Punchinello's Chronicles

May 30, 2018

Many Changes Now in 2018

Filed under: The Great Adventure!,View from the Bottom — Punchinello @ 8:44 pm

I was maintaining this site for a long time, way back when. Then life got in the way. I’m not entirely sure if I’ll continue forward now, but thought I’d at least post something. It’s not a dead site, yet.

I’ve learned a tremendous amount about the medical industry, health supplements, nutrition, and life in general. Perhaps this is a place to blog about all that. On the other hand, who cares? We all have lots of things happen to us, with us, and around us. What’s so important about one person? Not all that much.

What I’ve particularly noticed is the now-total separation between what we call a conservative ideology and the progressive-liberal ideology. I’m interested in how that happened, and what’s at the foundation. It’s taken many years, but I think I’ve figured it out.

Maybe I’ll write about that.

I’m in the process now of dismantling 45 years of everything I’ve done in life. Long story, but I do get the chance to do it myself. Most people have this kind of experience when they’re victims of a major catastrophe, like a hurricane, fire, flood, and so forth. The other way it happens is they’re killed and someone else goes through everything and gets rid of it.

Not all that often do people close out their entire life on their own. It’s given me many insights into life, social interactions, and what matters or doesn’t. So many people these days are living with uncertainty. It produces great anxiety, fear, worry, and anger. Why all the uncertainty?

I think it’s because most people have now been taught that there isn’t any such thing as certainty. There aren’t any absolutes. Nothing can be proven. Everything is a result of our own perceptions. That’s all “modern” or post-modern philosophic bullshit, taught by people who live in a delusion of university education.

The problem is the source of certainty: What if we aren’t particularly religious, and God isn’t a core part of our life? What if we aren’t part of a collective, where we’re spoon-fed slogans in place of original thought?

I’m thinking about the topic of Logical Spiritualism, or maybe Rational Spirituality. At this point, I have no clue what happens next.

I’ve been broke, down at the bottom, and worked my way up. More than once. I’ve had dreams, made them come true, and seen them collapse. The past 13 years followed that cycle, and created a dream-come-true. And then it disintegrated.

We always ask, “Why? How could this happen?” There are reasons and answers, but in today’s world, it’s really quite rare to find something that actually doesn’t include a myriad of contradictions. I wonder if I can make the case for a philosophy that’s consistent, and can handle the extremes in life. It does work for me, but I wonder if it would work for anyone else.

We’ll see.


January 5, 2012

The So-Called Unfair Wealth Gap

Filed under: Word of the Day — Punchinello @ 1:54 am

Here we are, starting January 2012, and The Protester was the “man of the year” on Time magazine. We remember the “Occupy Wall Street” movement, made up of people inarticulately angry at all the money the bankers are making. Their main chant is that 99% of the population makes a barely living wage, while 1% of the population owns all the money and assets. What do we do about it? They have no clue, other than turn American into a socialist system. They want the government to fix it!

The government caused the problem in the first place!

So how come there’s all this money at the top? Why is it so hard to get credit? How come small businesses are being shut down because they can’t get a line of credit from the big banks? What’s this “too big to fail?”

Over the past decades, laws have changed allowing banks to merge and have branches all over the country. As smaller banks have failed because of real estate crashes, the FDIC offers them to the bigger banks rather than use federal money to pay out the insured claims of depositors. The big banks get bigger, the small banks fail and disappear.

We also know that the reason the real estate market crashed is due to government laws mandating that banks provide low-cost loans to anyone who can draw an X on a piece of paper. They don’t need a job, don’t need a past, don’t need a credit rating, and don’t need a down payment. If the banks do NOT make those loans, they face government sanctions.

“Liar’s loans” were a moral hazard, where a bank would be guaranteed a loan they made to anyone. The government would make those guarantees through Freddie Mac or Fannie Mae. Additionally, we have “notional value,” which means that the value a bank places on a property is whatever they say it is.

In the old days, “mark to market” meant that a property would periodically be assessed at some market value. If that value went up, then the value was carried on the bank’s books at the higher price. Lower assessments, the asset value would be reduced. As real estate prices began to crash, banks had to reduce their asset values on the books. So Congress repealed “mark to market.” What we now have is what some people call “mark to unicorn.”

Remember, banks hold only a small percentage of actual money or property to back up loans. Decades ago, the Federal Reserve set the rules that a bank could lend out 10 times what they had on the books as assets. Today, that number is almost unlimited. The Fed has allowed banks to lend out 30 times or more of their assets.

So “asset” means all sorts of important consequences. If the assets go down, then a bank has to call in loans and can’t make more loans. With “mark to unicorn,” a house that was originally mortgaged for $400,000 but is now worth $300,000 is still carried on the books at $400,000. That’s the “notion” of what it’s value would be if everything went back to normal. It doesn’t matter what’s going on now, for how long.

In the real world, that house has lost 25% of its value. In the real world, the bank would have to cut back on lending to match the reduced asset value. In the real world, someone might be able to buy the cheaper house and take it off the market. With “mark to unicorn,” the bank can keep the value, keep their loans outstanding, foreclose on the house and make more money by selling it again while collecting penalties on the loan. And the person living there, ends up in the streets.

Banks began having major trouble meeting the Federal Reserve banking rules, not to mention SEC regulations. They’d borrowed money at zero interest from the Fed, then used that money to bet on the stock and commodities market. They stopped lending money to people, and made the money from investing. In fact, the end of the Glass-Steagall Act, repealed during the Clinton administration, made it legal for a bank to be both a customer bank and an investment bank.

Banks are allowed to use whatever money they have to invest, presumably on “behalf of” the customers. The SEC used to make sure that “invest” meant something reasonable. Now, with the SEC watching porn videos, “invest” means gambling.

But the casino is falling apart. Occult investments in derivatives, credit-default swaps, currency swaps and so forth, have meant that hundreds of BILLIONS of dollars have been borrowed, then used to gamble. Estimates of the currently outstanding derivatives market make it $500 TRILLION!!! That’s a half a QUADRILLION dollars outstanding!

What happens when people start making claims on all those pieces of paper? The total, entire, complete, EVERYthing value of the Entire United States is $54-trillion dollars. If we sold every tree, rock, river, mountain, house, building, bike, doll, bushel of corn and everything else, leaving us without even the dirt we’re standing on, we’d need Ten Times that amount to meet ONLY the obligations created by ONLY the banking and financial industry!

With only 10 banks controlling around 90% of the entire national asset list and financial structure, Congress and the Federal Reserve noted that these banks were “too big to fail.” If they failed, they would collapse the entire world economy, shutting down the whole concept of money, ending all trade, and bringing on a Dark Ages. They say. Therefore, there’s no way these banks can fail.

But what if they do?

Throughout all of nature, the most basic principle has always been competition. Bad actions lead to failure. Good actions are those that succeed. Humanity has, in the past, also said that “good” actions mean moral actions. Then we go on to create religions and philosophies about what’s good. Banks, based on the Chicago school of economics claim that “whatever succeeds is good.”

According to modern economics, ALL profit is good. That means morally good! That means that any time you make a profit, no matter how you do it, you are doing a morally good thing. Does it matter who gets hurt, killed or destroyed? No, as long as you’re making a profit. It’s up to the “other guy” to watch out for their own best interests. If they don’t make a profit, then that’s too bad. They’re “bad.”

The end result is that profiteering with no moral code at all is considered the new moral standard. Crony capitalism means using other people’s money to make a never-ending profit. “Moral hazard” means that IF you fail to make a profit, AND you’re a bank, THEN the government will bail you out. With other people’s money. OUR money! Money taken from the 99%. Too bad the morons in the protest movement don’t understand a frickin’ thing about all this!

The reason that wealth has concentrated more and more into the hands of fewer and fewer super-billionaires is that they can’t fail! They’re not allowed to fail! They’re too big to fail! No matter what stupid-ass decisions they make, they’ll be bailed out. No matter what dumb-ass investments they make, if they lose they’ll be bailed out. By the government. The same government the Occupy Mars movement wants to “fix” things!

More importantly, no matter what laws are broken, regulations are disregarded or ethical principles are ignored, the federal government will be there to bail out the criminals. Banks can’t fail. Major industries like the automobile companies won’t fail. The government will levitate them, no matter how bad their actions and investments.

What would it be like if you could start a business with an unlimited amount of money? No matter what you did, no matter what product, no matter what market or lack of market, no matter what decisions, no matter what kind of business practices, all you’d have to do is show your books every few months. If you made money, you get to keep it. If you lost money, the government would re-stock your bank account. If you wanted to borrow more money to go to Las Vegas, the government would give you an open-ended credit card.

You go to Las Vegas, spend money on food, hotels, shows, clothes, jewelry and whatever. All reimbursed. Then you go gamble. If you win, you get to keep the winnings. If you lose, the government covers the bill.

How hard would it be for YOU to become one of the super rich?

The problem is: Where does all this government money come from? You? The taxpayer? Of course not! There isn’t enough money in the universe to make up all the dollars flying around. Instead, it’s all being printed by the US Treasury, which borrows the “authority to print” from the Federal Reserve. That’s the American continental central bank, a private bank having nothing to do with the United States.

If you went to buy a bolt of cotton 10 years ago, you would pay, say, $50 in US dollars. That means that one dollar would purchase a certain amount of woven fabric. The world markets set the “exchange” rate as to how much was the value of that dollar in terms of cotton — how many dollars it takes to buy a certain amount of cotton.

Today, to buy the same bolt of cotton you would have to pay $75 US dollars. What happened? Did the cotton get more expensive? No. The value of the US dollar has dropped by 50% in the world markets. The cotton is the same, it’s the dollars that have become worth…less. Worthless. Why? Because the Federal Reserve has printed so many new dollars, they have nothing whatsoever backing them.

So to make sure the big banks can continue their unrestrained, out-of-control gambling spree, the Federal Reserve has authorized an unlimited credit line to the US Treasury. That credit line is what Congress wants raised and raised and raised every few month. Keep in mind that while the banks are gambling trillions of dollars, the US government is also spending trillions of dollars to buy a constant supply of voters.

Is it unfair that the super wealthy have so much money? Not really. It’s only that they can’t fail. The banks and investors buy the politicians and their votes. We repeal or negate laws meant to protect free markets. We make new laws designed to take more money from taxpayers, and every election a larger number of people have no idea what’s happening. The Occupy Mars people want to re-elect the same government, over and over again. Republican or Democrat, it doesn’t matter. Same thing.

To make it all fair again is a simple thing: Allow failure to fail! That’s it, pure and simple. If General Motors makes a bad car and nobody buys it, the company should go bankrupt. If Citigroup or Bank of America can’t collect on their loans, then let them go bankrupt.

If that had happened ten years ago, we would have maybe had an economic depression for a year or two. Instead, we kept it all floating and kicked the can down the road. Now, if these mega-institutions were to fail, it would bring down the entire financial structure of the world. Would we survive? Of course. But we’d have some major chaos for awhile.

To just keep kicking the can down the road means that every single last dollar available from working people has to feed the maw of the never-ending gambling spree on the part of the big institutions and Congress. I say stop the credit card, cut up the credit card, and let the failed businesses fail. T’row da bums out!

May 24, 2011

Why Use Digital Money?

We all live our lives with different levels of activity, based on different circumstances. At the most basic level, we survive with water, food, shelter and clothing. Much of our time is spent getting food and shelter, and that’s been true throughout human history. Long ago, we actually went out hunting for food and water, living in caves and discovering agriculture. Nowadays, we use money of some sort in exchange for these basics.

When we’re at the basic survival level, our own survival comes first and we take whatever resources we find to ensure that survival. Depending on circumstances, we’ll share limited resources in order to help the survival of people close to us. Think of a ship wreck and lifeboat. We need to survive individually, and if there’s enough water and food, we’ll try to help others. Presumably, each of us acts the same way, but we know that’s not really true.

It’s only after we’re fairly sure of our own survival and we can get our own resources that we move upward to the next step. With additional resources, we begin looking around for things that we’d like to have, in addition to things we need to have (what we must have). That’s where a modern economy begins to introduce whole new concepts. In today’s world we really do need transportation, an address and a connection for communication. We need income, and in most cases that means a job. Otherwise, we have to create a product to trade.

The most basic economics involve the idea of exchanging something of value. That value is in the eyes of the beholder, not in the eyes of the owner! I might have something I think is junk, but if someone else “beholds” that thing and decides they want it, then they’ve placed a value on the thing. Regardless of what I might think about that thing.

Exchange: That’s the fundamental concept.

As societies got more complicated, people started using various commodities as symbols of value. Among the most well known are gold, silver, diamonds, copper, and other metals and jewels. Because those items were considered to be equal with actual “stuff,” they became precious metals and precious jewels. “Precious” means that which has a high value to people.

If you work all day underground digging out coal from the bowels of a mountain, you’ve sacrificed your comfort, your time, your energy, your muscles and so forth. At the end of the day, you have a pile of coal that’s as valuable to you as the sum of all that labor and sweat. It’s physical coal. You own it because you dug it out of the ground. But you can’t eat coal, so you want to go buy some food.

A farmer might want some coal to keep a fire going, so that farmer is willing to give you some food in exchange for some coal. The exchange is a real one, and both of you continue to have in your possession something each of you values. The farmer now has in his possession the coal, and you have the actual food. The farmer doesn’t care about your muscles, your time or anything else. The farmer “sets the value” to himself, and YOU decide if that’s “fair.” If it is, then you exchange products.

Symbolic money is no different. If you do whatever it is that gets you a piece of gold, then you have a physical piece of precious metal. When you exchange it, you first want to get something of equal value. Secondly, whatever it is that you trade for, you continue to have something physical.

The problem with a “gold standard,” where it refers to money is that there isn’t enough gold to match all the stuff in the world. Not only that, but there isn’t enough gold to match what stuff MIGHT enter into the world. There might be enough gold for all the current stuff, but what if you want to start a business making new stuff? There isn’t enough gold.

To solve the problem, societies create money out of something that’s more readily available. Those societies arbitrarily declare the value of that new item, and it becomes real money. “Real” means that you can pay bills, pay taxes, and make legal claims based on the exchange of that money.

So what’s the difference between, say, paper money and “fiat” money?

Social money has two basic requirements. First, it MUST associate with and match some underlying real-world value. Secondly, whomever is in charge of that money MUST be honest!

For example, we might decide to use pearls as money. We know we can find a fairly large supply of pearls, but they’re not so easy to find that anyone could pile up a whole lot of pearls. When we make the decision to use those pearls, we have to assign a value to them. We have to say that pearls, from now on will equal the amount of all the food in the world. If surplus food shows up after a good harvest, then the value of each existing pearl will go down. If there’s a shortage of food, then the value of each pearl will go up.

What matters fundamentally is that the person in charge of keeping track of all the pearls in the world, MUST be honest in their numbers! They have to tell us the truth as to how many pearls are floating around. Otherwise, how would we know if the pearls should be more or less valuable? That person, therefore, must also know the truth about how much food there is in any given year.

The US Treasury and the Federal Reserve are in charge of telling us how many paper dollars there are in the world. The Bureau of Labor & Statistics is in charge of telling us how much food, work, service and product there is in the world. Both of them are lying.

In theory, at any given time you or I could go to the person counting pearls and ask to see those pearls. We could walk around and count up how much food there is, then match that food to the pearls. A “standard” means that the “thing” being used for money matches the “stuff” being exchanged as valuable.

When someone arbitrarily decides to make more money, they have to also arbitrarily tell us how much that money is worth. They make a declaration by “fiat,” and so we end up with fiat money. Fiat money is a symbolic form of exchange based on nothing at all other than someone’s say-so.

Long ago we had a gold standard, where people could physically exchange a piece of gold (or silver) for something of value. In 1913, we decided once again to go with paper money. At that time, the US Government assigned 35 pieces of paper to 1 ounce of gold. The gold was supposed to match the amount of work and production in all of America.

In 1975, we decided not to use gold anymore. (Well actually the government decided, not you and me.) The government said that we would print paper dollars in enough volume to match the entire production of the country — the United States Gross Domestic Product.

They also said they’d be honest, and tell the truth about how much paper they were printing, and how much stuff America was producing. Since then, nobody has ever been able to audit the Federal Reserve, just to…say…check to see if they’re being honest. They say they are, though, and that’s good enough for Congress.

Likewise, nobody actually audits the Bureau of Labor & Statistics, except for weird (extremist) alternative blogs and strange financial analysts. Nothing the BLS prints makes any sense, but nobody minds really. It’s good enough for the financial news reports.

Meanwhile, people got used to exchanging actual pieces of paper for actual stuff. If you bought a candy bar, you handed over some paper and metal and you got the candy bar in exchange. You could actually put that candy bar in your mouth and eat it. The store owner had to trade the paper and metal for either more candy, or for something else he or she valued.

Since the mid-1990s, the amount of paper the government needs has been growing so fast the printing machines are in danger of exploding. NONE of that paper is matched to a damn thing! They “say” it matches the US economy, but that’s a lie.

Even so, the rest of us still like to know that we have something valuable in our pocket, wallet or purse. We like to actually see our paper money in a box, an envelope or under the mattress. But we’ve been learning how to use futures contracts for money, in the form of checks.

You give me a hamburger today, valued at $1.00. In exchange, I give you a contract that tells you that sometime in the future you can go to a special place and the people there will give you a dollar. In other words, I write you a check for a buck and you hang on to it until you cash it at the bank.

That was all fine and dandy, until we discovered computers. That led us to credit and debit cards and electronic gift cards. What actually does that mean?

When we used paper money, the only reason we needed checks and checking accounts was to handle long-distance transactions. That distance might be physical, or it might be distance in time. But one way or another, a bank actually had to have a certain amount of paper money in its vaults to match the numbers in their accounting books.

The problem is that money started moving around so fast, nobody could keep up with the actual transfer of dollars! There weren’t enough trucks to move that amount of money from bank to bank. Prices started going up as more and more paper flooded into the economy. (Those pearls suddenly started being made out of plastic, and everyone who could started making pearls.)

Instead of a house needing $35,000 pieces of paper moving from one bank to another, that house required $300,000 pieces of paper. All that paper was taking up room! BUT!….no matter how screwed up, at least there was some amount of paper that matched some amount of stuff.

The problem is that we now have such a massive amount of paper, there isn’t any room to store it anymore! Not only that, but none of that paper is worth anything other than as toilet paper or kindling. It costs more to print and move that paper than it’s worth!

Enter the final disaster: Digital Currency.

This digital currency is electronic money. Now we don’t even need a “thing” to represent underlying value. No, with digital currency we can just pretend that some “thing” exists, even when it doesn’t. At that point, we no longer even need to have fiat money! From now on, we can arbitrarily move numbers around on computers, none of which mean anything at all.

It’s already impossible to comprehend 14 Trillion Dollars. The paper would be mind-boggling, or we would have $1-billion bills in our wallets. Therefore, why bother? Why not just have numbers in a machine, totally disconnected from any kind of meaning at all? You get Direct Deposit for your paycheck? Well then, why not just pay you $1-million a year? Who cares? They’re just numbers, and there’s no need to carry around actual paper in an actual wallet!

This all works only until people who actually produce things stop exchanging!

When that coal miner, who sweats and digs to pull physical coal out of the ground no longer will accept “a number” instead of real value, we’re finished. At that point, no doctor will perform services. No farmer will sell food. No mechanic will fix a car. No store will sell candy. No weaver will make cloth. No plumber will fix the toilets.

Digital currency means that we can instantly give everyone with a food-stamp card $1,000 a month. We can increase your credit card limit to $18-billion. We can increase your wage to $10,000 a month. It’s like…magic! We can give everyone as much money as they want, and never have to use chopped up trees or ink or printing presses! Nobody has to do anything, we just push a button and BLAM!….you have a new minimum wage!

Until nobody agrees anymore to give up real and valuable things!

The reason the whole world wants fiat digital money is because there’s still a limit on how much money the government can print. It’s hardly a limit at all, but the amount of paper money necessary to pretend we have an economy is still that limit. Get rid of paper money, and there’s no more limit whatsoever. At that point, the government can spent quadrillions of dollars a minute, and the only thing that changes is a computer register.

Next Page »

Blog at WordPress.com.