January 2023 - cypherpunks - lists.cpunks.org

[ot][crazy] Hero Video Game: Ancient Spirit of Peaceful Care
by Undescribed Horrific Abuse, One Victim & Survivor of Many 18 Jan '23

18 Jan '23

The player can play as an ancient spirit of peceful care, like the dalai lama or jesus or buddha or a mother tree or a famous pecemaker or anybody. It’s gimmicky, to connect with mainstream media, so isn’t necessarily accurate to a specific story. Once they select their character, they proceed into the game. I need something interactive that is not aggressive nor controversial. I made this thread to make spasmodic posts of possible game content, so that I could pretend to myself i am engaging something nonaggressive.

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Cryptocurrency: Juan's Keys Are SAFU
by grarpamp 18 Jan '23

18 Jan '23

https://www.youtube.com/watch?v=zG-rKa_uva0 Juan's Secret Place Not your keys, not your crypto.

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Cryptocurrency: WEF Demands "'We' Must Now Handover Crypto To GovBankCorp"
by grarpamp 17 Jan '23

17 Jan '23

The ignorant crypto internet masses are cheering that WEF is talking crypto. Note also their use of the 'We' psyop word. The correct answer and response is... No, go fuck 'Your'selves, signed, crypto-anarchy/privacy/money. 'We' don't need 'Your' questions addressed for 'Us' Free Humanity. 'We' are figuring it out just fine by 'Our'selves without 'You'. Nothing but weasel words for what is ultimately continuing and growing Authoritarian Control, CBDC, Regulation, etc... https://cointelegraph.com/news/wef-panel-discusses-the-coming-tokenized-eco… https://www.weforum.org/agenda/2023/01/future-of-cryptocurrencies-davos2023/ https://www.weforum.org/reports/decentralized-autonomous-organization-toolk… https://www3.weforum.org/docs/WEF_Decentralized_Autonomous_Organization_Too… 1) 2022 was a terrible year for cryptocurrencies, with the loss of $2 trillion in market value. 2) We could now see the handover of crypto technology and blockchain infrastructure to more regulated and established institutions 3) Cryptography and blockchains will continue to be integral parts of the modern economic toolkit. "Collaboratively governed and code-driven, decentralized autonomous organizations (DAOs) are engaged in nothing less than an experiment to reimagine how we connect, collaborate and create. Although DAOs today manage billions of dollars’ worth of assets, engage millions of contributors and operate across industries as diverse as finance and philanthropy, basic questions regarding operations, governance, law and policy are only just beginning to be addressed by policy-makers, regulators and entrepreneurs."

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Revolutionary suicide
by professor rat 17 Jan '23

17 Jan '23

Who today talks up revolution without net logistics - without a cryptoanarchist strategy and without cypherpunk tactics - these fools only talk with a corpse in their mouth. Their lies precede them and their grave lies open in front of them. https://anarchistnews.org/content/communiqué-numero-zero Reposts not timeshare with stiffs in Lenin's crypt

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What would we do without Harvard
by professor rat 17 Jan '23

17 Jan '23

Few institutions have highlighted the existential threat of even normal intelligence than Harvard has in recent years. Or even as far back as the 1940's - if you include General Yamamoto. Where would we be without it! https://thehill.com/opinion/technology/3810852-three-necessities-to-regulat… Harvard related reposts like a light-on-the-hill

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Softwhale Litigation Investment Fund to Focus on Anti-Competitive Digital Asset Marketplace Law - Litigation Finance Journal
by Gunnar Larson 17 Jan '23

17 Jan '23

Check out my new article: https://litigationfinancejournal.com/softwhale-litigation-investment-fund-t… Bitcoin Satoshi Vision (BSV) launched with high hopes of digital asset innovation. Once at a market value over $8.1B, today BSV hovers around an $850M market cap. Softwhale, a litigation finance investment vehicle for digital assets, is now representing 243,000 UK residents in a first of its kind digital asset anti-competition trial. The fund is looking to clawback over £9.9B in damages from exchanges that delisted BSV trading activities. BNN Bloomberg profiles Robert Buckland MP (UK’s former Lord Chancellor and Justice Secretary) and Lord David Currie (UK’s first chairperson of the Competition Markets Authority) who are the founders of BSV Claims Limited. Lord Andrew Tyrie (former UK Conservative lawmaker) has been named to represent the firm’s advisory board. Likewise, BNN Bloomberg reports controversial digital asset entrepreneur Calvin Ayre has launched Softwhale out of Antigua. Ayre is the CEO of Bodog, an online gambling platform and is the-self proclaimed ‘largest BSV blockchain investor.’ BSV Claims Limited and Softwhale aim to reset BSV’s utility as a legitimate digital asset investment. Both firms claim that anticompetitive behavior has defrauded investors and is the chief reason behind the downfall of BSV. https://www.bnnbloomberg.ca/a-gambling-tycoon-and-two-british-lords-team-up…

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Facebook Agrees To A $725M Cambridge Analytica Class Action Settlement - Class Actions - United States
by Gunnar Larson 17 Jan '23

17 Jan '23

Moscow Exchange, if you are listening... https://www.mondaq.com/unitedstates/class-actions/1271180/facebook-agrees-t… United States: Facebook Agrees To A $725M Cambridge Analytica Class Action Settlement 16 January 2023 by Mitzi L. Hill (Atlanta) Taylor English Duma The data harvesting scandal over Facebook's sharing of user data with outside developers appears to be close to settlement. The social network has reportedly agreed to pay $725M to settle claims of affected class members (estimated class size: 250-280 million users). Why It Matters Decision after decision in the EU and, increasingly, the US, is chipping away at the blank wall that used to confront users who wanted to know what happened to their data once it was collected by a company. Facebook, Google, et al. can afford to keep fighting in court and keep paying eye-popping fines. Most companies cannot. Although the large social and advertising companies have a vested interest in skirting or at least testing privacy laws, most companies would do well to ignore their example. The better path for companies that want to stay out of the regulatory cross-hairs? Disclosure, transparency, and choice when dealing with users and users' data. That applies to any downstream uses they allow, as well. Cambridge Analytica obtained the information from researcher Aleksandr Kogan, who gathered the data in 2014 through the personality quiz app "thisisyourdigitallife," according to reports. Only 270,000 Facebook users downloaded Kogan's app, but he reportedly collected data from up to 87 million of those people's Facebook friends. www.mediapost.com/... The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Cryptocurrency: Fixes Socialism's Politicians Gone Insane
by grarpamp 17 Jan '23

17 Jan '23

Will You Beat Uncle Sam's Relentless Pursuit Of Your Wealth? https://economicprism.com/will-you-beat-uncle-sams-relentless-pursuit-of-yo… https://thefga.org/press/fga-launches-countdown-clock-to-100-million-on-med… The United States is lurching towards an epic financial catastrophe. This isn’t a novel insight. The great tragedy has been in the works for decades. Anyone with a mild inkling of curiosity knows what’s going on. According to the U.S. Census Bureau’s population clock, the U.S. population is over 334 million. This, no doubt, is a lot of mouths to feed and people to clothe and shelter. But that’s not all. Many of these people also need some sort of medical care throughout the year. Some may break their arm. Others may have their appendix burst or suffer cardiac arrest. There are also serious medical emergencies from car accidents or other hazards. In an economy characterized by limited government and individual liberty people are self-supporting. They provide the means to pay for these needs through the fruits of their own labors. Minors are supported by their families until they can provide for themselves. The elderly may fall back on their kids if they didn’t squirrel away enough nuts during their working years. In an economy characterized by central planning this is not the case. Large segments of the population are dependent on government programs for their daily bread. They also look to the benevolent hand of government to pay for their drugs and other medical needs. The U.S., over the last 100 years, has transformed from a nation of self-supporting individuals to a nation of collective dependents. In fact, the U.S., at this very moment, is closing in on a significant milestone. Several days before the Ides of March, 100 million people – or approximately 30 percent of the total population – will be on Medicaid. Can you believe it? Forced Philanthropy An outfit out of Naples, Florida, called the Foundation for Government Accountability (FGA), even has a special website with a countdown clock so you can monitor precisely when this magical moment arrives. The FGA is forecasting that Medicaid enrollment will hit the 100 million mark sometime between the late evening of March 12 and early morning of March 13. Will you pop a bottle of bubbly and toast this momentous accomplishment? The actual significance of 100 million is found primarily in the number itself. It’s big. And round. It offers a unique opportunity to pause and contemplate the madness of what’s been erected. How is it that 100 million Americans ended up on Medicaid? Could it be that the entire Country will one day be ensnared by this program’s wide casted nets? What happens to the quality of medical care when payments for services rendered are diverted through an ultra-mega government program? Politicians, by and large, are enamored by transfer payment programs. The more idealistic of the lot may believe that through their programs of forced philanthropy they’re making the world a better place. Others just get a thrill out of employing central planning to control the masses. “The way to Hell is paved with good intentions,” remarked Karl Marx in Das Kapital. The devious fellow was bemoaning evil capitalists for having the audacity to use their own money for the purpose of making more money. Marx, a wordy busybody, was consistently wrong. The road to hell is paved with plenty more than good intentions. Grift, graft, larceny, corruption, and fake money all compose the pavement. Good intentions are simply sprinkled on top to improve the aesthetic. Government Scam Perhaps Medicaid, when it was first created under the Social Security Amendments of 1965, was established with good intentions. Who, but a complete Scrooge, could possibly be against providing medical aid to low-income residents? But what you may not know is that Medicaid, in its current form, is an absolute government scam. Strings from the coronavirus fiasco have been attached to the program, which places state governments at the mercy of the federal government. The FGA offers the following details: “The sharp rise in enrollment is largely due to the federal government’s continued extension of the COVID-19 public health emergency which locks states in ‘Medicaid Handcuffs.’ While the emergency is in effect, states receive extra Medicaid funding on the condition that everyone enrolled remains locked into the program. This has led to an additional 24 million enrollees, more than 21 million of whom would previously not have qualified because they earn too much money or are otherwise ineligible.” The price tag for these 21 million otherwise ineligible Medicaid enrollees comes to $16 billion per month – or $192 billion per year. The taxpayer – that’s you – foots the bill. As perspective, to better understand how many ineligible people 21 million represents let’s look to Florida. The population of Florida, the third largest state in the Country, is 22 million. So, the equivalent of nearly the entire population of Florida, is illegitimately on Medicaid. Think about that on Monday morning when you rise at the crack of dawn to start up your daily grind once again. Think about that the next time you peruse your paycheck and see the massive federal income tax deduction being confiscated. How many other government scams are you working to pay for? The actual costs of the scam portion of Medicaid are much, much more than $16 billion per month. As the FGA notes, as welfare enrollment – including Medicaid enrollment – increases, workforce participation decreases. So, the ability of the U.S. economy to pay for Medicaid and other government scams is diminished. Yet the madness continues. Washington policies are handcuffing people to dependency who are entirely ineligible for the programs they’re dependent on. What’s more, they’re doing this at the worst possible time. Will You Beat Uncle Sam’s Relentless Pursuit of Your Wealth? Presently, the U.S. national debt is over $31.4 trillion. Factor in unfunded liabilities – such as social security, Medicare parts A, B, and D, federal debt held by the public, and federal employee and veteran benefits – and the number jumps to $173.5 trillion. That comes to over $519,000 per citizen. These debts won’t magically disappear. However, they won’t be directly paid either. Simple arithmetic doesn’t allow it. But they will be paid, nonetheless. You’ll pay with your time and your talents. You’ll pay with a declining standard of living. In fact, you already are. This week, the Bureau of Labor Statistics released the latest inflation data. According to the government’s aggregate data manufacturers, consumer prices, as measured by the consumer price index (CPI), increased at an annual rate in December of 6.5 percent. After peaking in June 2022 at 9.1 percent, the rate of inflation has steadily slowed. Should you be happy that you’re only being robbed of 6.5 percent of your savings per year instead of 9.1 percent? Remember, at an ‘official’ inflation rate of 6.5 percent it only takes 11 years for the purchasing power of your savings to be cut in half. And 11 years is only about one-fourth of a person’s working years. In other words, over the duration of a person’s working life their earnings will be cut in half at least four times. Wage and salary increases may soften the blow. But they won’t keep pace with government sponsored inflation. In truth, real wages have declined for 21-months in a row. And what about after retirement when employment income disappears? In this regard, a retiree should expect the purchasing power of their savings to be cut in half at least once – possibly twice. This, in essence, is how you’ll pay for Washington’s massive debts and unfunded liabilities. The Medicaid scam is but one example of the servitude you’re indentured to. By this, saving and investing your income and wealth has never been more important. With hard work, diligence, unending perseverance, and some luck, you can maintain your independence and standard of living in the face of Uncle Sam’s relentless pursuit of your wealth. The challenge is great. The stakes are grave.

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Cryptocurrency: Is Savings Reserves, Cancels Keynes Broken Dystopia
by grarpamp 17 Jan '23

17 Jan '23

The Benefits Of A Savings Culture & The Future Role Of China's Yuan Alasdair Macleod https://www.goldmoney.com/research/the-benefits-of-a-saving-culture Savings are a vital component of any successful economy, and the foolishness behind the paradox of thrift is exposed in this article. It has been a huge error for Keynesian policy makers to discourage savings in the interests of temporary boosts to consumerism. It is probably too late now but encouraging people to save by removing all taxation from savings makes an enormous contribution to reducing price inflation and trade deficits, while enhancing national wealth. This is evidenced empirically and demonstrated by reasoned theory. Furthermore, there is an error in assuming that there is no alternative to Triffin’s dilemma, which posited that for a nation to produce a meaningful level of reserve currency for external circulation it must run trade deficits. Triffin was describing the problems the United States gave itself under the Bretton Woods agreement, leading to the failure of the London gold pool in the late sixties. It still informs US policy makers today, and wrongly leads American commentators to believe that the dollar cannot be toppled from its pre-eminent position. But Triffin’s dilemma assumes that central banks must accumulate currency reserves. Unless a government has foolishly indebted itself in a foreign currency, there is no need for them to do so. Currency reserves add nothing to a domestic currency’s stability. Gold fulfilled this role successfully, and likely to do so again in future. It is a savings ratio of 45% which is at the root of China’s power. The lack of savings in America and its western alliance is their Achilles heel. Empirical evidence If there was one taxation policy which would reduce consumer price inflation, stabilise a fiat currency, encourage capital allocation for productive purposes, and improve government finances for the longer-term, what would it be? Remove all taxes from savings. This is the lesson from past-war West Germany and Japan, both of which suffered absolute defeat and economic destruction in the Second World War. Their currencies were worthless. But they recovered to become economic powerhouses in Europe and Asia respectively in little more than two decades. Both implemented savings-friendly taxation policies, which made capital available at stable interest rates for new industries to invest in production. Germany developed its Mittelstand, and Japan built on her vertically integrated Zaibatsu. Germany was fortunate in its Economy Minister, Ludwig Erhard. A free marketeer who on 20 June 1948 took the bull by the horns, Erhard unilaterally ended rationing on the same day as the new mark was introduced, presenting it as a fait accompli to the military governors in the British and American zones. In a week, shops had begun to reopen, and goods became widely available. In negotiations with the military governors, Erhard managed to obtain income tax concessions for savings, which through the banking system were invested making capital available for private sector reconstruction. While he struggled against both military governments in the two zones to retain lower taxes and for favourable treatment for savings into the 1950s, Erhard had laid the foundations for a savings driven, free market economy. By the 1980s, the only tax on savings was a 10% withholding tax on bank interest and bond coupons, which was not generally pursued by the German tax authorities in the knowledge that attempts to do so would simply drive savings beyond their reach into Luxembourg and Zurich. For this reason, Germany remained a savings driven economy with a strong currency right up to the mark’s incorporation in the new euro. Much to the confusion of British and American neo-Keynesians subscribing to their cherished savings paradox, Germany became the wealthiest of the European nations, other than perhaps Switzerland. In both cases, hard currencies accompanied wealth creation. Erhard’s post-war opposition was principally from General Sir Brian Robertson, the head of the British occupation government, and from the French. The commander of the American occupation zone, General Lucius Clay was more sympathetic with free market solutions. The Americans had promoted A Plan for the Liquidation of War Finance and Financial Rehabilitation of Germany (1946), written at Clay’s behest, one of the co-authors being Joseph Dodge. In 1949, Dodge was then appointed to advise the Japanese government on its post-war reconstruction as an aide to General MacArthur. And Dodge was instrumental in ensuring that up to a certain level, post office savings accounts were entirely tax free. It was probably a deliberate oversight on his part, but the tax law didn’t stop an account holder merely opening another savings account when the tax-free limit on an existing account was reached. Dodge implemented what became known as “The Dodge Line”. By insisting on a balanced national budget and shutting down the printing presses, he ended hyperinflation. The exchange rate between the yen and the dollar stabilised. Government economic intervention and interference was slashed across the board. Echoing John Cowperthwaite’s free market policies in Hong Kong, Dodge realised that the best economic progress was obtained by eliminating state interference, leaving it to Japan’s businessmen and entrepreneurs who, despite the war, retained the skills and connections to run their businesses. With MacArthur’s support, he ruthlessly eliminated subsidies and price controls. Dodge was eventually recalled to America, becoming Truman’s Director of the Budget where in the space of only a year he had cut the US federal deficit in half. Dodge’s free market approach was supplemented by the assistance of another American adviser, W Edwards Denning. Denning introduced quality control techniques to Japanese manufacturing which revolutionised production. As a consequence of Denning’s contribution, Japan rapidly evolved from a source of shoddy goods into a producer of the best consumer technology and the manufacture of world-beating high quality consumer goods. Behind this revolution was the tax incentive to save – a simple approach of assuming that taxed earnings put aside should not be taxed again. In both Germany and Japan, these were not the only factors that led to a successful emergence from total desolation, but they are the elements that ensured that both nations continued to flourish. And in Japan, despite the government fully embracing Keynesian philosophy in the wake of the late-eighties speculative bubble, the savings culture of “Mrs Watanabe, the Japanese housewife” persists to this day. After his stint in Japan and while Joe Dodge worked his budget magic for Truman, the British were going in the opposite direction, eschewing free markets, embracing Keynesianism, persisting with rationing until 1954, and imposing punitive taxes on savings. The decline of post-war Britain and much of Europe need not enter our narrative, but it was a feature of all nations which implemented economic policies of taxing savings. The theory behind savings The empirical evidence is clear. Since the Second World War, economies that embraced free markets and the role of personal savings outperformed those which saw savings as an easy source of tax revenue. Furthermore, we can easily explain why free markets succeed in creating wealth for all, while a state directed economy is anti-progress. It was demonstrated by the Austrian economist, Ludwig von Mises, who in an essay written in 1920 explained the futility of central planning due to a lack of the ability to perform economic calculation. Admittedly, he compared the full-blown socialism which Russia had embraced with free markets. But his conclusions, that the state is unable to allocate economic resources including capital as efficiently as profit-seeking capitalists applies equally to less aggressive forms of socialism. In a free market economy, individuals are compelled to make provision for the unknown vagaries of the future. Often through the medium of insurance policies and pension plans, they put aside a portion of their income to protect themselves from the financial consequences of ill-health and incapacity, provide for their old age, and to ensure there is something to pass on to their heirs. If the circulating medium is sound, no financial skill is required to preserve the value of savings in these arrangements and in the form of bank deposits. Within the limits of their acumen, those with some financial knowledge can venture into other forms of savings, such as bonds issued by their government agencies and corporations and even to acquire equity interests in ventures. As always, investors with skill and knowledge will improve their position relative to those less financially literate, which is anathema to redistributors of wealth. But the corruption of the value of credit that goes with monetary intervention by the state impoverishes those who lack investing skills most, always the poorest in society. It stands to reason therefore, that an economy that benefits most from the savings of the masses must protect the value of credit. The Keynesian revolution rode roughshod over this issue. Keynes dismissed capitalist savers as rentiers, a term with emotive connotations suggesting that they are workshy and greedy only for interest on their capital. His academic environment at Cambridge and afterwards the Bloomsbury set in London was certainly populated with these flaneurs. But this was not representative of the wider population which was to be deprived by his desire for the euthanasia of the rentier expressed openly in his General Theory. So it was that Keynes came up with the paradox of thrift, while he was working his way towards discarding Say’s law to justify his General Theory. In Chapter 23, he takes preceding crackpot theories on the subject as evidence of the destruction wrought by saving. Earlier in Chapter 3, on Observations of the Nature of Capital, he claimed that excess savings could lead to “the fate of Midas… assuming that the propensity to consume and the rate of interest are not deliberately controlled in the social interest but are left mainly to the influences of laissez-faire”. In working his way towards a role for the state, which appears to be his objective here, Keynes makes a number of errors, the principal ones being glossing over the role of bank credit (there is only one indexed reference to credit, commercial bank or otherwise in the whole book!), and whether it is the borrower or lender who sets the rate of interest. To be absolutely certain of the role of savings in an economy, and as to whether there can be an excess leading to the fate of Midas, we must explore Keynes’s errors further. Variations in the rate of interest are not due to the ephemeral dispositions of rentiers but in large part to fluctuations in the supply of bank credit. It is the expansion of bank credit which leads to an economic boom, which when it leads to excessive demand and speculation by driving up prices engenders caution in the banker’s mind. Naturally, he then restricts the supply of credit, which raises the interest cost. This is why the cycle of bank credit would never permit “the fate of Midas” to occur. Clearly, Keynes’s conclusion that there can be a savings glut is based on his wilful ignorance of the nature of money and credit.[iii] Furthermore, Keynes’s basic assumption, that it is the greed of the rentier which forces an unnecessary and arguably immoral cost onto production is also incorrect. It is the same error that leads monetary policy makers today to assume that by manipulating the interest rate the general level of prices can be controlled. It was Keynes himself who earlier noted this error, which he named Gibson’s paradox after Arthur Gibson, who pointed out the lack of correlation between the two. Because Keynes was unable to explain the paradox, he simply proceeded as if it did not exist, and so has every monetary policy committee ever since. The paradox is real, and the explanation is simple, falling into two elements. The first is that savers are generally reluctant to save, because it means a deferment of consumption, an immediate satisfaction being exchanged for one in the future of less certain value. Therefore, a business requiring capital for production must bid up the rate of interest it is prepared to pay to a level where the consumer is willing to defer his enjoyment. It is this marginal rate that balances the demands for capital with the availability of savings in an economy. And it is not just a question of setting the rate of interest for recycling credit through the banks’ balance sheets. It sets the rates of return for all financial assets as well and the cost of funding for their issuers. The second element is the time-preference for which savers will naturally expect compensation. Time preference describes the value of possession of money or money substitutes. A saver loses the value of possession until his money or credit for money is returned. For simplicity’s sake, we must ignore counterparty risk but include expectations of changes in the purchasing power in the circulating media for the time that possession is lost. It becomes clear that if a potential saver is to part with possession of money or credit when the evidence points to its debasement, he will reasonably seek compensation. Therefore, for the saver interest rates are not the cost of money which he demands, except in a strictly minimally additional and marginal sense. For a central bank to assume that by varying the underlying rate of interest it can control the economy is therefore incorrect. Central banks have it the wrong way round, which explains why there is no correlation between their interest rate setting and the rate of price inflation. Furthermore, Gibson pointed out that the correlation was between interest rates and the general level of wholesale prices, and not their rate of change. This correlation is consistent with a businessman’s economic calculation: in order to calculate the profitability of an investment, he must consider the price he will expect for his production, by necessity always referring to current levels. He can then calculate the interest cost he is prepared to pay to secure the capital necessary for his project, and therefore assess its profitability. The hope harboured by Keynes, that the state can stimulate the economy at the expense of savings beyond the very short term is incorrect. His paradox of thrift, which Keynes used to try to dissuade a propensity to save, was a conclusion drawn from these errors. They are in large part responsible for the plight in which the US, the UK, and various member states of the EU now find themselves. Savings in the context of national finances More than any other factor, the propensity to save is a major influence on national finances, being a “swing factor” between a government’s budget and the national trade position. There is an important question most analysts ignore. It is the twin deficit hypothesis, whereby if the savings rate doesn’t change, a budget deficit leads to a matching trade deficit. The reason the two deficits are linked in this way is because of the following national accounting identity: (Imports - Exports) ≡ (Investment - Savings) + (Government spending - Taxes) In other words, a trade deficit is the result of a budget deficit not funded by savings but by additional credit. This can be confirmed by following the money. For a budget deficit, there are only two sources of funding. Consumers put aside some of their spending to increase their savings in order to subscribe for government bonds. Otherwise, the banking system comes up with funding in the form of credit issued by the central bank or by commercial banks, putting additional credit into circulation which didn’t exist before. The financing of a budget deficit by credit expansion leads to excess credit in an economy without matching production. This is the point behind Say’s law, which defines the division of labour. We produce to consume, and the function of money and credit is one of intermediation between the two. Injecting extra credit into an economy does nothing to raise production, but it does increase overall demand, at least until it is absorbed into the economy in accordance with the Cantillon effect. Directly or indirectly, this excess demand can only be satisfied by imported consumer goods, because an increase in domestic production is unavailable. The role of savings in the context of national finances is very important. An increase in savings is at the expense of consumption, which is why economists often refer to savings as consumption deferred. For consumption to remain deferred requires it to be invested, either into production or government debt usually through the banks, pension funds, insurance companies or other financial channels acting on the savers’ behalf. If the destination of additional savings is investment in government debt, they are turned into consumption by the government. By not being spent on additional consumer goods, the trade deficit falls relative to the budget deficit. As noted above, despite the destructive Keynesian policies of its government, Japanese savers habitually respond to an increase in credit by retaining it in their savings accounts. Consequently, consumer price inflation is subdued, relative to that in other countries. While the Eurozone has employed similar interest rate policies and is suffering CPI-recorded debasement of over 10%, in Japan it is about 4%. As we note below, in China whose savings ratio is 45%, CPI measured inflation is currently less than 2%. The deployment of capital by Japan’s corporations, which is the counterpart of increased savings, is invested in improvements in technology and production methods, keeping consumer prices lower than they would otherwise be. Because Japanese savers are so consistent in their savings culture, Japanese corporations have benefitted from a relatively low and stable cost of capital, making business calculation more reliable. For Japan, savings are the positive swing factor in the twin deficit hypothesis. The same is true of any economy where there is a government deficit while at the same time there is a propensity in the population to save rather than spend. It is the driving force behind China’s export surpluses, because with the sole exception of Singapore, the Chinese are the biggest savers on the planet. The position of nations whose economic policies have been to tax savings and to encourage immediate consumption is diametrically different. It is consumption funded by the expansion of money and credit without increases in savings which has led to persistent US trade deficits, twinned with budget deficits. The evidence confirms that a savings driven economy is more successful than a consumption driven economy. Not only does the former protect the currency’s purchasing power by reducing the need for reliance on foreign capital inflows to finance internal deficits, but empirical evidence clearly shows savings-driven economies are more successful at creating wealth for their citizens. Importantly, a currency backed by a savings culture can weather a greater level of credit expansion by its central bank without adverse consequences for prices. The condition which must apply is that fiat currencies continue to operate as media of exchange. The moment a major currency such as the US dollar fails, then all fiat currencies are likely to be destabilised. The cure for that risk is to tie currencies to legal money, which is gold. In the absence of that link, even the strongest fiat currency loses purchasing power over time. The Japanese yen has lost 95% of its purchasing power relative to gold since 1970, an average of 1.83% every year. But including tax-free bank interest, the Japanese housewife has probably just about retained the value of her post office savings account, unlike her taxed equivalents in the other major currencies. Supplying a reserve currency As Robert Triffin, the Belgian-American economist put it, for a currency to be available internationally to act as the reserve currency requires irresponsible short-term domestic economic and monetary policies. Triffin originally described why this is the case in evidence before the US Congress in 1959. It was a dilemma, which would eventually lead to an erosion of confidence in the currency. He was proved right eight years later when the London gold pool failed, leading to the abandonment of the Bretton Woods agreement in 1971. In a twist of Triffin’s earlier warning whereby his predicted outcome is ignored, in recent years the dilemma has been taken to justify continual trade deficits, the counterpart of which is the accumulation of dollars in foreign hands. The eventual consequences are ignored. Currently, these dollars and the US financial assets in which they are invested total over $30 trillion, significantly more than US GDP. This total has fallen by over $3 trillion in the year to September, mainly due to a fall in market valuations. But there has been net foreign selling of existing US dollar assets as well, while the US trade deficit has added to the outflow by an additional trillion dollars. The US now appears to be in a similar position to that described by Triffin as the inevitable outcome of providing the world with its reserve currency. Furthermore, the scale of dollar and dollar denominated financial asset accumulation has been encouraged by a bond bull market on the back of a declining interest rate trend which has lasted forty years. Crucially, domestic funding of budget deficits as recorded by the savings rate has failed to match this foreign interest. However, domestic investors have made substantial portfolio gains along with foreign holders of dollars. Driving these gains has been the inflation of credit directed into financial activities thereby sustaining the bubble, while the Fed goosed valuations by suppressing interest rates to the zero bound. When the rate of consumer price inflation unexpectedly broke the bounds of statistical management — independent analysts had it far higher than official figures for many years citing changes in methodology — it became clear that the bull market in US asset values was over. Being in the early stages of a bear market, this fundamental change is yet to be widely recognised, but with official interest rates well below the CPI rate of increase, foreign investors are certain of yet more portfolio and currency losses. Domestic investors and bulls of their own currency assume foreigners will still demand dollars, when the evidence from the continuing trade deficit and the US Treasury’s TIC figures confirm they are already turning sellers. This dichotomy between foreigner and domestic users of a currency is not unusual. An examination of previous episodes of currencies in trouble confirms that the foreign exchanges are usually first to recognise they should be sold, while domestic users usually continue to believe that they will retain their value. If it is not too late, the solution to stabilising today’s fiat currencies is to remove all obstacles to savers, in an attempt to increase the savings ratio. But when a currency is already on its way to eventual extinction, removing tax disincentives may not be enough, and other measures to reduce the budget deficit must be taken in order to reduce the trade deficit. But then we run into Keynes’s savings paradox: discouraging consumption in favour of savings is viewed by neo-Keynesians as recessionary when economic growth is already stalling. The Saudi’s decision to ditch dollars in favour of yuan — turning from petrodollars to petroyuan — couldn’t have come at a worse time for the dollar. In addition to facing a bear market for their dollar assets, foreign holders now find its mainstay justification is distinctly frayed. Almost certainly, the dollar is on the verge of a Triffin crisis. The future role of China’s yuan This time, it appears that the dollar has nowhere to turn. Asia is now the most important geopolitical region, with some 3.8bn people rapidly industrialising. Member states of the Shanghai Cooperation Organisation, the Eurasian Economic Union, and BRICS are increasingly determined to move away from dollars, its hegemony, and influence. As the Saudis and the whole Gulf Cooperation Council of oil exporters are demonstrating, China’s yuan is being seen as the dollar’s replacement for inter-Asian payments. The roles of the euro, yen, and sterling in foreign reserves are also likely to diminish with the dollar as well. At this stage the new global currency reserve position is still unclear, with the Eurasian Economic Union planning a trade settlement currency, and the Russians sending vague signals but yet to prognosticate. But in the context of Triffin and savings rates, China could hardly be more different from the US. China has a savings rate of about 45% of its GDP. With this propensity to save, it is unsurprising that consumer price inflation is under two per cent. Moreover, government finances have taken a hit from China’s covid lockdown policies and a property development crisis, leaving a deficit of over $1 trillion equivalent for 2022. But even so, with such a high savings rate the surplus on the balance of trade for 2022 was still positive at $890bn. The Triffin dilemma suggests that for the yuan to become a replacement reserve currency the Chinese government will have to start spending like drunken sailors while taxing domestic savings to the hilt. Only then can a trade deficit be expected to arise. But such a volte face in economic policy would surely destroy the yuan’s credibility. After all, it took ten years from the suspension of the Bretton Woods agreement and interest rates rising to 20% for the dollar to then assume the role of a reserve currency in gold’s stead. We must question the need for central banks to maintain currency reserves in the future. Not only did the western alliance send a signal that they could be made worthless by its cartel at the stroke of a pen, but the shift from the petrodollar to the petroyuan is symbolic of a currency regime that has had its time. The possession of reserves originated with the requirement for central banks to back their currencies with legal money — gold. It is the abandonment of this link with money that led to possession of currency reserves, with dollar holdings at their core. But other than for limited international intervention purposes there seems to be little reason to hold them, particularly for those central banks who have become aware of the western alliance’s declining influence. China with its trade surplus while maintaining a balance in its payments by exporting capital has no need for other currency reserves beyond some minor liquidity. The capital being exported is in yuan in the form of bank credit, and it suits China with her plans for the industrialisation of Greater Asia and its suppliers in Africa and South America to make substantial investments for her greater good. The Chinese government controls its major banks and can direct the application of this surplus credit. There is no need therefore for China to destroy its finances to provide yuan as a reserve currency, as Triffin originally suggested. Clearly, there must be a revolution in central bank thinking underway in the broader Asian camp. Central banks are beginning to replace the major currencies in their reserves with yuan and even roubles. But these currencies are not available in sufficient quantities to replace their dollars, euros, yen, and sterling. This is why they are turning the clock back and beginning to accumulate physical gold. In a few words, it is China’s high savings rate which gives its government the resources, the power, and the opportunity to displace the American dollar and its hegemony from Greater Asia and much of the developing world. Our mistake leading to our relative decline was to listen to Keynes and his paradox of thrift.

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RIP P. Cuevas ( ex-CNT )
by professor rat 17 Jan '23

17 Jan '23

PEPE CUEVAS (1951–2022) https://anarchistnews.org/content/pepe-cuevas-1951%E2%80%932022 Reposts not US business bollocks ad nauseum

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