PLUTOCRACY IS A DISEASE, THE GOVERNMENT A CONDUCTOR, THE ECONOMY AN ORCHESTRA. BUT ONE CAN’T CONDUCT A DISEASE.
Abstract: The essence of the socio-economic crisis of the West is the rise of plutocracy. It is enabled by a number of mechanisms that the People have not elucidated, hence the passivity with which they accept further abuse. Many exploitative pathways have to do with the nature of money, how it is created, and that money represents power.
By throwing money to the plutocrats, under the pretext that, if enriched further, they will revive the economy, central reserve banks are feeding the fire consuming civilization.
Thus governor Perry of Texas is not crazy when he calls the central bank chair a traitor: throwing money at the richest, and most culprit, is what Bernanke has been doing. The ever greater amount of riches of the richest means that the rest of the People are increasingly not living in democracy, as they are increasingly deprived of money, thus power.
I explore various aspects of the crisis rarely dwelled upon, in a question and answer session.
Question: Don Peck in the Atlantic has written a rather tame, not to say lame, review of the symptoms of the crisis in Can The Middle Class Be Saved? As he puts it: “The Great Recession has accelerated the hollowing-out of the American middle class. And it has illuminated the widening divide between most of America and the super-rich. Both developments herald grave consequences. Here is how we can bridge the gap between us.”
A defeated Peck concludes rather meekly that: “Perhaps plutonomy, in the 21st century, will prove stable over the long run. But few Americans, no matter their class, will be eager for that outcome.”
Does your insistence upon evil as a force which gives many people meaning, unveil a deeper layer of understanding of the economic crisis?
Answer: How we can bridge the gap between “us“? Us? How charming, holistic, new age, and wise in the chick sense of the term. There is no “us” there. The world is sick with plutocracy, such is the essence of the crisis. Plutocracy causes the increasing financial, economic, educational pauperization of most of the most developed part of the world.
“Plutonomy” is an arrogant concept: it means managing Satan. This new concept is a further outrageous twist on Faust. It was coined by bankers at Citigroup who made the self serving, erroneous, and grotesque analysis in 2005, that “The earth is being held up by the muscular arms of its entrepreneur-plutocrats.” Apparently, those new Atlases did not get to the word “plutocracy” in the dictionary.
However, Obama has been operating according to their book of lies. Although, most of the time, he covers himself up, with the opposite discourse. Since the crisis has started, most of the effort has consisted in supporting the “entrepreneur-plutocrats” with public money, under that exact theory, that they “hold the earth up with their muscular arms”.
Question: How do the plutocrats do whatever they are doing to make leaders obey their wishes?
Answer: Very simple: plutocrats monopolize most of the money and capital. That give them all the power they need to make most people think, feel, and act according to their desiderata.
Not only have the plutocrats captured higher education ever more, the more sensitive it has been to private financing, but they even have tweaked the emotional mien of People. That is why Americans are not revolting.
In recent years, being “cool” has become the most valued behavior in the USA. Obama was pretty much elected on that criterion. If one comes to think of it, “cool” means that one is indifferent to whatever is going on, only guided by one’s inner compass of self “navigation” towards self advantage in one’s self obsessing world. Naturally “no drama Obama” has been the top model of coolness and self obsessed navigation (Obama extols “navigation” as the supreme value a man can have in his imaginary autobiographies).
One can now see that his coolness makes him a strong competitor in the run to worst president ever. His emotions feel fake, and if they are, as they appear to be, the fact that he found impossible to move (“motion”) out (“e”) as needed is fully explained: a man cannot move out on emotions he got from the teleprompter.
Just before Lincoln, an American president tried to encourage slavery, making him the worst president; Obama’s attempt to force Americans to purchase life saving services from private, profit making owners is akin to the same, namely the denial of the basic human right to life, used for profit. I view that monstrosity (which is in the process of being found unconstitutional, as judge after judge knocks it down as such), a direct consequence of Obama’s coolness. Iguanas can’t be in charge of human rights, they are too cool. The Nazis used to consider coolness a top quality, of course.
Besides extolling nihilistic values, such as coolness, as the highest values, the plutocrats have technically made the democratic economy impossible. In their rush to ever more power, the plutocrats have stolen most of the money, leaving not enough to everybody else to operate the economy.
Q: Does not that sound pretty much like the old criticism of Marx and his many French predecessors?
A: In many ways, the situation is worse now. The capitalists, in Marx’s time needed the workers, now, they don’t.
Q: How come?
A: There are machines and slaves in China, both of which were not factors in Marx’s time. Plus, in Marx’s time, the planet was not going to explode, now it is. The plutocrats are not just exploiting workers nowadays, they are destroying everything.
Q: Are you not abusing the word “Pluto”? Aside from poetry, does it have a technical content?
Satan is a seducer, and he is crafty. He seduces people to act against their best interests. This has been in full view for centuries; see the ancient myth of Faust. So there is a technical psychological content, as I sketched with the reverence for inhuman coolness.
Financially Pluto is a major factor; Pluto lives underground, and can make itself invisible. This is exactly how the banking system works. As the cover article in today’s Murdoch’s Wall Street Journal admits: “Banks around the world are being whipsawed by the fact that much of the bank-funding market is opaque… That forces nervous traders—and even regulators—to piece together a view of a complex, global banking system using threads of data, anecdotal information and even rumors.”
Opacity is one of Satan’s characteristics, allowing it to deploy its abusive schemes, and a quality adverse to democracy. It is central to the exploitation system by plutocracy because People cannot fight what they can’t see, or cannot even conceive.
Q: Do you have a problem with capital?
A: No. I do not. Capital is as old as the first tools, the first weapons. Property is as old as the first cave. I have a problem with the distribution of capital. I do not share the condemnation of private property made by many philosophers. It is as if they had never heard of cavemen. In the concept of “caveman”, there was a property, the cave. Although I salute these philosophers’ contribution to the slogan of the French republic, Liberté, égalité, fraternité. Which I approve of.
Jean-Jacques Rousseau famously wrote in his attractive style: “The first man who, having enclosed a piece of ground, thought of saying ‘This is mine,’ and found people simple enough to believe him, was the real founder of civil society. From how many crimes, wars, and murders, from how many horrors and misfortunes might not somebody have saved mankind, by pulling up the stakes, or filling up the ditch, and crying to his fellows: Beware of listening to this imposter; you are undone if you once forget that the fruits of the earth belong to us all, and the earth itself to nobody.”
This was also the point of view, claimed by nomadic American hunters, especially when mounted on horses, and talking to the whites. But the Iroquois came out of their mountain redoubts, and exterminated entire Indian nations that the French Jesuits had civilized, and settled on their lands as peaceful peasants. The Iroquois had never invaded these lands before. That horror and misfortune is outside the explanatory schemes that Rousseau dwelled in. Instead it belongs to the instinct of intellectual domination. The Iroquois wanted to demonstrate they were better thinkers, they had the best system of thought, and there is nothing better to achieve this, than breaking one pacific opponent’s skull in two.
Indian tribes fought each other to death for horses, if not hunting grounds.
Some animals have to be territorial, because, if they were not, the resources they need to exist would be spread too thin, and their species would die. Humankind, which was 2 billion a generation ago, will reach 7 billion within weeks, and may be reminded the hard way that man is, and has to be, highly territorial. Whenever the Earth belongs to everybody, that is nobody in particular, it suffers the tragedy of the commons.
Humanity had always to be territorial, and even racist, in some sense, which has varied, according to specifics. Humanity was de facto specifist, to use a neologism: all the competitive species, dozens of them, in particular the Australopithecines, were eliminated. To make the Earth in a human garden, deadly enemies next door eating one’s lunch presented no viable option. (Kipling makes specifism the main message of his novel, “the Lion”.)
All of this to say that demonic tendencies are never far below the surface, by necessity of the human condition. One ignores them at all imaginable costs, as Obama is in the process of demonstrating, from the Hindu Kush, to the Potomac.
The Marquis de Sade’s in his 1797 text L’Histoire de Juliette, agreeing for once with his intimate enemy Rousseau, uttered : “theft is only punished because it violates the right of property; but this right is itself nothing in origin but theft.“ Sade was not up to his usual level of natural objectivity. Nature does not steal, it produces, monsieur Le Marquis. A lion produces territory, to feed itself, just as a fire produces grassland, because it fed itself.
Lodging a protest, a provocation, as he admitted later, French anarchist Pierre-Joseph Proudhon summed up the naïve point of view: Property is theft! (“La propriété, c’est le vol!”) in his 1840 book What is Property? Or, an Inquiry into the Principle of Right and of Government.
To attack the principle of private property is silly. When it got cold, and Homo Neanderthalis wanted to improve his lodgings, he went into the caves, and chased out the gigantic Cave Bears. Enough of sleeping outside for 250,000 years! This happened around 50,000 years ago. Did Neanderthal steal the bears? He did more than that, as intended. The Cave Bears, with no place to call home anymore, went the way of the Indians later, and were exterminated. Civilization could rise only after most of the ferocious beasts had been eliminated (it is thought that, at some point lion like predators were the most abundant species: a lion can survive by eating just rabbits, as wolves do with mice).
It took a lot of work, for Homo erectus to make the first clothes, the first stone weapons (both necessary to conquer the Caucasus, as Erectus did, two million years ago!) And, a fortiori, to make vast swathes of the earth into a garden. Those individuals could be motivated only if they worked pro privo (for the individual). in other words: privately.
Q: So maybe the plutocrats are the new Neanderthals, and common people need to go the way of the Cave Bears!
A: Keep your sarcasm down. The Cave Bears did not go down without a fight. As you could see in London riots (5 dead), the People is having enough of the exploitation by sleek plutocrats such as Cameron, who find everything “disgusting“, but for their own classy predation. All around the world, nations are chafing under plutocracy, from India to England.
Democracy cannot operate if capital is not spread around enough. Capital represents potential power, and democracy basically means people power. If the People has basically no capital, the People has no power, and there cannot be any democracy. Plutocracy and democracy are completely incompatible.
In recent decades, there has been a massive switch of power to fewer and fewer individuals and families in the West. This had some clear consequences: young people are less relatively knowledgeable and passionate than their forebears in the sixties, so they have tolerated more readily the increasing abuse they are subjected to. In the sixties what president Johnson did in Vietnam was intolerable, but, at the same time, he was creating a “Great Society”, spending a lot on the people, and the program was basically extended by Nixon. For example, Nixon created the Environmental Protection Agency, and today’s young republicans want to shut it down. Young people nowadays watch all this with the concern of cows contemplating trains whizzing in the distance.
Q: What causes the present imbalance of capital?
A: Three principal effects concentrate capital ever more: unfair and unsustainable taxation, using the rich to create money, and globalization, aka inverse colonization. All of this under the watchful mind’s eye of plutocracy unchained, whose malevolence has no more bounds than its dissemblance.
In the USA, the foremost process is very simple: the top 400 incomes in the USA pay 17% average tax. It is legal tax evasion, organized by a Congress “coddling the super rich“, as Warren Buffet put it. American politicians coddle the super rich, because they hope they will be rewarded by joining the super rich; see the immensely rich Clintons.
The influential chairman of the House Oversight and Government Reform Committee, republican Darrell Issa, comes complete with as the New York Times puts it: a “nonprofit family foundation, which seeks to encourage values like “hard work and selfless philanthropy,” [which] earned millions from stock in DEI, which bears his initials. Mr. Issa’s fortune, in fact, was built on his car alarm company, and to this day it is his deep voice on Viper alarms that warns potential burglars to “please step away from the car.”
In recent months, The New York Times has examined how some lawmakers have championed particular industries, pushing measures to protect and enrich supporters. In Mr. Issa’s case, it is sometimes difficult to separate the business of Congress from the business of Darrell Issa.”
Mr. Issa is worth nearly a billion dollars, and generated a billion dollars in financial trades, just from one Merrill Lynch account. He is from southern California. According to the NYT, he would buy a clinic, and then direct public funds to build a great road going to that clinic, this sort of things. He is in charge of financial ethics, appropriately enough in a plutocracy.
Q: OK, there is great legal corruption in the USA, but that does not explain the crisis in Europe.
A: Indeed, legal corruption is the best way to describe the political and fiscal scene in the USA. Most of these deplorable practices are illegal in Europe.
However a second sort of mechanism exists to make the rich ever richer, and that mechanism exists both in the USA, and in Europe. It has to do with the public mandate some private individuals are given to create money for everybody, an intrinsically perverse mandate, because nobody has elected those banksters, and they have become much more perverse in recent years. Those crafty ones discovered that the cows were not watching, and they kept most of the money to themselves.
Q: You are alluding to the fractional reserve system, a notion even economists don’t ever speak about.
A: Well, that’s how money is created. Economists paid by the system are not supposed to demolish the system. But there is something nearly as unhealthy in the non separation of bank and state as in the non separation of church and state.
Q: You quote many causes for the crisis, and I know you have more up your sleeve, can you simplify?
A: As I keep on saying, THE ROOT OF THE CRISIS, WORLDWIDE, IS THE SAME: THE RISE OF PLUTOCRACY. That malevolent dragon has to be pushed back in the subterranean sojourns, where it belongs.
Thatcher and Murdoch, in the early 1980s, turned Britain in a plutocratic heaven. It was a summit of dishonesty: resting prosperity on making a country into a haven for world class thieves (the USA, by the way, does the same; at least in the EU, plutocrats are forced to pay the Added Value Tax, heavier on luxury).
Then Blair and Murdoch delayed the day of reckoning by buying the people on credit (and making Wall Street dirtiest derivative work, besides ingratiating themselves to American plutocracy by going to invade Iraq). Meanwhile Clinton gave full power to Rubin (Goldman Sachs) and his assistant, the well connected Summers, to dismantle president Roosevelt’s financial and economic revolution, so that their class could stuff itself with all the money they wanted. They just forgot that even enormous leverage limits how much money there is.
At the bottom, money represents power, that is energy, and there is only so much to go around. If you take all the energy away from the People, they may not be able to make a revolution, indeed, as happened under Rome, but neither will they have the energy to operate civilization, as happened under Rome, too.
Basically the same pattern happened in all the leading democracies. Even upper middle class Londoners and Parisians cannot afford to live in their own cities, which were sold to tax free world plutocrats, in connivance with domestic plutocrats. (Long ago an African “emperor”, Bokassa, had offered diamonds to his girlfriend (?) French president VGE.)
The effect is worse in London, as said foreigners were taxed there even less. Entire buildings in those democratic capitals turned out to be the property of Middle Eastern or African potentates, or, as I prefer to say, plutocrats. For example president Bongo of Gabon was found to own for hundreds of millions euros of property, in France alone (he had properties in Britain, and more than one hundred million dollar in the USA).
Q: Why this irresistible rise of plutocracy?
A: I have explained this in much older essays, and will give a little refresher in a few paragraphs. The rise of plutocracy is a tendency always, ever since capital and property became extensive enough in the Neolithic (hence the rage of Rousseau, Sade and company above). It’s basically a mathematical effect. In general plutocracy won, and demonic wealth ruled thereafter. This why democracy is rare in civilized times, although it is the natural state of the genus Homo.
Even Athenian democracy died this way, as the Athenian plutocracy, however modest, surrendered to the ferocious and mighty Macedonian plutocracy, which had made them an offer they could not refuse. OK, the Athenians had been defeated in a first naval battle, and they surrendered after the second one became indecisive. The philosopher Demosthenes, an enemy of fascism, took poison as Macedonian shock troops seized him.
Q: Does the decline and fall of Rome fit your model?
A: Yes, plutocracy caused the fall of the republic. However, the army came to represent the People, something already obvious in the writings of the Gracchi, or, later, in 100 BCE, when seven times Consul Marius, victorious on invading Germans, a “New Man” fought the hyper rich. After Augustus, the army fought the Senate, representing the plutocracy. They weakened each other, and the rise of foreign soldiers, or their descendants, and of the Eastern Empire, and theocracy, made it into a 5 way fight. Which became a six way fight, as the Persian Sassanids and then the “Saracens” (“Sons of Sara”) got into the brawl. After a century of darkness, and theocracy, the Franks came out on top.
Q: Were not the Franks very rich? Did they not own Europe?
A: For people who ruled what they called Europe, the Franks were austere, relatively speaking. Most of them were peasants with a frankly unsubmissive attitude. They had a high birthrate, and their inheritance law forced equal distribution of inheritance. Charlemagne’s capital, in Aix, was modest for someone who was the only legal Roman emperor, and controlled most of Western Europe. Over seven centuries of Frankish queens, kings and emperors, I do not know one example of extravagant luxury from one the many monarchs. Many were major war chiefs present on the battlefield, sometimes for decades. Charlemagne spent 50% more time at war on horseback than Marcus Aurelius, the Roman emperor who spent the most time fighting.
Many Frankish head of states (for example Bathilde, Charlemagne, Charles the Bald) supported intellectual activity on the largest and highest scale. Their philosophers were condemned, many centuries later, by the abominable fascists of the Inquisition, representing a most vicious type of plutocracy, the theocratic type.
In general, plutocratic tendencies cannot be avoided. Democracy has to prevent plutocracy actively. Societies, for 12,000 years, have had active forms of sacrifices and taxes to keep plutocracy from killing society. Obama, a way cool guy, cannot prevent plutocracy anymore than the average iguana, and for the same reason; even if he wanted to, his metabolism is too cool, his passions so little developed, that he cannot get to move. Without e-motion, there is no motion. As everybody can attest.
Q: Forget Obama. Now everybody is starting to agree with you that the guy (to speak like him) is clueless, hopeless without any belief, because we can’t, and it was all about: “Yes, we can!” because he can’t, so we had to step in, but we were not made president by electing him, a point he forgot. You did not answer fully the question on the rise of plutocracy.
A: There are two phenomena at work. One has been in evidence for 12 millennia. It is purely mathematical. It has to do with the nature of the exponential function applied on the notions of capital and interest. You have three ingredients there which are as fundamental as possible: the exponential, the most important function in mathematics, capital, that is potential energy, and interest, without which the human brain would be just impotent jelly, plunged in the abyss of terminal cool.
Q: So you claim that the basic problem with plutocracy involves deep mathematics, but has been well known?
A: Yes, sustainable societies have known forever what capital is, and interest too. Long lived societies also grasped the intuitive properties of the exponential function, such as being its own derivative, so growing the faster, the bigger it gets. Mathematics often makes explicit and systematic notions which were guessed long before, if they were of vital interest.
The ancients in Carthage reacted to the exponential by throwing the eldest of the hyper rich in the fire. Or, more exactly, in a machine which would throw them in the fire. Wives of Viking and rich Indians would also not enjoy the riches of cool inheritance, but the bite of flames. Same idea: prevent wealth to get so ingrained in a few hands that society would come to a standstill.
Q: Is the mathematical tendency for plutocracy to feed on itself why all societies bring up margin rates for taxes for higher incomes?
A: Of course. The exponential function, acting on the interest capital brings, imposes an EXPONENTIAL TAXATION, just for the distribution of riches to stay the same. So strong redistributive taxes are mathematically necessary to prevent democracy to turn into plutocracy.
The hyper rich in the Late Roman empire refused to pay taxes. That dearth of state income was the main proximal factor in the fall of the Roman state, as the political leaders of Rome had to subcontract defense to various German tribes, and even the Huns. When the Franks took over, they took over as the legal army of Rome. They decided to collect tax themselves, as Rome would not do it. Thus the Frankish army became the state. If the USA’s government revenue keeps on collapsing, it is likely that the U.S. military will also take over. An efficient military always operates as a socialist meritocracy.
Q: let’s compare apples to apples. Is the USA more of a plutocracy than in the past?
A: The USA did not have much wealth inequality in its first century, at least among voters (white men with property). Carnegie, the first billionaire, at the end of the nineteenth century, would now be called a left wing liberal, somewhere to the left of Soros. He was an important author, guru to his wealthy contemporaries, explaining the populist bend of early American billionaires.
The top income-tax rate was 91 percent under the republican Eisenhower, in 1960. It was 70 percent in 1980, after Nixon and Carter, 50 percent in 1986, after Reagan and Bush Senior, and 39.6 percent in 2000, after Clinton had sold democracy short to plutocracy, and is now 35 percent. Income from investments is taxed at a rate of 15 percent, and most of the hyper rich have connived with the IRS to claim that rate for their income. The gutting of the estate tax by Oblabla, the democrat from make believe, insures that the USA is transforming itself into an hereditary plutocracy under our unbelieving eyes. Indeed remember: wealth breeds wealth faster, the bigger the wealth. This is actually how the social inequalities of the feudal society evolved. Just to stand still, a heavy tax need to be applied so that the rich does not grab more and more of the riches, generation after generation.
Q: What is wrong with that?
A: Let’s leave aside the intrinsic violation of the Aristotelian Constitution of the USA that this would be, as it would deny “life and the pursuit of happiness” to the many. Human beings are not psychobiologically made to be submitted. They suffer stress, debilitated health, they become much less intelligent, much less human in the most noble sense of the term… So the USA would become a nation of debilitated morons, ultimately to be defeated on the battlefield.
Q: I thought you admired Nietzsche? You should admire the return of an aristocracy…
A: I am far from agreeing with all of Nietzsche’s ideas. Moreover, Nietzsche precisely alluded to what I just said. We are actually in agreement. On that point as many others, I am more Nietschean than Nietzsche. The slave mentality, slave religion, and spirit of the herd which Nietzsche condemned, he condemned for precisely the reasons I said, although he used different semantics. On top of that, we are not talking about aristocracy here, which is the rule of the best. The mediocre tricks applied in Libya by the Gaddafi clan, and those applied by Western plutocrats, have nothing to do with being the best. We are not talking about Charles Martel’s knights here. What we have been confronting in the last decade has been naked kleptocracy, the rule of the thieves. They did not just a little bit of money, but too much to keep on operating civilization itself.
Q: You think that the hyper rich are thieves, because they become ever richer using not merit, but riches to become richer, and they have got so rich that there is not enough money for the world to go ’round. What about the guy which founded Facebook? Was not that a beautiful American success story? What about Google?
A: What about worshipping Standards & Poor, as you are at it? That’s a whole can of worms. It would take several pages to explain that some sort of organized crime is at play in some exaggerated valuations on the private market. Facebook, like Google, was founded by discrete, but very rich individuals, venture capitalists we don’t want to mention, but we that have personally encountered. They are the real power behind those thrones. the valuation of Facebook, up to 50 billion dollars, according to the usual suspect at Goldman Sachs (both judge and party in Facebook), is an organized criminal plot.
If you want to talk about great American companies, think Intel, or GE (in spite of GE’s propensity to go overseas).
Q: You said that the very way money is created contributes to converting today’s world into plutocracy. How does that work?
A: Money is traditionally created, by private financiers leveraging from public money, laws and regulations prevented financiers to keep (most of the) money to themselves. However laws and regulations to prevent plutocracy were removed by the plutocrats and their (servant).
To make things worse, there is only so much money to go around. Banks create money by leveraging, presently with a multiplier of about 30, it seems, in the USA. So, if the central bank and treasury give a trillion to the banks, they loan 30 trillions. By contrast, in cautious, democratic Switzerland, the multiplier is only 5 (five!)
And of course, the derivative market is in excess of 600 trillion (the banks mumble disingenuously that, once one has added and subtracted everything, it’s more like 30 trillion; the fact remains, it’s at least twice the GDP of the USA!) Banks seem to be loaning mostly to that.
By stealing more and more of the money, the super rich have left the rest of the population with less and less money, hence power. The solution? Hyper tax the hyper rich, or face mayhem. And not just in the markets. Also tax heavily the transfer mechanisms which allow the hyper rich to steal the poor.
Q: Many economists and pundits observe that a DELEVERAGING EVENT is ongoing. Paul Krugman uses the label “Minsky event”, for a deleveraging crisis. Why do you not insist on that point?
A: Krugman wants to advertize Minsky’s views, which are not really his own, but ought certainly to be better known. Deleveraging is part of the crisis. However, deleveraging, although important in the USA, is not the essence of the crisis.
How do we know this? Well, there is a crisis, but THERE HAS BEEN VERY LITTLE DELEVERAGING, SO FAR. Actually, quite the opposite. Indeed, individuals are trying to deleverage, in the USA. But they have not (yet) been very successful (private debt relative to GDP has gone down very little). Moreover, individuals are not deleveraging in Europe (traditionally, the Franco-Germans families have assets, but little debt, so there is nothing to deleverage). Moreover, the states piled up debt since 2007, especially the USA and the nations making up the EU. For example Spain went from a debt around 30% of GDP to 65% of GDP, between 2008 and 2011.
Thus one needs to look somewhere else for the main causative set of the crisis. Much economic analysis, not only does not go to the bottom of economics (which is energy + ethics), but do not even go deep enough to understand even the main factors causing the present Greater Depression.
Q: If deleveraging has not caused the crisis, why do people talk about it so much?
A: Pernicious actors hid much bigger causes behind smaller, rather irrelevant ones. For example, American economists obsess about Europe and the euro in a thoroughly negative way, due to their nationalistic bias (USA first!) Even supposedly left wing economists in the USA do this. Of course, they are paid to howl that way, by their plutocratic sponsors (don’t forget Harvard, MIT, Princeton, Stanford, etc. may be great universities, but they are also plutocratic devices). The European Union has a constitutional social welfare, which is anathema to American plutocrats, and they are afraid that the American People could catch the fancy that they would prefer such a society.
Q: So deleveraging will never be a problem?
A: I never said that. Quite the opposite. Deleveraging will contribute to the crisis considerably, if and whenever it gets underway, and stupid political decisions just taken insure that it will, should they be implemented. Decisions coming out of false analogies, such as Obama claiming that the government ought to balance its budget, just as a family does.
Q: Why does not the government need to balance its finances?
A: Because the only correct way to reduce debt is through growth. The less growth, the more debt. Obama, and the Tea Party do not understand the role of government. The government makes banks possible. Government makes the entire financial system possible. The problem is not debt, it is what you make with the debt. If you make nothing with it, you are in serious trouble. This is the case of the USA presently. Even Bush Junior can claim that he put the USA further in debt to pay drugs for seniors. Obama, on the other hands can only show you dead seals in Afghanistan, a surrealistic spectacle that would have thrilled Salvador Dali by its absurdity.
The government is to the economy in general, and the ‘free’ market in particular, what a conductor is to an orchestra. It is also composer and paymaster.
Q: Is there a similarity between the American and European crises?
A: In truth, there is a European banking crisis, just as there is an American banking crisis. Trillions have already been directed towards American bankers, not yet as much towards European bankers. There is also a deficit crisis, as many states (including the USA) run high “primary deficits“.
The European banking crisis has not been as bad, because the banks there are more regulated. moreover, Great Britain, Belgium and Germany nationalized derelict mega banks.
Q: What’s so great about nationalizations?
A: Once a bank inside a nation has been paid for by the People of a nation, it ought to become property of the People of that nation. Once a mega bank has been nationalized, it can be ordered to lend to the real economy. by contrast, in the USA, Bush and Obama paid personally the crooked bankers much more than their banks were worth, and now those same bankers refuse to lend to the real economy.
Bush senior and Reagan had nationalized 2,000 banks during the Savings and Loans crisis, very successfully (this inspired Scandinavia to do the same during its own financial crisis, a few years later, and an ill informed, pathetic Obama to make fun of the whole thing, 20 years later).
Q: Do you hate the rich? Are you jealous?
A: No. I am extremely weathy myself, at least where it really counts for high self esteem. A form of wealth no money can buy.
In an editorial, “Stop Coddling the Super-Rich”, Warren Buffet, the third richest individual in the world, goes into the injustice of American taxation. This has been true, for more than a decade, and was mentioned hundreds of time on my sites. Buffet does not mention further injustices, such as tax support for fossil fuels, or for companies making money overseas.
Buffet does not mention why it is so bad to have a few making an immense amount of money while most do not. It is not just unjust: concentration of capital and power is gripping the entire socio-economy of the USA. The remark applies to the whole planet, by the same mechanism. The reason is this: a very rich person can only rise by so much aggregate demand. After all that person and family are only a few.
When Bill Gross, founder of PIMCO, another money manipulator, bemoans the lack of “aggregate demand” in the economy of the USA, he is an hypocrite, because it is actually his fault. Indeed, Mr. Gross, worth personally more than 2 billion dollars, can only demand so much; how many people will he employ to lick his toes?
In 2009, 25 hedge fund managers in the USA earned, personally, more than 25 billion dollars, and they were taxed 15%. Some will celebrate American ingenuity. What they do not realize, though, is that this money was stolen from everybody else, or, at least retirees with pension funds, and all those that could have been paid when working for these retirees.
In Great Britain a youth who stole bottled water was condemned to 6 months in jail. Others got four years for “inciting riots”… on the Internet. Not that any riots directly connected to what they wrote happened, as the police and “justice” readily admits. This, on Facebook pages (a funny concept, as Facebook is the site, on which the alleged incitation occurred, thus ought to have been condemned too; but Facebook is good for revolution in Syria, not London). In a step soon to come, people who click on this site will be jailed automatically…
Q: Are there objective, factual differences between the attitude to the crisis in Europe and the USA?
A: As I said, some banks were nationalized already. Some major French banks, are among the most crucial in the world (not just because Italy owes them 400 billion dollars, but because they are central to the derivative market). One thing is sure, though: if they need major help from French taxpayers, they will be nationalized.
France, under the presidency of de Gaulle in 1945, did massive nationalizations, which were very successful. Nobody has forgotten that, in Europe.
Q: why is the crisis so deleterious in the Anglo-Saxon world?
A: Australia and Canada are doing great. Tightly regulated banks in the later. It is not just a question of commodities doing well. these are also more honest countries. They both declared war to Hitler a few days after France and Britain in September 1939. Canada landed soldiers in France in 1940, and again in 1942 and 1944!
The irresistible drama of plutocracy in the USA is a direct long term consequence of the collaboration between American plutocracy and European fascists before, during and after World War Two. The fact the USA stabbed democracy in the back in 1939, by helping Hitler, and hurting Poland, France and Britain, was never dispassionately pondered. This American duplicity was never explored, let alone explained seriously, so it has persisted, like a malignant cancer, always there, always growing.
Ever since the spirit American plutocracy, you know the stuff they learn at the “Skull and Bones” society or at Harvard, kept on a roll. That many Nazi songs were modified Harvard songs are the sort of telling details which were swept under the rug. That weapon smuggling from the USA, using American owned companies, armed the Nazis during their hyper violent rise to power is another subject which is ignored. That the Bush family fortune is splashed all over in Auschwitz blood, is something best never evoked in good company. Prescott Bush, and many other American plutocrats were Hitler’s closest and most important collaborators.
In spite of American plutocratic help, Hitler’s Reich last 12 years. American plutocracy on its own, had a better run, but much of it has been, in a sense, Nazi fuelled. Tough. Once again, nobody wants to say this. But many European leaders have these notions, unexpressed, deep in the back of their heads, and American leaders such as Bush have got to have some notions about the friendship between Prescott and Adolf. This has led to a deep, mostly unconscious, so far, conflict between Europe and the USA.
At the root of the Conflict between the USA and Europe is the question of whether plutocracy or democracy will lead the West. Something similar happened between Rome and Greece. In the first phase, Roman plutocratic fascism won. In the second phase, Greece recovered her empire, and Rome was displaced by the Franks. In the third phase, European civilization gobbled everything up. But now, Europe is confronted to a rogue colony.
because, under the façade smiles, it’s coming to the fore. The Americans, paid by their plutocrats, are trying their best to demolish the euro (Goldman Sachs’ organized lying to European authorities about Greek finances being a case in point; using derivatives, with their enormous leverage, to demolish European finances is another example). If they fail in a timely manner, everybody will be able to observe that the primary deficit of the USA is the worst of the planet. We are talking epic failure on a Zimbabwean scale here. The American deficit augments at the rate of 1% a MONTH. Yes, a month. Next years, state finances will collapse.
Q: Which other deleterious consequences do you see to plutocracy?
A: Plutocracy is fundamentally anti-intellectual, as its power rests on People not understanding what it dies to be so powerful. So plutocracy is against intellectual, philosophical, and scientific progress. It is friendly to stupidity, superstition, superficiality, selfishness.
There is evidence that scientific, medical, and technological progress has slowed down, and this, in my opinion, can be traced to the rise of plutocracy, as it was in Ancient Greece, which became distinctly less clever when it got ruled by the plutocrats (“Hellenistic Kingdoms“, Rome).
This is not just lost opportunity. We are in a race between our knowledge and our demolition of the biosphere. As cognitive expansion has abated, the chances for irreversible demolition have augmented. This plutocratic show is just a waste of opportunity, and precious time.