Friday, July 10, 2009

It Appears That Carmack's Proposal Has Blinded "Judenfrei" to the Flaws and Sophistry Built into Said Proposal

Christopher Jon Bjerknes

I have been attempting without success to explain to "Judenfrei" that Carmack's proposal falsely claims that by paying off the government debt within one year while concurrently requiring banks to hold 100% reserves for their already outstanding loans and for all new loans issued, that the hyperinflationary effects of introducing such massive amounts of money into circulation would be counteracted by the 100% reserve requirement which would suposedly take that new money out of circulation. "Judenfrei" states, quoting from Carmack's fatally flawed proposal:

"Can Bjerknes not read or is he deliberately wasting our time? An illustrative sample has been mentioned in the footnotes of Carmack’s MRA (dated to when the national debt was about $10 trillion). Here it is:

The gross National debt is presently c. $9.9 trillion [Sept. 2008]. The net or Public National Debt portion of that (i.e. net of what the government owes itself) is c. $5.4 trillion, of which the Federal Reserve holds c. $480 billion in the System Open Market Account managed by the NY Fed. There is obviously less urgency in paying off what the government owes itself (i.e., the difference between the gross and the public national debt, owed to different government departments and funds), presently c. $4.5 trillion. The Act provides that the remaining c. $5.4 trillion public debt should be paid off with U.S. Notes issued by the Treasury Department. The only real objection to this is that, under the present law, such action would be hyperinflationary, which is true. This is why the proposed Act requires the simultaneous increase in the required reserve ratios of banks from 10% to 100%, which both fully solves the inflationary issue and ends private bank creation of money. Commercial bank loans in the US total c. $7 trillion. This represents money created by the banks as loans. Increasing the reserve ratio to 100% would require banks to have a source of deposits equal to the needed increase in reserves which would be c. $7 trillion, in order to avoid calling in loans. Paying off the public national debt would provide c. $5.4 trillion of the needed capital. Commercial banks hold another c. $1 trillion in other US government agency securities, which the Act provides would also be paid with U.S. Notes, thus providing a total of $6.4 trillion and extinguishing national debt to the same amount. The Act provides for the gradual payment of the c. $4.5 trillion intra-governmental debt, which shall be timed to provide the balance of the needed reserves (c. $600 billion), and thereafter to provide the 3% growth of the money supply, until fully retired. The intra-governmental debt thus provides a ready and flexible avenue for the Treasury to manage the amount of U.S. Notes created to retire the National debt to match capital needed for the reserve ratio increase. Hence there is no technical obstacle to implementation of this section.

What's so difficult to understand?"

Placing money into circulation does not of necessity send that money into bank reserves and neither Carmack nor "Judenfrei" have offered any proof that it would. Instead, the likely result of Carmack's proposal would be that the money would circulate with even greater velocity than before, because the World would recognize that the dollar was being inflated and would be reluctant to save their dollars but would instead toss them out like hot potatoes. Both the increase in the money supply and the velocity of money which would likely result would definitely hyperinflate the currency of necessity.

Instead of increasing bank deposits, Carmack's hyperinflationary proposal would likely decrease them, which in and of itself would cause the already collapsing banking industry to completely fail. On top of that, Carmack would strap the banks with a 100% reserve requirement that would of necessity cause them to fail even if they issued no new loans, but simply tried to meet the requirement for outstanding loans. With no domestic banks to loan money, and with hyperinflation rampant, who would be in a position to regulate the money supply of viable currencies and loan capital in the United States (a distinction which continues to elude "Judenfrei") other than the international Jewish bankers?

Money supply is not loan capital. The government can simply print debt free currency and hand it out to the citizens, but this will not of necessity improve the economy in a sustainable way, but rather would tend to destroy it by introducing hyperinflation.

Loan capital is a different animal from both money supply and production capital, as Gottfried Feder emphasized. Communism failed, in part, because it focused on capital instead of loan capital. Whether or not the Jews control the money supply, if they continue to control the supply and direction of loan capital, they control the economy. We can have an overabundance of money supply, but if it is simply given out willy nilly, without regard to creating employment geared towards domestic production and Autarky, then it simply results in the long term in hyperinflation.

On the other hand, if the money supply is regulated by means of loan capital, then many positive effects can be generated in the economy to benefit the majority of the citizens, rather than the super rich who profit from exporting our industry and who would profit from "Judenfrei's" proposed valuation of government debt. If the government directs loan capital into production, infrastructure, education, and other productive enterprises, instead of giving the rich money with which to send our production to other nations, then our nation will grow strong and produce a sustainable domestic economy with stable prices, full employment and a high standard of living. Carmack's proposal results in none of these effects.

Increasing purchasing power is great if you concurrently increase domestic production and employment at a commensurate rate. Increasing purchasing power to only send that cash to other nations is a certain recipe for national bankruptcy.