Title:The world crisis of capitalism and the prospects for socialism
By Nick Beams starting 31 January 2008 and the following 4 days.

Economic history, graphical analysis and the current state of affairs are presented with much reference to leading economists, publications, government agencies.
Start on Part one, with links found at the page top to the next part, 5 parts total.

Part one: “Most economists are now predicting a recession and discussion is centring on how soon it will come and how long it will last.”
http://www.wsws.org/articles/2008/jan2008/nbe1-j31.shtml

Part two:
http://www.wsws.org/articles/2008/feb2008/nbe2-f01.shtml#top

Part three:
http://www.wsws.org/articles/2008/feb2008/nbe2-f01.shtml#top

Part four: (with charts, long term wave analysis)
http://www.wsws.org/articles/2008/feb2008/nbe2-f01.shtml#top

Part five:
http://www.wsws.org/articles/2008/feb2008/nbe5-f05.shtml

This is an attempt to state it simply, because if you understand the problem, then you’re going to see the solution clearly as well. If it doesn’t make sense the first time you read it, try reading it again. Eventually, the whole picture will sink in…

A quick history of money

1) Once, gold and silver were considered the only ”real” money, but it was heavy and risky to carry around…

2) So people paid goldsmiths to store the money, and got paper receipts for it…

3) After a while, people used the receipts like money, and left the gold in the bank most of the time. So the bankers got clever and came up with a scam…

4) The banks printed off receipts for more gold than they actually had, and ”loaned” those receipts out to charge interest on it. They kept their fingers crossed, hoping that not more than a few people would come in asking to redeem receipts for real gold at the same time. This let them make a lot of money charging interest, because they could charge interest on MONEY THEY DIDN’T HAVE.

An analogy can be made using property and titles. Here’s the scam in another way:

Step 1: Acquire a vacation home.
Step 2: Sell the title to the home to one person.
Step 3: Sell the title to the home to ANOTHER person.
Step 4: Hope both of them don’t show up on the same weekend!

Fractional reserve banking lets a bank say to a depositor that all his money is safe and sound at the bank, while at the same time they get to loan most of it out to someone else and charge interest on it. So there are two people with a legitimate claim to the same pile of money. So whose is it, really? And where is it?

This profitable scam runs the risk of discovery when too many customers ask for what is theirs all at the same time. This is called a run on the bank, and the best the banks can do is call in their loans and see how much money they can cough up, which is invariably far less than what people believed they had deposited.

The story of the vacation home is a good analogy of how banking works today, except for one important thing: there is no home. Because our money is no longer backed by gold, we have all been trading titles to property which does not even exist! Paper backs paper, and all they represent are promises to pay. This is the reality of money, and is quite different from how most of us expect it to be.

What’s the result?

1) Loaning money while claiming it is still on deposit increases the money supply, essentially creating more money (otherwise deposits would vanish). In essence, for the bank to have your cake and loan it too, it must create more cake. This increase in money supply is the cause of inflation.

2) Almost every dollar that exists is owed to a bank somewhere, because at some time in history, it was created when it was loaned out.

3) The amount of money owed to banks is more than all the money in existence! So we cannot possibly get out of debt under this system. The bulk of this debt is in the form interest, which is an arbitrary amount of money banks demand in return, but never gave.

4) There is no money, in the real sense. Just checks, data stored on computers, and promises. It is all created by typing on a keyboard, and signing signatures. The only tangible assets in regard to money anymore is the collateral we pledge when we ask for a loan. The money they loan you comes from nowhere, but the assets you lose in foreclosure are real!

5) Because the US government borrows from the Federal Reserve, bankers have the power to influence our society and government by controlling finance. They decide to create (or not create) money depending on who’s asking, and for what. They choose what projects get funded, and let other needs wither on the vine by starving them of working capital. This subtle yet immense power is more than enough to undermine democracy, and guide the course of a nation’s history.

So what’s the solution?

Simple. The public must demand that money must not be created by loaning it into existence. It must be something that is openly and publicly controllable, issuable, accountable, and interest-free. Otherwise, a class of parasites will rise to power in society by cleverly disguising the fact that the money they are creating, spending, and controlling us with is MONEY THAT ISN’T EVEN REAL.

The biggest lie that ever came out of the FED…Don’t worry children the deflationary dragon is never going to get you because we have a magic weapon that can slay the dragon forever…It also happens to be the most accepted of all the lies that ever came out of the FED…

And since 2002 when it was told…I have had to put up with zealots…Really it’s a religion now…

From the point The Germans were told by the City of London to print money to buy GOLD in 1920 until maximum potential gong show was reached was 4 years…and the actual Hyperinflation lasted 14 months…from early 1923 to late 1924…The whole situation comedy imploded into food riots and the German army was machine gunning people in the streets.

It fueled the roaring 20’s in the USA…It took until 1927 for the German implosion to spread out into the system and hit the USA with the climax the 1929-1933 crash followed by the 1933-1945 bankruptcy reorganization of the now 314 year old global system…The whole global system collapsed…England was dumping grain at sea while the population starved trying to cut supply so that demand could bid up prices and get inflation started again.

And that was minor compared to the insanity we are headed into.

The FED is not going to print anything it does not print money…or electronically inflate…It’s consumer requests…and when consumers are maxed out…thats it…The FED is not going to buy all your food to feed you or pay all your bills.

It’s liquidation time.”

http://www.hypertiger.blogspot.com

I don’t speak from ignorance, but nevertheless - let the economy crash - I don’t really care! I don’t need much in this world, and large investment banks and multi-national corporations are not part of the something I do need!

Putting all of your faith and basing your happiness on money will only lead to one thing - severe despair.

If people were smart they would have enough money under their mattresses to cover things such as: food, shelter, and water. Instead they eat their money and donate it to companies selling plasma televisions, boats, and cars.

Hey, middle-class, you have nothing to blame but your insane spending habits for your financial hardships.

Each transition we make away from exports, we lose the societal memory essential to ever do it again. So, farming can be viewed as purely ob creation/neoclassical GDP metric, or it can mean feed people. So, we will be a purely import nation. An import nation can best be understood by looking at those cities in the US that have utterly collapsed and are dependent on government remittances and social services to sustain it - essential a dead city. Best example would be to compare the sun’s energy hitting a desert and rain forest. The former is what the US is becoming. Energy (imports) hit and is lost in gobbled up consumption, needing replentishment from more imports. In the rainforest, the sun’s energy is diffused and used and reused throughout the highly diversed and vibrant life forms. That is a healthy economy that fully uses its exports to purchase imports and make those imports work throughout the locality.

When you, Mr. Tremblay, foresake the purpose of ecomomics for neoclassical economic trends and cycles you take yourself on a journey of navel gazing that serves absolutely NOBODY!