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Politics : President Barack Obama -- Ignore unavailable to you. Want to Upgrade?

To: Sr K who wrote (126179)	11/2/2012 12:57:03 PM
From: RetiredNow	Respond to of 149317

Bubbles get blown and then they burst. In hindsight, we can watch as credit creation expanded beyond the organic growth rate from capital formation, so did the bubbles. When the bubbles burst, we had financial crises. Think of it this way. Organic growth comes from capital formation. Capital is created through savings. Organic growth does not cause huge bubble growth. Rather, organic growth is restrained by access to capital from savings. So you may get business cycles, but they are mild. Growth from credit expansion is artificial growth. It allows companies and governments to expand faster than their organic capital is growing. This leads to bigger booms and bigger busts. Credit leads to higher variability and higher instability in economic processes. In an economy with non-fractional reserve, non-debt based currency, natural economic forces put the breaks on mal-investment through price discovery. Companies who try to borrow money are evaluated on risk and reward. When they go bust, they don't take the whole economy with them. It's a localized bust that does the macro economy very little harm. However, in a fractional reserve, debt based currency, with a presiding central bank and lender of last resort like the Fed, that is backed by the full faith and credit of a sovereign, you have a system that has virtually no restraint on credit creation, and thus currency expansion. That inevitably leads to increasing variability and instability in the business cycles and an acceleration of the gap between rich and poor, as busts fall hardest on the 99%, whereas the rich are the ones who mostly benefit from not just the recovery measures of bailouts and credit expansion, but also from the boom times, since they own most of the capital and hard assets. All of this leads to a level of incestuousness within the financial industry and banking that is inherently corrupt and unstable. Not only that, but with the increasing money supply and credit expansion, the financial industry begins to engage in regulatory capture, through power brokers and lobbyists. Systemic risk is simply inherent in this financial model. Central banking, fractional reserve banking, debt based currency...these are all the root causes of not just this financial crisis, but EVERY financial crisis. Eliminate the root causes and you eliminate the systemic financial crises. A free market currency is required for a free market and maximum liberty of the people. With a banker/sovereign controlled currency, not only is the economy enslaved to the whims of an elite group of people, but the people themselves are enslaved and doomed to periodic episodes of wealth destruction, largely outside of their own control. It's insidious and must be stopped. Keynes the economist commenting on currency debasement and its destructive powers: "not one man in a million can diagnose it" Rothschild the banker commenting on who holds the real reins of power: "give me control of the money supply and I care not who makes the rules"