Applied Philosophy

First they were stripped of their utensils, furniture, mobile phones, televisions, ration cards and heirloom gold jewelry. Then, some of them drank pesticide. One woman threw herself in a pond. Another jumped into a well with her children.

Sometimes, the debt collectors watched nearby.

More than 200 poor, debt-ridden residents of Andhra Pradesh killed themselves in late 2010, according to media reports compiled by the government of the south Indian state. The state blamed microfinance companies — which give small loans intended to lift up the very poor — for fueling a frenzy of overindebtedness and then pressuring borrowers so relentlessly that some took their own lives.

—Lender’s own probe links it to suicides, Associated Press, Feb 24, 2012

People in the West consistently get manipulated by sophisticated media campaigns into supporting the most harmful measures all in the name of lifting people out of poverty and saving the world. Sooner or later these romantic dreams are crushed on the rocks of reality, unfortunately its the poor who suffer and not the Western audience.

Early in 2010, before the suicides story broke out I wrote in Micro Credit is Usury against micro-finance. My post concentrated on Grameen Bank and did not really argue its title. The reasons I condemned micro-finance are easy to comprehend:

• A large number of people in poor countries do not use any kind of financial service. Micro-finance is the wedge used to get these people into the hands of finance.

• People offered micro-finance were outside of the cash market, but had to pay the loan with cash. Historically state violence was used to push people to the market, for example by imposing cash taxes on subsistence farmers.
• Historically finance was spread by providing saving accounts and not credit. In Europe and Japan most villages had only a post office, were they could open a saving account (see Postal savings system on Wikipedia). This helped capital formation and enlarged the national capital market (see my previous post).
• Credit is not used to build equity in the villages. This is an important point, best illustrated by the example of an early adapter whose case is used by Grameen Bank in the media: a woman bought a mobile phone with her loan and earned money by renting the calls. She did not invest in the village, she brought a new consumption to the village. She earned a lot of money that she used to buy land and build a house. The village production capacity did not increase due to the loan.
• Poor people who never borrowed money had no understanding of how interest works. Actually it seems that few people and even less governments have any understanding how credit, finance and interest works. This meant abuse will happen.
• The more money you borrow the cheaper the rate you pay. This meant that the poorest people in the world are going to pay some of the highest legal rates in the world; not really a recipe for lifting people out of poverty.

“About 40 million people in Bangladesh have availed of loans from microfinance organizations whose interest rates can be anywhere between 20-40%. There are some micro financers who also charge interest rates of more than 50%,” Said Khandakar Muzharul Haque, the executive vice chairman of Micro Credit Regulatory Authority. “We want to structure and regulate this interest rate.”

—Microlending Backlash Spreads to Bangladesh, Wall Street Journal, November 10, 2010.

• The most important point is: Grameen Bank was not self-sustainable and the commercialisation of this practice would inevitably mean that the human mask falls off and the real face of usury is shown.

The Indian lenders are stock-traded companies with shareholders to satisfy:

The shares of SKS – which is in some sense the main offender, if it is an offense – are worth less than half of what they were at their highest, and even far below what they were at their public offering which was just in August.

—Malcolm Harper in An Interview with Malcolm Harper, December 14, 2010

Despite Muhammad Yunus (of Grameen Bank) statements against the new breed of “high-profit, high growth” micro-lenders (see WSJ article quoted above) he has used the bank to build a commercial business that have brought him as much wealth as the fame that he got from micro-finance:

A Bangladesh government-appointed investigation last year found that Grameen Bank violated its charter as a microlender by creating affiliates that did not benefit the bank’s shareholders, and recommended the government integrate those affiliates with the bank.

Yunus maintains those social businesses are independent and should remain so.

—Bangladesh to probe Grameen Bank units, Bloomberg Businessweek,  April 23, 2012.

The Wikipedia article Grameen family of organizations gives an idea about the extent of those organisations. The not-for-profit label does not mean that Yunus and other directors of these organisations were not highly compensated. I am not accusing Yunus of anything illegal, but my problem with him goes beyond misguided idealism or humanising usury; as the following interview shows he is either delusional or a liar:

Q: Do you think Grameen Bank itself has lived up to its own hype?

It depends where you are coming from and what you are looking for. We’re very happy with what Grameen Bank has done. It’s owned by the poor people. It lends to the poor people. It’s self-contained. It doesn’t borrow any money from anybody.

—5 Questions with Muhammad Yunus, CNBC, 1 Mar 2012. [my emphasis]

While the balance sheet of Grameen Bank clearly shows that Deposits and Other Funds were 87% of liabilities in 2010—a deposit is a loan to the bank—while loans were only 54.5% of the bank’s assets. There is also a whole category called Borrowings from banks and foreign institutions, which in 2010 was 1.27% of liabilities. Apart from borrowings the organisation received foreign aid for many years. The use of aid money was investigated:

“It seems that the dispute regarding use/transfer of Norad aid funds for Grameen Bank has been settled. But the fund transfer to different organisations by Grameen Bank was beyond its authority (ultra vires),” the report said, a copy of which is available with bdnews24.com.

—Grameen fund transfer ‘ultra vires’: inquiry, Apr 25th, 2011.

If poor countries like India want to develop their market and their financial sector they must do it in way that provides benefit to the maximum number of people and not profit to the minimum number of people. There are some simple steps that any country can take to develop their economy and liberate the productive forces for the enrichment of their people:

1. Open the mint to gold and silver. This can be easily done by any country, the cost of minting is minimal.
2. Recognize gold and silver coins as legal tender.
3. Issue government gold bonds.
4. Establish a Post Bank and give it monopoly in low-population areas.
5. Invest in developing agriculture and  the productivity of villages.

The first is crucial; sucking people into the cash market under a fiat currency regime is the set up for a shakedown. Indians hold about 20,000 tonnes of gold, that would make about 5 billions of my zimbi coin. Gold bonds would act like magnets pulling the gold from the necks and hands of Indians brides and channelling it to the capital market. Spending that money on the bureaucracy or big white elephants would send the country down the path of revolution; funds raised by gold bonds should be spent on improving the basic infrastructure of the country and not providing more cheap services for the urban wealthy.

A postal bank will slowly introduce the concepts of finance and lending, starting with saving and not borrowing. The monopoly would limit costs and insure a tight regulation oversight. Even a developed country can benefit from a post bank, as the experience of New Zealand shows:

Postal banks are now thriving in New Zealand, not as a historical artifact but as a popular new innovation. When they were instituted in 2002, it was not to save the post office but to save New Zealand families and small businesses from big-bank predators. By 2001, Australian mega-banks controlled some 80% of New Zealand’s retail banking. Profits went abroad and were maximized by closing less profitable branches, especially in rural areas. The result was to place hardships on many New Zealand families and small businesses.

The New Zealand government decided to launch a state-owned bank that would compete with the Aussies.

—Saving The Post Office, January 13th, 2012 [my emphasis]

See also:

• Bacon on Usury, refuting Bacon’s arguments in favour of usury.
• Posts on the subject of usury.
• Bagehot on Money, a five part series about finance and how banks works.

From William Shakespeare to Jane Austin

It seems there were times when people better understood the relation between capital and income. In past times when people had stable money and more importantly stable interest rates and their mathematical faculties were neither suitable for fractions nor large numbers they cleverly converted income to capital and vice versa.

SEBASTIAN

I prithee, foolish Greek, depart from me: There’s
money for thee: if you tarry longer, I shall give
worse payment.

Clown

By my troth, thou hast an open hand. These wise men
that give fools money get themselves a good
report—after fourteen years’ purchase.

—Twelfth Night – Act IV

Land was seen as an infinite stream of income (the landlord would lease it to tenants, so the only cost was the purchase price) similar to a perpetuity that can be easily capitalised by dividing the yearly income on the prevalent interest rate. The purchase price divided on the income would give a multiple dependent only on the interest rate. If the interest rate was about 7% then the multiple would be about fourteen, a land would sell for fourteen times its yearly income or put more succinctly: “fourteen years’ purchase.” (today this is called Capital Cost)

“He is a man of very large property in Derbyshire, I understand.”

“Yes,” replied Mr. Wickham; “his estate there is a noble one. A clear ten thousand per annum.”

—Pride and Prejudice Chapter 16

Landowners, on the other hand, who owned vast estates did not really care about the price of their lands for two reasons: they had no  intention of ever selling their land and the price was almost constant over long periods of time. They were basically living on fixed income or a perpetuity. The price of their estates can double or half without affecting their life, because their income is fixed. So a gentleman would not be known for his net worth but for his yearly income, for example: “his estate there is a noble one. A clear ten thousand per annum.”

From Francis Bacon to Bill Gross

Now I come to the subject at hand: Francis Bacon’s essay on usury. In my previous thrashing I skipped the part about setting up a primitive central bank to manage usury; today I handle it in detail. Here is the paragraph I skipped:

To serve both intentions, the way would be briefly thus. That there be two rates of usury: the one free, and general for all; the other under license only, to certain persons, and in certain places of merchandizing. First, therefore, let usury in general, be reduced to five in the hundred; and let that rate be proclaimed, to be free and current; and let the state shut itself out, to take any penalty for the same. This will preserve borrowing, from any general stop or dryness. This will ease infinite borrowers in the country. This will, in good part, raise the price of land, because land purchased at sixteen years’ purchase will yield six in the hundred, and somewhat more; whereas this rate of interest, yields but five. This by like reason will encourage, and edge, industrious and profitable improvements; because many will rather venture in that kind, than take five in the hundred, especially having been used to greater profit. Secondly, let there be certain persons licensed, to lend to known merchants, upon usury at a higher rate; and let it be with the cautions following. Let the rate be, even with the merchant himself, somewhat more easy than that he used formerly to pay; for by that means, all borrowers, shall have some ease by this reformation, be he merchant, or whosoever. Let it be no bank or common stock, but every man be master of his own money. Not that I altogether mislike banks, but they will hardly be brooked, in regard of certain suspicions. Let the state be answered some small matter for the license, and the rest left to the lender; for if the abatement be but small, it will no whit discourage the lender. For he, for example, that took before ten or nine in the hundred, will sooner descend to eight in the hundred than give over his trade of usury, and go from certain gains, to gains of hazard. Let these licensed lenders be in number indefinite, but restrained to certain principal cities and towns of merchandizing; for then they will be hardly able to color other men’s moneys in the country: so as the license of nine will not suck away the current rate of five; for no man will send his moneys far off, nor put them into unknown hands.

—Essays, by Francis Bacon: Of Usury [my emphasis]

Bacon advocate low interest rate for two reasons: asset price inflation and increased risk apatite leading to economic growth. He also wants to give a monopoly to lenders who would only lend to merchants, at a lower interest rate than what prevailed before. I will discuss each point below and then comment about Bacon’s brooking (enduring or tolerating) of banks.

If the prevalent interest rate is 6% and it is cut by one percentage point then the value of an asset will rise from sixteen to twenty years’ purchase, but why stop there why not cut it by one more point and assets rises to twenty-five years’ purchase; cutting the interest to 3% makes assets worth about thirty-three years’ purchase. Thus halving the interest rate doubles the asset price. Only big speculators would benefit, those living on the income of assets (e.g. gentlemen, widows, pensioners) would gain no benefit and suffer from the inflation brought about by declining interest rates. The speculation in the price of tulips came after chartered banking spread in the Netherlands (see Chronology of Money below).

If interest rates are cut capital will indeed shy away from investments that pay less and that might lead to increasing productivity or seeking new avenues that pay higher. In reality technological (“industrious and profitable”) improvements takes long time to bear fruit and carries with it potential risk. Money would more likely seek profit in asset price speculation aided by falling interest rates. Again society would not benefit but only speculators. Capital would flow from industry to property and speculation, destroying the industrial base of the country.

The monopoly Bacon suggest is nothing but government chartered banks run by a central bank. Both the Federal Reserve and the Reichstag (of the Weimer inflation) were limited to discounting commercial notes with duration not longer than three months. Both were allowed, by hook or by crook, to first discount government notes and then government bonds. Both ended up as money-printing machines for the benefit of the government and financial elite. The commercial banks follow the central bank like ducklings following their mother into the path of traffic.

Now I solve the riddle of the banks: Bacon does not “mislike” them and yet he clearly is trying to put them out of business. Francis Bacon is the creature of big money oligarchy that formed around Elizabeth and flourished under the Stewarts. Banks at the time were goldsmith shops that had cash (gold & silver coins) accounts and lent money at interest—England oldest private bank C. Hoare & Co started like that—he wanted to expropriate their role to the benefit of others. As I showed elsewhere Bacon had the interest of big money oligarchy at heart, not the merchants or the small landowners. His fall would be at their hands, lead by Sir Lionel Cranfield an MP for Sussex and the son of a mercer. Twenty years after Bacon’s downfall merchants and small landowners would break six hundred years of tradition and behead the king. Bacon’s essay provides an economic insight into that monumental struggle. This essay was not idle philosophising, The Act Against Usury which reduced rates to 8% was enacted in 1621, the year of Bacon’s disgrace (see Chronology of Money below).

The reason I skipped this paragraph, despite its importance, was because Bacon’s plan has become our reality for the last thirty years. The following graph gives an idea of the prevailing interest rates for the last thirty years, it is the 30-years treasury yield from its peak in January 1982 to January 2012 (with a linear trend-line):

30-Year Treasury Constant Maturity Rate 1982-2012

(Data source: St. Louis Fed. Graph made with LibreOffice. Image created with GIMP)

Long-term interest rates went from about 11% to 3% in thirty years, the value of assets tripled as a result; thus Chinese officials who put earned dollars into long-term Treasury bonds saw the value of their bonds tripling from 40% to 120% of face value; coupled with constant exchange rate they earned huge profits. Everyone who speculated in assets got awarded thanks to the falling interest rate. Over the last thirty years the world has seen one bubble after another: the Japanese bubble, the Asian bubble, the Tech bubble, the housing bubble. Here is the view from the head of the world’s largest mutual fund:

Still, the primary way to coin money over the past 30 years has been to use money to make money. Although the price of it started in 1981 at a rather exorbitantly high yield of 15% for long-term Treasuries, 20% for the prime, and real interest rates at an almost unbelievable 7-8%, the gradual decline of yields over the past three decades has allowed P/E ratios, real estate prices and bond fund NAVs to expand on a seemingly endless virtuous timeline.

—Defense by Bill Gross.

The price of assets that speculators buy rises because of falling interest rate and not because of any intrinsic improvement done by the speculators; money makes money bypassing useful productive activity.

At the same time industry and small business has been destroyed. In countries like Spain and Greece the process happened much faster: falling rates after joining the Euro caused a bubble in properties and financial assets, that ended in a bust with small business bankrupt and cut-off from credit and unemployment at all-times record high (up to fifty-percent for the youth).

Some commentator repeat that there is little room to cut interest rates any more, but to obtain the same result (tripling of price) the long term rates has to be cut from 3% to 1%. After cutting the short-term rates to zero the Federal Reserve has moved to longer-term treasuries; today 93.6% of the treasuries it is holding will mature in over a year compared to 47.9% in January 2007 (I cover operation twist in Will the Fed ever Get Paid Back). The Fed recently announced a 2% inflation target, leaving the real rate of a 30-year treasury at 1%. There is no upward limit on inflation.

Bill Gross sees the abyss lying ahead and is preparing for it, those at the helm seem oblivious to the dangers ahead. Business, industry, employment, pensioners, savings, the dollar, the whole lot will be thrown into the abyss to save system.

See also:

• Chronology of Money: 1600-1699, spread of banks in the Netherlands and England.
• Professor Antal E. Fekete, covering the destructive effect of rising and falling interest rates on industry and finance.
  
• Bacon on Usury, refuting Bacon’s arguments in favour of usury.
• Bagehot on Money, a monumental five part series about finance and how banks works.
• Liquidating the Debt of the United States, graphs of falling interest rate and a numerical example about asset price and interest rate.

I discovered on the exceedingly excellent website of Project Gutenberg a book, that although written 110 years ago, speaks to the heart of our modern economy problems. The book is called Usury: A Scriptural, Ethical and Economic View by Calvin Elliott. I was surprised by how much my own writings about usury follows his arguments. Of course no book about usury could bypass Francis Bacon’s attempt at legitimizing it:

The dictum of Bacon that “Usury gathers the wealth of the realm into few hands” is readily proven and fully verified in the experience of these times. The tendency to centralization under a system of usury or interest-taking is so strong, and the modern result so apparent that the statement only is necessary.

Usury not only enslaves the borrower and oppresses the poor who are innocent of all debt, but it also affects the rich by gathering the wealth of the wealthy into fewer and fewer hands. There is a centralizing draft that threatens and then finally absorbs the smaller fortunes into one colossal financial power. It is as futile to resist this as to resist fate. Wealth cannot be so fortified and guarded as to successfully resist the attack of superior wealth when the practice of usury is permitted. The smaller and weaker fortune, using the same weapon as the larger and stronger, must inevitably be defeated and overcome, and ultimately absorbed.

Rates of interest do not affect the ultimate result. Under a high rate the gathering is rapid, under a low rate the accretions are slower, but the gathering into few hands is none the less sure. Rates of interest only place the convergent center at a nearer or more remote period.

—CHAPTER XXIX – USURY CENTRALIZES WEALTH

I advise all readers to study this book (do not be put off by the religious chapters at the start and continue to the purely economic arguments in the later chapter).

See Also:

• Bacon on Usury
• Real Bills are Not Usury
• Micro Credit is Usury
• Sovereign Credit is State Usury

Little Bill Daggett: Well, sir, you are a cowardly son of a bitch! You just shot an unarmed man!

Will Munny: Well, he should have armed himself if he’s going to decorate his saloon with my friend.

—Unforgiven directed by Clint Eastwood

I remembered this magnificent quote while reading this disgusting piece of  journalism:

Since when has it been acceptable practice to run away from your debts? Well right now the idea seems to be all the rage. Eminent economists from around the world have come together to agree that that the only way out for the eurozone’s beleaguered peripheral economies is to “restructure” their debts – a polite term for default.

…

This was, and remains, a remarkably common attitude. I don’t doubt that Europe’s periphery needs debt write-offs, but if I were Irish, I’d be very wary indeed of the idea that this is a cost free way out. Sovereign default, even through a managed restructuring, is a big deal. It will be decades before these countries win back credibility in the markets, and in the meantime they’ll be paying horrendous interest rates for anything they do manage to borrow.

—Someone forgot the poor lender in all this talk of debt forgiveness

The term he should have used is not ‘lender’ but ‘usurer’. An usurer is the worst kind of human being, practising economic rape and pillage on his fellow humans. The only way to enforce an usury contract is with force, that is because every religious and moral framework severely condemns and prohibits usury*.

Without force there can be no usury. Force, whether it is knee-breaking or debtors-prison, must always backup usury. If the state would refuse to enforce usury contracts, then it would disappear because poor lenders will refuse to give up their money without state protection.

There has been two cases of banking failure: Poor lenders (read highly leveraged banks) gave money to the private banks of both Iceland & Ireland with profit being the sole motive, the banks of both countries subsequently failed. Iceland let the banks default and their lenders are lucky to get 25 cents on the dollar, a haircut from the Sweeney Todd School of Haircuts and Decapitation.

Iceland still has a little sovereignty in a world of rapidly decaying sovereignty and the little feisty island is not giving up its hard won independence easily. Ireland has already given up its sovereignty when it joined the European Union and the Euro.

The Irish state has took over the debts of their banks and will pay for them by taxing the workers and decreasing the minimum wage! Let us in turn ask the writer: Since when has it been acceptable practice for the poor to pay the debts of private banks?

Argentinian bonds

The conclusion at the end is wrong: First of all Ireland does not have to default, Irish banks must. Second Argentina defaulted and gave its bondholders a whopping 70% haircut and their rates got back to their old level in less than a decade. Thirdly Ireland is just the canary in the mineshaft, it will soon be followed by all Western countries, one way or another.

To add insult to injury the writer uses a very condescending tone when he talks about “Europe’s periphery” as if haughty Britain has never practised ‘restructuring’ before. Actually it has, just as much as any of Europe’s periphery countries:

In 1757, the coupon rate on the stock was reduced to 3%, leaving the stock as Consolidated 3% Annuities. The coupon rate remained at 3% until 1888. In 1888, the Chancellor of the Exchequer, George Joachim Goschen, converted the existing Consolidated 3% Annuities, along with Reduced 3% Annuities (issued in 1752) and New 3% Annuities (1855), into a new bond, 2¾% Consolidated Stock under the National Debt (Conversion) Act 1888 (Goschen’s Conversion). As part of the terms of the Act, the coupon rate of the stock was reduced to 2½% in 1903, and the stock given a first redemption date of 5 April 1923, after which point the stock could be redeemed at par value by Act of Parliament.

—Consol (bond), Wikipedia

A ‘conversion’ is yet another “polite term for default”, and they did it again with the War Loan, as I have already explained in How to Honour your Financial Obligations.

He probably yearn to the days when European powers invaded any country that defaulted on its debts:

In 1861, the Tunisian prime minister, Mustapha Khaznadar made an effort to modernise administration and tried to increase revenues bydoubling taxes. The major effect, only fully felt by 1864, was widespread rural insurrection, coupled with great hardship for the general population. The government had to negotiate a new loan from foreign bankers. In 1867, an attempt to secure money failed; government revenues were insufficient to meet annual interest payments on the national debt. Tunisia plunged towards bankruptcy. Two years later France, Italy and Britain set up an international finance commission to sort out Tunisia’s economic problems and safeguard Western stakes. Their actions enjoyed only partial success, largely because of opposition from foreign traders to increase in the customs levy.

—French Protectorate of Tunisia, Wikipedia [my emphasis]

Today the IMF, which is a permanent “finance commission”, dictates to sovereign states how they should slash spending and double taxes. Financial solvency preceded the invasion of most sovereign countries up to the modern era as easy credit preceded the breakup of the eastern block. Will the easy credit of the Euro bring the collapse of European Union?

see also:

• Real Bills are Not Usury
• Micro Credit is Usury
• Bacon on Usury
• Sovereign Credit is State Usury

*: Now let me explain for the sake of prosperity, since no one reads my blog, we can think of a moral framework to condone usury (like Francis Bacon tried to do), but such clearly unnatural thought will never germinate in the hearts of men. No man will ever walk in a snow storm to pay back more than what he borrowed. Such artificial frameworks function only as the velvet glove for the iron fist.

Now that the Federal Reserve has announced a new wave of government debt monetization all commentators are discussing inflation, but I was talking about inflation (see Defining Inflation) when the media and almost all of the investment minded commentators were obsessing about deflation.

In Here is my Handle Here is my Spout I tried to use the image of a teapot that has both a handle (deflation) and a spout (inflation): The economic crisis might start with a severe bought of deflation, but it will only end after the heat of inflation burns society. Now that everyone is on board, I think I will skip ahead and see what will happen after the inflation fever goes down.

In this post I will look at the effects of the coming inflation (I hold the view that hyperinflation is a relative phenomenon depending on the time-scale, see Beware the Boom! for further discussion) on a certain section of the US public, namely American Jews.

They will wash their hands

Until a couple of generations ago Jews in the Western world were hated and regularly prosecuted. This Western hatred is sustained by  the charge that the Jews were responsible for the death of Jesus. The strange thing about this story is that the Romans were the ones who arrested, prosecuted, tortured and then crucified Jesus, but the Jews were the one to get the blame (remember dear reader that these are the beliefs of the Western culture and not my own).

²⁴ So when Pilate saw that he was gaining nothing, but rather that a riot was beginning, he took water and washed his hands before the crowd, saying, “I am innocent of this man’s blood; see to it yourselves.”²⁵And all the people answered, “His blood be on us and on our children!” ²⁶Then he released for them Barabbas, and having scourged Jesus, delivered him to be crucified.

—Matthew 27:24-26

When powerful people want to commit a crime they first find a partner who is willing to stand in front of the cannon. After the cannon goes off those in power usually wash their hands of their former partner and let the people vent off their anger with a pogrom or two.  The Jews have a long history of willingly standing before the biggest and heaviest cannons, the ones that take the longest to load and then make the biggest bang.

In Granada they become the inner circle of a corrupt ruler. When the people could not take the corruption any more it was the minister who took the fall:

On December 30, 1066 (9 Tevet 4827), a Muslim mob stormed the royal palace in Granada, which was at that time in Muslim-ruled al-Andalus, assassinated Jewish vizier Joseph ibn Naghrela and massacred many of the Jewish population of the city.

—1066 Granada massacre, Wikipedia

Badis, the ruler, continued until his death in 1073.

In the West it was the cardinal sin of usury (see Bacon on Usury) that was given to some Jews to carry, while those in power stayed in the shadows.  When the people have enough of the economic rape and pillage of usury, the Jews are dropped by their partners, who sit watching while the people carry on a holocaust of all Jews; the banker and the doctor, the rich Jew and the poor one are all burnt by the fire.

There are two lessons: the first is the same people who help the Jews to attain high office and gain vast riches, will stand watching while all Jews are punished in their place. The second is that the social bonds that keep the Jewish community united and holding its traditions and religion, will make almost all Jews partners of the few who get involved in social crimes (e.g. corrupt rule, financial corruption, corrupting media, etcetera)

The Great Inflation of 2011-2012

I shot the dollar, but I didn't shoot no economy

Jews seem to have assumed the task of dollar devaluation in the American Empire. They seem to be present at every turn of the long decline of the dollar that have dissipated 98.5% of its value (from $20.67 to $1400 per troy ounce of gold).

Paul Warburg, one of the leading advocates of the establishment of a central bank in the U.S. and one of the first governors of the newly established Federal Reserve System, came from a prominent Jewish family in Germany. Several Jews have served as chairmen of the Fed, including Ben Bernanke, the current Chairman, and Alan Greenspan, the prior chairman.

—American Jews, Wikipedia [my emphasis]

Of course the modern economy is influenced by the likes of  Milton Friedman,  Paul Samuelson and Paul Krugman (all three received the Nobel Memorial Prize in Economic Sciences, a prize set up by a central bank and not part of the Nobel legacy.)

Jews involvement in US finance precedes the establishment of the central bank:

American Jews in the 19th, 20th and 21st centuries played a major role in American finance or “Wall Street”, both at investment banks and investment funds… As was true of their non-Jewish counterparts, family, personal, and business connections, a reputation for honesty and integrity, ability, and a willingness to take calculated risks were essential to recruit capital from widely scattered sources. The families and the firms which they controlled were bound together by religious and social factors, and by the prevalence of intermarriage. These personal ties fulfilled real business functions before the advent of institutional organization in the 20th century. Nevertheless, antisemitic elements often falsely targeted them as key players in a supposed Jewish cabal conspiring to dominate the world.

Since the late 20th century have Jews played a major role in the hedge fund industry, …. They have also played a pivotal role in the private equity industry, co-founding some of the largest firms, ….

—American Jews, Wikipedia [my emphasis]

GREENSPAN - WIZARD OF BUBBLELAND (click picture for article)

Wall Street reputation in the eyes of the US public has nothing to do with “honesty”, “integrity” or “ability”. People view the financial powers in Wall Street as a parasite that has successfully attached itself to the state and is sucking the life out of the economy for the enrichment of the few.

Social bonds that keep the Jewish community united turn into a stigma that inflicts all Jews, whether they work on Wall Street or in a Hospital, after all the doctor might have studied on a scholarship given by the banker. Guilt by association is the motif of our times.

After the inflation subsides and the people have a minute to think about what is happening, they will start looking for someone to blame. The ruling elite in the United State will want to give the people a scapegoat. Foreigners will be blamed: China, Iran and Mexico will be punished somehow, but this time the people will not be satisfied with just external enemies and they will start looking for internal ones.

In Germany it took 10 years from the hyperinflation until the Nazi party formed the government in 1933.  After hyperinflation things do not go back to normal, despite the apparent normalisation.  Such massive economic rape of the population will change everything, but it might take a while for the change to appear on the surface.

Is Israel the solution?

By the time Jewish Americans start thinking of moving to Israel, that state will be in collapse, but let us assume there is a perceptive American who can see what is coming (maybe a reader of this blog) and decides that it is better to bring up his children in Israel. Would he be right?

As a student of military history (see Conquering Russia: The Holy Grail of Strategy) let me assure all readers of this blog that the famed Israeli Defence Forces will have their heads handed to them very soon. Forget David & Goliath, think more of Tiglath-Pileser III and Nebuchadnezzar II. Once the East wakes up and rises almost all the world will cut ties with Israel, eventually even the US will wash its hands of Israel.

But long before that happen the economic situation will suffer greatly as the world turns away from global trade and energy costs rises; the social situation in Israel will greatly decline as the military burden rises on the state budget.

Robert Rubin, Bill Clinton's former Treasury secretary, spent 26 years at Goldman before becoming chairman of Citigroup — which in turn got a $300 billion taxpayer bailout from Paulson. (click picture for article)

Israel might have taken a million Jew from the Soviet Union in the 1990′s, but those were the ones who could not make it tot the US and so took the second best option, i.e. Israel. The Jewish community in America is actually bigger than that in Israel:

The Jewish population in the U.S. totals 5.2 million people, consisting of an estimated 4.1
million adults and 1 million children in households and 100,000 Jews in institutional settings.
Jews reside in 2.9 million households with a total of 6.7 million people, both Jews and non-
Jews.

—National Jewish Population Survey 2000-01 [my emphasis]

And those going to Israel will not be young pioneers willing to go live in collective farms in the desert, nor orthodox Jews who live in settlements surrounded with Palestinians where they try to out-breed them. They will be getting middle aged urban couples with one or two children.

The American Jewish population is older than the Jewish population ten years ago and the total U.S. population now. The median age of the Jewish population is currently 42, five years older than the median Jewish age in 1990 and seven years older than the overall median age for the U.S. population. The proportion of children in the Jewish population stands at 20%, compared to 21% 10 years ago and 26% for the total U.S. population now. Atthe other end of the age spectrum, 19% of Jews are elderly, defined as 65 years of age or older, compared to 17% in 1990 and 12% for today’s total U.S. population.

—National Jewish Population Survey 2000-01 [my emphasis]

By the time these people realise that they are no longer a (privileged) member of the top nation on Earth, they would be totally demoralised and exhausted. They would be looking for a place to take refuge and not participate in a forlorn hope defence of a lost crusader state.

Not only is Israel not the answer for American Jews, I believe that Israeli Jews themselves will be seeking refuge in other countries when the Islamic world discovers that they have sold billions of oil barrels for worthless US dollars.

Hie thee to Siberia

So what Jews, not only  in the US but around the world, should do? In my opinion they should head east instead of west and go to the promised land

Birobidzhan (Russian: Биробиджа́н; Yiddish: ביראָבידזשאַנ) is a town and the administrative center of the Jewish Autonomous Oblast, Russia. It is located on the Trans-Siberian railway, close to the border with the People’s Republic of China, and is the home of two synagogues, including the Birobidzhan Synagogue, and the Jewish religious community of the Jewish Autonomous Oblast.

—Birobidzhan, Wikipedia

It might sound crazy for an urban New Englander (or a professional from Los Angels) to quit their life and move to Moscow, let alone a sleepy hamlet in the middle of East Siberia, but the point is that does he want to find himself and his family in a refugee camp being denied entry to third rate failed state?

The US will not turn into Nazi Germany, but Jews might find themselves in the same situation as Christians in Iraq today. They will become a target, their life will worsen little by little. Even years after the beginning of this trend people will still hope that things can go back to the way it was. Waiting until the last moment will mean suffering the worst conditions, leaving early means getting at the best moment. Cashing out and immigrating to Birobidzhan today, will place one’s children in the best possible position to enjoy the future growth of Birobidzhan.

We will close with a poetic quote:

Hie thee to France,
And cloister thee in some religious house:
Our holy lives must win a new world’s crown,
Which our profane hours here have thrown down.

—The Tragedy of King Richard the Second, Wikisource

In Bacon on Usury I claimed that there were other ways to get financing than usury. In this post I show a way to finance the production of consumer goods. This method is suitable for fast moving goods, for example perishables, seasonal cloths, etcetera. I will show an example and then go into a more systemic discussion.

Real Bills Practical Example

Imagine there is a baker with a bakery ready to transform flour to tasty backed goods to satisfy public demand. The only problem is that he has no flour; a miller has flour ready for the market. The obstacle is that the baker has no money to pay for the flour. The solution is for the miller to sell flour to the backer on a delay payment scheme.

The backer will take possession of a $95 worth of flour on the first of the month and give the miller a bill drawn on the fifteenth for $100. The miller is giving up value but not receiving value back for it, thus the ancient law of barter is not satisfied. The miller, although giving up possession of the flour, is not giving up ownership of it. Until the bill is paid by the backer the flour is the property of the holder of the promissory bill, i.e. the miller.

The backer will bake bread and cakes and sell them to the public. To fulfil the ancient law of barter the public must give the backer real value, e.g. gold or silver coin, but that is a subject that has already been covered (see The Difference between Past and Future Labour). The backer’s total sales will be, for example, $120 (in any way higher than $100) due to the added value of his labour. He will pay the miller’s bill and maybe $10 for other costs and the last $10 is his income.

Let us say that after one week of selling the flour the miller’s son falls and breaks his leg, the miller now needs cash to pay the medical costs. The miller can not sell his mill just for a small amount of cash; he can sell some of the corn, but that is his working capital. The miller would want to sell flour, because that contains the added value of his labour, while the corn only contains the value of what the miller paid the corn merchant for it.

The miller still owns the flour he gave the backer and the bill is the proof of that ownership. The miller knows that the grocer sells $97.5 worth of goods for a $100 one-week delayed payment, so the miller sells the bill to the grocer for $97.5. This time the backer’s bill is not only a promissory note but also represent value, so the ancient law of barter is satisfied by the exchange. After a week the grocer submits the bill to the backer and collects a $100.

The result is that the backer received financing, the miller sold his goods and made a profit of $2.5 on his $95 in one week and the grocer made a profit of $2.5 on his $97.5 in one week (the difference follows from the fact that the miller discounted a bill of two weeks and the grocer discounted a bill of one week duration). The probability that the backer will fail to sell his goods is very small, there is very little that could happen in a fortnight to drastically change the market (natural disasters will devastate the whole market and loses will effect everyone).

The miller might have bought the corn from the corn merchant with the same method by discounting a bill drawn on a future date. In reality the whole path of consumer goods from raw materials to finished good can be financed by discounting bills, such that the amount paid by the final consumer settles all the bills.

Real Bills System Conditions

Let us start with a quote from Professor Fekete a champion of Real Bills:

All the government needs to do is to open the Mint to gold and to protect real bill trading against fraud. Funds raised through the bill market are public funds that must be protected against misuse just as other forms of public funds must. Let me mention just three types of misuse: (1) drawing more than one bill on the same consignment of merchandise; (2) drawing a new bill upon the expiry of the old on the same unsold merchandise; (3) financing stores of goods in the expectation of a rise in price by drawing bills.

Bills of exchange drawn on goods in most urgent demand and moving fast enough to the ultimate gold-paying consumer are capable of monetary circulation on their own wings and under their own steam, regardless whether or not banks are standing by, ready to monetize them. But if they are, legislation should prohibit banks from borrowing short in order to lend long. In practice this means that the banks would be prohibited from rolling over short term commercial credit at maturity. Commercial banks must also be prohibited from conspiring with the drawer of the bill. Withholding stocks from trade in expectation of a rise in price must be financed by an investment bank, never by a commercial bank. The two types of banks should be strictly separated by law. Commercial banks must also be prohibited from investing in brick and mortar. In practice this means that mortgages are “hands-off “.

Treasury bills are also “hands-off”, except on capital account. We know that people will want to eat and to keep themselves clad and shod tomorrow. That’s what makes bills the safest earning asset. We also know that people will pay their taxes only after they have eaten, clad and shod themselves. That’s why real bills as an earning asset are superior to Treasury bills.

—The Hungarian Connection by Antal E. Fekete [my emphasis]

The first step is opening the Mint, because Real Bills do not function with fiat money, discounted bills have to be settled with bullion coin. Professor Fekete states the following three misuses:

1. “drawing more than one bill on the same consignment of merchandise;”
   Once a bill is drawn on merchandise the holder of the bill is the real owner of the merchandise, drawing another bill on the same merchandise amounts to fraud.
2. “drawing a new bill upon the expiry of the old on the same unsold merchandise;”
   A discounted bill promises to pay coin at a certain date, rolling the bill breaks the implicit trust needed for the system to function.
3. “financing stores of goods in the expectation of a rise in price by drawing bills.”
   Only the bill of goods on the line of production that ends with the paying consumer can be discounted.

All three must be prohibited by law and severely punished, up to the death penalty. Although a single violation is a small crime, the system of Real Bills is based on trust and each violation undermines the trust and consequently the economy.

I would add the following condition: Ownership remains with the holder of the bill, the merchandise is given on trust. In case of failure to sell or destruction of merchandise the bill’s holder takes back the merchandise or absorbs the loses.

Compared to people like Friedman and Krugman Professor Fekete is an intellectual giant, but no one is perfect. Professor Fekete errs when he fails to distinguish that Real Bills are not usury (if the above conditions are satisfied) and thus falls into the trap of thinking that usury is anything but extremely harmful and must be prohibited at all times and under all circumstances. He thinks that it is enough to have usury “strictly separated” from the real economy, financed by real bills, to avoid the damage of usury.

When France and German enacted fiat currency laws in 1909 (see Professor Fekete’s article Forgotten Anniversary) the people did not riot, they did not object, no one minded. The people had been using fiat currency for a whole generation, since the 1870′s, the laws only codified the reality. The Federal Reserve act of 1913 strictly prohibited the Fed from buying anything other than Real Bills, now the Fed holds a trillion dollars worth of treasury debt; the law itself was changed during the depression in accordance with the reality.

The economy is the health of society, there can be no compromise when it comes to it. Societies are not like secure citizens, living in a safe society, they are more like animals living in a jungle, any weakness and the predators (sickness, rivals, etcetera) will jump on them.

Usury is the most dangerous sickness that strikes a society, usury is like cancer cells, it metastasises and consumes the whole body if it is not removed. Cancer is so dangerous that a doctor will either open the patient and cut it out just like a butcher filleting a carcase; or douse the patient with toxic cocktail of chemicals; or as a final solution radiates the patient with the same radiation released by nuclear bombs. Doctors take all these extreme measures to save a single life, while the damage of usury could destroy society and cause widespread devastation.

See also:

• Sovereign Credit is State Usury
• High Treason in Zimbabwe
• Real Bills: an Emergent Market Phenomenon by Bill Koures.

I found an interesting post on this blog, thank to the wordpress.com tags system. The writer, a western woman, visited Grameen Bank in Bangladesh. Her first-hand account is full of gems, here are some quotes (all emphasis is mine):

Our first day at Grameen was a debriefing on Grameen and figuring out our schedule.  It was mainly a huge waste of a day, until the end of the day when Muhammad Yunus came to the office to show the screening of a video on Grameen in America.  The movie was extremely interesting, and Yunus gave a little speech after it was finished, although not in English.

Self-glorification and propaganda. First thing is to set an image in the mind of the visitor to paint everything they will see or hear later on. It seems it had little effect on this visitor.

There is no way you could intern at the Grameen Bank and feel like you’ve walked away helping anyone, or learning anything from their mistakes or issues, as everyone continuously claims that everything functions near perfectly.  Maybe it does, they didn’t win the Peace Prize for nothing.

The only thing they are concerned about is preserving their image, that is how they ‘won’. It is all a show.

Most employees seemed so concerned with protecting the Grameen model that they wouldn’t answer the questions as fully as I’d hoped.   Or other times, my translator would often leave out any negative feedback someone might provide.  The meetings with the clients using simple questions and allowing them to answer by raising their hands was a much more effective approach to get any information.

Has there ever been a study about this ‘miracle’ bank by an independent public commission? No. The whole image has been built up by the media (ultimately owned by banks) and the seal of approval was given by the Norwegian Nobel Committee.

[I]t was interesting to find that the majority of the women took loans for their husband’s.  There were only 2 or so women from each center of over 50 who had their own businesses.  What was even more interesting was that no one at the bank had any issues with this.  I do agree that it is still helping to empower them as they are providing the money for the family and they are responsible to pay it back.  Bangladesh is a much different cultural setting for women as well compared to many other places–20 years ago most women were unable to leave their homes to do shopping and other activities.  However, I also found that nearly no one (1 women out of over 200) had invested in any training for themselves.  As Grameen Bank only provides financial services, it seems impossible that they would be able to learn a trade or skill–especially when none of their fellow members have businesses either.  I suppose it comes down to the question of whether credit is enough to empower women or must it be paired with training and other support.  And the answer is almost always that the credit is wonderful, but when put with training it can be a lot more effective.

To understand life first-hand experience without solid philosophical foundation is of little value. The writer thinks that usury-bondage is a wonderful thing, which should be celebrated. She thinks that destroying the family structure of the poorest people in one of the poorest countries in the world is “help”.

Having wealth, power, technology, et cetera. The West decided to make its life easy by rejecting sound philosophy; the result is the decline and imminent fall of the West.

Today we will examine  Grameen Bank—founded by Muhammad Yunus in Bangladesh—which uses micro-credit and social engineering to implement its goals.

Wikipedia provides a good summary of the criticism against Grameen Bank:

Sudhirendar Sharma, a development analyst, claims the Bank has “landed poor communities in a perpetual debt-trap”, and that its ultimate benefit goes to the corporations that sell capital goods and infrastructure to the borrowers. It has attracted criticism from the former Prime Minister of Bangladesh, Sheikh Hasina, who commented, “There is no difference between usurers [Yunus] and corrupt people.”

Hasina touches upon one criticism of Grameen Bank: the high rate of interest it demands from those seeking credit. Similar to all microfinance institutes, the interest charged by Grameen Bank is high compared to that of traditional banks, as Grameen’s interest (reducing balance basis) on its main credit product is about 20%. The Mises Institute’s Jeffrey Tucker has criticized the Bank, asserting it and others based on the Grameen model are not economically viable and depend on subsidies in order to operate, thus essentially becoming another example of welfare. They disregard Yunus’ claims that he is working against subsidized economy, giving borrowers the opportunity to make business. Another source of criticism is that of the Grameen’s Sixteen Decisions. Critics say the bank’s Sixteen Decisions force families and borrowers to abide by the rules and regulations set forth by the bank. However, they do not make clear why the leading principles (unity, courage, discipline and hard work) and some rules set up by the bank, like living in healthy houses in good repair, not drinking unsafe water or refusing to give dowries for daughters, can be bad for borrowers. They mostly object to the requisite of having to make a borrower club to cover defaults, which they disqualify as a totalitarian tool, instead of a community building strategy. David Roodman and Jonathan Morduch disagreed with a statistic once often cited by Yunus, that “5% of the Grameen borrowers get out of poverty every year.” Reanalyzing the underlying study, they obtained opposite results. But they did not interpret these to imply that lending to women made families poorer. Rather, the negative causality may go the other way: women in richer families may borrow less.
—Grameen Bank, Wikipedia [my emphasis]

The most important point against Grameen Bank and the ideas of its Vanderbilt University educated founder are the ‘rules’ that Grameen Bank enforces on its borrowers.

Let us take the rules (called decisions) one by one (rules in bold, my comments are in regular font):

We shall follow and advance the four principles of Grameen Bank: Discipline, Unity, Courage and Hard work – in all walks of our lives.

Forget religion, forget traditions, forget everything; remember only to pay the bank on time.

Prosperity we shall bring to our families.

Not really a decision, but a way to convince the poor into believing they have only themselves to blame, because they did not make the decision to become rich.

We shall not live in dilapidated houses. We shall repair our houses and work towards constructing new houses at the earliest.

In the absence of woodlands to provide building material this means more money is spent on cement, iron, plastic, et ceterea. They might afford some of it in the good years but this is not an approach for a long term solution of adequate housing and it will only make the poor more dependent on the world market.

We shall grow vegetables all the year round. We shall eat plenty of them and sell the surplus.

I do not think anybody in Bangladesh is against eating more vegetables, but it is the selling of the surplus that is the real point here. The point of Grameen Bank is push the poor who operate outside the market into the market where they will try to survive alongside multinational corporations.
When the time comes to pay the usurers I am sure they will eat less and sell more.

During the plantation seasons, we shall plant as many seedlings as possible.

To maximise revenue and be able to pay the bank and if the crop should fail they can always buy food from the world market if they can afford it. This worldwide drive to maximise seed utility have resulted in a world with only a few weeks of grain store, compare that to the ancient Egyptians who had a seven year store of grains.

We shall plan to keep our families small. We shall minimize our expenditures. We shall look after our health.

You cannot end poverty by destroying your human resource, that will only result in economic decline. China will soon prove this fact after killing 400 million people to achieve ephemeral economic growth.

We shall educate our children and ensure that they can earn to pay for their education.

Education here only means participating in the schooling system to produce cheap trained labour for multinational corporations who want to outsource their white-collar work to third world countries like Bangladesh.
Zimbabwe had one of the literacy rates of Africa, and the West today is more “educated” than a century ago and yet most people can not even afford to have a couple of children, such is modern prosperity.

We shall always keep our children and the environment clean.

Nice, but modern western consumers are the worst polluters, most of the pollution they cause is on the other side of the world, where resources are mined and processed. Making the people of Bangladesh into consumers will not help the environment.

We shall build and use pit-latrines.

Another way to use imported materials and be dependent on the market for your necessities, just like the western consumer.

We shall drink water from tubewells. If it is not available, we shall boil water or use alum.

Boil water with imported gas paid for with export-earned dollars. Every effort is needed to support the wanning world-hegemony of the dollar.

We shall not take any dowry at our sons’ weddings, neither shall we give any dowry at our daughter’s wedding. We shall keep our centre free from the curse of dowry. We shall not practice child marriage.

Paying for your daughter to get married is just another nonsensical Hindu practice. As Muslims the people of Bangladesh should follow their religion and have the man pay the woman a dowry. In this way young men are motivated to earn money and those who have half a dozen girls have only to worry about where they should dine.

We shall not inflict any injustice on anyone, neither shall we allow anyone to do so.

I think it is against religious and moral practice to inflict injustice and the worst injustice one can inflict is usury.

We shall collectively undertake bigger investments for higher incomes.

Gamble to pay the bank. You win they get paid (and feature you in their promotional videos), you lose they get paid.

We shall always be ready to help each other. If anyone is in difficulty, we shall all help him or her.

Socialise the losses, as long as the bank is paid.

If we come to know of any breach of discipline in any centre, we shall all go there and help restore discipline.

Your basic social control as used by the best tyrannies. There is no point in writing a formal contract for a load of $2, it takes more to process it and the state will probably not use force to collect. The solution is to use social control, which is useful when one deviates and the others not. If the whole village decided to default on their loans (i.e. sovereign default) then Grameen bank will be in the same predicament as European banks that have lent money to countries like Greece and Latvia.

We shall take part in all social activities collectively.

Just like sheep, easier to herd when they are together.

—Grameen Bank, Wikipedia

These western engineered maxims are drilled into the minds of simple village women:

In a country in which few women may take out loans from large commercial banks, Grameen has focused on women borrowers as 97% of its members are women.
—Grameen Bank, Wikipedia

The bank is pushing women into the social sphere, outside of the traditional family. This greater participation in the labour force have already had disastrous effects on the black family structure in the United States as was explained in The Negro Family by Daniel Patrick Moynihan:

According to the book Representing: Hip hop culture and the production of black cinema by S. Craig Watkins:

The report concluded that the structure of family life in the black community constituted a ‘tangle of pathology…capable of perpetuating itself without assistance from the white world,’ and that ‘at the heart of the deterioration of the fabric of Negro society is the deterioration of the Negro family. It is the fundamental source of the weakness of the Negro community at the present time.’ Further, the report argued that the matriarchal structure of black culture weakened the ability of black men to function as authority figures. This particular notion of black familial life has become a widespread, if not dominant, paradigm for comprehending the social and economic disintegration of late twentieth-century black urban life. (pp.218-219)

—The Negro Family: The Case For National Action, Wikipedia

I doubt Grameen Bank would have survived all this time if it was truly run as economic enterprise, it only survived thanks to direct western support in the beginning and now it survives thank to direct support from the central bank.

Grameen Bank and its founder were awarded the Nobel peace prize to join past winners who committed genocide and future ones who were still waging war when they received their ‘award’.

See also:

• Bacon on Usury
• Sovereign Credit is State Usury

“As one might easily guess, the bank also lends based on the political dictates of North Dakota and plays a key role in permitting the state government to command and control the local economy via selective lending. Obscured as it may be, the bank is actually just another tax on North Dakota citizens, and is just a dividend to the general fund away from supplementing the state budget with bailout money when things start to go south. Of course, it also helps when you are running as a wholesale bank and processing most of the payments through and in North Dakota for those private sector banks that service the state and acting as a market maker in the secondary market for residential loans.”

—Adventures in Nationalization with the Central Bank of North Dakota [my emphasis]

In Sovereign Credit is State Usury (posted two years ago) I explained that state credit is just another tax:

The Germans, actually, replaced initial capital formation with depreciating “special money” that acted as a tax on the farmers and workers, as it did in Russia, this [fiat] currency was initially welcomed in both countries but in the long term it was unsustainable.

See also:

• Bacon on Usury
• Bagehot on Money (5 parts)
• The Difference between Past and Future Labour

In Sovereign Credit is State Usury I mentioned a post about usury, the following is what I planned as the first section of that post.

Usury Forbidden

Although usury was invented in ancient Sumer all three Abrahamic religions prohibit the taking of interest on debt. In ancient times money was extended by the temples to the farmers, secured by their land, after four years they either paid or the amount was doubled. When debts on the farmers grew too large there would be a general amnesty and all debt owed by farmers would be annulled. To this day orthodox Jews, marginal Christian sects and devout Muslims will have nothing to do with usury, neither a lender nor a borrower.

The current worldwide domination of usury is the result of the worldwide domination of Europe and Western culture in general for the last couple of centuries, thus to understand how this happened we have to review the history of usury in Europe.
Read the rest of this entry »

Introduction

This post was supposed to be the last section in a post about usury (interest-paying debt), but it developed and expanded beyond the limits of a section; so I decided to go ahead and finish it as a stand-alone post. The last section, the current post, was to discuss the thesis of using state usury in the form of sovereign credit to develop the internal market of a country. In particular it discusses Henry C. K. Liu’s article Nazism and the German Economic Miracle, which advocates using sovereign credit to develop the internal market as the Germans had done in the thirties of the last century.

Nazi Germany provided another example of successful inter-war economic planning.

Henry C. K. Liu, Nazism and the German Economic Miracle

Due to the particular history of this post it will be helpful to sum up the conclusions of the original post, which this one takes as given; it is enough to state the following points: Read the rest of this entry »