We are gradually realising how stupid and falsely mis-led we have become. - Fundamentally, it is energy and a cheap supply of energy that fuels our economy - not the bankers, and the monetarists who now rule over the hegemony of the market. Their 'stake' in the economy, is largely 'unreal', what is 'real' is energy, and particularly oil, and the products it manufactures.
We see this we've all the propaganda about Thatcher. She wasn't the 'Iron Lady' - a personality cult - she was the 'Oil Lady' - her crude policies were made possible through crude oil.
Without a supply of cheap energy, there can be no cheap production of goods, or pump-priming consumption, or financial inflation in the developed world making us 'feel' rich.
The 'first world consumers' / 'third world producers' model of global capitalism is gradually breaking down because the producers are catching up with the consumers - in a race to the bottom - driven by economics (and crippling debt levels) and an increasing lack of cheap energy.
The average man or woman in the west, is having to pay more for their fuel/food bills than ever before. They can't afford to buy the latest goods made in India or China. They could only afford to do so, latterly, through building up debt, which they are now having to pay back, and at the exact same time, the cost of living, i.e. food and energy is going up.
I think that is what is being revealed to us. Economic debt is the tip of the iceberg, with energy distribution being the mass of the ice berg. Consequently, our high living standards cannot be sustained - economically, or more importantly - via high energy consumption.
Economics in many ways is only a proxy measurement for energy consumption. Where there is a high consumption of energy, there are developed economies. Where there is a low consumption of energy, there are developing economies. Modernity is based on oil and energy development - primarily, and economic development - secondarily. We seem to have completely forgotten which way around things go. We've certainly become consumer junkies in the developed world, but the things sustaining that (cheap, plentiful energy and cheap, plentiful debt) is no longer available to us.
The question is what comes next? What are we as 'consumer junkies' going to demand? A rational and reasonable solution that suits most people doesn't seem possible, as long as people keep buying into what they're currently sold.
We are witnessing the unraveling of the hard truth: The economy is built largely on the reality of finite energy resources, not on the unreality or symbolism of money as a resource.
Thatcher is dead, and her economic philosophy is dying because, as we are seeing - it is wholly false ideology - not based on the core truth of what makes modern life; modern economics; modern politics; and modern society, possible and 'sustainable': oil and energy resources.
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Do we want to keep renting our money from the private banking system ? No.
If the UK government printed debt free money, it would not be inflationary because it would go to pay off existing debts, there are 10 million people of working age economically inactive and many more under employed, so plenty of surplus labour, and there is a huge need to improve our infrastructure - crumbling roads, creaking railways, new nuclear power stations needed, more public housing. We would get something for the money, at no cost to the tax payer and no need to keep borrowing. This does not suit the banking cartel who want to keep us in debt forever, and keep increasing those debts, or "investors" who require a continual profit on something that should be a public utility like our road and rail systems.
By all means carry on with the boom/bust nature of the existing debt money system, but it has failed, and the only beneficiaries are a few, to the detriment of society. QE is a buggers muddle, not the right approach, it is not getting the money where it is needed, and is not true debt free money. It's main purpose is to rescue banks, not society.
"An interest rate rise from 2pc to 4pc would generate losses of 16pc on the market value of a 10-year bond, the IMF said."
The converse is also true. An increase in market rates will reduce the long term liabilities on corporate balance sheets and put an end to the destruction of capital that has been in process for the past thirty years due to falling long term interest rates.
It would also reduce the total amount of government debt outstanding and provide savers with a decent return on their CDs thereby attracting real capital back to the market and inducing a recovery.
What we need is a rise in interest rates to about 12% but that will never happen as long as the bankers are in charge of setting interest rates and overall monetary policy.
A quote for the venerable Austrian-school economist - Ludwig von Mises comes to mind:
"There is no means of avoiding a final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion or later as a final and total catastrophe of the currency system involved."
It appears that our masters are opting for the 'no pain now, disaster later' option, as usual.
How does one "stabilise" a system underwater with too much bad debt by issuing more debt?
My guess is that the mother bank has slowly taken all the rotten debt off the satellite banks' books and issued crisp new government bonds in exchange for them.
That this puts all these bonds into the liability column of the government's balance sheet does not seem to bother the bankers. They continue to enjoy big bonuses some of which they will pay to the government in return for their largesse. It works a lot like a bribe really.
The upshot of it all is that the rubbish is still in the system on the central bank's balance sheet. This means the centre cannot hold and eventually must give way. Right?
The cost of the bailout for Cyprus has increased to 23bn euros ($30bn; £19.5bn), according to a draft document prepared by the country's creditors.
The original cost of the bailout was put at 17.5bn euros.
But the new total, disclosed in a document seen by news agencies, means Cyprus will have to find 13bn euros to secure 10bn euros from the European Union and the IMF.
Previously it was thought that Cyprus would have to raise 7.5bn euros.
Government spokesman Christos Stylianides said: "It's a fact the memorandum of November talked about 17.5bn (euros) in financing needs. And it has emerged this figure has become 23bn.
"Who is responsible for this? How did we get here? It was the fear of responsibility and indecision of the previous government," he added.
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