Free Learner

What a trillion means

The US Treasury and the Fed have given away or promised a total of almost $13 Trillion in roughly the last year and half, almost entirely for the benefit of banks.

That's a lot of money to give to the banks, the ones who put us in this sorry economic situation in the first place.

Today I read that the poorest half of the world, the poorest 50% of all human beings on Earth, have a combined income of less than $800 billion per year.

I guess that gives us some idea of the level of banker theft.  For not much more money than the infamous $700 billion bailout, the US could have doubled the income of half the world.  For considerably less than the cost of all bank bailouts to date, we could have multiplied the incomes of the poorest half by 10.

Dante didn't envision a circle of hell awful enough for these banking elites.

Bankers and pitchforks

Yesterday's Clusterfuck Nation post is highly recommended.  Kunstler can write!  Here's an excerpt:

One mistake that the banking elite and their lawyer paladins made the past decade was their show of conspicuous acquisition -- of houses especially -- in easy-to-get-to places where anyone can see them, for instance an angry mob in Fairfield County, Connecticut, or Easthampton, New York. Unlike the beleaguered elites of South Africa (where I visited recently), who live behind layers of fortification, the executives of Citibank, Goldman Sachs, J.P. Morgan, and a long list of hedge funds, will be found cringing in their wine-lockers behind a measly layer of privet hedge when the tattooed minions of Glen Beck come a'calling.

He's always good for a laugh, every Monday.

Black and white

So I'm sitting here with Anya, reading the news while she's looking at her penny collection, and out of the blue she says "Well, I guess the Obama family is more white than McCain, anyway."

I said: "What?"

She continued on to explain that the Bushes are definitely a black family, but in her opinion, Lincoln was "mostly white".

Thankfully my brain kicked into gear and I remembered yesterday's dinner conversation, during which Anya got really mad at Seth for criticizing Lincoln.  This led to a discussion about how these things are not black and white, and most things fall into a gray area.  And then we got into what "black and white" means, and that the color white is equated with "good" and the color black with "evil".  Thus, the Bushes are a black family.

On top of that confusion, Anya doesn't know that "black" people are called black, because when talking about race I only use the actual skin color and geographic origin.  American slaves weren't black, they were brown-skinned people from Africa.  (The term "black" is itself racist if you think of how this word was used 200 years ago, as in "blackguard," an evil person.)

When Anya was about 3 she once said that a friend of ours was black, and he is African American, but I was shocked that she was using the term.  She had never before shown any awareness of race.  As it turned out, she wasn't talking about race after all.  This friend was "black and brown," while his Irish heritage wife was "orange and white".  She was just mentioning his hair.

Recently I've begun talking about race with Anya, but I never use the word "race," I just put it in really simple language.  Pale-skinned people took brown- and black-skinned slaves from across an ocean, but a few hundred years before that, other brown-skinned people (Persians) were taking pale-skinned people as slaves.  It's an unfortunate human trait that we dehumanize those who look different than us and live differently than we do.

I'm leery of much of what people teach their kids about race because they tend to focus on recent US and British history, in which light-skinned people have constantly victimized darker-skinned people.  That's dangerous, no matter how sensitive and left-wing you are, because children will often come to either of these conclusions: 1) light-skinned people are evil, or 2) dark-skinned people are weak.  You can get around this problem by taking the broader historical view and explaining that a few hundred years earlier, the light-skinned people in northern Europe were the backwater of the whole planet, constantly being pillaged and enslaved.  And around that time or a little earlier, Baghdad was the center of the civilized world, whereas now it is a bombed out hell-hole.  In fact, every color of skin and every part of Earth has had its own Empire, at some point in history, and with few exceptions (usually mountain peoples) every part of the planet has at one time been decimated by foreign enemies.  The center of power moves.  And as it moves, those who have been colonized, pillaged, and then abandoned by a Major Power are doomed to internecine warfare, famine, and plague for centuries afterward.  (See Europe, post-Romans; or Africa, post-British/French.)

I actually object to the terms "black" and "white" when they indicate race, although I use the terms like anyone else because it's a losing battle.  But I've never used those terms to indicate race when talking to Anya, and I'm annoyed to have to explain them now.  I guess I have to, though, to prevent some spectacular misunderstandings!

Good news

It feels to me like there's hardly any good news out there, lately.  One site that does have good things to report is Natural News, so check them out if you need to read something positive.  Here are some recent headlines:

Gingko Reduces Brain Damage from Stroke by 50 Percent

Ginger Reduces Nausea and Vomiting of Pregnancy and Relieves Menstrual Pain

IP6 Is Highly Effective Alternative Treatment for Cancer

Broccoli Compound Found to Protect Against Lung Disease

Increasing Fruits and Vegetables Leads to Permanent Weight Loss

Copper Fittings Could Eliminate Superbugs in Hospitals

GFCF Diet Shows Promise as Natural Treatment for Autism

Music Can Restore Vision After Stroke

L-Carnitine May Prevent and Treat Liver Cancer

Drink Red Wine and Keep Breasts, Livers, and Brains Healthy

Alternative health is an area where you can always find good news... and almost everyone can find a way to alleviate some minor (or major) health issue.  But just remember: you have to do it yourself, or if that's not possible, be an indefatiguable nuisance who demands alternative therapies from doctors.

On being prepared... mentally

The one thing that seems to get left out of "survivalist" or preparedness plans, on the blogs and sites I come across, is the mental health component.  I think, perhaps, that even the worst doom and gloomer suffers from a bit of romanticism.

"Suppose the power goes out," says the Doom and Gloomer.  "Wouldn't that be fantastic?  We could haul in some wood and snuggle in front of the fireplace.  No TV, no video games, no Internet-- it'd be just like camping!  We could cook all that wholesome oatmeal in the dutch oven and read to one another all evening.  Even use our fireplace popcorn popper!  Good times!!"

Yeah, I suffer from that too.  You try to be balanced, you know?  You say "Well, okay, jobs are disappearing like beers at a frat party, but we'll all be closer to our families."  Or: "Well, I may never eat clementines again, but I'll be developing a relationship with my local farmers."  Or: "If there's no TV for a week it will bring my family together."

It's mostly true, too.  But then again, last night my family was brought together -- all of us having a grand old time and laughing our butts off for 2 hours -- by The Simpsons Hit and Run video game, in which you not infrequently mow down cartoon pedestrians as you mishandle your vehicle.  (In my defense, that's not the point of the game and we try hard to stay on the road!  And if you hit someone, they just yell at you as they roll out of your way.)  To be honest, I just can't see Candyland or Chutes & Ladders (other games which all 4 of us can play) as being anywhere near that much fun.  When it comes to old-fashioned values, The Simpsons Hit and Run game fails miserably on all counts, but that much laughing together has to be good for us.  So I suppose I try to look on the bright side, but I also try not to romanticize things like a Depression, peak oil, power outages, or having to stay inside the house for 3 solid weeks because of H5N1.  The fact is, I kind of like the 21st century.  I can't help it -- that's what I'm used to.

My own (minor!) "crisis" experience, when I went without power for 4 days in August of 2003, was far from romantic or refreshing.  I huddled near the radio, clinging to our local radio station like a lifeline, praying the batteries wouldn't quit, because by the time I'd gotten to the grocery store (45 minutes into the blackout) they were totally sold out of batteries.  And ice.  And bottled water.  And any kind of meat you'd typically grill.

Let me tell you, if you're an Internet junkie -- and we know who we are -- you need radios.  I mean, you need a hand-crank back-up radio, a regular radio or two, alkaline batteries, and possibly rechargeable batteries and a solar battery charger, plus headphones or ear buds to save those batteries.  Maybe even a shortwave radio.  My MP3 player has FM radio and I can charge it in a few minutes off the car battery, without starting the car; if you have one, consider getting the car charger.  You might even consider one of those radios that picks up TV, even though supposedly they are always about to halt old-fashioned TV network broadcasting.  If you are the kind of person who checks the internet more than a couple of times a day, you need INFO and you need it YESTERDAY, and thank god the local station put on BBC at 10pm so I could go to sleep feeling connected to the rest of the world.

Secondly, you need light.  Flashlights don't cut it, not even close.  A single night of reading by flashlight is enough to depress you and make your children crazed and creeped out.  I would aim for at least one small room that you can keep pretty well illuminated.  There are bright LED lanterns that are totally kid-safe, including some that are solar.  There's the old-fashioned kerosene lantern, the antique oil lamp (which we used in 2003-- thank you Grandma for giving it to me!), and there are 100-hour candles if you can manage those safely with the kids in your family.  (The 100-hour candles are round, squat, and hard to tip over.)  Hand-crank flashlights are a good back-up and kids think they're fun, and I'm glad that we own a couple.  But they do get tiresome, so I think recharge batteries with an AC and/or solar recharger are a good bet.  By the way, Costco sells a recharge battery set that has the "spacers" that convert an AA battery to fit a C or D slot.  This means that with one set of AA batteries and one AA recharger, you can put batteries into almost any flashlight.  Lastly, head-lamp style flashlights which strap onto your head may look ridiculous, but hey-- it's a no-hands flashlight.  Could be very useful.  Kids find them amusing.

So again, from my experience, a couple of flashlights somewhere in the house doesn't cut it.  It's not a matter of "Can I get to the bathroom without breaking an ankle?"  It's a matter of "Can I get through 4 days without power while not becoming depressed /creeped out by darkness every evening?"  Some kind of little battery / solar nightlight, or light sticks, are a good idea if you have kids in the house, as they can panic when waking up in pitch darkness.

And then, of course, you need entertainment.  If you can work out some way of listening to an audiobook, that's fairly entertaining and can be done on batteries.  Obviously someone can read aloud.  You can also put aside some "beach reads" for the adults & some previously unseen books for the kids -- I'll bet your local library has cheap paperback novels -- for emergency escapism.  I've also put aside sudoku, crosswords, cards, games, puzzles, etc.  Keep in mind that during crude oil disruptions schools will be closed, so whether you homeschool or not, in such a scenario you'd be (or someone would be) with your kids all day, and possibly without power.  (We take coal to our power plants largely by diesel truck-- brilliant, eh?)

And, for those who are stockpiling beans, barley, wheat, rice, and other wholesome Amish fare -- may I suggest Doritos and candy?  (Okay... organic non-GMO tortilla chips and fair trade cocoa powder?)  Don't forget junk foods as a treat.  Even if you very rarely eat junk food, your family may need something to cheer them up, make things a little easier.  Canned soups (Costco has good deals on Progresso), chewing gum, chocolate, potato chips, and so forth may compensate for other inconveniences and keep everyone in a cheerier state of mind.  (Whiskey or half a case of Charles Shaw doesn't hurt either, for extended disasters... for adults, I mean!)

So that's my two cents on crisis preparation, on the sanity front:

Connection, light, entertainment, and treats.

On printing money

"[T]his idea to increase the money supply by printing money is the Single Stupidest Idea (SSI) in the whole history of economics for the last 4,500 years, and the reason that no nation does it is because it shows a serious mental defect in that nation’s leaders, its universities, its news media, and the people themselves because it is truly, truly stupid because it is truly, truly catastrophically ruinous every time anyone has tried it."

                    --The Mogambo Guru

Monopoly money

The American dollar is monopoly money in two senses: first, because it's just a piece of paper, same as the Parker Brothers variety; and second, because the private banking cartel known as the Federal Reserve has a monopoly over our currency.  We aren't allowed to print our own local currencies and use those.  We have to use the one and only currency which is legally allowed, the Federal Reserve Note.

Kings and democratic governments both impose their monopoly currency on the populace by insisting that taxes be paid in it.  This, it turns out, is the secret to fiat currencies.  If you demand that taxes be paid in that currency, everyone will use it.  If you, furthermore, threaten jail time (or in some cases, death) for those using any other currency, that usually cements the deal.

There used to be another way.  During the European heyday known as the Middle Ages, when commerce and specialization were re-established after the Dark Ages, many local currencies were used.  Check out this fantastic article:

There used to be lots of different kinds of money. Local currencies, which helped regions reinvest in their own activities, and centralized currencies, for long distance transactions. Local currencies were earned into existence. A farmer would grow a bunch of grain, bring it to the grain store, and get receipts for how much grain he had deposited. The receipts could be used as money—even by people who didn’t need grain at that particular moment. Everyone knew what it was worth.

In other words, these local monies represented production.  Production is the only way to increase true wealth.  In the US in 2009, the majority of what we consider to be "wealth" is not wealth, it's just paper.  You say you have $10,000 in the bank?  Kudos, in 5 or 10 years that'll buy you a washing machine, if you're lucky.  You own shares in GE?  Well, keep your fingers crossed.  In bankruptcy proceedings you will get precisely $0 for your common stock, but hey, maybe they'll stick it out.  You have $50,000 in equity in your house?  Check on that again in 2 years, and good luck.  We are approaching the point where 401k's may be partly nationalized (for instance, by passing laws mandating that all 401k accounts purchase Treasuries); where Social Security payments will be denied to many; where life insurance policies may or may not be paid out.  There are no certainties now, in the world of paper "wealth".

I'm therefore getting rather medieval about what I consider "savings" or "investments".  I don't want any more 401k shares, thanks, or even that many Federal Reserve Notes.  Real wealth is... well, real.  It's sacks of wheat, bolts of flannel, tilled land, tools, silver coins, wool blankets, cast iron pots.  Those things are true, physical wealth.  (If you were rich in the Middle Ages, you stored your wealth for the future in the form of gold and precious stones, often in the form of jewelry.)  Any form of "wealth" which involves receiving a monthly or quarterly statement should be viewed as quite dubious over the next decade, and possibly non-existent if it's denominated in Federal Reserve Notes.  We're coming up on the worst global economic shut-down since the 14th century and hyperinflation.

Back to that article (boldface is mine):

Local currencies favored local transactions, and worked against the interests of large corporations working from far away. In order to secure their own position as well as that of their chartered monopolies [the first corporations], monarchs began to make local currencies illegal, and force locals to instead use “coin of the realm.” These centralized currencies worked the opposite way. They were not earned into existence, they were lent into existence by a central bank. This meant any money issued to a person or business had to be paid back to the central bank, with interest.

Paid back with interest-- and that interest money comes from... well, some other loan.  The interest on older loans is paid using money from new loans.  Continue until there is no one left who is willing or able to borrow more money, and the whole system collapses.  Debt-based money is the ultimate Ponzi scheme.

All Ponzi schemes come to an end, as did the Venetians' in the 14th century, and as will the American version of the past 96 years.  It is unfortunate for the rest of the world that they pegged themselves to our currency for so long, and still use it for international trade and as an ostensible store of wealth.  They've tied the US Ponzi dollar around their necks like a giant rock.

We can abandon the Ponzi Fed note any time we like: individually, by using barter or transacting in gold or silver, and by saving our wealth in some other form.  We could abandon Fed notes as a country, as well, whenever the Congress and the President make it so.  I don't hold out any hope of the government cutting out the banks and issuing a new currency, but it is possible in theory.

A last word from the same article (emphasis is in the original):

President Obama may be smarter than most of us, but he’s still attempting to rescue the very institutions that robbed us in the first place. He’s not a socialist, as conservatives may be arguing, but he is a corporatist. Using future tax dollars to fund government job programs is one thing. Using future tax dollars to give banks more money to lend out at interest is robbing from the poor to pay the rich to rob from the poor.

A little thing called "debt monetization"

So let me break down this term debt monetization.

Say you're the US government.  You plan to spend a lot more money, this fiscal year, than you're going to take in.  Like, maybe an extra couple trillion, maybe three.  You expect other people to lend this to you at extremely little interest.

Turns out, though, the economy sucks.  Like-- globally, the economy sucks.  The Chinese don't have that much fricking money to throw down the drain (since we all know the US government cannot ever pay this money back).

They haven't got the money, see?  But we need to take on debt to pay our bills.  So, what to do?

Turns out we have a helpful cabal of private banks (some of them foreign) who have the sole and unique ability to print US dollars out of thin air.  And this little cabal can decide, whenever they want, to print up enough money to provide the needed loans to the US government.  The cabal will fund the needed debts.  Since they're inventing money out of nowhere, people call it "monetization" of the debt.

The trouble is, oodles of brand new dollars floating into the world make the existing dollars worth less.  Today, for instance, the Fed announced they were going to invent $300 billion and use it to buy debt, i.e. Treasuries.  We all knew it was coming, but that doesn't change the fact that it's unprecedented for them to openly do this.  Here is today's stunning dollar chart:

This is the biggest plunge since the year 2000.  I've never seen anything like it.  The gold price went from 1 ounce = 885 dollars to 1 ounce = 940 dollars.  The gold didn't change in value, the dollar did.

In other news, global production is collapsing:

It is like someone flipped the switch off and world production came to a standstill. Production has fallen in every country from 9 to 43 percent. That certainly will catch the world’s attention. On February 1st we declared a depression and this is one of the reasons why. The global economy is headed to a shutdown and that should bring free trade and globalization to a halt.

...The result of banks not lending or issuing letters of credit has led to a global credit contraction. The lack of credit is forcing businesses everywhere to shut down.

It won’t be long before inventory is depleted. In fact, it should start to become evident in the second quarter. Supply has put a sign up – out of business. This absence of goods, although deflationary, will drive prices higher for remaining goods. Food prices are still rising as well. It would be a very good idea to buy what you can now.  [International Forecaster 3/19/09]

International trade is also collapsing, with exports from Asian producers plunging at breathtaking speeds.  As for US trade:

Over the past five months since the credit crunch intensified, real exports have plunged at a 49% annual rate, while real imports have fallen at a 30% pace.

The pace of the decline is unprecedented in modern times, economists say. "We doubt even during the Great Depression that trade collapsed with such ferocity," said David Greenlaw, an economist for Morgan Stanley.

Unemployment is rising faster than expected-- as an aside, this phrase "faster than expected" is becoming a joke.  It goes without saying that whatever disastrous thing it is you're talking about, it's "happening faster than expected."

And only a month after finally passing a budget, California is $8 billion more in the hole.  It's the legislators' fault, because they were using absurd Pollyanna economic figures.  In fact, they are still predicting an increase in personal income tax revenues next year.  Ha ha ha!!  They should do stand-up.

The Greater Depression is now

[The images I am including here are by the excellent photographer Harvey Finkle, who will likely take some of the iconic photos of this next Great Depression which is just beginning.]

Roughly 1 in 5 children in the United States lives below the poverty line.  In 2009, the poverty line for a family of four is $22,050.

Rising unemployment could push an additional 7.5 million to 10.3 million United States residents below the federal poverty line over the next two or three years....

[E]conomists say the total is sure to rise over the coming years, and if the... estimates hold true, the number of poor people could approach 47 million.  (New York Times 11/24/08)

From Seattle to Athens, Georgia, homeless advocacy groups and city agencies are reporting the most visible rise in homeless encampments in a generation.

Nearly 61 percent of local and state homeless coalitions say they've experienced a rise in homelessness since the foreclosure crisis began in 2007 (source).

The relatively tony city of Santa Barbara has given over a parking lot to people who sleep in cars and vans.

The city of Fresno is trying to manage several proliferating tent cities, including an encampment where people have made shelters out of scrap wood.

In Portland and Seattle, homeless advocacy groups have paired with nonprofits or faith-based groups to manage tent cities as outdoor shelters.

Other cities where tent cities have either appeared or expanded include include Chattanooga (Tenn.), San Diego, and Columbus, Ohio. (source)

 

And meanwhile, in America as across the planet, it’s economic devastation, near and far. Here in northern California I walk into a local plumbing store, a large place used by building contractors. There’s one other man in the store, buying a $5 plastic fitting....

Throw in the idled lumber yards, construction stores, paint suppliers, and building crews. Count in the car lots that are going out of business because the banks won’t finance car loans. Go to the lost auto assembly jobs. It tots up to job losses across America just in December and January of 1,175,000. And that’s an underestimate. Every president since Reagan, particularly Clinton, has jimmied the unemployment criteria to produce an undercount. The actual number for the two months is nearer one and three quarter million. The actual total unemployment rate, according to statistician John Williams, by pre-Reagan criteria, rose to 18 per cent in January. (source)

The worst unemployment rate seen during the first Great Depression was 25%, and we are at 18%.  Moreover, we have millions of homeless Americans and tens of millions who go without food in order to pay bills.  In my own state, a 93-year-old WWII vet froze to death in his home after the electric company shut off his power for non-payment (which is illegal, but they had their ways of getting around the letter of the law).  We're in bad shape, and I'm afraid we've only just entered a Depression which will last for years to come.

Just sign here

The idea that we have representative democracy at the federal level is utterly false for one simple reason:

The bills are so damned long, no member of Congress could possibly read them prior to the vote.

The stimulus bill was 1,071 pages long.  Among other things, it created a new federal bureaucracy that will collect all of our medical records and review them to make sure that the federal government approves of the treatment we're receiving from our doctors.  Gee, who knew that was in there??

Our members of Congress are a bunch of overpaid, bribed, corrupt, cocktail-party-attending Forest Gumps who vote how they're told to vote, on bills written entirely by lobbyists.

I have two words to describe this:  Banana.  Republic.