🚀 go-pugleaf

How does interest slavery work in the year 2001?

Here is my version of neo-Feder populist economics:
an analysis of how the financial establishment has rigged
the economic game so that they can function in an "easy-money"
perpetual-boom money-circulation loop (the "inside track")
while the rest of us run on a tight-money increasing-debt
"bust" loop (the outsider's track) that is "farmed" by the
insiders from their higher food-chain loop. (A rigorous
description and analysis follows below -- although not
the formal journal-worthy write up it deserves.)
...................

M3 and Derivatives versus M1; The Plunder and Destruction of the Middle
Classes


"The global financial elite are each unregulated laissez-faire
"wildcat bankers" in the sense that they can create any backing
they want for the medium of exchange they need at the moment,
i.e., that they need for manipulating the the money and credit of the
rest of us who are constrained to operating in a closed-in
tight-money loop, which the elite manipulates to "milk" the
rest of us, a loop of merely M1 and M2 money and
credit circulation. "  (excerpt from below)

WHEN BANKERS RULE

Modern society has made the
bank account
the standard of values.


When the bank account
becomes the standard of values
the banker has the power.


When the banker has the power
the technician has to supervise
the making of profits.


When the banker has the power
the politician has to ensure law and order
in the profit-making system.


When the banker has the power
the educator trains students
in the technique of profit making.


When the banker has the power
the clergyman is expected
to bless the profit-making system
or to join the unemployed.


When the banker has the power
the Sermon on the Mount
is declared impractical.


When the banker has the power
we have an acquisitive,
not a functional society.

                     - Peter Maurin, 1931

Subject: Fw: Gottfried Feder - M3 + M4 versus M1 and the
Devastation of the Middle Class

> It appears I earlier missed some of the point in
Dick Eastman's article:
>
> Arno
>
> From:  Dick Eastman
> To: Arno
> >
> > What joy for me to see that you have shared these
> > "neo-Feder" views (below) with gang8 economists.
> >
> > Please don't consider it ingratitude if I offer
> > a correction of the subject title you have
> > chosen for this post.  (corrected above)
> > In the analysis presented,  M1 is not
> > contrasted with M2, but rather with
> > M3 and M4 and even money substitutes
> > that go beyond our systems of classification.
> >  The "elite loop" players can create their own
> > monies at will, for example, by creating a
> > "derivative" or a swap option and then marketing
> >  it with absolute assurance of its easy liquidation
> > whenever convenient.  In other words they
> > have transaction liquidity that is not even
> > counted as money by conventional monetary or
> > foreign trade economics.  (And derivatives are
> > entirely unregulated internationally.)  The financial
> >elite are each unrugulated laissez-faire "wildcat bankers"
> > who can create any backing they want for the medium
> > of exchange they need at the moment, while they
> > milk the rest of us when they manipulate money and
> >credit in our closed off victim-loop based on M1 and M2."
> >
> >   If you do invite your statistician and econometrician
> > friends to test this hypothesis -- have them use the
> > widest-transaction money definition for which thay
> > can get data.  M2 is not sufficiently "above" M1 to
> > show the two loops.  M2, which adds, for example,
> > savings-acount deposits, is sort of a gray area in
> > my analysis, but probably still more in the lower
> > loop than the higher.
> >
> > Also, if the man who does test these conclusions
> > wishes, he can  publish the whole idea under his
> > own name.  I would be satisfied with a footnote
> > stating that the existence of the two loops of two
> > different levels of money tightness was
> > first suggested by yours truly.
> >
> > Again, you have made me a very happy man.
> > Why couldn't our paths have crossed twenty years ago?
> >
> > Warm regard,
> >
> > Dick
> >
> > ----- Original Message -----
> > Subject: Fw: Gottfried Feder -[ M2 ] v. M1 and the devastation of the
> >middle class
------------------
Subject: Re: Gottfried Feder:
> > Asking J�rgen Backhaus here in Erfurt, Germany about
> > Feder, he replied appr.
> > "Oh, yes he is well known but his ideas do not go deep."
>
My (DE) reply:
> Here is how deep Feder took my thinking when I was teaching
> money and banking at Heritage College in Washington state..
> Feder provided the clue of what to look for, and I found it.
> I hope you will make allowances that my style is geared to
> newsgroup polemics -- but I know the economics is sound
> and the analysis is complete.  Please share with Herr Backhaus.
> This treatment of "Yakima school" neo-Federism was posted to
>  the newsgroups over a year ago.
> ------------
>
> In article <8547ul$kqe$1@nnrp03.primenet.com>, "Lawrence Tseung"
> <ltseung@primenet.com> wrote:
>
> >The Strategic View of Banking and Investment
>
> There already is much international pressure for China (the Communist-
> held mainland) to adopt the American (also called "globalist") system
> of central banking and money supply/interest rate management.
>
> If this system is adopted it will prove a great wealth-making
> boon to the financial elites of the New China, but it will mean
> the constant impoverishment and indebtedness of the masses of
> the Chinese people.  The foreigners will bribe heavily for China's
> political leaders to adopt their kind of system (they will share
> mightily in the transfers of wealth!)
>
> I offer the following letter which was meant to warn Americans
> of the abuse and corruption of their economic system.  The astute
> Chinese student of economics will at once see the relevance to
> his own country's situation.
>
> If you are a student I urge that you bring this to the attention
> of your economics professor. I claim no authority for this essay
> based on my name. (I hold a Masters degree from Texas A & M where
> I studied Macroeconomics under Dr. Akira Takayama and Banking under
> Dr. Richard Saving; but this analysis does not stem from their
> treatment of this topic.)
>
>      How the Future Was Stolen
>              by Dick Eastman
>
> Everything you hear about the Federal Reserve (and the Euro Central
> Bank for that matter) raising interest rates to �combat inflation�
> is private disinformation from a deviant banking elite intended to
> conceal the fact that the middle-classes are being robbed blind and
> their hopes for the future are being stripped from their existence.
>
> Unfortunately the same elite has dumbed down most of us to the
> point where it is difficult to follow an explanation of how this
> super-theft is accomplished.  So copy this and go someplace where
> you can concentrate.
> *  *  *
> The middle class is shrinking because the  money supply that the
> middle class uses, M1, is being contracted while the wide-transaction
> monies exclusively used by the financial elite and multinational
> corporations are being expanded.  So instead of the whole economy
> undergoing a boom followed by a bust as the state alternately
> inflates a commonly shared currency and bank credit and then
> tightens it; today we see the middle class languishing on an
> M1- money contracted �bust loop� (the internal �little people's
> economy) even as big banks, multinational corporations and
> billionaire currency traders enjoy an easy money boom that
> captures most of the real-goods �economic pie� for itself and,
> more important, all the claims to future economic pie (the
> result of savings/investment on the elite loop) while the
> middle class, lacking even the money to meet its
> expected commitments goes into debt (receiving pieces of
> �negative economic pie� for the future).
>
> The M1 money supply (think: cash and check-book money, or
> in bigger words,  domestically circulating currency and
> bank-loan generated checking accounts called demand deposits),
> both as a stock and as a flow, has been SHRINKING with very
> little fanfare since the current Fed Chairman assumed his
> position under Ronald Reagan.  This means the  circulating
> money media of the middle classes--which the middle classes
> use to pay their debts, buy clothes for school, and take
> the family out for  dinner, fix up the house, buy a new car,
> or make donations to the local orphanage --has been less and
> less each year.  (This explains the shocking rise in middle
> class debt(that the prostitute press downplays falsely
> attributing the rise as the result of �spend-now-rather-than-later�
> decisions of middle class people themselves--as if they had
> any choice in the matter!
>
>   But while the Fed has been shrinking M1 it has been
> allowing the monies of the elite, the so-called �wide
> transactions monies,� M2 and M3 to expand. Under Greenspan
> and during the Presidencies of Reagan, Bush and Clinton,
> the Fed has been holding M2 and M3 (each of which includes
> M1 monies, but then adds the wide transactions money-supply
> components used the multinational-loop transactions  of of
> elite institutions.  I�m talking about money market deposit
> accounts and general purpose money market mutual funds, but
> more important, the  overnight Eurodollar deposits issued to
> US residents from foreign US banks and, most powerful of all
> the overnight and continuing contract REPURCHASE AGREEMENTS.
> These are the privileged money-supply components that the
> middle class never gets to touch.  What owner of a vacuum-cleaner
> repair shop or a machine shop   parks  his �excess liquidity� at
> a commercial bank in the form of a short-term loan to the bank,
> with a REPO, redeemable the next day for principle and interest?
> And which middle class guy with �an idea for a better mouse trap�
> gets to borrow that cash?
>
> By the way, don�t be fooled by the �overnight� aspect of these loans.
> The banks accepting these loans know that they can count on
> sufficient �parked money� each and every night to permit
> highly significant, i.e., huge,  loans on the basis of them.
> This is a source of money  that the little �building and loan
> association� managed by �good ol� George Bailey�
> could never touch for the residents of  Bedford Falls
> (the character in Frank Capra�s populist film of pre-WWII
> Americana: �It�s a Wonderful Life.�)
>
> The REPO is a computer data entry that, for all practical
> purposes is money. I�ll go even further: since it is a banks
> IOU and can claim the creation of new demand deposits when
> it is electronically �turned in� it functions exactly like the
> private-bank generated monies  of the  early days of the Republic,
> in the relatively unregulated days before the (American) Civil War.
>
> I am telling you that the elite have their own private loop for
> their own less-regulated AND more-privileged monies. It is these
> monies of the elite that are the components of money-supply
> definitions of M2 and M3 within the definition of M2 and M3
> that have expanded as the M1 component has been shrinking.
> (In other words, the relative share of M1 has been shrinking
> against the REPO�s and CD�s within M2 and M3.)
> Thus M2 appears to be stable, to be �held relatively constant,�
> ostensibly to �keep inflation under control� in the manner  of
> monetarists.
>
> This money circulates  in the multinational corporate and
> financial realms of Wall Street, not in your  home town or
> backwater state.  (WHY are some states backwater states?; a
> related topic for another time.)--and when it is spent it is
> spent on new factories on the Communist mainland of China,
> or a new Wal Mart  that will put �Ma and Pa� stores of your
> home town OUT OF BUSINESS.  (Ma and Pa spend their PROFITS in
> your town; Wal Mart sends its profits to Arkansas.  Get it?
> The Waltons (billionaires) get the profits that used to go to
> middle-class mom and pop.  (Ma can be seen today offering you
> free samples of cheese spread as an a senior-citizen employee
> of Wal Mart.  (I am not knocking Wal Mart.  I�m just saying
> that the capital for those giant stores came from a lending
> source unavailable to Ma and Pop.   And before someone tells
> me that Wal Mart is better than Ma and Pa; let�s switch our
> example to restaurants.  Could your grandmother cook a better
> meal than McDonalds?  Then why hasn�t she driven McDonalds out
> of business?  Maybe she does not belong to the little circle
> of pals on the closed investment loop, closed to little guys
> that is.
>
> At this point we need to consider the effects of a monetary
> contraction.
>
> The 1929 crash destroyed a third of the money supply.
> That monetary contraction (caused by the mass calling in
> of bank loans to meet the cash demands brokerage houses that
> investors meet their margins (they had bought stock on credit
> during the good times) plus downward rigidity of
> wages  (there is less money circulating and lower prices at
> the stores but no one cuts wages to bring them into balance
> with other depressed prices--they settle for firing a third
> of the work force instead, so that those who kept their jobs
> now have their old wage and lower prices in the store.  That
> is why those who kept their jobs in the Great Depression where
> much better off than before, as one can see by comparing the
> average home build in the twenties with the average home of
> the 30�s.  (And I think the massive margin calls by brokerage
> firms was deliberate--why else would Winston Churchill have
> been on Wall Street that day?  (Britain needed the crash because
> Churchill, the Chancellor of the Exchequer had set the gold
> content of the Pound too high considering the weakened economic
> condition of Britain after WW1; Wall Street Relatives were
> willing to help out, and wipe out a lot of their competition
> from middle-class businessmen at the same time.)    It is true.
> It is as John C. Calhoun said back in 1836:  �A power has
> risen up in the government greater than the people themselves,
> consisting of many and various and powerful interests,
> combined into one mass, and held together by the cohesive
> power of the vast surplus in the banks.�  Today such a vast
> surplus exists, but only for the benefit of those with
> access to the privileged money-circulation loop.
>
> The elite-serving media denies that the middle class
> is hurting.  The truth is the upper income groups have had
> great growth in income  and wealth accumulation, the poor
> are  slightly better off (except for their prospects
> of entering the middle class someday),  but the  middle
> has been hollowed out.  Real wages of the middle class are
> dropping in the Clinton "boom."  Think of the manufacturing
> jobs (the �elite of the blue collar� jobs) gone to  China.
> Think of the middle-management jobs eaten up by  mergers and
> downsizing (increasing monopolistic concentration of firms).
> Think of the Ph.D.'s driving cabs.  Think of the burger-flipping
> jobs awaiting college graduates.  Think of the small businesses
> that have vanished due to Wal Mart and a middle class that
> can no longer afford their advantages.  Think
> of the  designer tee-shirts that pass for fashion. (It is
> amazing how the servitors of the Establishment can conceal
> our own impoverishment from us.  (Kids today have no clue
>  how good it once was for the typical person). And the
> gains of the poor are not moves towards  the middle class
> but toward greater dependency: more transfer payments
> (the result of vote buying) and benefits at the expense
> of middle-class, not fat-cat,
> taxpayers. (A good example  of the deception is the way
> legislators call an increase in the minimum wage "middle-class
> legislation."--unless the middle-class teens on their first
> jobs are all the middle class they are talking about)--the
> minimum wage increases ruin  small-business restaurants
> for example.   The point is, that is small potatoes as help
> for the middle class.
>
>
>  There is an identity recognized by all economists
> which can be simply stated as
>         MV = PQ.
>  Which means that the money exchanging hands in a year
> (MV) equals the total of receipts for goods and services (PQ).
>       M= money supply, V=velocity,
>       P=price of goods and services.
>       Q equals the goods and services purchased.
> (P can be thought of as an average or index or, or a mathematical
> vector and so can Q).   Now  velocity (V) is fairly constant due
> to institutional factors such as: 1)the fact that we are usually
> paid every two weeks or every month;  2)that we usually receive
> government transfer payments every month etc.--so if EVERYONE
> was paid every month  V would equal 12,
> get it?)
>  But if V is constant than  MV = PQ  means PQ is a function
> of money supply (M) alone..  But a change in M can affect
> either  P (meaning inflation or deflation) or Q (meaning
> more or less economic pie, a change in the standard  of
> living as measured by consumption of goods and services).
> If M has been shrinking we must have either deflation
> (P goes down)  or people ending up worse off (Q goes down).
>
>  Now the question  is:  Should the Federal Reserve use M1
> as the money supply it watches or one of the wide-transactions
> definitions,   M2 or M3,  the equation MV = PQ?
> Milton Friedman suggested and argued for  M1 and Greenspan
> says he �sometimes� looks at M2, but has definitely stopped
> monitoring M1.     But if  M1 is all that a large segment
> of the economy (the middle class) ever cycles through its
> household and if that M1 is contracting  then these
> households are either experiencing deflation or a fall
> in their standard of living.  (You�d better read that again.)
>
>   But prices ARE holding steady.  Then the middle class
> must be loosing in goods and services,  since  in MV = PQ
> both V and P are relatively constant and M (here M1) has fallen.
>
>   The lower middle class  only have  M1  (far from being
> financial asset holders, over 51 percent of American
> households have 0 or negative net wealth;  (due to
> mortgage,  consumer debt etc.  think of the
> rise in bankruptcies.)
>
> (By the way, the advent of electronic banking does nothing
> to alter this picture--accept insofar as the banks offering
> the online banking are the banks most likely to send the
> money electronically deposited as investment capital to
> China to build giant factories manned by new-coolie labor.
> The profits generated by this move never filters down to
> the �lower loop� to fertilize local American business
> enterprise.  Our �savings for the future� takes away our
> capacity to earn what it takes to buy those goods that
> line Wal Mart shelves.
>
>   Now as for my contention that M1 is middle class life
> blood  here is a list of  different components that go
> into this complex reality we are calling  M (money supply)
> and that economists use to distinguish definition M1 and
> broader definition M2.
>
>
> 1. Currency (outside the Fed and the reserve deposits
>    of banks because they never circulate)
>
> 2. Traveler's checks
>
> 3. Demand deposits ( checking accounts; created when
>    banks S & L's etc. make loans)
>
> 4. ATS checkable deposits
>
> 5. NOW accounts
>
> 6. Credit Union share draft accounts
>
> All of the above are M1, the familiar "spending money" of the economy.
But
> there are other liquid assets that function as money in MV = PQ.  Let's go
> on:
>
> 7. Savings deposits
>
> 8. Money market deposit accounts
>
> 9. Small-denomination time deposits
>
> 10. General Purpose Money Market Mutual Funds
>
> 11. Overnight Eurodollar deposits issued to US residents
>     from foreign US banks
>
> and most critical to my argument:
>
>  12. overnight (and continuing contract) repurchase agreements:
> component of M that has displaced M1 money in the overall economy.
> --but these non-M1 monies circulates  in the corporate and
> financial realms of Wall Street in Middle America. town--and
> when it is spent it is spent on new factories in china  or a
> new Wal mart  that will put Ma and Pa stores of your home town
> OUT OF BUSINESS.  (Ma and Pa spend their profits in your town;
> Wal Mart sends its profits to Arkansas.  Get it?  The Waltons
> (billionaires) get the profits that used to go to middle-class
> mom and pop.  (Ma can be seen today offering you free samples
> of cheese spread as an employee of Wal Mart.)
>
>
>  MV =PQ  is an always-true identity  called
> "The Equation of Exchange"  but when you assume that V is constant
> it becomes "The Quantity Theory of Money."
>
> As for you Keynesians, (I'll bet of the ten people that read this
> post have used Samuelson�s textbook in college.
>
>  To convert my Marshallian analysis (Keynes was a pupil of
> Alfred Marshal) to the Keynesian framework, merely mark the
> dollars spent in a year, i.e., MV, according to whether they
> were spent by consumers, by by investing
> businesses, or by government,  and MV is thus redefined as
> C + I + G.  And you have the simple Keynesian model:
> PQ = C + I + G
> This slight of hand trick by Keynes enabled him  to confuse people
> and conceal the real role of money.  Thanks to Keynes, now when you
> want to increase Q you merely goose government spending, G.
> And when you  want to  fight inflation you merely reduce C
> (through taxation of consumer income).
>
>
>   Future standards of living are based on present investment.
> The savings (foregone consumption) allows the investment to
> take place.
>
> I'm distinguishing between middle-class enhancing investment
> (Ma and Pa's business) vs. that billionaire who built the
> sneaker factory in China and Vietnam.  (Much profit to
> him--lost wages to the American shoe factory workers--ignoring
> the national security ramifications not relevant to my explanation.).
>
> Well, today the M1 money supply is being contracted, but
> you do not hear about it. The Wall Street Journal does not
> regularly report M1  (although the superior Investor's Business Daily
>  does) and when it does it does not do so prominently.
>
>
> The shrinking of M1 is a great secret (known only to economists
> and others who have reason to consult  the statistics). During
> the chairmanship of Greenspan the FED started tracking M2 and
> M3 and interest rates, i.e., the money  the corporate and
> International (Eurodollar) loops circulate--the  money that
> never touches the wage earner  or the small businessman  of
> the middle-class loop.  The interest rates of course,
> the per year �prices� of loanable funds are of course of
> importance to the bond-holding Establishment, Greenspan's
> number one constituency and concern.
>
>  ...  In the old days we had inflationary boom and then
> bust for the entire U.S. economy.  Now we have ongoing boom
> for the corporate and international  (elite loop) transactors
> and  perpetual bust for the domestic little-guy transactors
> (let�s call it the �schmo loop�), you and me.
>
>   From the Nation and Rolling Stone to Human Events and
> Readers Digest (before Lawrence Rockefeller bought it),
> to current economics text books,  the verdict has been in:
> we are loosing the middle class.
>
> As the middle-class small firm alternative jobs dry up
> and all that is left is working for the oligopolist/oligopsonist
> firms of the Post-Industrial State, in the  new �Service Economy�
> (read Servant Economy.)
>
> If anyone wishes to comment on this on this ng, please e-mail me at
> eastman@wolfenet.com so I can respond.
>
> I am not interested in discussing your investments opportunities.
>
> Dick Eastman
> Yakima
> U.S.A.
> Every man is responsible for EVERY other man

(Note:  The above ideas evolved through many of my
newsgroup posts over the years.)
----------------------------
> > > Alan has found where to obtain the Feder book
> > > and phamphlets.
> > >
> > > Thank you, Alan.
> > >
> > > Dick
> > > ----- Original Message -----
> > > Sent: Monday, April 30, 2001 10:23 PM
> > > Subject: Gottfried Feder
> > >
> > > > http://www.nationalbolshevik.com/nrf/nrfrisingpress.html
> > > >
> > > > All titles are available from: The Rising Press,
> > > > BM Box LCRN, London
> > > > WC1N 3XX, England.
> > > > FORGOTTEN IDEALS: NATIONAL-SOCIALISM BEFORE 1933