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Forum Post: The FIRE is consuming US

Posted 3 months ago on Aug. 24, 2017, 7:02 p.m. EST by agkaiser (1888) from Fredericksburg, TX
This content is user submitted and not an official statement

The most cogent argument for community ownership of the means of survival is that the contemporary domination of the economy by the non productive FIRE sector [the Capitalists] is ultimately unsustainable.

The Dow went over 20,000 into record territory in August, 2017. What's next. The profit taking of course. When those who bought low after the last crash cash in, the sheep who've been buying as prices rose will soon follow. Then comes the drop off and the sharks can feed again, using their recently acquired cash, to buy low again. But even the biggest fish don't seem to know that this [business?] cycle cannot be sustained indefinitely.

Each time around the bubbles have been reinflated with new debt. A good deal of the accumulated wealth of the all time winners is put to work collecting compound interest in the credit market. The debt and concentrated wealth with the creditors and a very small percentage of the global population are what must bring capitalism down in the end.

"According to figures from the Institute of International Finance (IIF), global levels of debt held by households, governments, financials and non-financial corporates jumped by over $US70 trillion in the past decade to a record high of $US215 trillion, equating to 325% of global GDP." - Business Insider

In previous "downturns" more money has been created and loaned. Thus more interest and concentration of wealth, which lead to the next crash. When debt grows to the point where governments and most people can't pay, they won't be paid. At some point debt saturation is achieve and new loans won't be issued. If the creditors don't write it off and start over, deflation kills the economy and most of us with it. If banks and governments create more money to loan, then inflation becomes the angel of death for us and the next [possibly ultimate] crash is hastened.

Many have wondered why people voted communist at times.

"No, no nostalgia. Maybe then as well, many had opened their wings like so many seagulls who were ultimately unable to fly.

"And now? Now as well, we feel like two people: on the one hand the conformist who obsequiously navigates the squalor of his own daily survival, and on the other the seagull, no longer with even the intention of flight, because the dream has shriveled away.

"Two wretchednesses within a single body." - from Giorgio Gaber's "Some People Were Communists"

"...Vive le roi quand même. French royalists who were frustrated with the fecklessness of Louis XVI would open up about his shortcomings in discreet conversations, and then end by saying 'Long live the king anyway!'" - Outis Philalithopoulos on Giorgio Gaber's "Some People Were Communists"

http://www.nakedcapitalism.com/2017/07/people-voted-communist-because.html

28 Comments

28 Comments


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[-] 2 points by DKAtoday (33208) from Coon Rapids, MN 3 months ago

Hhmmmmm = record making stock market gains

Still have not fixed what was broke that caused the last public bailout meltdown.

So

This new stock market bubble has every possibility to burst just as bad or worse than the very recent last meltdown.

That's the problem with hyping fiction = it is not sustainable!

[-] 1 points by agkaiser (1888) from Fredericksburg, TX 3 months ago

What is the absolute limit to debt and dissipation by the ever growing compound interest on it?

[-] 3 points by DKAtoday (33208) from Coon Rapids, MN 3 months ago

Compounded interest = crime of usary

Borrowed amount deliberately artificially inflated = crime of usary

[-] 0 points by ImNotMe (1488) 2 months ago

This comment above - is possibly and indeed probably ... one of the most important comments on this still extant OWS forum - ever!!! Hyperbole?!! I think NOT! Further please do try to consider:

radix omnium malorum est cupiditas ...

[-] 2 points by DKAtoday (33208) from Coon Rapids, MN 2 months ago

Usury

I remember growing up when it was illegal

Now - it's just - Business as usual = The fall of civilization

[-] 1 points by agkaiser (1888) from Fredericksburg, TX 2 months ago

PV=Present Value

doubling time:

2PV=PV(1+i)**t

t=log2/log(1+i)

doubling time factors directly into inflation rate and concentration of wealth!

[-] 2 points by ImNotMe (1488) 2 months ago

''Loan Sharks Were Meant to Be Eradicated -- Now They're Back'', by Chuck Collins:

From which I excerpt the following: ''In the aftermath of the 2008 mortgage meltdown, millions of people lost their homes to foreclosure - particularly across the midwest rust belt states. Fannie Mae disposed of thousands of these properties in bulk sales to Wall Street private equity firms, some with fingerprints leading back to the original subprime mortgage scandal that fueled the meltdown.''

It ends ... ''The financial predators will find ways to extract wealth from those aspiring for the dream of homeownership and their neighborhoods. Only with vigilance and oversight can we keep the sharks at bay.''

As Albert Einstein said: ''Compound Interest is the eigth wonder of the world. He who understands it, earns it - he who doesn't .. pays it.'' Thanx agk, for the coda re. exponential function & doubling time. Compound Interest - is the mechanics by which The Injustice of Parasitic Wealth Extraction - works.

fiat lux ...

[-] 1 points by agkaiser (1888) from Fredericksburg, TX 2 months ago

Loan sharks back is a great link. Read Upton Sinclair's "The Jungle." 'Contracts for deed' are just like the real estate scams going on in Chicago in the early 1900s in that book. Teddy Roosevelt, while President, started 'trust busting' after reading it.

[-] 1 points by agkaiser (1888) from Fredericksburg, TX 2 months ago

Moses, Buddha, Aristotle, Jesus, Mohammed and others have banned or sharply criticized usury but it grows more acceptable every day. They threaten the survival of the human race with their stupidity and greed, as most of the victims praise their goodness and envy or try to emulate the success of the parasites that afflict us. None of them understand probabilities.

[-] 2 points by ImNotMe (1488) 2 months ago

Strong comment and without reference to ''usury'', it's difficult to know just how we critique the Extreme Financialized Capitalism that Marx predicted & warned us about. [ https://en.wikipedia.org/wiki/Usury ]

The youth in America, are waking up at a rate that could not anticipated and six short years after OWS happened & a year since Bernie Sanders put Democratic Socialism firmly and permanently into popular consciousness. Here's to the future ...

dum spiro, spero et per aspera ad astra ...

[-] 1 points by agkaiser (1888) from Fredericksburg, TX 2 months ago

Maybe we can fan the spark of hope by the introduction of Marx's notion of fictitious capital. Most of the loans we and the government pay interest on are created on the ledgers of the large banks and backed by the largest private bank. The FED covers imbalances on bank ledgers every night and they're redeemed every morning with new debits written on the spreadsheets or deposits from other banks who created the loans that made them possible in the same manner.

If we try that, it's a check kite and we go to jail.

[-] 1 points by ImNotMe (1488) 2 months ago

Well said! Dr. Michael Hudson wrote a thought provoking piece on .. ''The Fictions of Fictitious Capital'', the year before OWS kicked off. I append it below in compliment and solidarity ...

It ends with ... ''To save society, its victims must see that asset-price inflation fueled by debt leveraging makes them poorer, not richer, and that financialization is the destroyer and exploiter of industrial capital as well as of labor. The objective of classical political economy was to bring prices in line with socially necessary costs of production. This was to be achieved in large part by taxing away economic rent in order to prevent it from being capitalized into loans to new buyers. Buying rent-extracting opportunities on credit increases prices for basic needs, turning society into a “tollbooth economy.” It also forces governments to compensate by raising taxes on labor and tangible capital.

''Many Social Democratic and Labour parties have jumped on the bandwagon of finance capital, not recognizing the need to rescue industrial capitalism from dependence on neofeudal finance capital before the older conflict between labor and industrial capital over wage levels and working conditions can be resumed. That is what happens when one reads only Volume I of Capital, neglecting the discussion of fictitious capital in Volumes II and III and Theories of Surplus Value.'' & fyi http://convergence2017.org/

radix omnium malorum est cupiditas ...

[-] 2 points by agkaiser (1888) from Fredericksburg, TX 2 months ago

Hudson is the man!

[-] 1 points by ImNotMe (1488) 2 months ago
[-] 1 points by flip (7101) 2 months ago

just listened to hudson and he was very good as usual. he just said -"the fed is privatizing the treasury's job of money creation" right on - i think greider is saying essentially the same thing

[-] 1 points by ImNotMe (1488) 2 months ago

http://neweconomicperspectives.org/ .. is the other site now

associated with Dr. Michael Hudson & Dr. Stephanie Kelton.

ipsa scientia potestas est ...

[-] 1 points by flip (7101) 2 months ago

he is - and do you know what he says about fiat currency and central banks??

[-] 0 points by agkaiser (1888) from Fredericksburg, TX 2 months ago

What Hudson said about fiat currency and central banks may be inferred from what he said about fictitious capital:

"Classical economists developed the labor theory of value to isolate economic rent, which they defined as the excess of market price and income over the socially necessary cost of production (value ultimately reducible to the cost of labor). A free market was one free of such “unearned” income – a market in which prices reflected actual necessary costs of production or, in the case of public services and basic infrastructure, would be subsidized in order to make economies more competitive. Most reformers accordingly urged – and expected – land, monopolies and banking privileges to be nationalized, or at least to have their free-lunch income taxed away."

http://michael-hudson.com/2010/07/from-marx-to-goldman-sachs-the-fictions-of-fictitious-capital1/

If you've read this far down, flip, be sure to read the article linked before you flip an answer.

[-] 1 points by agkaiser (1888) from Fredericksburg, TX 2 months ago

"first of all are you for the gold standard and hard money???

...

"and can you give this up already - it's boring. over and over i point out the flaw in your "money masters" thinking and you just plow ahead."

What the hell? Your rant is incoherent w.r.t. the thread you are responding to. It's not merely off topic. It's irrational and argumentative without rhyme or reason.

see above:

"Maybe we can fan the spark of hope by the introduction of Marx's notion of fictitious capital. Most of the loans we and the government pay interest on are created on the ledgers of the large banks and backed by the largest private bank. The FED covers imbalances on bank ledgers every night and they're redeemed every morning with new debits written on the spreadsheets or deposits from other banks who created the loans that made them possible in the same manner.

"If we try that, it's a check kite and we go to jail."

How is that comment supportive of private creation of money or discouraging control of by and for the people? WtFU!

Are you just trying to be disruptive like some right wing nut job troll?

[-] 1 points by agkaiser (1888) from Fredericksburg, TX 2 months ago

I'm talking about bank fiat money, what does the gold standard have to do with it.

How is this:

"now are you for the gold standard and did you read what kelton said about sovereign currency"

responsive to this?:

"Maybe we can fan the spark of hope by the introduction of Marx's notion of fictitious capital. Most of the loans we and the government pay interest on are created on the ledgers of the large banks and backed by the largest private bank. The FED covers imbalances on bank ledgers every night and they're redeemed every morning with new debits written on the spreadsheets or deposits from other banks who created the loans that made them possible in the same manner.

"If we try that, it's a check kite and we go to jail."

Your last three comments are like the latest: off topic and unresponsive; designed only to distract by picking a fight with sincere posters by the use of serial non sequiturs.

[-] 1 points by agkaiser (1888) from Fredericksburg, TX 2 months ago

"i think i answered very nicely here - "i was responding to this - "What Hudson said about fiat currency and central banks may be inferred from what he said about fictitious capital" - and my response was to send along kelton's comment - perfectly rational point seems to me."

You're responding there to my response to your non sequitur that preceded it. I'm not willing to respond to your bullshit in the future. You'r5 insincere and duplicitous in comments designed to distract and disrupt. That's a right wing fascist trick and I'm done with you. So rave on if it pleases you. I'm done here.

[-] 0 points by flip (7101) 2 months ago

i think i answered very nicely here - "i was responding to this - "What Hudson said about fiat currency and central banks may be inferred from what he said about fictitious capital" - and my response was to send along kelton's comment - perfectly rational point seems to me.

did you read kelton?

this is the first time that i have read in all of this that you are talking about private bank money creation - i have said many times that i am talking about the money creation of central banks. i thought that was clear. we agree that private money creation at interest can be very harmful but it must be also very clear that government central bank fiat currency is a very different thing. all of which kelton and hudson make clear.

i am just as sincere as anyone here i just don't agree with you. now if it is a misunderstanding and you have no trouble with fiat currency as long as it is not private then we are fine but i think you should say that in a straight forward manner. as in - yes central bank currency creation can be a very good thing!

lastly there is nothing off topic in what i have written. the confusion may be because i often have had to respond to a comment that is a bit back in the line. not always allowed to comment directly to the last in line comment.

it may surprise you to know that i think you and dk and stock market man are not clear with your responses. long and not to the point far too often. over and over you refuse to answer simple questions - like do you want to go back to the gold standard. very simple yes or no question but it seems nobody wants to answer it - i wonder why? or maybe i missed it - is that possible??

[-] 0 points by flip (7101) 2 months ago

you are replying to this correct - "first of all are you for the gold standard and hard money??? and not reading it and here is why. no need to infer what hudson thinks when you can read what his associate at mmt says straight out - stephanie kelton"

if so i don't see what is incoherent since i was responding to this - "What Hudson said about fiat currency and central banks may be inferred from what he said about fictitious capital"

now are you for the gold standard and did you read what kelton said about sovereign currency - which hudson agrees with. and i am the troll or wing nut?? disruptive yes - of nonsensical arguments and money masters fanatics

[-] 1 points by flip (7101) 2 months ago

first of all are you for the gold standard and hard money??? and not reading it and here is why. no need to infer what hudson thinks when you can read what his associate at mmt says straight out - stephanie kelton -

"But, hopefully, by now you understand that a country that operates with its own fiat currency, that is a non-convertible currency—government does not pledge to convert the currency into gold or into some other country’s currency—it doesn’t have to behave like a household. It can use its powers differently. And that’s what functional finance is all about."

" “The government, when it issues its own currency, and goes into debt in that currency can always pay its debt, can never go broke, can never run out of money. It can afford anything that is for sale in that currency. It doesn’t need to borrow its own currency. And it can set its own interest rate. It does not have to pay what markets want. It does not become a victim to speculation, to bond vigilantes. It has additional policy space. It can do things for its economy and for its people that a government that does not have a sovereign currency cannot do."

you need to get a grip - you refuse to see what is right in front of your eyes. hudson is railing against private currency not state fiat currency. private banks create money through credit cards and loans and also insane financial instruments. state fiat currency can and should be a different matter. read carefully next time - and can you give this up already - it's boring. over and over i point out the flaw in your "money masters" thinking and you just plow ahead.

[-] 1 points by agkaiser (1888) from Fredericksburg, TX 2 months ago

If I bet $10k that Dallas wins some game, I risk ten thousand. If I was impetuous and foolish when I made the bet, I might have second thoughts. In that case I hedge the bet by betting $9k that the Cowboys lose. If I'd only bet $1000 in the first place, I'd have saved the bookie's commission on $19,000. We don't much care about what happens to the fools who do this with their money. But what about the banks that do it with ours?

Credit Default Swaps, like derivatives in general, add costs to transactions without adding value to the real products that they may represent. In that way they parasitize the real economy from which the abstract instruments must [ultimately] be derived. So whether the fools are politicians who facilitate the fraud of derivatives, or respected bankers and investors, or the schmuck at the local off track betting bar, the practice of hedging, futures speculation, CDSs or whatever harm the Human Race. They threaten our economy and therefore our lives.

“Concentration of wealth is harmful to Human culture and a threat to our survival. It's perhaps the greatest threat that civilization has always faced.” With that unambiguous introduction, Dr. Economicus begins to reveal the destructive nature of abstract economy.

“Consider this analogy: In a hypothetical casino card game the house takes 5% of every pot. If 10% of the money at the table is on average played on each hand, then the house takes 0.5% of the money in the game on each rake. After 200 hands, 100% of the money that is on average at the table has been taken by the house. The only way the game may continue is to have new money come to it. The winners, of course, smell the new blood and even anticipate it greedily. And the biggest winner over a time is always the house. Until the free market ideologues took over, the biggest difference between a casino bank and finance was that the gaming house took a bigger cut of the handle.

“The media have played up the CDS and futures gambling aspect of derivatives, in what they call 'Casino Capitalism.' This distracts from the better casino analogy where the principal players are the house that always wins. The fundamental function of the big hedge funds, banks, brokerages, private equity firms [formerly venture capitalists] investors and insurance companies is to take a cut of almost every transaction and enterprise through interest on finance and profit on investment, banking, debt and credit card fees, etc. Even if some of them did lose a little on the derivatives frenzy and didn't pass on their losses - to we, the people, their victims, the all time losers - by virtue of the bailout, the biggest just got bigger and only the suckers and small fry got hurt badly or wiped out.”

https://www.createspace.com/3852916

[-] 1 points by agkaiser (1888) from Fredericksburg, TX 3 months ago

Capitalism is a dead end economy. Debt grows faster because of the compound interest added to it. When it grows so large it cannot be paid, the bubbles can not be sustained. That's why capitalism is unsustainable.

[-] 1 points by agkaiser (1888) from Fredericksburg, TX 3 months ago

definition of Capitalist: One who takes the profit from the hard work done by others.

[-] 2 points by DKAtoday (33208) from Coon Rapids, MN 3 months ago

definition of Capitalist: One who takes the profit from the hard work done by others.

Not only that - but - also - works to take more from every individual tomorrow than was taken today without increasing wages to keep-up = a system of financial growth for providers of goods and services that can not sustain itself as it drives prices beyond ability of it's market to pay.