Tag Archives: debt

5 Charts Show How Banks Are Raping Small Business

9 Jul

“If you owe the bank $100 that’s your problem. If you owe the bank $100 million, that’s the bank’s problem.”

– J. Paul Getty

With Dun & Bradstreet’s most recent ‘Business Failure and Start-up Analysis’ reporting that “the number of small businesses going bankrupt jumped by 48 per cent over the last 12 months” — growing by 57 per cent over the year among firms with less than five employees, and 40 per cent over the year among firms with six to 19 employees — and that the start-up rate for small businesses fell by 95 per cent, it is worth taking a closer look at the usury rates charged by the banks for small business loans, as compared to large ones.

The following charts show the total value of variable usury-rate business loans, that have a usury rate of 17 per cent or greater.

First, loans of $100k to less than $500k:

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Loans of $500k to less than $2 million:

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Loans of $2 million and over:

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And finally, loans of less than $100k:

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Clearly there’s been no mercy shown by the usurers to their smallest business borrowers, post-GFC.

Here’s the direct comparison of business loans less than $100k, versus loans greater than $2 million, that are copping a 17 per cent or greater rate of usury:

Click to enlarge

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All-time record low “official” interest rates?

Perhaps someone forgot to tell the usurers.

Who needs small businesses anyway, right?

Monopoly “capitalism” is much better.

For the 0.1% at the very top.

“Competition is a sin.”

– John D. Rockefeller

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Usury And The Irrelevant Complicit Church

4 Jul

With thanks and h/t to reader Phil, the following article dated May 2010 is cross-posted from the Economic Edge:

Damon thinks this is one of the most important articles he’s written. I think it’s powerful and should get you thinking regardless of your personal views. I also think it’s important to note that he is addressing religion from this perspective, “We need to avoid dialectical conflict… left vs. right, religion vs. non-religion, black vs. white, immigrant vs. citizen, etc. We need to come together to fight the monetary powers that are bringing us all down together.”

Amen to that.

The Coming Crash: Usury and the Irrelevant Church

By Damon Vrabel

Please, let us stop this usury! – Nehemiah 5:10

It’s been a wild couple of weeks—increasing unemployment, Greek debt crisis, yet another ridiculous bailout, pressure on Goldman Sachs, accusations of commodities manipulation by JP Morgan Chase, and new freakish levels of market volatility that might be signaling the next phase of market collapse. The many day-to-day issues can leave us dazed and confused, so most people ignore them. Huge mistake.They are all related to the most powerful force on earth that controls our lives because it is the very foundation of our society—usury. We are ruled not by governments anymore but by financial powers that use interest-bearing debt to exert control over governments, corporations, and people. Almost all other political issues with which we concern ourselves are secondary symptoms of or purposeful distractions from this larger narrative that is never reported by the Wall-Street-funded media. Sadly the church has remained silent as well.Explaining the details can be extremely complicated, but the basic core to understand is that the US government issues no money. Instead all money comes from private banking institutions with interest attached. At times in the past the US government issued real money for people to use—US notes and coins. But today all money comes from the Federal Reserve’s private banking system by putting the US government, i.e. 308,000,000 Americans, in debt. If the US government were not in debt to the banking system, the American people would have no money.More technically, the Fed and its Wall Street cartel banks like JP Morgan Chase and Goldman Sachs make billions by doing nothing but controlling our money. They have the monopoly license to create the core money in our system from holding US Treasury bonds on their balance sheets. These bonds represent the debt of the United States. Thanks to interest, the bonds pull a large portion of our wages to the banks. The primary purpose of the IRS is to take your wages to pay the interest back to the banks. In effect, Wall Street owns a good bit of your labor. And the more bonds they hold, i.e. the more debt the population is in, the more money they make thanks to the interest flows and the profits from gambling on your debt. The system is very much one of “us vs. them.” Such is the nature of monopoly power and usury.

Economics and Morality

Controlling others and living off their backs by forcing them to borrow with interest in order to have any money is called usury (this does not include standard, self-liquidating bank loans to businesses to fund production). It is a system that ensures everything we do, whether in the public or private sector, feeds Wall Street and the controllers above it. It creates a two-tiered societal pyramid of money pushers on top vs. money users on bottom. The power differential is huge. Everyone is hostage. In doing something as simple as buying food to survive, we contribute to usury because we only have usury-based money, not real money. Like the slaves who built the Egyptian pyramids, today we are stuck building an invisible pyramid of monetary power.In such a system there is never enough money to pay back all the interest to the money pushers. The only solution is for the money users—government, corporations, individuals—to borrow more. This is the reason our debt continues skyrocketing to increasingly insane levels. It isn’t about politics, but the fundamental exponential math underlying the system—the users must borrow more and more to pay back interest and keep the system afloat. Such math is guaranteed to fail. Iceland and Greece have reached the point of failure. The rest of the Europe and the US will experience failure as well. Then we will see money and assets vacuumed up the pyramid by the money pushers—the banking establishment that owns the collateral and can take your property.The exponential math not only creates exponential debt growth, but also exponentially increasing:

  • Scale – government and businesses keep getting bigger; we get smaller and local communities lose their meaning
  • Velocity – the hamster wheel keeps spinning faster; human life suffers
  • Consumption – we buy more and more things that break more quickly
  • Production – we make more and more things that break more quickly
  • Inflation – the dollar buys less and less; we can’t seem to make progress

None of these things have to happen in an economic system. They only happen in ours because of debt-based money, usury, that greatly benefits the top of the pyramid while everyone else suffers to a certain degree depending on their level in the pyramid.

So this system is guaranteed to fail due to not only the impossible math, but also the fundamental immorality. Taken together those five issues paint a horrible picture. Republicans blame Democrats and vice-versa. Nope. It’s all a very simple result of a system based on usury, which used to be considered profoundly immoral. It was a fundamental violation of every major religion. It still is for Islam, but Christianity succumbed long ago. They thought a free market economic system would be beneficial, but got snookered into thinking that usury had to be part of that system. On the contrary, monolithic usury kills the free market.

Our monetary system is a top-down controlling machine, not a free market. It is run not by government, but by the most powerful financial interests in the world. Some people feel in their guts that someone must be stealing from them because they just can’t get ahead no matter how hard they work. Well that’s because it’s true—someone is legally stealing from them. The simple math of usury pulls money from people on the bottom of the pyramid who create real value toward those at the top who create no value. MBAs and others serving the system must reckon with this truth rather than remaining blind. Farmers understand it well, having lost their property over the years to the bankers. Families feel it in the fact that it’s difficult to get enough money to feed the kids compared to 50 years ago when one parent could work a standard week and feed a family of five. Everyone in the system will feel it once the debt system collapses as it is doing in Greece.

Living off the backs of others was called feudalism 300 years ago. It was slavery 100 years ago. Today it’s called the “free market” thanks to the propaganda and fraud of neoclassical economics. It completely ignores the truth of our monetary system, the math behind it, and the eventual collapse that will result from it. Greece is giving us a glimpse, but it is only a mild pre-game warmup compared to what’s coming. The world will rue the day it was ever seduced into accepting usury and the illusion of prosperity driven by nothing but debt.

The Irrelevant Church

On this issue of monolithic usury, the issue from which many of our other problems spawn, the church seems to have no voice. Recently, an older church leader told me, “Keep it up, this needs to be addressed, but you have more guts than me, I don’t want to be killed.” Sobering comment, to be sure, but in the shadow of Gandhi, Dietrich Bonhoeffer, Oscar Romero, and Martin Luther King, is the church now impotent? Are its leaders now too afraid to speak truth to power, to stand against darkness? Or is the problem that the church is, like most of us, fooled by the myth that we live in a free market so we don’t realize we are immersed in an immoral system of controlling usury?

Lower class Greek citizens are now learning the painful truth about the mythical free market. A few of them have died as the police brutally repress them to enforce the usury system for the rich bankers like Goldman Sachs. Where is the voice of Bishop Romero? “I order you, stop the repression!” Iceland learned the lesson a few months ago. Several other populations have learned the lesson in the past as the controlling debt peddlers punished, conquered, and restructured their countries (Indonesia, Malaysia, Thailand, India, Argentina, Chile, Mexico, England, etc.). The same lesson is coming to the rest of Europe and the United States. But again, the church seems to be oblivious. It failed to heed Martin Luther King’s warning, “One of the great liabilities of history is that all too many people fail to remain awake…today our very survival depends on our ability to stay awake.” The church has fallen asleep.

The Dialectic of Left vs. Right

A possible reason is that the church has been co-opted by the manipulative left vs. right civil war created by the corporate media. In fact, Protestant denominations have split into conservative vs. liberal camps so they war against each other—Wall Street is brilliant at divide and conquer. Some sermons in conservative denominations sound like speeches from conservative politicians. Liberal Christian magazines sometimes seem to be just liberal political magazines with an added dash of Jesus.

Postmodernism should inform us that the left vs. right narrative is contrived to keep people from noticing the real power structure behind Wall Street that controls our lives. As long as the church submits to the false framework, church leaders will be “safe.” But that means they will also be irrelevant because they are not speaking to the primary narrative in our world that has always caused problems and is getting ready to unleash far more pain and poverty in the near future—the issue of monolithic usury and debt servitude. By not speaking against usury, the church has become a pawn of it. So the church has largely been conquered by the same concocted civil war that has divided society.

Dollar Tyranny

Another reason the church may be silent is the simple fact that it depends on money just like everything else does. Since all money in our system comes from usury, it is difficult to even notice it. And what authority would the church have to speak against it since it is itself complicit in it? Anybody or any organization that uses a Federal Reserve Note or a credit/debit card, which everyone must do, is unknowingly participating in usury because, again, all of that money comes from the bonds held by Wall Street. But knowingly or not, how could the church or any organization speak against the very thing that fuels its own existence?

The church’s tax-exempt status may be another reason for the silence. Tax exemption is one of the powerful ways the financial empire system influences and controls other entities. If the wrong person says the wrong thing, the IRS has the ability to suddenly remove the exemption, which doubles the cost of running that organization. The church never should have submitted to such tyranny over what may or may not be said.

Comfort of the Middle Class Bubble

Finally, it seems the comfort provided by the monetary system for the great mass in the middle, which is a key part of the church, keeps us from wanting to really think about it. The illusion of peace and prosperity that has lasted for so long has been nice. Some of us even thought we had that comfort because we were better people, so God blessed us. Reckoning with the truth will be painful for those who believe this. The fact is that our perceived comfort today is a result of the darkness of usury. The middle can only exist because there is a bottom that keeps our system afloat. They are the only reason the middle class exists. Moreover, the comfort is currently an illusion because most in the middle class don’t realize how indebted they are. Total unfunded liabilities currently hidden on the government’s financials put each American in an extra $300,000+ in debt that they currently aren’t aware of. That debt comes from the fact that, again, our money comes from usury.

Since the bubble was built on usury, its very existence is immoral, and everyone who participates in it becomes infected. It is also flimsy because usury means the bubble is sustained by debt. Many are already aware of the hollowness of the bubble since it has destroyed the fabric of our communities and a sense of deeper meaning in life. But others are able to ignore that and focus on the material comfort. What will happen to them once the material comfort itself crashes? It will soon. Some market forecasters predict the final collapse of our debt system will be worse than the Great Depression. The math is clear—it will be worse. Just like Greece, we will then see Wall Street paying the government to crackdown on the people, cancel social programs, and take their assets from them to hand them over to the upper class behind the banks. That is the end result of usury—using debt to control others and take their assets so they have no equity. At that point it will be too late for the church to save the lower and middle classes from violent repression and the upper class from their narcissistic detachment from the horror.

“Silence is Betrayal”

So is there a wing of the church that has not yet sold its soul? Is there a remaining Christian voice against usury, or are Muslims the only people in the world who stand against it? The church must wake up to the truth of our system and become relevant again. This is the civil rights issue of the 21st century, only this time it is not black vs. white but a few money pushers vs. the great mass of users. The power of the bond market is getting ready to wreak havoc. We’re all in it together this time. As Martin Luther King said, “There comes a time when silence is betrayal….That time has come for us today.” Will the real church please speak up?

Damon added the following commentary, “We are heading toward a very dark future, unless we fix it, because our system is built on a fundamental evil–usury. This force has taken over not just our economic system, but our governments, our lives, and everything else from schools, to nonprofits, to families, and even the church. I hope the word gets out on this one. And if you attend a church, regardless of religion or denomination, I think the leadership needs to be informed about this.”

***************

For readers interested in further research on this topic area, your humble  blogger recommends Michael Hoffman’s excellent book, Usury In Christendom: The Mortal Sin that Was, and Now Is Not.

See also:

Usury Centralises Wealth

21 Jun

Cross-posted from Applied Philosophy, by author Anonemiss (my bold emphasis added):

I discovered on the exceedingly excellent website of Project Gutenberg a book, that although written 110 years ago, speaks to the heart of our modern economy problems. The book is called Usury: A Scriptural, Ethical and Economic View by Calvin Elliott. I was surprised by how much my own writings about usury follows his arguments. Of course no book about usury could bypass Francis Bacon’s attempt at legitimizing it:

The dictum of Bacon that “Usury gathers the wealth of the realm into few hands” is readily proven and fully verified in the experience of these times. The tendency to centralization under a system of usury or interest-taking is so strong, and the modern result so apparent that the statement only is necessary.

Usury not only enslaves the borrower and oppresses the poor who are innocent of all debt, but it also affects the rich by gathering the wealth of the wealthy into fewer and fewer hands. There is a centralizing draft that threatens and then finally absorbs the smaller fortunes into one colossal financial power. It is as futile to resist this as to resist fate. Wealth cannot be so fortified and guarded as to successfully resist the attack of superior wealth when the practice of usury is permitted. The smaller and weaker fortune, using the same weapon as the larger and stronger, must inevitably be defeated and overcome, and ultimately absorbed.

Rates of interest do not affect the ultimate result. Under a high rate the gathering is rapid, under a low rate the accretions are slower, but the gathering into few hands is none the less sure. Rates of interest only place the convergent center at a nearer or more remote period.

CHAPTER XXIX – USURY CENTRALIZES WEALTH

I advise all readers to study this book (do not be put off by the religious chapters at the start and continue to the purely economic arguments in the later chapter).

See Also:

Looking For A Root

28 May

one-root-to-rule-them-all-fa41dc-e1341482332407

“In Keynes’s view capitalism’s driving force is a vice which he called ‘love of money’ … in the General Theory ‘the propensity to hoard’ or ‘liquidity preference’ plays a vital part in the mechanics of an economy’s rundown, once something has happened to make investment less attractive. And this links up with Keynes’s sense that, at some level too deep to be captured by mathematics, ‘love of money’ as an end, not a means, is at the root of the world’s economic problem.”

Robert Skidelsky; “John Maynard Keynes: Vol. 2, The Economist As Saviour 1920-1937″ (1994)

“There are a thousand hacking at the branches of evil to one striking at the root.”

– Henry David Thoreau

Would you be inclined to agree, that the best way to solve a problem, is to begin by looking for a root?

Economy

Definition of economy

1. the state of a country or region in terms of the production and consumption of goods and services and the supply of money

Oxford Dictionary

Who is responsible for the “supply of money”?

Changes in the quantity of money may originate with actions of the Federal Reserve System (the central bank), depository institutions (principally commercial banks), or the public. The major control, however, rests with the central bank.

– Federal Reserve Bank of Chicago, Modern Money Mechanics: A Workbook on Bank Reserves and Deposit Expansion

How is “money” supplied?

The actual process of money creation takes place primarily in banks. As noted earlier, checkable liabilities of banks are money. These liabilities are customers’ accounts. They increase when customers deposit currency and checks and when the proceeds of loans made by the banks are credited to borrowers’ accounts.

– Federal Reserve Bank of Chicago, Modern Money Mechanics: A Workbook on Bank Reserves and Deposit Expansion

Why is money supplied (by banks)?

…banks basically make money…

Investopedia

How do banks “make money” (ie, make profits)?

by lending money at rates higher than the cost of the money they lend. More specifically, banks collect interest on loans and interest payments from the debt securities they own, and pay interest on deposits, CDs, and short-term borrowings. The difference is known as the “spread,” or the net interest income…

Investopedia

Er… let’s hear that again … HOW do banks “make money” (profits)?

They make money just like any other business. The difference is that their product is money. In other words banks sell money, mostly in the form of loans. Their profit is the difference between what they pay in interest on your deposits and what you pay them in interest for the loan they made you. Banks also charge fees for services.

National Australia Bank, How Banks Work

What is “interest”?

The charge for the privilege of borrowing money, typically expressed as an annual percentage rate.

Investopedia

Is interest on money natural?

The most hated sort (of money-making), and with the greatest reason, is usury, which makes a gain out of money itself and not from the natural use of it. For money was intended merely for exchange, not for increase at interest. And this term interest (“tokos”, i.e., “children”), which implies the birth of money from money, is applied to the breeding of money, because the offspring resembles the parent. Wherefore of all modes of money-making, this is the most unnatural.

– Aristotle, Politics, Book One, Part X (c. 350 BC)

DIGGING DOWN

  • The global economy has a problem.
  • The supply of money is a defining component in the functioning of the economy.
  • Banks supply the money in the economy.
  • Banks supply the money by creating it ex nihilo (“out of nothing”).
  • Banks create new money when they make loans.
  • Banks make loans in order to make profits.
  • Banks make profits by charging interest on money they create.
  • Banks make profits by charging more in interest, than they pay in interest.
  • Interest is a charge for the “privilege” of borrowing money.
  • Making money out of money, by charging “interest” / usury on money … is not natural.

Would you be inclined to agree, that it is not a “privilege” but a burden, to have to borrow money at interest?

Would you be inclined to agree, that it is banks who have an incredibly privileged position and role in the functioning of the economy?

Would you be inclined to agree, that it is immoral and unjust to charge “interest” for the “privilege” of “borrowing” something that was created out of nothing — mere electronic digits, typed into a computer?

Would you be inclined to agree, that because banks are legally permitted to make profits from the production of money“their product is money” — that bankers are likely to have a vested interest in selling as much of their product — that is, creating as much debt — as they can get away with?

Is it possible that usury — the making of gains (profit) on the lending of money; the unnatural “birth of money from money” — is the root of the problem in the global economy?

For the love of money is the root of all evil: which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows.

– St. Paul, 1 Timothy 6:10

…no one shall deposit money with another whom he does not trust as a friend, nor shall he lend money upon interest; and the borrower should be under no obligation to repay either capital or interest.

– Plato, Laws, Book V (c. 348 BC)

And if you lend to those from whom you hope to receive back, what credit is that to you? For even sinners lend to sinners to receive as much back. But love your enemies, do good, and lend, hoping for nothing in return; and your reward will be great, and you will be sons of the Most High.

– Jesus Christ, Luke 6:34-35

See also:

Imagine A World With No Banks

A Tale Of Usury, Explosions, And A Used Car Salesman

Babylon = Usury: We Want Interest-Free Money at realcurrencies.com

The Chart That Proves RBA House Price Policy Is Doomed

14 May

The RBA’s surprise decision to cut the official interest rate earlier this month has re-energised the housing-debt-spruiker community, who have begun forecasting house price rises of 8 – 12% per annum on the back of more interest rate cuts to come (they presume):

Stephen Koukoulas - economist and ALP apologist

Stephen Koukoulas – economist and ALP apologist

Close examination of just one chart — one drawn directly from RBA statistics — is enough to debunk those who still cling to the belief that the RBA’s cutting interest rates must inevitably result in rising house prices:

Click to enlarge

Click to enlarge

This chart shows the all-important annual growth rate in credit for “Owner-occupied” and “Investor” housing, for the period July 1992 to March 2013. As we saw in January’s very popular “The Easy Way To Know Where House Prices Will Go”, anyone can visit the RBA’s website and use their monthly updated Chart Pack to see the true reason why house prices rose so strongly for over twenty years. It was all about the annual growth rate in “credit” for Housing, which is presently five (5) times lower than the peak seen in February 2004.

In that January article, we used the RBA’s own data to discover that the twenty year boom in house prices was largely due to a stunning annual growth rate in so-called “Investor” housing credit…

Clearly then, house prices in Australia were not driven up over the past 15-20 years by “demand” from “population growth”, from people who needed somewhere to live (Owner-occupiers). On the contrary, by far the strongest rates of growth have – during the bubble phase – been driven by so-called “investors”.

… and that is where a closer examination of that one chart above demonstrates that the RBA’s house price policy — trying to pump up the housing bubble again, now that their recently preferred “make room for the mining boom” policy has proven to be seriously short-sighted — is doomed to failure.

Why?

Because using interest rates to influence demand for housing “credit” — especially with “Investors” — has lost its effectiveness. And we can see this clearly, simply by zooming in on the above chart to look at the period November 2007 through to March 2013…

Click to enlarge

Click to enlarge

… and then adding in the actual interest rate rises, and cuts, and rises, and cuts during this period immediately before and since the GFC:

HousingFinanceGrowth_07-13_InterestRates

Take careful note of the change in the growth rate of housing “credit” for “Investors”, as compared to “Owner-occupiers”, as interest rates moved.

As you can see, the three (3) interest rate increases in late 2007 through early 2008 tipped both “Investor” and “Owner-occupied” housing credit growth over the cliff. By October 2008, when the RBA began taking a chainsaw to interest rates, housing credit growth was practically in free fall, plummeting from 12% per annum (Total) to 6.3% per annum, before the total 4.25% in “emergency” interest rate cuts halted the decline.

Interestingly, you can see that both the rate of fall and the total decline in housing credit growth was greater for Investors than for Owner-occupiers. As we saw in our January article, this is also what happened in the brief early 2000’s recession:

The rate of growth in “credit” for housing “Investors” was, until early 2004, far in excess of that for “Owner-occupiers”, with the notable exception of the early 2000′s global recession that only briefly affected Australia. At that time, “credit” growth for “Investor” housing plummeted to the same level as the “Owner-occupier” rate, before recovering spectacularly to reach a whopping 30.7% annual growth in Feb 2004.

What prompted the recovery? John Howard’s introduction of the First Home Owners Grant in 2000, and in particular, his doubling it in early 2001. With a rush of newly-enslaved borrowers bidding up house prices, “investors” too rushed back into the welcoming arms of the bankers, as ever only too eager to lend “credit” at interest to willing borrowers against the “security” of “their” house.

We see a similar, though far smaller effect largely repeated in the post-GFC period. The Rudd Government further doubled the First Home Owners Grant. A modest influx of new “First Home Owner” buyers rushing out with their government-debt-financed mortgage deposit to bid for a house, drew the “investors” back into the market as well. By July 2010 the “Investor” housing credit annual growth rate once again overtook that of “Owner-occupied” housing.

But not for long.

As you can see from the chart, the annual growth rate in credit for “Investor” housing had already peaked in August 2010, and had begun to fall, 2-3 months before the RBA’s final 0.25% interest rate increase in November 2010.

“Owner-occupied” housing credit growth, by contrast, had peaked back in October 2009 — the very same month in which the RBA first began to raise interest rates again, from their GFC “emergency low”. The First Home Owners Grant helped keep “Owner-occupied” housing credit growth relatively steady through to March 2010, when it resumed its long, steady post-2004 and pre-GFC decline. It has only now begun to flatline, in the first quarter of 2013.

The important observation to make about this chart, is that since the GFC “peak fear” in late 2008 and early 2009, things have changed. The world has gone past a point of no return, and the old “rules” of monetary and economic policy do not necessarily apply anymore.

While RBA interest rate increases still have the effect of reducing annual growth rates in housing credit, cutting interest rates no longer appears to have much effect in boosting housing credit growth back up again. Since November 2011, the RBA has cut interest rates seven (7) times — the most recent (May) not shown on this chart — to what are now lower than “emergency lows”, without causing an overall increase in the housing credit annual growth rate. Indeed, the RBA’s own Housing Credit growth chart in its Chart Pack confirms this:

9br-cgbys

The RBA now has the official interest rate at 2.75%. They have cut a full 1.5% since November 2011, without managing to “stimulate” a “recovery” in the growth rate of  house prices housing debt.

There are many more knowledgeable observers than I who have argued that 2% is as low as the Australian official interest rate can go; that 2% is effectively ZIRP (Zero Interest Rate Policy) for us.  The reason given sounds plausible enough; the Australian economy is essentially financed by borrowing “capital” from abroad, so with the rest of the West operating on ZIRP, we need a +2% interest rate difference in order to have any hope of continuing to attract foreign “capital”.

If the RBA is indeed “lower bound” by the 2% level, then the above chart makes one thing pretty clear.

At the present 2.75% cash rate, even another 0.75% in possible interest rate cuts is unlikely to “stimulate” much if any additional growth in Housing credit.

And with annual housing credit growth now running five (5) times lower than the February 2004 peak, and barely two-thirds the level when interest rates hit the 3% “emergency low” in April 2009, the RBA’s policy of trying to re-stimulate the housing bubble to support the economy after the mining boom … is doomed.

Simply, the RBA is pushing on a string:

This is the crux of the “pushing on a string” metaphor – that money cannot be pushed from the central bank to borrowers if they do not wish to borrow.

Don’t Buy Now.

Barnaby: “This Is How Stupid They Are”

30 Apr

Dear reader,

Please enjoy a few minutes of politico-economic sanity:

2GB Chris Smith Afternoon Show Transcript
Tuesday 23 April, 2013

Topics: Chris Smith, Senator Barnaby Joyce
Subjects: Budget black hole

Chris Smith: Senator Barnaby Joyce, good to have you on the program.

Barnaby Joyce: My pleasure, how are you?

Chris Smith: I’m well. Where are you today?

Barnaby Joyce: Well I’m actually making my way to Canberra, but I’m stopping off in Tamworth on the way. The bloke I used to stay with, he and his wife, unfortunately he passed away from cancer so I’m going to the service for that. I was going to go to Rockhampton but changed direction.

Chris Smith: So, you’re heading to, hopefully, a new place. Have you done any polling of late to work out how close you’re going to get to Tony Windsor?

Barnaby Joyce: It’s going to be tough. Mr Windsor will desperately say he wasn’t there, he’s not responsible for this government and he didn’t put them there. I will keep on reminding people that he did. The only reason that we’re $270 billion in debt is because he put them there. The only reason that we’re heading towards another $12 billion deficit is because he put them there. The only reason we have a carbon tax is because he put them there. He’ll be saying it wasn’t me, it was somebody else, I was away that day.

Chris Smith: The Prime Minister’s big budget black hole, estimates now putting the budget deficit anywhere between ten and $20 billion which is not a bad effort considering we were told that less than a year ago that we’d have a surplus of $1.3 billion. How is it possible that $21 billion goes missing Barnaby?

Barnaby Joyce: Bad management, simple as that. What happens is, they’re spending 12 bucks and only bringing in 10 and sure enough you start running out of dough. All of your listeners would understand that the deficit is just like the loss of the government for the year. The real problem of course is the debt that sits behind it. The debt is getting bigger and bigger. They had a good week last week, they only borrowed another half a billion dollars last week. The week before they borrowed another two billion. If you put the price of your house out to $300,000 a pop that’s 6,000 houses that they borrowed for the week a fortnight ago. They borrowed for another thousand or so last week.

Chris Smith: They keep talking about their debt to GDP ratio. “It falls in line with the rest of the world”. The rest of the world is a basket case right now, how dare they compare us with the rest of the world right now.

Barnaby Joyce: Yes Chris, that’s like walking around the graveyard saying: “This person’s more dead than that one”. It’s irrelevant. Once you’re out the backdoor, it’s irrelevant. It becomes an argument in sophistry, an argument in rather large numbers you can’t repay. This is a garbage argument: “Oh, we’re not as bad as Greece. We’re not as bad as Portugal”. I hope not. If we keep going the way we’re going, Ms Gillard, Mr Swan, Mr Windsor and Christine Milne if they keep running the show, don’t worry we’ll get there.

Chris Smith: I had to laugh when I was hearing this long speech of 33 minute duration, off and on through my commercial breaks here yesterday. I was hearing this reference to company tax revenue being down and company tax revenue usually gives us, company tax revenue has hit us and company tax… I thought to myself, no wonder company tax revenue is down, because if they open their damn eyes they would have seen companies close left, right and centre.

Barnaby Joyce: People are doing it tough. I was talking to a manufacturer the other day. He travelled 500km to have dinner with us and amongst the things he wanted to show me was his carbon tax bill: $12.1 million for the year. He said: “What that means to me is that I should go to another country. Why do you guys do this? What is wrong with you people? If I moved to America this is my cost. If I move to Asia here’s my cost but I choose to stay here. Guess who gave me these costs – the government!”

Chris Smith: They change the goalposts so often. The other goalposts they’re about to change if you believe some of the scribes today, is this Medicare levy. We’re going to get to the stage where we’re upping the Medicare levy for the National Disability Insurance Scheme. Shouldn’t they be looking at the bank, that is, our bank, the National Bank and say: “Hang on a second we’re in such crisis at the moment, maybe we’ll hold off on that for a while”, like most people do in business, like most people do with their house budgets.

Barnaby Joyce: The first thing they should be getting, as a little old bush accountant, they should be getting their day to day finances under control. Then other good things that you want to happen like the National Disability Insurance Scheme can be paid for. This idea that: “Oh we don’t know where the money is going to come from so what we’re going to do is borrow more money and if we can’t borrow it, we’re just going to tax you”. That’s just a sign that they’re financially out of control. The people with disability are a soft spot for me and I do want to do something to help them. My gosh you get frustrated when you find the money that has been put up against the wall and all these nutty ideas and when a good idea comes up they have no money for it. We’re beyond not having any money for it. We’re getting to the point where we can’t borrow. We won’t be able to extend our credit limit and we won’t be able to borrow more money.

Chris Smith: You said as soon as they get money they spent more, remember they didn’t get a zap from the mining tax and they spent that on handouts remember before they even got anything.

Barnaby Joyce: This is how stupid they are. They basically said” “We’ve got this ticket in the lottery and now we’re going to buy the house and oh gosh, the lottery didn’t come in. That’s a bad plan, that’s bad luck. Let’s put out a media release blaming somebody about that”.

Chris Smith: Yesterday was a shocker and as I said at the beginning of the program, someone who stands there for as long as the Prime Minister did to come up with a series of excuses as to why everything is stuffed, is a person who is more culpable every minute she speaks.

Barnaby Joyce: I don’t think anyone is listening. I had to deal with the same thing in this area, I had Mr Windsor say that he wanted to bring about a referendum on gay marriage, however he wasn’t going to bring it up with the Prime Minister and if it did come up he wasn’t going to vote for it. I was trying to translate that for people and it’s called confusion – mass confusion.

Chris Smith: The race to become Prime Minister doesn’t just involve Julia Gillard and Tony Abbott, Clive Palmer’s thrown his hat in the ring. Is the Coalition under threat of having their votes diluted because of Palmer?

Barnaby Joyce: Clive’s a mate but a lot of things he’s doing of late things are getting out there. Clive’s a good bloke. I don’t know why we’ve got this distraction here. It doesn’t quite work like that. As you know to set up a political party you’ve got to have members, branches, policies, people willing to give up their jobs and go campaigning for you. It costs a lot of money and I know he has a lot of money but it takes a lot of money to run a campaign.

Chris Smith: I’ve got to tell you that Clive Palmer may be one of your mates but he doesn’t count Tony Abbot as one of his mates. This is what he told me yesterday when he was in the studio.

Chris Smith: Tony Abbott has never been Prime Minister.

Clive Palmer: Thank God for that.

Chris Smith: His party has never been in the position of running the country, is there a sense of vengeance?

Clive Palmer: Not really. My number one criticism is that all sides of politics wherever they’re from, have lobbyists who are not elected, who advise them. If you go to Parliament House, there’s a box in Parliament House, on the floor of Parliament where the advisers sit. Tony Abbott goes over and gets advice from his advisor and someone else gets advice from theirs. Those advisers have direct links, were or are or will become in the future, employed by lobbyist companies. If you go to those companies, it doesn’t matter if it’s a Liberal or a Labor Government who you want to influence policy, they’ll assist you for a fee. I think that’s subrogating the Australian rights.

Chris Smith: Thank God Tony Abbott has never become Prime Minister he said.

Barnaby Joyce: That’s not helpful. The thing is, if Clive’s got a problem with advisers and lobbyists, that’s great, let’s deal with that problem. What are we going to do? Leave the Labor Party there and the Greens and the independents to run the show for another three years? What do you think is going to be left of this country if they stay there for another three years? You won’t have to worry about me campaigning there for another three years because honestly I would be lying to you if I said I’d know how to fix it.

Chris Smith: This is all about vengeance isn’t it?

Barnaby Joyce: Vengeance is a bad thing. Vengeance eats you up and gets you nowhere. You have to learn to park grief and move on. If you start carrying around a bucketful of bile no one cares about it, it just eats you up.

Chris Smith: What’s your message to Clive?

Barnaby Joyce: Clive help us get the country back on the rails. We don’t need any more instability. I’ve got to give up my job, an easy-paying job to have a crack at a seat where the bloke has 71 per cent of the two-party preferred vote. Why? Because our nation has got to get back on the rails. We all have to put our shoulder in to get the show back on the rails, not try and sink the boat. If we sink the boat we all go down with it.

– ENDS –

The Only Aussie Economist To Predict The GFC Shows Treasury Department How The Economy Really Works

26 Apr

This past Friday, Professor Steve Keen – the only Australian economist to predict the GFC and give cogent reasons why, and thus one of very few economists in the world who is not a danger to the public – gave this superb, by-invitation (!?!) presentation to staff at the Australian Treasury department.

If you want to gain a better understanding of how the economy actually works – as opposed to how all the people who run the country ass-ume it works – I highly recommend making time to watch the whole thing.

One of many highlights for me came in the question time following Steve’s presentation (1:09:20):

“One of my students put a beautiful question to me once saying, ‘Is the finance sector a Profit centre, or a Cost centre to be minimised?’ It is the latter.”

Logical inference: We must minimise the size (and power) of the finance sector.

The excesses of the finance sector are built, primarily, on the Twin Pillars of currency exclusivity (legal tender laws) … and the power of usury.

Breaking those twin pillars is where any realistic long term “solution” must begin. For those interested, this is my idea for how to begin doing that.

Enjoy this brilliant presentation by Steve Keen, and follow him on Twitter @ProfSteveKeen

* Please help educate others, by sharing this video.

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