Perspectives on the global economic changes

[Neshant]

interesting. They are suggesting capital levy on the fiat wealth. If one does not keep their wealth in fiat currency then what are they going to do. Marc Faber says stay in one country, keep your wealth in another and hold a pass port of a third country. Makes eminent sense for those who can afford it, coz there is no limit to idiocy of the banksters.

Banks are now getting politicians to write into law that FDIC will cover their gambling bets in the derivative market.

As you probably know, the derivative market is a market based on leveraged bets. For every point some bet goes down, the loss is magnified 10 to 100 fold.

It might be a good idea to get at least some of your money out of the bank and keep it in physical cash.

Keep at least 25% on hand in notes.

These cocksuc&kers are going to run this thing into the ground from the looks of it.

Or maybe the govt will help rig the market to make it look like the banks "earned" profits. Either way someone is going to get screwed big time.

[Neshant]

House Votes to Protect Citigroup if It Gambles and Loses

http://www.allgov.com/news/where-is-the ... ews=851642

One of the nation’s leading banks wants Congress to amend federal law adopted in the wake of the 2008 financial crisis so it and other Wall Street institutions can go back to gambling with risky investments and have taxpayers cover the losses again if they bet wrong.

Under the Dodd-Frank Act of 2010 (pdf), banks can no longer use monies backed by the Federal Deposit Insurance Corporation (FDIC) to invest in high-risk derivatives, such as “swaps.” This prohibition was adopted because derivatives crippled numerous key players on Wall Street five years ago, including Countrywide Mortgages, Bear Stearns, AIG, Lehman Brothers, Washington Mutual, Wachovia and others.

One of those “others” was Citigroup, which had to be bailed out by the federal government to the tune of $45 billion. A Citigroup lobbyist, though, was primarily responsible for authoring the Swaps Regulatory Improvement Act, which was approved by the U.S. House of Representatives two weeks ago.

The bill would wipe out Section 716 (pdf) of Dodd-Frank that requires banks to use a non-bank entity for trading commodity, energy and other swaps. In other words, if the legislation becomes law, financial institutions could return to conducting high-risk trading with funds that are backed by the FDIC (i.e. the taxpayer).

The legislation cleared the House on a 292-122 vote...

[TSJones]

eurozone must have back stops

http://finance.yahoo.com/news/euro-zone ... 17972.html

Euro zone governments must put in place ways to financially support their banks in case they need more capital as a result of health checks by the European Central Bank next year, ECB Executive Board member Joerg Asmussen said on Friday

[TSJones]

House Votes to Protect Citigroup if It Gambles and Loses

http://www.allgov.com/news/where-is-the ... ews=851642

One of the nation’s leading banks wants Congress to amend federal law adopted in the wake of the 2008 financial crisis so it and other Wall Street institutions can go back to gambling with risky investments and have taxpayers cover the losses again if they bet wrong.

Under the Dodd-Frank Act of 2010 (pdf), banks can no longer use monies backed by the Federal Deposit Insurance Corporation (FDIC) to invest in high-risk derivatives, such as “swaps.” This prohibition was adopted because derivatives crippled numerous key players on Wall Street five years ago, including Countrywide Mortgages, Bear Stearns, AIG, Lehman Brothers, Washington Mutual, Wachovia and others.

One of those “others” was Citigroup, which had to be bailed out by the federal government to the tune of $45 billion. A Citigroup lobbyist, though, was primarily responsible for authoring the Swaps Regulatory Improvement Act, which was approved by the U.S. House of Representatives two weeks ago.

The bill would wipe out Section 716 (pdf) of Dodd-Frank that requires banks to use a non-bank entity for trading commodity, energy and other swaps. In other words, if the legislation becomes law, financial institutions could return to conducting high-risk trading with funds that are backed by the FDIC (i.e. the taxpayer).

The legislation cleared the House on a 292-122 vote...

I don't think the senate or the president will ever sign this bill. It's dead in the water.

[Austin]

Max Keiser and Stacy Herbert discuss confessions and corruption, back doors and austerity. They look at Mark Carney’s claim that house prices are rising because of expectations of higher wages and at David Cameron’s calls for permanent austerity for the non-corporate class. Max suggests QE is being used not only to keep TBTF banks afloat but to keep whole bankers that would otherwise be vivisected. In the second half, Max interviews Cody Wilson about living in a trifecta of disruptive technology as a citizen of the future in which bitcoin means a thousand silk roads and fanfare for the common man.

http://rt.com/shows/keiser-report/episo ... eiser-773/

[panduranghari]

As you probably know, the derivative market is a market based on leveraged bets. For every point some bet goes down, the loss is magnified 10 to 100 fold.

It might be a good idea to get at least some of your money out of the bank and keep it in physical cash.

.

[Austin]

Putin: EU blackmailing Ukraine over halt in trade deal

Russian President Vladimir Putin has accused the EU of "blackmailing" and “pressuring” Ukraine over its decision to suspend preparations for a trade pact with the bloc. He added that Ukraine’s decision will be clear in the next few days.

"When we heard (I just found out yesterday) that Ukraine has suspended – not canceled but suspended – negotiations with the EU and wants to review everything, we heard a threat from the EU to Ukraine up to the point of holding mass protests. This is pressure and blackmail," Putin said at a joint press conference with Turkish Prime Minister Recep Tayyip Erdogan in St. Petersburg.

Putin reiterated Russia's readiness to hold three-way talks with the EU and Ukraine on trade and the economy.

“President Yanukovych suggested that we should have three-way talks on these problems,” Putin said. “We are ready to participate in such talks, and this is in a way a test of how serious our European partners’ intentions are. It’s a test of how ready our European friends are to conduct negotiations on an equal basis, or the absence of such readiness.”

Putin added that there “shouldn’t be any politicizing” of the situation, adding that Turkey has a “big experience of negotiating with the EU” and Russia will ask the advice of Ankara on how to behave in this situation.

Erdogan smiled, and said it “was a not a joke,” as Turkey has 50 years’ experience of trade talks with the EU.

Ukraine’s integration with the EU is not a political issue, but an economic one, Putin added.

At one point in the press conference, Putin lightened the mood with a joke – at America’s expense.

A Russian journalist brought up the question of a phone call between Ukrainian President Viktor Yanukovych and his Lithuanian counterpart, Dalia Grybauskaite. Grybauskaite’s aide, Jovita Neliupšienė, claimed that Moscow had warned Kiev off the EU deal, the journalist said.

Putin replied he had no information about what was said in the call, but added, smiling, that maybe the question should be asked instead to the United States.

“I do not know what the president of Ukraine and the president of Lithuania were talking about. Maybe we can ask our American friends and they can tell us. But they haven’t said anything to us yet," Putin said, apparently referring to the latest scandal with the US National Security Agency’s surveillance program and their tapping of EU leaders’ phones.

Ukraine’s government signed a degree Thursday suspending preparations for the association agreement between Ukraine and the EU. Lawmakers said that the decision was taken after Kiev considered the effects of the association on its trade relations with Moscow.

Russia welcomed Kiev’s desire to rekindle ties with Moscow, and Putin said that he wasn't completely against Ukraine's association with the EU. The Ukrainian president however said that his country would continue its efforts towards European integration, despite the “difficulties.”

Putin said Friday that after Ukraine’s decision, the two countries now have a free trade zone agreement.

“It means that in many product groups, very sensitive to both countries, we have zero export and import tariffs. The level of customs protection of our territory in relations with EU partners is very different. We have achieved this status as a result of negotiations within the framework of the World Trade Organization, which were carried out over the past 17 years.”

If Ukraine signs a trade pact with the EU resetting its trade tariffs, then this would automatically affect Russia if it keeps its free trade zone with Ukraine, Putin said, adding that this could destroy entire sectors of the Russian economy.

Putin said that the competitiveness of Russian agriculture and a number of other industries had not yet met the European Union’s requirements. If Ukraine went ahead with its Euro-integration deal, Russia would be forced to cancel preferential tariffs with Kiev, he said.

[Austin]

Max Keiser and Stacy Herbert discuss QE as the meals on wheels for over-leveraged, consume-aholic debt addicts with Ben Bernanke as the pusher with a story to tell which is that ‘cheap money is good’ for buying depreciating assets like cars and where ‘gold slamdowns’ are meted out to those who refuse to stay intoxicated on that cheap money. In the second half, Max interviews Barry Silbert of Second Market and BitcoinTrust.co about the future of bitcoin in terms of regulation, market dominance and how the transaction network will change the way people think of money.

http://rt.com/shows/keiser-report/episo ... eiser-144/

[Neshant]

Sounds like they are planning to grab depositor's money Cyprus style.

Why else would they be planning the freezing of funds.

Get some part of your cash out of the bank and under the mattress. You never know when one of these guys will come up with their next bright idea.
____

Fed's Tarullo details plans to counter bank runs

http://www.cnbc.com/id/101222045

Global regulators need more policy tools to counter the risk of devastating bank runs and should have powers over a wide array of market participants , U.S. Federal Reserve Governor Dan Tarullo said on Friday.

"There is a need to supplement prudential bank regulation with a third set of policy options in the form of regulatory tools that can be applied on a market-wide basis," Tarullo said at a conference on shadow banking.

[TSJones]

^^^^^^Unless you are exceeding the $250,000 FIDC insurance limit at any one particular bank, I wouldn't worry about it. They are searching for whales. The little people won't be running on a bank. Diversification is your friend.

[Neshant]

You obviously don't understand that FDIC does not even have enough money to cover 1% of total outstanding deposits. The govt will not and in any case can not print trillions to cover all deposits. Bond holders will see this massive devaluation and start dumping Treasuries (govt bonds) immediately sending yields higher and making the national debt unpayable.

What's worse is that certain companies which are leveraged up the wazoo like GE and a bunch of other financial firms (not banks) gambling in the markets have declared themselves banks and availed themselves to FDIC coverage.

Insurance only works when 1 to 5% of the of the population collects while the others pay in without collecting. It does not work when everyone wants to collect.

That's the whole reason this fed guy wants the power to freeze and grab those funds ahead of time.

My guess is they will grab the 401k first and turn it into worthless IOUs. But by that time, a bank run would have already started as people would anticipate the next move. People will be rushing to cash out of the stock market too hoping they can get their physical cash before govt freezes their stock or bank accounts.

Get a third of your money out of the bank now. In the Great Depression, it was the collapse of one bank in Austria that triggered a bank run across the world. That was in an era when most people did not even have a phone. Today news of any tremor will move like greased lightning and the funds will be grabbed in the blink of an eye.

[TSJones]

^^^^ To say that the US banking system is going to collapse is making a very sweeping statement. It is constantly made about the derivatives market but it never happens. It only happens in certains sectors and the Fed can handle sector collapses. Just as it did in 2008.

FDIC applies to retail deposit banks only. It covers the small depositors not the whales, not securities dealers or any other type of financial institution.

What type of collapse do you envision? A comet striking the earth? Black plague? What?

[Neshant]

2008 was very nearly the end of the leveraged fiat money system. Derivatives did collapse and it is only massive
debt (shifted onto the public's back) and money printing that is propping it up. But that won't go on indefinitely.

The ultimate killer of this system is leverage - the same leverage that made western countries rich at a rapid pace
is now working to the downside. Leverage means to gamble with the fruits of someone else's labor.

As the fiat monetary system is fractional (which is to say leveraged), there is less distinction between a savings bank
and an investment bank gambling its arse away in the markets. Thus no deposit ends up being safe.

The party will begin when savers come to realise that none of their deposits the bank has lost will (or for that matter
can) be covered by any entity.

[panduranghari]

^^^^^^Unless you are exceeding the $250,000 FIDC insurance limit at any one particular bank, I wouldn't worry about it. They are searching for whales. The little people won't be running on a bank. Diversification is your friend.

So FDIC will give you money if your bank goes bust?

Who gives FDIC the money? US Fed.

Who gives US FED the money? Printing presses?

Ayn Rand said -“It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a ‘dismal science.’ But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.”

[TSJones]

^^^^^^Unless you are exceeding the $250,000 FIDC insurance limit at any one particular bank, I wouldn't worry about it. They are searching for whales. The little people won't be running on a bank. Diversification is your friend.

So FDIC will give you money if your bank goes bust?

Who gives FDIC the money? US Fed.

Who gives US FED the money? Printing presses?

Ayn Rand said -“It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a ‘dismal science.’ But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.”

Ayn Rand was a Jewish exile from Russia where her family lost everything they had due to anti-Jewish discrimination pogroms both Czarist and communist. Her entire life reflected that. Plus, she was one of the biggest hypocrites that ever lived.

We haven't had a small depositor run on banks since 1933 when the FDIC was created. It has been tested many times since then. That's 80 years. Blowhards and gold bugs have been predicting its demise since it was created and Roosevelt brought so called "socialism" to the US.

[Neshant]

We haven't had a small depositor run on banks since 1933 when the FDIC was created.

We have not had declining real estate prices since 1933. Except now we do. That pyramid scheme has ended.

Derivatives are a fairly recent creation and the amount of derivatives that exist has skyrocketed since 2000. The huge leveraged bets made on real estate and all things related to real estate have collapsed. The realization of those massive losses are merely being forestalled with even more debt and market rigging.

Leverage is what will kill this system just as fast as it created all the bogus wealth that wasn't backed by real productive output.

If you notice, you have no answer as to where the money will come from to pay depositors in the event of a bank run.

Sooner or later, some sucker has to eat huge losses to pay for all the leveraged bets that have blown up.

[TSJones]

^^^^ And no has told me why the small depositors will run on the bank other than the US banking system is going to collapse because everyone has borrowed so much money. And I have yet to get a response that anyone understands that the FDIC only covers the small depositors at the retail banks. Yet you are saying the government is going to confiscate their money. Why should they if the small depositors don't run? They haven't run in 80 years. Yet, you insist they are going to run.

Can everybody get their money out if everybody runs? No. And let me tell you something, you can't breathe either if there is no oxygen in the atmosphere. The sky is falling!

Happy Thanksgiving everyone!

Things to argue about over the Thanksgiving table:

http://drezner.foreignpolicy.com/posts/ ... anksgiving

*note you may have to google this article to access it.

[svinayak]

2008 was very nearly the end of the leveraged fiat money system. Derivatives did collapse and it is only massive
debt (shifted onto the public's back) and money printing that is propping it up. But that won't go on indefinitely.

The ultimate killer of this system is leverage - the same leverage that made western countries rich at a rapid pace
is now working to the downside. Leverage means to gamble with the fruits of someone else's labor.

As the fiat monetary system is fractional (which is to say leveraged), there is less distinction between a savings bank
and an investment bank gambling its arse away in the markets. Thus no deposit ends up being safe.

The party will begin when savers come to realise that none of their deposits the bank has lost will (or for that matter
can) be covered by any entity.

If people have not understood this post it has to be read many times. This is one of those post which is top of the list.

[TSJones]

Here's some gold action for ya.

http://finance.yahoo.com/news/venezuela ... 01331.html

Talk of possible deals with foreign banks began when the opposition said last week that the Venezuelan government was negotiating a swap operation with Goldman Sachs (GS) involving 1.45 million ounces of gold worth around $1.86 billion.

A senior government source said on Wednesday that nothing was finalized, "but if there's an opportunity to do something, it could be done."

Such an operation would effectively let Venezuela borrow against the value of part of its gold reserves, using them as collateral and paying interest to the bank.

Opposition leader Henrique Capriles also said last week that the government was planning an operation in which Bank of America (BAC) would help pay off debts to foreign suppliers who now have billions of dollars in pending invoices due to payment delays caused by the nation's currency controls.

And dang, gold is at 1244.00 an ounce.

What's happening to gold Neshant?

[Theo_Fidel]

TSJ,

To be fair Neshant is not one of the unrequited gold bugs. From what I understand of his comments it is paper money that he concerned by and gold maybe a option .
He thinks the bankers are playing fast and loose with the system and I happen to agree with him.

Where I don't agree is that wealth production will hit a brick wall.
Every year the world produces $40 Trillion of fresh wealth.
This is more than enough to write off all the losses the system may produce.
Debt should also be compared to assets. The assets of GOTUS or for that matter GOI run into some multiple of the $100 Trillion range.
Losses are produced from risk taking. Over time risk taking pays off big time and the losses are more than compensated with new wealth.

Except that is in the financial sector. Risk taking losses here are not compensated. Hence the need for periodic bail outs.
--------------------------

But yes gold has been in a free fall. I think there is a risk of sub-$1000 prices because production is mismatched with demand. The low cost producers too are producing way too much.
It will recover however to about the inflation rate. In the long run gold appreciates about 2%-3% per annum. Just about guaranteed.

[TSJones]

Here is what is happening in the US and it is giving to speculation of seizing small depositors cash which is not in the plans:

Per Wiki:

It is widely anticipated that the Financial Stability Oversight Council will eventually designate certain significant asset managers as nonbank systematically important financial institutions (Nonbank SIFIs).[8] The FSOC recently asked the U.S. Treasury Department’s Office of Financial Research (OFR) to undertake a study that provides data and analysis on the asset management industry.[9] The study analyzed the industry and describes potential threats to U.S. financial stability from vulnerabilities of asset managers. The study suggested the industry’s activities as a whole make it systemically important and may pose a risk to financial stability. Furthermore, it identified the extent of assets managed by the major industry players. This request for the study is considered by some as a first step in by the FSOC in reviewing the industry and individual player to determine which are systematically important. Once designated as systematically important those entities will be subject to additional oversight and regulatory requirements.[8]

What is happening is political backlash and rumour mongering to stop this reform. "They are going to take your deposits" is their refrain in order generate poltical fear and anger. Because if they do, it is hoped the small depositors will get their legislator stop it.

Companies like Metropolitan Insurance and AIG have already been declared a SIFI and they hate it. So does Goldman et. al.

[Austin]

Debt should also be compared to assets. The assets of GOTUS or for that matter GOI run into some multiple of the $100 Trillion range.

I am not sure if India has assets in $100 of Trillions of Range , How do we arrive at such figure ?

[shyam]

Every year the world produces $40 Trillion of fresh wealth.
This is more than enough to write off all the losses the system may produce.
Debt should also be compared to assets.

Debt is not equivalent of assets. If one person buys home for $100K more, the asset prices of all houses in that neighborhood goes up by $100K. It goes down in the similar way too. There is no similar effect on the debt. It doesn't go up for or down for others, even for the borrower, it doesn't go down without paying it off or writing off (i.e. passing on loss to someone else).

If you look at the house price scenario, the person who purchased the house for $100K more, incurred the $100K additional debt (assuming he took loan) to buy the house, and there by creating 9 others (say there were 10 houses in that neighborhood) $100K wealthier (i.e. $900K in asset value creation for $100K debt). It also tells us that by taking small debt, system can create huge asset value. This increased asset value is useful as collateral for borrowing money (i.e. to take more debt), otherwise it is good on paper only. But to realized the actual increase in asset value, someone else has to take $100K debt (assuming he took loan) when owner sells that house. If that additional $100K debt is not available in the system, the house price will retrieve to its original value.

It looks great when asset prices goes up for a much smaller debt increase, but it has similar rate when it goes down too. But debt will remain the same, to be paid off.

[Theo_Fidel]

I am not sure if India has assets in $100 of Trillions of Range , How do we arrive at such figure ?

Well, all the public assets of India belong to the government one way or another. From roads, bridges, dams, canals, coal deposits, iron ore deposits, oil deposits, forests, land, etc, etc. For instance the government can always 'sell'/lease a highway to a private group and allow tolls on it. Same is true of USA.

Assets of GOI are not often counted but are very high. Assets of GOTUS of course are higher.
-----------

Shyam,

I read it three times but could not understand most of what you said.
Don't know anyone who said debt is equivalent of assets.

[Austin]

^^ What you are stating is equally true for any other nation on earth atleast any big nation .... but just because one has the asset does not automatically translate into having trillions of dollars might not be even hundreds of billions.

[Theo_Fidel]

Yes, It is. which is why all the rhona-dhona about government debt is quite silly WRT the numbers.

BTW one can do the numbers quite easily. It is an asset until it is monetized.
Take coal alone for instance. India has ~ 250 Billion tons assessed so far. International market price for coal is $60-$100 per ton. But lets use a conservative $30 per ton number. 250x30= $7.5 Trillion dollars. So on so forth.

BTW the USA has 5 Trillion, tons of coal.

[TSJones]

^^^^^That's the reason why we should rely upon that amount of goods and services produced during the year. It more accurately reflects the economic activity of any country. If a government is assuming too much debt as a percentage of the GDP then obiviously these are potential signs. That is the reason why GDP growth rate is so important.

Then the argument gets down to what is too much government debt and what are you spending it on? It's a vicious circle. Technological and agricultural growth are also very important. The government serves as an incubus for this. There would no railroads crossing the US coast to coast w/o government programs. There would have been no internet w/o DARPA sponsoring research at various universities in the US. I cud go on nad on......

Interesting factoid: The Deep Space Network was authorized in 1963 by NASA? That's before the internet. Just goes to show ya "necessity is the mother of invention"........

[Theo_Fidel]

As I said it is not the Debt/GDP of governments that matter than more mundane things like jobs, GDP growth, inflation, etc. The absolute number of Govt debt is usually meaningless when compared to assets.

[gakakkad]

by some Indicator a figure of 14t was quoted as total Indian assets...the amreeki figure was 64 t...cant remember the source...

[TSJones]

Indian stocks climb most in asia:

http://www.bloomberg.com/news/2013-11-2 ... cmpid=yhoo

[shyam]

Shyam,

I read it three times but could not understand most of what you said.
Don't know anyone who said debt is equivalent of assets.

You always suggest to compare debt with asset values, and not GDP. It can't be done unless they are equivalent to/similar to/mirror image of the other. What I was saying is that they have very different behavior and so they can not be compared.

[Theo_Fidel]

by some Indicator a figure of 14t was quoted as total Indian assets...the amreeki figure was 64 t...cant remember the source...

I believe that was the capital stock number. Which is a subset of total assets.

G saar, I remember the discussion that we had a few years ago.

http://data.worldbank.org/data-catalog/ ... of-nations

Here the data I slotted in back then from the world bank on the wealth of nations.
Why are some nations rich and some poor.
Left side is percapita. right side is total.



-----------------------------

Shyam,

Assets can very much be monetized and turned into cash.

If you go to the bank to borrow money your coconut farm asset value will be used as collateral.
You would not just use your income from coconuts as collateral right.

In the same way debt/GDP is a meaningless ratio.

[shyam]

I said, the assets are useful only for further borrowing (i.e. creating more debt).

[Austin]

The World’s Most Resource-Rich Countries

http://247wallst.com/special-report/201 ... ies/print/

[Neshant]

Here's some gold action for ya.

Not sure why you're babbling about gold when I'm talking about cash.

It is cash in the bank that is at risk.

What actions governments take when depositors demand their savings and banks are unable to pay will determine if gold comes to be seen as the only trustworthy money.

[chanakyaa]

Minutes from a 1974 Henry Kissinger Staff Meeting on Gold

The following excerpts are from a transcript of a 1974 meeting held by the then Secretary of State Henry Kissinger and his staff. This particular meeting was held on April 25, and focused on an European Commission Proposal to revalue their gold assets. What follows is an incredible insight into the minds of powerful American leaders scheming to maintain power and show other nations their place. What is most significant is how clearly they understood that demonetizing gold was a critical strategy to maintaining a dominant power position in the world..

http://libertyblitzkrieg.com/2013/11/30 ... g-on-gold/

Full Transcript http://history.state.gov/historicaldocu ... 31/d63#fn1

[Neshant]

[chanakyaa]

2008 was very nearly the end of the leveraged fiat money system. Derivatives did collapse and it is only massive debt (shifted onto the public's back) and money printing that is propping it up. But that won't go on indefinitely.

The ultimate killer of this system is leverage - the same leverage that made western countries rich at a rapid pace is now working to the downside. Leverage means to gamble with the fruits of someone else's labor.

As the fiat monetary system is fractional (which is to say leveraged), there is less distinction between a savings bank and an investment bank gambling its arse away in the markets. Thus no deposit ends up being safe.

The party will begin when savers come to realise that none of their deposits the bank has lost will (or for that matter can) be covered by any entity.

Neshant, agree on the leverage. But using leverage is not proprietary to western world. Using leverage and using leverage intelligently to advance the national interest, feels like, two separate things. Of course, it comes with it a package hidden troubles when things go out of control.

Fiat currencies are a great mechanism (tool) for the disciplined countries (i.e. west) to use against under developed, undisciplined countries (including India). I believe that all those who hate fiat currencies, when realize what an incredible tool or competitive advantage it has brought them in the past, they would stop hating it.

[Neshant]

I don't know what you mean by "disciplined" and "non-disciplined".

[Neshant]

Interesting. So the next step is to outlaw cash transactions while starting up an even more worthless digital currency automatic theft scheme ?
___________________________

To sell this new rip-off scheme, Summers has conjured up an explanation based on the crude and discredited Keynesianism of the 1940s that explained the Great Depression as a problem caused by too much savings. Instead of spending their money, people hoarded it, thus causing aggregate demand and employment to fall.

Summers says that today the problem of too much saving has reappeared. The centerpiece of his argument is “the natural interest rate,” defined as the interest rate at which full employment is established by the equality of saving with investment. If people save more than investors invest, the saved money will not find its way back into the economy, and output and employment will fall.

Summers notes that despite a zero real rate of interest, there is still substantial unemployment. In other words, not even a zero rate of interest can reduce saving to the level of investment, thus frustrating a full employment recovery. Summers concludes that the natural rate of interest has become negative and is stuck below zero.

How to fix this? The way to fix it, Summers says, is to charge people for saving money. To avoid the charges, people would spend the money, thus reducing savings to the level of investment and restoring full employment.

Summers acknowledges that the problem with his solution is that people would take their money out of banks and hoard it in cash holdings. In other words, the cash form of money provides consumers with a freedom to save that holds down consumption and prevents full employment.

Summers has a fix for this: eliminate the freedom by imposing a cashless society where the only money is electronic. As electronic money cannot be hoarded except in bank deposits, penalties can be imposed that force unproductive savings into consumption.