Still Unvoiced Econ Questions

the unvoiced
fundamental questions begging to be addressed

I. do we really need a private banking system?
banks would at first appear glance to be simple institutions. they take in deposits for which they pay interest and they lend money to qualified borrowers at a higher rate of interest, the difference between the two interest rates forming the bank's profit. banks decide who gets a loan based on the criteria of potential of the borrower to refund the loan through a series of payments. profitability, rather than any criteria of usefulness, enters into the decision of who is to be granted a loan.

doug noble of 'the credit bulletin' criticizes the easy monetary regimes of greenspan and bernanke for distorting the flows of capital into asset bubbles, rather towards more productive uses. but government has always subsidized the designs and projects of private capital from a perspective other than which employments of capital might be more productive or useful for the nation. in part, it seems that noble is criticizing just one more variation of government shaping of capital flows.

the tremendous buildup of capital wealth can no longer be assured of its profitable use. the subsidization of consumption by means of credit has reached a breaking point. from a capital accumulation perspective, existing investments and embodiments of capital wealth are superfluous and will need to be destroyed in order for a new virtuous accumulation cycle to begin.

but when this existing mass of production forces represents such a massive investment of social wealth and people are going without work, to destroy these means of production should seem foolish. why do the autoworkers and citizens affected by the auto industry seem to passively accept the onslaught of destruction at the auto plants they have relied upon for a livelihood?



which industries are the more vulnerable in an econ downturn? high-value durable goods such as auto and computers? or businesses affiliated with the service industry, such as financial services and insurance, advertising, real estate, restaurants, legal counsel, teaching, nursing? yes, it depends probably on where the government throws its money. teaching, nursing and government employment so far have seen increases even during the great credit crunch.


A note On Gold - 120109

banks are buying and trading gold with with interest free money from government.

a sign to look for that the gold rush is ending is the resumption of lending to actual businesses. this will result in a strengthening dollar.

the dollar's weakness affects gold but the reverse is not usually considered that the gold's relentless strengthening will pressure the fed to raise interest rates sooner than is desirable for econ recovery.

Defaltion or Inflation?

deflation dynamics are driven by capital overaccumulation. profits being too low to justify further investment. debt has to be reduced. one means is to lower the cost of capital. money is devalued by increasing supply. debt can be retired at lower cost than first acquired.