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This shows a fundamental lack of understanding of the shift of the world using the USD as the primary means of exchange to something else, like Keynes' Bancor or something similar. China has been calling for this for nearly a decade.

https://www.bis.org/review/r09...

At the end of the day, the problem is Congress. They have known for nearly 10 years China was going to pull the plug. This is the price we pay.

As well, I'm always amazed at people who say trade imbalances don't matter. Don't you study history? This is what World War II was about! What did they discuss when the UN was founded? Trade imbalances! They discussed nothing else of significance.

The private sector understands the alchemy of money creation, and creates at least an order of magnitude more money than governments do. The BIS reports that $76 trillion in OTC derivatives were created out of thin air by private entitites in 2013 alone. There is plenty of room for government to create the money for a basic income.

Did you know that worldwide OTC derivatives total $710 trillion, according to the Bank for Internatiional Settlements?

The private sector created some $76 trillion in one year alone.

There is plenty of room for the government to create money to spend on projects the private sector considers too long-term to invest in. Government debt is a complete distraction. There is an artificial scarcity of money.

We should be spending money on research. Using economics as an excuse not to do research is silly, since the private sector wouldn't exist without money creation and debt being rolled over or forgiven.

How about libertarian socialism. Libertarian on individual freedoms, socialist in that the government creates money to pay for social services.

As a hedge against inflation, index everything, income, bank accounts, transfer payments, everything to inflation, so purchasing power does not decrease.

Make taxes voluntary.

The BIS reports that OTC derivatives worldwide are $710 trillion. That's how much money the private sector creates, an order of magnitude more than governments.

There's no shortage of money. From http://www.bis.org/publ/otc_hy1311.pdf :

The latest BIS statistics on OTC derivatives markets show that notional amounts outstanding totalled $693 trillion at end-June 2013.

In the face of so much global liquidity, it's ridiculous to say there's not enough money for food stamps, or science, or free health care.

Could I get you to load this on it, and see how it looks?

http://www.bis.org/publ/bppdf/bispap21o.pdf

No, not a good idea. What is the point in having a Cultural Revolution? Better to just split these companies which are too big to fail into smaller chunks, kick out the top management making sure they never work in that capacity anymore, enforce layers of separation between businesses and let them free. Restore the Glass–Steagall Act and separate commercial banking from investment banking.

That fits with my idea that the standard politician idea of going after bankers' salaries and bonuses is moronic. The crux of the problem is how fat the BANKS get, not how they pay bigwigs.

One more comment: all governments seem bent on getting aid money back from the banking system ASAP, and the Herds are mooing that that's a good thing; but if you consider that the regulations of the banking system is more or less what it was when Lehman went under, central bankers included, I see it more as a "blank check " for keeping regulation lax ( or stupid, witness Basel II ); It would be very difficult for governments to press for reenacting the Glass- Steagall act, which would permanently erase excess profits at realities like Goldman Sachs, all the while asking the same companies to make those excess profits in order to repay the Government.

#1 - The CRA expansion in 1995, which put 30% more people on the housing market than there should have been, creating an incredible sellers' market in which housing, which previously had roughly paced inflation, spiraled up until people were looking at "house value" increases of over 200%.

The homeownership rate went from 64.2% in 1995 to 69.1% at the peak in 2005. That is barely an 7-8% increase, nowhere close to a 30% increase. The Community Reinvestment Act had little to do with the current mess. See BIS Working Paper #259 or this BW article. Most of the subprime lenders were not subject to the CRA and much of the foreclosure problem lies in the 'burbs where the CRA did not apply.

What explains the US net income balance?
http://www.bis.org/publ/work223.pdf

And a great mystery for the uninitated.
http://en.wikipedia.org/wiki/Federal_Reserve_Board
http://en.wikipedia.org/wiki/Fractional-reserve_ba nking
http://en.wikipedia.org/wiki/Money_multiplier

This is the stuff Hollywood movies are made of. To paraphrase the old saying, 'the worst kind of lie is the one with a grain of truth.'

This is just alarmist paranoia, and it is more than somewhat untrue. It first posits that a massive breakdown of our infrastructure will instantly lead to massive chaos.

Just like the way the North-Eastern US and Ontario descended into chaos during the blackout in August. I recall being a victim of that unfortunate few days without power. I remember, the second I heard there was no power I got out of my car and started smashing windows and "bustin' heads," because, as they say, a widespread loss of infrastructure will lead to some sort of descent into complete madness, complete with the strong turning on each other.

In fact, ATMs were down, the banks couldn't possibly guarantee all deposits. But wait! There is this funny thing called deposit insurance. Oh yes, that's right. There are safeguards in place to keep runs on banks from happening. It turns out that banks that are a member of the Canadian Deposit Insurance Corporation have insurance! This means that deposits up to $60,000 are guaranteed, despite anything that happens to the bank itself. If you have more than $60k just rotting in some bank when it could be better invested (not to mention splitting it into multiple accounts), you deserve to lose anything above the $60k anyway.

"Deposit insurance protects eligible deposits at CDIC member institutions in case of the failure of a member institution. If a member institution should fail, CDIC will reimburse you for any insured deposits you have with the failed institution." (source: CDIC: How Deposit Insurance Works

OECD countries cooperate on banking regulations in order to harmonize regulations among those countries so that they can avoid collapse and contagion among them. The Basle Committee on Banking Supervision, which is part of the Bank of International Settlements, is a forum where experts formulate regulations and guidelines that are widely, and voluntarily, adopted by national central banks worldwide in order to stimulate investment and encourage prudent banking, and discourage failures of any magnitude.

The argument that Panic is a key part of a digital Pearl Harbor is, I suppose, plausible, except there would be no panic. "Panicking" Wall Street, thus "destabilizing the financial sector" is this funny plot mechanism that people who don't understand economics (but have a thumbnail view of from the econ 100 that they dropped out of halfway through the first semester) will use in their Hollywood screenplays of those apocalyptic movies that have a frightening tendency to star Kevin Costner. This article really does read like a treatment of some ridiculous movie, with all the theatrics about "if you don't have cash, you go hungry. Then the lights wink out. Everywhere. And then it begins to get cold." Do people in 2008 not have sweaters? In this time far into the future, are all the trees deforested so no one can build a fire?

Assuming that the global financial system is so fragile that everything would just collapse is wrong, and not really worth the time I'm putting into this comment. Witness the Asian crisis of 1997-98. I must be getting senile in my old age, but I forget how many people tragically lost their lives because of the panic that ensued after the world's banking sectors collapsed. Oh right, there was a slowdown of investment, and some investors lost their shirts and some banks in Indonesia, Thailand, South Korea and Malaysia were closed or consolidated, and some people did tragically lose all their savings, but nothing close to the chaos described in this article happened. Those governments got smart, implemented tougher restrictions and accounting standards that kept banks fr

This is the stuff Hollywood movies are made of. To paraphrase the old saying, 'the worst kind of lie is the one with a grain of truth.'

This is just alarmist paranoia, and it is more than somewhat untrue. It first posits that a massive breakdown of our infrastructure will instantly lead to massive chaos.

Just like the way the North-Eastern US and Ontario descended into chaos during the blackout in August. I recall being a victim of that unfortunate few days without power. I remember, the second I heard there was no power I got out of my car and started smashing windows and "bustin' heads," because, as they say, a widespread loss of infrastructure will lead to some sort of descent into complete madness, complete with the strong turning on each other.

In fact, ATMs were down, the banks couldn't possibly guarantee all deposits. But wait! There is this funny thing called deposit insurance. Oh yes, that's right. There are safeguards in place to keep runs on banks from happening. It turns out that banks that are a member of the Canadian Deposit Insurance Corporation have insurance! This means that deposits up to $60,000 are guaranteed, despite anything that happens to the bank itself. If you have more than $60k just rotting in some bank when it could be better invested (not to mention splitting it into multiple accounts), you deserve to lose anything above the $60k anyway.

"Deposit insurance protects eligible deposits at CDIC member institutions in case of the failure of a member institution. If a member institution should fail, CDIC will reimburse you for any insured deposits you have with the failed institution." (source: CDIC: How Deposit Insurance Works

OECD countries cooperate on banking regulations in order to harmonize regulations among those countries so that they can avoid collapse and contagion among them. The Basle Committee on Banking Supervision, which is part of the Bank of International Settlements, is a forum where experts formulate regulations and guidelines that are widely, and voluntarily, adopted by national central banks worldwide in order to stimulate investment and encourage prudent banking, and discourage failures of any magnitude.

The argument that Panic is a key part of a digital Pearl Harbor is, I suppose, plausible, except there would be no panic. "Panicking" Wall Street, thus "destabilizing the financial sector" is this funny plot mechanism that people who don't understand economics (but have a thumbnail view of from the econ 100 that they dropped out of halfway through the first semester) will use in their Hollywood screenplays of those apocalyptic movies that have a frightening tendency to star Kevin Costner. This article really does read like a treatment of some ridiculous movie, with all the theatrics about "if you don't have cash, you go hungry. Then the lights wink out. Everywhere. And then it begins to get cold." Do people in 2008 not have sweaters? In this time far into the future, are all the trees deforested so no one can build a fire?

Assuming that the global financial system is so fragile that everything would just collapse is wrong, and not really worth the time I'm putting into this comment. Witness the Asian crisis of 1997-98. I must be getting senile in my old age, but I forget how many people tragically lost their lives because of the panic that ensued after the world's banking sectors collapsed. Oh right, there was a slowdown of investment, and some investors lost their shirts and some banks in Indonesia, Thailand, South Korea and Malaysia were closed or consolidated, and some people did tragically lose all their savings, but nothing close to the chaos described in this article happened. Those governments got smart, implemented tougher restrictions and accounting standards that kept banks fr