15:05-15:30: you tell Mr and Mrs Front-Porch that your loonie of 1871 cannot be compared to your loonie of 2013 (year of this interview). You went off the gold standard in '33, you abandoned the peg in '70, and your currency has been free-floating ever since. Yes, the ratio of debt to GDP has some importance, but so does the nature of your currency. Just look at Greece and Japan, where the former uses a foreign currency and the latter uses its own, sovereign, free-floating currency.

Pay back the national debt -- have you thought that through?

First, the Bank of Canada is the monopolist currency issuer for the loonie, so explain to me in detail just how the issuer of the currency is supposed to borrow the currency from someone else? If you're the issuer of the currency, you spend it into existence, and use taxation as a means to create demand for your currency, and to free resources for the government to acquire, because you can only ever buy what is for sale.

Second, every government bond is someone else's asset. An interest-bearing asset. A very safe asset, in the case of Canada, the US, the UK, Japan, etc. "Paying back the debt" means putting a bullet into just about every pension fund in the world that doesn't rely exlusively on private equity or other sorts of volatile toilet paper.

There's a distributional issue with these bonds (they are concentrated in the hands of the non-working class, aka the rich), no doubt about it. But most of the other issues are strictly political, not economical.

What if the interest rate rises 1%? The central bank can lower the interest rate to whatever it damn well pleases, because nobody can ever outbid the currency issuer in its own currency. Remember, the central banks were the banks of the treasuries. The whole notion of an independent central bank was introduced to stop these pesky leftists from spending resources on plebs. That's why central banks were often removed from democratic control and handed over to conservative bankers. If the Treasury wants an interest rate of 2% on its bonds, it tells its central bank to buy any excess that haven't been auctioned off at this rate. End of story.

What if the market stops buying government bonds? Then the central bank buys the whole lot. However, government bonds are safe assets, and regulations demand a certain percentage of safe assets in certain portfolios, so there is always demand for the bonds. Just look at the German Bundesanleihen. You get negative real rates on 10 year bonds, and they are still in very high demand. It's a safe asset in a world of shitty private equity vaporware.

But, but.... inflation! Right, the hyperinflation of 2006 is still right around the corner. Just like Japan hasn't been stuck near deflation for two decades, and all the QE by the BoE and the ECB has thrown both the UK and the Eurozone into double-digit inflation territory. Not! None of these economies are running near maximum capacity/full employment, and very little actual spending (the scary, scary "fiscal policy") has been done.

But I'm going off track here, so.... yeah, you can pay back your public debt. Just be very aware of what exactly that entails.

As for the poster-child Latvia: >10% of the population left the country.

Here's a different poster-child instead, with the hindsight of another 4 years of austerity in Europe after this interview: Portugal. The Portuguese government told Master of Coin Schäube to take a hike, and they are now in better shape than the countries who just keep on slashing.

On a different note: Marx was wrong about the proletariat. Treating them like shit doesn't make them rebellious, it makes them lethargic. Otherwise goons like Mario Rajoy would have had their comeuppance by now.

PS: Blyth's book on Austerity is an absolute must-read for anyone interested in its history or its current effects in particularly the Eurozone.

@mgittle I think we agree in the broad strokes, and overall conclusion, but I think you have some of the minor details wrong.

You and others here have asserted that banks can "loan out more than they have". This is false, according to everything I've ever read or seen happen in my own work life (in financial services).

Here's my own version of a logical proof. If I want to take out a loan from the bank to buy something, the bank actually has to give real money to someone. But, the Federal Reserve is the only agency that can create dollars legally. Therefore, the bank must have enough dollars in some account in order to pay out the initial loan amount, or it can't issue the loan.

So where do banks get the money to lend out? Well, for a traditional bank, it comes from the checking and savings accounts of regular people, as well as out of capital accumulated from profits. This is that "some account" whose name is actually the bank's "reserve account" at...the Federal Reserve. To cover withdrawals from those savings accounts, banks are legally required to keep a fraction of their total capital in reserve -- hence the name "fractional reserve banking".

So, how does the Fed inject new money into the economy? It anonymously buys government bonds from banks, using freshly created money. What if the Fed wants to take money out of the economy? Well, it sells government bonds, and destroys the cash it gets in return for the sale. No physically currency really gets created or destroyed, of course, it's just adding and subtracting numbers from the relevant reserve accounts.

Here's wikipedia's explanation of the Fed's monetary policy process, which is more detailed and authoritative than mine.

You also make the case that paying off debt hurts the economy because it shrinks the money supply. That's true! Which is why right now the economy is seriously in need of the Fed expanding the monetary base. Right now everyone's trying to pay down their debts (deleverage, in the financial lingo), and it's sucking all the money out of the economy. The Fed needs to work overtime to pump more money into the economy to take up the slack. Unfortunately, the banks have been wanting to keep way more than their usual in reserves -- they aren't loaning out the money the Fed is creating, they're just piling it up in their account at the Fed.

Because of that, it's never leaving the building, much less entering into the economy where it might potentially cause inflation. That's why I've been trying to tell marbles that monetary base expansion != inflation...they're two different terms for a reason!

It's also why I think abolishing the Fed or returning to a gold standard just makes things worse for everyone. One can argue that the Fed is pursuing the wrong monetary policy (for exmaple most liberal economists say it's been too timid about expanding the money supply), but this whole attempt to make the whole seem like some sort of illegitimate scam grates on me.

Without the Fed trying to expand the monetary base, you'd get something like 20% unemployment, and outright deflation, rather than just a low and declining rate of inflation.

The guy is full of shit. BBC knows what they are doing. And so does this clown.

"Protect your assets, buy government bonds!" 🤦

This is BS. Utter BS. Underlying social contract? - I think the government broke that contract a long damn time ago!!!
I hire workers that paid way to damn much for their college education.
I, and their parents, paid taxes for them to get a crappy public education before that.
I ship product on poorly maintained roads, where the person standing with the stop/go sign gets more per hour than my warehouse workers.
My employees pay taxes on the money I pay them, which I have paid taxes as well.
I pay taxes on every cent I earn and my employer pays taxes on every product we sell.
I pay for every damn thing I use and pay taxes on every damn thing I buy.
If I should happen to work my a$$ off and get rich, guess what I did it by my own damn self DESPITE the government - not because of. And it's not luck - it's hard damn work. You make your own luck.
As far as incentive's for investing by giving a lower tax rate - yep that's what we do and there is nothing wrong with that. I make money and pay taxes on it. I buy something and I pay taxes on it. I save money and I pay taxes on the interest. I put some of what I have left in the Stock market - I TAKE RISKS on investing in companies which promotes their growth and the strengthening of our economy and IF I should happen to make money off of it then that is the reward for taking the risk. I shouldn't have to pay the same tax rate as if I had gotten it from my employer. My job doesn't incur risk, investing does. If you don't give an incentive to someone for taking risk, then you have no investment. I'd just buy government bonds at some crappy interest rate- just not in California or Illinois.
Yet we all focus on the part where she mentions capital gains tax and not the other part where she mentions Medicare, Medicaid, and 2 wars? How about we focus on changing those first couple of things and get our government to run EFFICIENTLY and then come back asking for more money.

>> ^bobknight33:

The Fed Fucked us.
The Fed is a group of private bankers and not a government entity. They look after themselves not the citizens of America
Let the USA print their own money supply as per the constitution.


Nobody owns the Fed. It's not just "some other private business". It was created in 1913 by law. Their powers are exclusive and granted by congress. In fact, according to most constitutional scholars, the government is not given the power to give powers they don't have to someone else. That would make them all powerful and defeat the purpose of the document. Remember, the constitution is a privilege system. Whatever isn't explicitly granted to the government is implicitly denied. Article I does not say that the government can print money, it says it can coin money. That wording was used at a time when government notes not backed by metal had just blown up in everyone's face. And if the government can't print money, what gives them the authority to create a virtual GSE that can? Somehow, the government got around that article by endowing a bunch of powers it didn't have to a "private" entity, continuing to call it private, and going from there. It doesn't make sense to anyone with a brain, but to a dumbfuck populace, it's plenty complex to achieve subversion. Government have always wanted to spend as much of the people's money as they can without eliciting the resistance of taxation. And inflation is what allows them to do it.

We don't want currency to be counterfeited by its issuer while everyone else has to produce to obtain it. That's the purpose of having 100% gold-backed notes in milligram denominations. The scarcity of gold cannot be reduced like a dollar unit. If the Fed started issuing denominations with extra zeroes, any dollars you hold buy 10% what they did before. They print money, buy government bond debt, and by the time it filters down to you, prices have gone up.

Guys, I'm not saying that he caused it. I'm just pointing out that he hasn't supplied -any- evidence here to support the idea that the bailout helped. His only support was the statement that "most people in the financial sector agreed that the bailout of the financial sector prevented a depression." I simply don't find that statement to carry much, or even any, weight. Even assuming that it's completely accurate, and that most of the financial types would say that, these people are not unbiased, nor have they demonstrated any particular expertise in the subject, except maybe for buying government officials and stealing from the rest of us.

Lots of people keep saying it would have been much worse, but I have yet to see the slightest actual evidence that this is true. Which is utterly typical of economists, and why I can't agree that it's a science...at best they're philosophers, with all the uselessness in the real world implied by that classification, and at worst they're con-men (which seems far more likely in most cases).

>> ^choggie:
"corporate think tanks, blogs, public relations firms" are the same places that fuel both sides dystop....you have made no point, you simply react to a nay-sayer with the same bullshit script-This is NOT an issue about anything else BUT, "follow the money"....Al Gore would have been the same brand of turd as any of them, creating empire and wealth and consolidating it for those who run the show.
Global Warming....Climate Change, no matter what the fuck you call it, it's obvious on this site and many others that there are still folks who think they have a clue as to what the fuck is going on based on the so-called findings of so-called experts.....Why not ask yourselves the questions instead of parroting answers. Could the nuclear furnace that appears on the horizon everyday have anything to do with climate change?? Could it be possible that pumping megawatts of energy into the ionosphere by the Dept of Defense have anything to do with erratic weather conditions? Could it all be a fucking hoax designed to further enslave the gullible populace(s) worldwide with the burden of so-called, carbon emission taxes?
There's a reason why carbon is not taxed yet....because people with a clue stand against the absolute absurdity of it. Want to eliminate the carbon footprints you leave??? STOP BUYING WORTHLESS PLASTIC SHIT, STOP EATING NON-NUTRITIVE FUCKING FOODS, AND FILLING YOUR HEADS WITH FUCKING INFOTAINMENT!!


There is consensus on this, regardless of how it fits into your world view. No internationally recognized scientific body holds a dissenting view on the reality of climate change. Not that there aren't exaggerated claims, politics and falsehoods from those who support the science side of the argument, but their actions do not discredit any of the standing research or the overwhelming consensus that climate change is real.

You are correct in saying I am ignorant of the specifics (as are you), which is why I choose take my 'bullshit script' from the 'so called experts' who have dedicated their lives to the study of climate change. You are free to take your 'bullshit script' from 'non experts' if you like, but it comes at the cost of your credibility, and doubly so when you make goofball AlexJonesian claims about ENSLAVING THE WORLD!!!!1!!

On the surface, a phony global climate change scare would seem to be a pretty complicated and esoteric means of enslaving the world. Don't you think there might be better, more efficient ways of putting us all in bondage? Buying governments? Building high tech mercenary armies? Destroying economies and then offering aid at a large premium? Destroying democracy under the banner of 'individual rights' and then picking off those powerless 'individuals' one by one? Creating massive unemployment to exploit the existing labor force via supply and demand? Creating some kind of deadly plague with an expensive proprietary antidote? These are just off the top of my head, but all of them would seem to be simpler, more logical, more direct avenues for world enslavement. I don't know, I'm no expert on world slaving.

I've got some logical issues with the conspiracy theorists that maybe you can help me clear up:

-How can you 'follow the money' and end up siding with industrialist polluters who stand to lose a lot of money if they are forced to clean up their act?

-How were the masterminds of this nefarious plot able to coordinate and control the research of many thousands of scientists from all over the world over many decades?

-How do you get from 'climate change' to world enslavement?

-Are the underpants gnomes somehow involved in this conspiracy?

1) Create a global climate change scare
2) ??????
3) Enslave the world

These conspiracy theories are vague, illogical and contradictory. In your response you throw out several possibilities a) It's real and caused solely by the sun (which is like saying tornadoes are caused solely by wind and have nothing to do with weather fronts) b) It's real and was intentionally created by the military (for some mysterious reason) c) It's a hoax to enslave the world through carbon taxes (but only polluting corporations pay these taxes).

It all comes out like a bunch of hastily though out nonsense, especially coming from someone who seems to think he has a monopoly on the truth. I'd love to hear an attempt to fashion these random bits into something vaguely plausible. Who might have engineered such a plot? How did they get the ball rolling? What was their overall plan from start to finish? How specifically might they parlay this into mass slavery? What do they intend to do with this massive slave force?