now.
“We have massive government waste in redundancy”
***************
We certainly do, and its massive. Congress could cut the waste and duplication but it won’t. One reason is the larger the government gets the more opportunities there are for corruption and graft that enriches politicians.
Neither party wants smaller government so we’re screwed. They detest the idea of federalism.
Many factors and to some degree that sure is true, as crazy as it may sound to some. Politicians use government, may that be the intel apparatus, law enforcement, regulations, subsidies, the tax code, government programs to buy votes, appease their campaign donors, and in some cases personally enrich themselves, like Joe Biden, Harry Reid...
Most of the redundancy and growth in government is a patchwork of “good ideas” proposed by politicians wanting to “show action” anytime something goes wrong, i.e. “we’re from the government and we’re here to help.”
DEA: war on drugs, Richard Nixon.
EPA: save the planet, Jimmy Carter
TSA/DHS: war on terror, George Bush
ATF: prohibition, Volstead Act.
Sad thing is, just like the war on drugs has been an abject failure by any empirical and objective measure (since 1969), so has the TSA which has caught ZERO (0) terrorists to date, prohibition and the ATF which of course remained even after this lunacy of a law was abolished...
And both parties are responsible! Only the themes change. For liberals it’s always more government for some social justice cause or the environment, while for conservatives it’s always national security and public safety.
The point is, MOST of government you can literally shut down, get rid of, and people would never know the difference.
If that sounds ridiculous, ask yourself how your life was impacted when the federal government shut down during covid and in some cases as many as 75% of their staff stayed home for as long as 6 months?
How did the airlines and airports operate before a TSA? I will tell you how, faster, cheaper, more convenient and without warrentless searches of my person and affects.
When Trump cut the EPA by near 1/3, forcing them to eliminate over 100 various regulations, what happened? -NOOOOTHING- Except for a liberal MSM was up in arms, it didn’t matter one damn bit: https://www.propublica.org/article/as-trump-slashes-epa-worry-over-the-fate-of-an-agency-doing-similar-work
I don’t disagree with anything you said. In fact, I thought it was a great post.
There is do gooderism at play for sure, but another factor in DC is the strong tendency to throw money at ‘problems’; some might argue its a gut reaction by congress to every issue. They perceive it as a display of action. But we shouldn’t lose sight of the self-serving nature of this either. The Swamp never saw a program it didn’t like. Expansion of government opens up all kinds of opportunities for office holders to reward their friends and themselves, and of course it opens up a whole new world for the bureaucrats and special interests in DC. Naturally they are constant instigators of expansion.
Spending money is good for business in DC. Look at how rich the politicos get while they’re in office and how comfortable the technocrats are. Life is very good in DC for them.
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