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September 15, 2008

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If the duhs and ignos get in, lay low, garden, save money (or tradable items), stockpile seeds, grain, and ammo. Have a good gun handy (semi- or fully auto is best).

"The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt." -- Bertrand Russell

Mr. Talton wrote:

"The reality: there's no free market. Markets are always gamed one way or another. They can be gamed for the good of all by regulation that ensures transparency, fairness and competition, or gamed for the good of the few, as they are now.

"And you're watching socialism -- private socialism. It's on display with the rescues of the shadow banking system -- profits go to the rich while losses and costs are bourne by taxpayers, in other words, socialized."

Wow! This is so good. Way to tell it like it is, Mr. Talton.

Here's something else to consider:

Consider the economy systemically: total wages and salaries paid equal the total amount these worker-consumers have to spend on goods and services. But this would make labor costs equal to or less than (with savings) consumer purchases, whereas capitalism implies that final prices of goods and services equal labor costs plus a mark-up, with the difference being profit.

So , a profit-based economy cannot be supported on the basis of wages and salaries alone, even if workers spend all wages and salaries on consumption and save nothing. Because wages + salaries = labor costs, whereas profits equal sales - labor costs. This implies the existence of purchasing power in addition to wages and salaries.

Where does the additional purchasing power come from? In large part, credit. What is the ultimate basis of credit, whether in the form of mortgages, car loans, business loans, or consumer loans? Well, credit must be repaid by means of deposit accounts. The basis of deposit accounts are bank reserves. Systemic bank reserves can only be increased by actions of the Federal Reserve System (or in other countries the central bank equivalent).

So, ultimately, the profits in excess of labor costs, which go to support the incomes of the owners, must be paid by the central bank.

Exactly how this works is the subject of another comment, but consider the fact that if this analysis is accurate we already have a form of "socialism" where the government pays the incomes of the owners! Then ask yourself if this is the best form of socialism possible, or merely a perverse version of it.

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