30 May 2013

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We know that the corporare media mixes lies with information in a manner that justifies an ever-wider gap between the 1% and 99%.  This is normal. But when media outlets become blatantly obvious, their lies degenerate from mere bullshit into vile insults. The Washington Post, for example, says there is no depression, and that all is well. Thus, austerity is prosperity.

IF AUSTERITY IS SO BAD, WHY IS THE ECONOMY DOING SO WELL?

In a year when tax increases and spending cuts by the federal government were expected to bleed life out of the economy, the strengthening housing and financial markets are proving to be more powerful than acts of Congress.

The S&P 500 has risen more than 25 percent over the last year. It’s risen more than 100 percent since President Obama was inaugurated.

“Financial markets” means the financial economy, which is separate from the real economy, although the Washington Post pretends that the two economies are the same.  If the real economy is in a depression, but stock market trading is vigorous, then the corporate media says there is no depression.

Wages might pick up soon.

 Nonsense. Austerity mania is designed to drive wages down.

Housing prices are rising faster than at any time since 2007. Autos are doing great. Consumer confidence just hit a five-year high.

 The Washington Post offers no proof of this.

There’s much more, but you get the idea. These bastards have no shame — and thus no honor.

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/05/29/wonkbook-if-austerity-is-so-bad-why-is-the-economy-doing-so-well/

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A different article says politicians in Ireland falsely claim that austerity is boosting Ireland’s GDP. Measured income is being inflated by foreign companies with no real activity in Ireland (e.g. Apple, which uses Ireland as a tax haven).

http://www.truth-out.org/opinion/item/16643-an-irresponsible-austerity-narrative-endures

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PUBLIC DEBT VS. PRIVATE DEBT

One way the corporate media deceives you is to pretend that public debt and private debt are the same.

Let’s expose this media garbage.

The chart below shows only the public debt (or government debt, or “national debt”).  The blue bars are countries that create their own currency. The red bars are countries that don’t.

I added the red color. The original chart had only blue bars, so you would falsely think that nations which create their own currency are the same as nations that don’t — when in fact the two types of nations do not belong together on the same chart at all.

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Nations with red bars (euro-zone nations) must borrow all their money. For them, the government debt-to-GDP ratio is critical.

Nations with blue bars create their money from nothing. For them, the government debt-to-GDP ratio is meaningless. Their governments can pay any size debt, simply by changing the numbers in bank accounts. To say that the USA’s debt-to-GDP ratio is 107% is merely to say that America’s GDP is $15 trillion for this fiscal year, and investors have purchased $16 trillion worth of T-securities. This is trivial, and has no negative effect on the US government or society.

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There is some confusion as to whether that $16 trillion represents all the T-securities that have ever been sold, or merely securities that are currently outstanding and maturing. Either way it doesn’t matter. Either way, the debt-to-GDP ratio is meaningless for the USA.

Again, politicians and the corporate media pretend that the two types of debt are the same.  They do this to make you think that for all nations, money is limited. This keeps you submissive to austerity, and thus submissive to rich people, bankers, and politicians.

As mentioned before, the chart above shows only the public debt (or government debt, or “national debt”) , which is only important to the countries in red. It does not show the private debt, which is important to all nations. Private debt is personal debt such as mortgages, student loans, revolving debt (e.g. credit cards, home equity lines of credit) and so on. When we look at private debt, a different picture emerges.

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Since Denmark’s currency is the Danish krone (not the euro), any austerity imposed by the Danish government is gratuitous. By contrast, euro-zone governments have no choice but to impose more austerity forever (or until they dump the euro currency).

Individual Greeks are crushed by public debt and austerity (tax increases and government spending cuts), which sucks money out of the Greek economy, whereas Danes are crushed by personal debt.

Therefore one might say that Greece had a higher quality of life (in some ways) than Denmark had – at least until the Troika destroyed Greece with public austerity.

Some countries like Ireland, Portugal, and Spain are crushed by both public and private debt – i.e. by government austerity and by consumer loans. Not only are people crushed by mortgages and car loans, people also have no jobs, and there is little money in circulation. In such places, life is a nightmare, and the gap between rich and poor is extreme.

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The chart below shows that people in the UK, USA, and Canada have very high personal debt. Therefore average people in these nations are miserable, despite their governments (UK, USA, and Canada) being able to create all the money they need, out of thin air, simply by changing the numbers in bank accounts.

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For nations that create their own currency, the purpose of austerity is not only to widen the gap between the rich and the rest, but to accelerate the financialization of the economy. Public austerity increases private debt. Private debt reduces the masses to slavery under Wall Street and the City of London.

Put another way, the less deficit the government has, the more debt you have. (The government’s deficit is the economy’s surplus,  and the government’s surplus is the economy’s deficit.) And unlike the government, you cannot pay your debts with money created from nothing.

In euro-zone nations, which do not create their own currency, the purpose of austerity is to service the euro currency. The euro is maintained to not only to widen the gap between the rich and the rest, but to accelerate the financialization of the economy (and to let Germany suck the other nations dry).

The charts below show the growth of Irish household debt and U.S. student loan debts. Note how they expand with austerity. This expansion serves the financial class. It boosts the financial economy at the expense of the real economy.

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Again, austerity causes higher personal debt. This serves the financial class.

Bankers and rich people bribe professors, politicians, and media outlets to make you submit to austerity, and thus, greater financialization of your society. In countries that create their own currency, this is done by falsely claiming that the government has a “debt crisis,” and that the public debt (the “national debt”) is the same as personal debt.  Perhaps 90% of articles discuss the public debt, which is meaningless, whereas only 10 percent of articles discuss the personal debt, which is crushing us.

These articles want you to fear the feather, and accept the ball and chain…

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The cartoon below falsely equates private debt with public debt, in order to make you submit to austerity. Since you are already crushed by private debt, you do not want more public debt, as you think it will somehow add to your private debt.

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In eurozone nations, the public debt (or government debt) does add to personal (private) debt, in that the public must pay via austerity.

Meanwhile in nations that create their own currency, the public debt is completely separate from the private debt. No one will ever have to pay a single penny on the public (government) debt.

However, politicians pretend that this is not the case.  Politicians pretend that every man, woman, and child owes the national (public) debt, and must pay it back. Politicians do this to justify gratuitous austerity.

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CONCLUSION

Whenever you see, hear, or read anything that discusses “debt,” you must ask, “Does this refer to private debt, or public debt?” Most commentators make no distinction. They do this because they are either stupid and brainwashed, or else deliberately, in order to justify austerity, e.g. — the infamous Harvard professors Reinhart and Rogoff.

In all nations, private debt is important, and it directly affects you if you have personal debt.

In euro-zone nations, public debt is also important, since those nations must borrow all their money.

But in nations that create their own money out of nothing, public debt does not affect you. It is trivial and meaningless.

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DOES CHINA “OWN US”?

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I could post a lot more of these images, but you get the idea. It’s all lies.

Now, why do I say that the USA exploits China? (Or at least gets the better end of the deal.)

Let’s consider reality. Most Chinese people toil in sweatshops to make things to sell to foreign companies like Wal Mart. When US companies buy Chinese items, they give checks to Chinese manufacturers, who deposit the checks in their banks. The checks are denominated in dollars.  The banks credit the Chinese manufacturers’ accounts (change the numbers) by the dollar amounts noted on the checks. Voila! Money has been created out of thin air. It’s all digital. Now the Chinese manufacturers can use that money to buy things (although U.S. law restricts them from buying certain U.S. assets) or else the Chinese can buy T-securities, and earn some interest.

To buy T-securities, they open a special account at their bank (a Federal Reserve-connected account). This is the “debt to China” part. When the T-securities mature, the Federal Reserve simply changes the numbers in the Chinese account to show the original value noted, plus interest. Voila! Money has once more been created from nothing. No American pays a single penny out of his pocket, and no American ever will. So much for the “China owns us” bullshit.

Chinese people toil in sweatshops so their Chinese masters can have  the digital numbers changed in their bank accounts.  The Chinese send us goods, and we send them “paper,” so to speak.  Americans get cheaps goods at Wal Mart in exchange for paper. And yet, most Americans think the USA is getting shafted.

Contrast this with Australia, whose economy depends on exporting minerals and raw materials to China. Australia had it so good that its minimum wage was USD $15.75 per hour, which is over twice the U.S. minimum wage. Now that U.S. demand is down for Chinese goods (because of austerity), Chinese demand is down for Australian goods. So average Australians are struggling with unemployment. And in their stupdity, average Australians actually think the right-wing Liberal Party is better than the Labour Party (in public opinion polls). If the Liberal Party manages to take power in the next elections, they will crush the Australian public with austerity.

And 23 million Australians will wonder what the hell happened.

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