14 Responses to Current Account – Who gets the cash

  1. Chuckles says:

    E.M. May I remind you of the 1993 Heisenberg Certainty Lecture #4 presented (as always) at that years Ig-Nobel Awards Ceremony at MIT, by the esteemed Paul Krugman (cough), which was –

    Heisenberg Certainty Lecture #4.
    Paul Krugman, Professor of Economics, MIT.
    “The MIT Economics Department has now solved the riddle of
    world economic crisis. It turns out that if you add up last
    year’s reported imports and exports for all of the countries
    in the world, world imports exceeded world exports by more
    than one hundred billion dollars. You know what that means.
    It means that we are running a huge global deficit in our
    interplanetary trade. So Ross Perot has it wrong. That great
    sucking sound isn’t coming from Mexico — it’s coming from
    outer space. Space aliens are stealing American jobs.”

  2. Speed says:

    Warren Buffett in Fortune Magazine …
    America's Growing Trade Deficit Is Selling the Nation Out From Under Us. Here's a Way to Fix the Problem — And We Need to Do It Now.

    Click to access warren_buffett_in_fortune_magazine_oct_03.pdf

    I’m not crazy about the solution (Import Certificates) but the illustration (Thriftville vs. Squanderville) is instructive.

  3. Bone Idle says:

    Australia has only been negative since the disastrous Rudd and Gillard Labor governments have been elected. 5 short years to turn a positive from the Howard conservative government to a huge socialist labor negative.

  4. adolfogiurfa says:

    @E.M. Peru is in the positive side, though its surplus fell down by 50% in the last year.

  5. adolfogiurfa says:

    As exporters have changed countries, from the US and Europe to China, India,etc., the real questions would be: Who are those “kids” who have the cash? and what is it buying that cash?, the answer is easy: farm land and precious metals. Then the majority of mankind will end having nothing or, as in many cases, worthless papers….A new kind of medieval feudalism: A “Brave New World”, where “they” will be the “Alphas”, and you and me the “Gammas”.
    Aldous Huxley interview-1958:

  6. DirkH says:

    adolfogiurfa says:
    20 February 2013 at 12:53 pm
    “A new kind of medieval feudalism: A “Brave New World”, where “they” will be the “Alphas”, and you and me the “Gammas”.
    Aldous Huxley interview-1958:”

    Aldous Huxley was an avid LSD user. Very interested in chemical mind altering, in other words. His brother was globalist Julian Huxley. Very interested in shaping the new human (UNESCO) and depopulating/ruling the world (WWF).

    I can’t decide whether Brave New World was meant as a warning or as a suggestion. THe Gammas in the book are happy. The Huxley clan was a bunch of globalists.

  7. adolfogiurfa says:

    @DirkH: You are right, and he is (in the video above) enough sincere to say that the solution is DES-CENTRALIZATION, not more any centralized power at all, local economy, local governments: A kind of disappearance of all those DINOSAURS, which we all know and we can identify even by their family names, pulling the economic and political strings backstage for their own (and obvious pathological) benefit. Who having a sane mind, would desire such a degree of power?.

  8. KevinM says:

    I think the distribution of assets in the US allows an easy path to “creative default”. The 1pct transfers into non USD assets, writes policy to inflate 10:1, then transfers back into USD assets. This would require some sort of collusion by the US government and its wealthiest citizens, but I’m sure someone could introduce them to each other.

  9. R. de Haan says:

    “I can only presume that a lot of ‘current cash’ flows to Swiss banks. But the Netherlands? What in the world are they selling? I suppose the Dutch are just doing a lot of trading, as they have always done.”

    1. Compare the Netherlands with Kuwait in terms of natural gas resources
    2. big trader
    3. head offices of many multi national corporations due to double tax treaties (now to be destryed by the EU)
    4. big exporter of agricultural products and meat
    5. big financial sector which is broken down recently
    6. big international operating off shore business
    7. big logistics and transport operations, shipping, trucking, railways en airtransport/cargo

    Unfortunately the country has now entered it’s 4th depression in 3 years and the current government is tearing the country apart with crazy austerity plans and lunatic investments in wind turbines. Without the green investments there wouldn’t be a crises.

  10. John Robertson says:

    I find it amusing, that Canadians believe we will not be effected by the coming turmoil, amusing in the laugh or scream sense.
    I suspect the intention is to inflate us out of existence, in which case the land owners will be some of the few to retain something of value.
    Its probable we will wake up one morning to find our bank accounts devalued to nought, actually from an RRSP annual report, I notice the cash in my sock drawer is providing a better return over the last 10 years.The cash is only worth a 1/3 its value of 10 years ago, but it did not promise growth.So inflation is already galloping along.
    Now I hear Provincial politicians claiming those earning more than $150,000 should pay even more tax. There goes any incentive for contractors.
    Any time wealth concentrates in our economy, the government moves in and steals it.
    Taxpayers plan their retirements, build wealth there and then govt changes the rules and ensures the investors cannot adjust their accounts to comply without paying gobs of tax.
    As the bureaucrats feel contracts are non binding, it seems fair to me that their pensions should evaporate.
    Socialism is wonderful, until you run out of other peoples money.
    So what does the holder of the net cash have?
    Do they hold empty promises or real wealth?
    Do they hold wealth or a hot potato? In that, net cash may become a liability rather than just a zero as the holders try to redeem these notes, spending more effort than they are worth.
    The money was borrowed on the promise our children will pay the tab, what happens when the kids say, forget it and sell us lazy sods into slavery.

  11. Jason Calley says:

    @ E.M. ” Is there some grand strategy to creatively default on all those promises and end up with the goods for nothing? Or are we just selling our capital stock for a bowl of gruel and mug of beer?”

    I would have to sadly opine that if there s a grand strategy, it is not a strategy that benefits the masses of the USA. Most of the goods we have bought from overseas are consumer goods that currently have been used up, chewed up and metaphorically spat into the land fills. We may have gotten some short term gain, but not a long term gain. The long term effect of all those cheap goods is that we no longer have the factories, the infrastructure, or even the trained workers, to create all those products. Imagine a crack junky who has learned how to cheat his dealer for years on end. As he approaches the final end of his long and successful “scam for drugs” he looks in the mirror and sees his decaying and weakened body, his toothless grin and shouts “YAHOO! I got all that crack for NOTHING!” Yeah… that’s us!

    My unproved suspicion is that the economic damage to the US has been done on purpose, that is has enriched a small class while impoverishing the majority into serfdom. My suspicion is that it was decided sometime around 1970 or a bit earlier. The US was in the process of going to the moon — an unbelievable technical achievement! — and had a generation growing up with the idea that maybe peace was a good idea. What a dangerous combination! Something had to be done…A century and a half earlier, China had been destroyed by forcing it to accept the opium trade. The US would be hooked on a different drug, cheap VCRs, low priced clothes, goods produced by near-slave labor. Concurrently, US manufacturing was hit with OSHA, with EPA, with IRS, with every type of regulation and restriction which a bureaucrat could devise. So companies, one after another stopped making things and moved out of the country. And consumers did not complain because even though the companies were gone from the US, the goods still magically appeared on the shelves, and in fact the goods were cheaper than ever! In one generation we went from being the richest nation of (mostly free) people which ever existed, to the most debt ridden nation (of mostly controlled people) that has ever existed. I just cannot see how a switch of that magnitude can happen by accident. I cannot understand how a system that worked so successfully for almost two centuries can suddenly no longer work and completely reverse in only a few decades. I think Humpty Dumpty was pushed.

    @ KevinM “This would require some sort of collusion by the US government and its wealthiest citizens, but I’m sure someone could introduce them to each other.”

    LOL! Yeah… I am sure someone can get them together! :)

  12. R. de Haan says:

    Must read: Ketchup, not blood on the trading floor by Spengler: http://www.atimes.com/atimes/Global_Economy/GECON-05-190213.html

  13. Gail Combs says:

    Jason Calley says:
    21 February 2013 at 12:56 pm

    @ E.M. ” Is there some grand strategy to creatively default on all those promises and end up with the goods for nothing? Or are we just selling our capital stock for a bowl of gruel and mug of beer?”

    I would have to sadly opine that if there s a grand strategy, it is not a strategy that benefits the masses of the USA….
    There is a ‘ grand strategy’ and Pascal Lamy, Director General of the World Trade Organization let the cat out of the bag.

    Pascal Lamy: Whither Globalization?
    …All had lived through the chaos of the 1930s — when turning inwards led to economic depression, nationalism and war. All, including the defeated powers, agreed that the road to peace lay with building a new international order — and an approach to international relations that questioned the Westphalian, sacrosanct principle of sovereignty — rooted in freedom, openness, prosperity and interdependence.

    The profound shock of the recent financial crisis, our inability to face (let alone solve) global warming, the failure to halt nuclear proliferation, even the WTO’s stalled Doha negotiations illustrate that the status quo is no longer good enough….

    Remember H. L. Mencken’s observation ~
    “The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary. “

    Aside for the fact this quote shows that the sovereignty of nations has been a target for years, another key concept is Interdependence. Several years ago Al Gore let the cat out of the bag while presenting a national award to a Colorado FFA member. Gore asked the student what his/her life plans were. Upon hearing that the FFA member wanted to continue on in production agriculture, Gore reportedly replied that the young person should develop other plans because our production agriculture is being shifted out of the U.S. to the Third World.” The plan is to have different areas responsible for different things. Africa and South America for example would be responsible for food production, China and India for manufacturing, the US for technical inovation…. In trying to find an additional old link to that I ran across this.

    Global interdependence: The case for large-scale green energy
    Thankfully, multi-decade transformative leadership by far-sighted visionaries like Paul Hawken, Al Gore, Amory Lovins, William McDonough and Jeremy Rifkin pioneered green commerce models that have improved the global business activities of established corporations and new ones like SolarReserve.

    This can all be traced back to the Club of Rome.

    This proposed new global system is highly interdependent as, in the same manner that the human body assigns different tasks to its various organs, each region is assigned specialized and specific tasks, and is each is dependent on the others for their common survival… The resultant ideal sustainable population is hence more than 500 million but less than one billion.” – Goals for Mankind, a report by The Club of Rome, 1977

    “Paths of development, region-specific rather than based on narrow national interests, must be designed to lead to a sustainable balance between the interdependent world-regions and to global harmony. A “horizontal” restructuring of the world system is needed, i.e., a change in relationships among nations and regions and as far as the “vertical” structure of the world system is concerned, drastic changes in the norm stratum. Cooperation by definition connotes interdependence. Increasing interdependence between nations and regions must then translate as a decrease in independence….

    And cooperation, finally, requires that the people of all nations face up to an admission that may not come easy. Cooperation by definition connotes interdependence. Increasing interdependence between nations and regions must then translate as a decrease in independence. Nations cannot be interdependent without each of them giving up some of, or at least acknowledging limits to, its own independence.” ~ Mankind at the Turning Point by Club of Rome, 1974

    These quotes are lifted from The Green Agenda and Mankind at the Turning Point: Interdependence is Totalitarian Unfortunately the links within those articles to the original documents are now dead.

    Just in case you think the hamstringing of the US economy is a fluke, read this from Al Gore’s book.

    Excerpted from “The Future: Six Drivers of Global Change” by Al Gore.
    In order to reclaim control of our destiny and shape the future, we must think freshly and clearly about the crucial choices that confront us as a result of:
    * The emergence of a completely new balance of political, economic, and military power in the world that is radically different from the equilibrium that characterized the second half of the twentieth century, during which the United States of America provided global leadership and stability-shifting influence and initiative from West to East, from wealthy countries to rapidly emerging centers of power throughout the world, from nation states to private actors, and from political systems to markets;

    His buddy Bill Clinton is of course responsible for the rise of China.

    Chasing the Dragon: Clinton’s China Policy

    …Bill Clinton took contributions he knew came from China, and played another angle as well. US companies wanted to sell China military technology, but the sales were prohibited by law. Economic sanctions for the Tiananmen square massacre and restrictions on technology exports prevented these companies from selling China the armaments they wanted.

    In return for campaign contributions, the President shifted regulation of technology exports from the State Department to the free-wheeling Commerce department. The administration also relaxed export controls and allowed corporations to decide if their technology transfers were legal or not. When easing restrictions wasn’t enough, Clinton signed waivers that simply circumvented the law. The President’s waivers allowed the export of machine tools, defense electronics, and even a communications system for the Chinese Air Force….

    Clinton even involved the Department of Energy, caretaker of our nuclear weapons, in his fundraising schemes. In 1994 and ’95 then Energy Secretary Hazel O’Leary accompanied Johnny Chung, John Huang, Charlie Trie, and Bernard Schwartz on trade missions to China. Shortly afterward the DOE relaxed security at US weapons labs. Wen Ho Lee, an ethnic Chinese physicist assigned to Los Alamos, illegally transferred data on nuclear warheads to his private computer files.

    In June of 1995, the CIA learned that China had stolen the crown jewels of our nuclear arsenal, including the neutron bomb and the W-88 miniaturized warhead. Later that year National Security Advisor Anthony Lake is briefed on the thefts. He is replaced on the Security Council by Sandy Berger, a former lobbyist for the Chinese government….

    With their new wealth, China has sought military parity with the United States. They have been aided by President Clinton and corporate America. US companies spent over 100 million dollars lobbying congress to pass the China Relations Act. Most of that money went to buy congressional votes with campaign donations.

    A few American stockholders have profited immensely from modernizing China’s armed forces. Still more US companies have built factories in China. These factories and plenty of cheap, docile labor earn huge profits for these investors. Protecting these profits is Clinton’s China policy.

    None of the economic disasters in the EU and USA are a fluke. They were planned and executed with malice aforethought and the planners have profited handsomely.

    Don’t forget Eugenics and the Fabians with their plans to smash the world and “REMOULD IT NEARER TO THE HEART’S DESIRE” as depicted in their stain glass window now proudly hanging in the London School of Economics. The same LSE where Pascal Lamy, Bill Clinton, Tony Blair and the Federal Reserve Chairman Ben S. Bernanke all lecture.

    Eugenics was the brainchild of Charles Darwin’s cousin Francis Galton.

    Fabian founder Beatrice Webb said eugenics was “the most important question” of all. Even for George Bernard Shaw, ‘the only fundamental and possible Socialism’ was ‘the socialisation of the selective breeding of Man’.

    [Fabian] H.G. Wells, vented his frustration and indignation in a direct address to the working class. ‘We cannot go on giving you health, freedom, enlargement, limitless wealth, if all our gifts to you are to be swamped by an indiscriminate torrent of progeny,’ he complained, ‘…and we cannot make the social life and the world-peace we are determined to make, with the ill-bred, ill-trained swarms of inferior citizens that you inflict upon us.’

    Eugenics was no quickly passing fad. The Eugenics Society reached its peak, in terms of membership, during the 1930s, and the cusp of the following decade saw the zenith of its prestige. The [Fabian] economist John Maynard Keynes served on the society’s governing council and was its director from 1937 to 1944. Once again, this was no casual hobby. As late as 1946 Keynes was still describing eugenics as ‘the most important and significant branch of sociology’. …. link

    Julian Huxley, [another Fabian] the first Director-General of the United Nations Educational, Scientific, and Cultural Organization (UNESCO) and a member of the Eugenics Society SEE: Introduction to Eugenics

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