Sunday, November 16, 2008

The Terri Schiavo Dilemma on Wall Street.

Can you imagine if each of us lived infinitely? Change, for better or worse, would never happen. Life would become stale, laborious, and, dreadfully boring. However, fortunately, human beings have a somewhat predictable life span, give or take a few years. This "morbid" process keeps humanity from growing stagnant and antiquated. It compels vibrant and dynamic innovation... the catalyst for evolution. When someone or something interferes with this process, it creates massive upheaval - think Terri Schiavo - but ultimately, life is terminated, for better or for worse, no matter what we do or fail to do.

Not so for institutions. No matter how antiquated, dysfunctional, or corrupt institutions are, there is no lifespan...they can go on forever. Yes, we occasionally tweak our long-established foundations, organizations, customs, practices, relationships, and/or behavioral patterns, hoping that will be enough to keep it from dying out completely. Unfortunately, just as our bodies give out, so do institutions. Keeping them on life support only prolongs the suffering for those of us who are either affected or depend on that institution.

No matter what your belief system, most sane people know human beings did not create Terri Schiavo, or any other human for that matter; therefore, when to stop life support will continue to be an issue because as technology improves, the lines between life and death blur considerably. Since we are strictly vessels through which new life is created, we don't know enough to answer the question of when to stop interfering when a body no longer works the way we think it should.

Nevertheless, we - human beings - do create institutions, and we, not God, or some other outside force, must determine when the institution is not functioning in the best interest of the people. We find this task extremely difficult, possibly because of our own mortality. We develop sentimental attachment to our own creations, but we should take a lesson from God, and learn to let go.

What's this got to do with Wall Street? Well, we should be debating the viability of our current monetary institution, rather than throwing bail-out plan after bail-out plan at it hoping something will restart its engine. It's clear that this system no longer works for the good of the people, if it ever did in the first place. We should really consider transitioning into a new system altogether.

Instead, the Fed is printing money like there is no tomorrow, and it's not working. Banks and everyone else for that matter continue to hoard their money, and the wheels of commerce remain stuck. The crux of the problem is not that those wheels need more grease, it is that those wheels only respond to one type of grease: lending. That is, in order for our monetary system to function properly, credit expansion is absolutely necessary. This system relies on continually renewed bank credit for there to be any money in existence, as money is created and destroyed in the ledgers of banks. To put it simply, in order for our monetary system to function properly, it requires most of our population remain beholden to banks.

However, even if those in control get it moving again, we're still faced with a fragile system that only responds to one remedy: debt. Sure, those with adequate capital will continue to thrive and more than likely profit, while, those of us who remain in a state of indebtedness, will suffer the consequences of this parasitical financial system continuously.

I am afraid that the ordinary citizen will not like to be told that the banks can and do create money. The amount of finance in existence varies only with the action of the banks in increasing or decreasing deposits and bank purchases. We know how this is effected. Every loan, overdraft, or bank purchase creates a deposit, and every repayment of a loan, overdraft, or bank sale destroys a deposit.”And they who control the credit of the nation direct the policy of Governments and hold in the hollow of their hands the destiny of the people. -- Reginald McKenna, at one time, British Chancellor of the Exchequer, and Chairman of the Midland Bank,
"If all the bank loans were paid, no one would have a bank deposit and there would not be one dollar of coin or currency in circulation. ...... Someone has to borrow every dollar we have in circulation, cash or credit. If the banks create ample synthetic money we are prosperous: if not, we starve. We are absolutely without a permanent money system. When one gets a complete grasp of the picture the tragic absurdity of our hopeless position is almost incredible, but there it is. It is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defects remedied very soon." -- Robert H. Hemphill, credit Manager of the Federal Reserve Bank of Atlanta, on January 24, 1939
“those who, because they hold and control money, are able also to govern credit and determine its allotment, for that reason supplying, so to speak, the lifeblood to the entire economic body, and grasping, as it were, in their hands the very soul of production, so that no one dare breathe against their will.” -- Pope Pius XI wrote in his Encyclical Letter Quadragesimo Anno, in 1931
“Since I entered politics, I have chiefly had men’s views confided to me privately. Some of the biggest men in the United States, in the Field of commerce and manufacture, are afraid of something. They know that there is a power somewhere so organized, so subtle, so watchful, so interlocked, so complete, so pervasive, that they better not speak above their breath when they speak in condemnation of it.” -- Woodrow Wilson,The New Freedom (1913)

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