Debt or Ponzi? By Bob Livingston

[Sapiens]

http://www.personalliberty.com/bob-l...debt-or-ponzi/

Debt or Ponzi?

I think the American people have a tendency to confuse the term debt with ponzi. The trouble is that we try to apply the conventional definition of debt as a legitimate accounting concept. It cannot be done as refers to the so-called national debt.

The terms fiat and debt are incongruent. Fiat by definition is default. The most learned writers that I read believe that there is actually a U.S. government debt and they repeat it, and they repeat it, and they repeat it. I can easily see why the government cabal wants the people to believe that there is government debt. Otherwise people might get the idea that the Fed was operating on printing press money (fiat).

What I am saying is that the reality of government monetary realism is that the U.S. government gets everything for nothing, even wars. That’s why we have so many.

John Maynard Keynes spilled the beans if anybody was looking, in his 1920 book, The Economic Consequences of the Peace, wherein he said “If governments should refrain from regulation (taxation) the worthlessness of the money becomes apparent and the fraud can be concealed no longer.” The pretense of collecting taxes supports the psychological syndrome that there is a national debt.

Translated, what he is saying is that without regulation through the tax collection system, and I would add, the propaganda paraphernalia of the national debt, that the people might come to wake up to the fact that the government is simply printing money and spewing it out and calling fiat “debt” as if it were legitimate and conventional accounting.

Again I say that so-called “debt” on everybody’s lips is nothing more than fiat ponzi and it has no more substance than whittenpoof dust. This is cognizant dissidence, which is the concept of holding two opposing thoughts at the same time. This is the irrational state of mind of the American people.

Of course their bailout, inflation and all the rest of it dilutes all the dollars in savings and circulation. It is my view that at present they are after the remaining trillions of dollars that the American people have in savings and retirement accounts. I believe that this is economic war on the American people. Unfortunately, not one in a million will ever figure it out until we become impoverished like the Weimar Republic in 1923. All of this is nothing more than witchcraft and created and concocted in such a way that it operates above the threshold of intelligence of the people.

This translates to government fraud on a worldwide and unbelievable scale.

Back to the current precious metals market, it appears to me that there has been so much damage to sentiment that we may be several months getting into another substantial rally, barring another war, which is highly possible as fiat needs war.

Of course government bureaucrats and propagandists love this mental suppression of the precious metals market because it extends their system of fiat.

The above is a great insight by Dr. Livingston.

[Supercilious]

Re: Debt or Ponzi? By Bob Livingston

On a completely unrelated topic:

http://www.constitution.org/la_boetie/serv_vol.htm

[...]
To achieve the good that they desire, the bold do not fear danger; the intelligent do not refuse to undergo suffering.Only the stupid are enslaved. It is the stupid and cowardly who are neither able to endure hardship nor to vindicate their rights; they stop at merely longing for them, and lose through timidity the valor roused by the effort to claim their rights, although the desire to enjoy them still remains as part of their nature. A longing common to both the wise and the foolish, to brave men and to cowards, is this longing for all those things which, when acquired, would make them happy and contented. Yet one element appears to be lacking. I do not know how it happens that nature fails to place within the hearts of men a burning desire for liberty, a blessing so great and so desirable that when it is lost all evils follow thereafter, and even the blessings that remain lose taste and savor because of their corruption by servitude. Liberty is the only joy upon which men do not seem to insist; for surely if they really wanted it they would receive it. Apparently they refuse this wonderful privilege because it is so easily acquired.

Poor, wretched, and stupid peoples, nations determined on your own misfortune and blind to your own good!Dictators work havoc. You let yourselves be deprived before your own eyes of the best part of your revenues; your fields are plundered, your homes robbed, your family heirlooms taken away. You live in such a way that you cannot claim a single thing as your own; and it would seem that you consider yourselves lucky to be loaned your property, your families, and your very lives. All this havoc, this misfortune, this ruin, descends upon you not from alien foes, but from the one enemy whom you yourselves render as powerful as he is, for whom you go bravely to war, for whose greatness you do not refuse to offer your own bodies unto death. He who thus domineers over you has only two eyes, only two hands, only one body, no more than is possessed by the least man among the infinite numbers dwelling in your cities; he has indeed nothing more than the power that you confer upon him to destroy you. Where has he acquired enough eyes to spy upon you, if you do not provide them yourselves? How can he have so many arms to beat you with, if he does not borrow them from you? The feet that trample down your cities, where does he get them if they are not your own? How does he have any power over you except through you? How would he dare assail you if he had no cooperation from you? What could he do to you if you yourselves did not connive with the thief who plunders you, if you were not accomplices of the murderer who kills you, if you were not traitors to yourselves? You sow your crops in order that he may ravage them, you install and furnish your homes to give him goods to pillage; you rear your daughters that he may gratify his lust; you bring up your children in order that he may confer upon them the greatest privilege he knows — to be led into his battles, to be delivered to butchery, to be made the servants of his greed and the instruments of his vengeance; you yield your bodies unto hard labor in order that he may indulge in his delights and wallow in his filthy pleasures; you weaken yourselves in order to make him the stronger and the mightier to hold you in check. From all these indignities, such as the very beasts of the field would not endure, you can deliver yourselves if you try, not by taking action, but merely by willing to be free. Resolve to serve no more, and you are at once freed. I do not ask that you place hands upon the tyrant to topple him over, but simply that you support him no longer; then you will behold him, like a great Colossus whose pedestal has been pulled away, fall of his own weight and break in pieces.

Doctors are no doubt correct in warning us not to touch incurable wounds; and I am presumably taking chances in preaching as I do to a people which has long lost all sensitivity and, no longer conscious of its infirmity, is plainly suffering from mortal illness.The sickness of nations. Let us therefore understand by logic, if we can, how it happens that this obstinate willingness to submit has become so deeply rooted in a nation that the very love of liberty now seems no longer natural.
[...]

Discourse on Voluntary Servitude-ÉTIENNE DE LA BOÉTIE, 1548

[phirang]

Re: Debt or Ponzi? By Bob Livingston

On a completely unrelated topic:

http://www.constitution.org/la_boetie/serv_vol.htm

I'll soon own a piece of every american when i pick up some JPM preferred.

[shadrack]

Re: Debt or Ponzi? By Bob Livingston

While it doesn't detract from Livingston's point, Keynes' support for Livingston's argument may be less substantial than it first appears.

Keynes wrote:

If, however, a government refrains from regulation and allows matters to take their course, essential commodities soon attain a level of price out of the reach of all but the rich, the worthlessness of the money becomes apparent, and the fraud upon the public can be concealed no longer.

By "regulation", I don't think Keynes is referring to simple taxation of the public but is literally referring to price regulation of domestically produced commodities, which could include but not be limited to taxation. I think Keynes would agree that to keep people from starving in early 1900s as they are unable to afford basic commodities realistically priced in worthless fiat, the government should perpetuate the myth of value in fiat.

Also, Livingston writes

The pretense of collecting taxes supports the psychological syndrome that there is a national debt.

The government could just create all the money they need to operate but that would quickly make matters worse as mentioned above. Relevant to this, Keynes also wrote:

Governments, unable, or too timid or too short-sighted to secure from loans or taxes the resources they required, have printed notes for the balance... this process has reached a point where for the purposes of foreign trade the currency is practically valueless.

[ThePythonicCow]

Re: Debt or Ponzi? By Bob Livingston

http://www.personalliberty.com/bob-l...debt-or-ponzi/

...

Translated, what he is saying is that without regulation through the tax collection system, and I would add, the propaganda paraphernalia of the national debt, that the people might come to wake up to the fact that the government is simply printing money and spewing it out and calling fiat “debt” as if it were legitimate and conventional accounting.

...

The above is a great insight by Dr. Livingston.

Argh!! The truth was right before his eyes, having flowed from the pen in his very hand, and yet he cannot see it.

It is exactly this tax collection system which, by way of funding the dividend payments on Treasuries, which are always convertible to and from Dollars, which is the backing of our money.

We do not have a fiat currency! (yet ;))

A fiat currency would be such as Monopoly money in the Parker Brothers board game, limited only by the costs of wood pulp, printers ink, and renting time on a printing press. Such fiat money is not convertible to anything of more substantial and stable value.

Dollars can buy a claim on the tax revenue income stream extorted from Americans. So long as we do not debase (over print) Treasuries so far that paying the interest on our national debt becomes a matter of serious public doubt, dollars are a serviceable paper currency.

This will all become clear, quite possibly in the next decade or three, when the United States actually does debase its Treasuries too far, growing the interest due on its national debt so far that it becomes difficult to pay. That will be the game changer; if history is any guide, to be accompanied by serious wars.

[ThePythonicCow]

Re: Debt or Ponzi? By Bob Livingston

This will all become clear, quite possibly in the next decade or three, when the United States actually does debase its Treasuries too far, growing the interest due on its national debt so far that it becomes difficult to pay. That will be the game changer; if history is any guide, to be accompanied by serious wars.

This is spelled out, in more detail and accuracy than I am able to provide, at http://news.goldseek.com/LewRockwell/1225121063.php

How to Bankrupt a Nation

By: Michael S. Rozeff
I don't normally read much at Lew Rockwell, and have some mild, yet unclear and perhaps groundless skepticism of them in general. However the above article sure made good sense to me, on first read.

[grapejelly]

Re: Debt or Ponzi? By Bob Livingston

We do not have a fiat currency! (yet ;))

A fiat currency would be such as Monopoly money in the Parker Brothers board game, limited only by the costs of wood pulp, printers ink, and renting time on a printing press. Such fiat money is not convertible to anything of more substantial and stable value.

fiat means by government law or enactment.

We *do* have a fiat currency. The government requires use of its currency as a medium of exchange. They invalidated "gold clauses" in the 1930s to make it very clear.

[ThePythonicCow]

Re: Debt or Ponzi? By Bob Livingston

fiat means by government law or enactment.

We *do* have a fiat currency.

Thank-you for the clearly stated rebuttal.

My informal take is that "fiat" has two variant meanings relevant to this discussion:

1. By the straight forward dictionary definition you quote, fiat means government mandated. Even 100% gold backed certificates could be fiat currency, by that definition, if the government mandated their suitability for specificied uses.
2. The definition of "fiat currency " that I think is the actual, more common, implicit usage is "currency that is only of value by virtue of such a mandate, and that has no other value such as perhaps derives from convertibility to some other base asset."

So when I protested that our currency was not fiat, I was not claiming that the Dollar lacked such a mandate. As you noted, the Dollar clearly has such a mandate. Rather I was stating that the Dollar's worth was not only due to this mandate, but also or at least, due to it being convertible to something else of more solid value, in this case Treasuries.

I think that the above (not entirely obvious) distinction is important for the following reason.

Most people raise the spectre of the Dollar being Fiat money in order to then justify the position that there is therefore little practical limit to the amount of dollars printed short of the speed of high speed presses, or worse the speed with which computer generated zero's can be added to values.

When I say no, the Dollar is not Fiat, I am saying that there are practical limits on how rapidly new Dollars are created, those being imposed by the FOMC using the convertibility of the Dollar to and from Treasuries to keep the quantity of Dollars within some policy (or magicly?) defined boundaries, where Treasuries are in turn constrained in their quantity by how much interest the American tax payer can afford to pay on the national debt.

All "good" convertible bases for paper currencies, whether Treasuries or Gold or pink sea shells, need to have various properties, including some imposing limits on the rate at which such a base can be expanded. Treasuries have that limit, so long their quantity is sufficiently limited that the American tax payer can continue to be relied on to pay their dividends.

Good question - thanks.

[walenk]

The stuff of Pooms

When (I wish it were if, and several years away) the government "over prints", then we get poom.

[ThePythonicCow]

Re: The stuff of Pooms

When (I wish it were if, and several years away) the government "over prints", then we get poom

Not quite so, I think. What you said sounds to me like telling an average American consumer that when they live beyond their means, paying off credit cards with more credit cards and spending more than they have earned to spend, then they go bankrupt.

I know that's not so. I happily lived the "good" life in Silicon Valley for twenty years, piling up enough debt to cause my Depression era parents to roll over in their grave or bed, respectively.

Just so long as my interest payments remained less than my disposable income, and I had the good fortune to cash out, before the game of Musical Chairs stopped, then that was no problem.

Clearly, the grand old United States of America, led by the esteemed ladies and gentlemen on Capital Hill, lacks that good sense. So the "cash out" while one still can part of my personal example doesn't apply to my dearly loved and decaying nation.

However the "as long as the interest payments remain less than the disposable income", or tax revenues in this case, clause still applies, modulo random noise and instabilities in the untested circuits of civilization.

We Americans are clearly doing our best to get to where our national interest payments are at risk, but we're not there yet.

In short, we can "over print". The Poom (if I understand) happens when the latent chaos of the current arrangements starts to explode onto the scene. The final trigger(s) for that explosion will make the stuff of some good History books, to be written by the victor, as usual. The greater the burden of interest payments on the American taxpayer, the less the margin of error on triggering these events.

Snow on a mountain does not cause avalanches. But the steeper the slope, and the more the snow, the greater the risk.

[walenk]

Re: Debt or Ponzi? By Bob Livingston

That was thoughtful, measured. Thank you.
I wish it will go down your way (truly), thoughtful, measured. My fear, alive and bright, is that it goes in a flash. Days, at most.
Let's dance. What was the band playing when the big boat hit the 'berg?