Stocks hit Dow 13,000 and then pulled back.
I did not see anything approaching serious selling. The markets are zombie like.
"And we headed out of the hotel, went to the airport, got on the plane and, about halfway through the flight, I found myself alone in the President’s cabin with him. I said, 'Mr. President, you don't have a cold. There’s something going on.' He said, 'You bet there is something else going on.' And he said, 'When you find out, grab your balls and run.' Pierre Salinger, On the Cuban Missile Crisis, 1995
"Do what thou wilt shall be the whole of the law."Have we not proved we were smarter, better, different from all the rest, these creatures whom we use and despise? And if these sub-humans prove to be troublesome, we will disparage them, silence them, beat them, corral them, and even burn them.
Aleister Crowley
ND2.0
Why Inequality Matters: The Housing Crisis, The Justice System & Capitalism
By Bruce Judson
February 20th, 2012
Extreme economic inequality is among the most destructive forces in a society. As inequality grows, it undermines the effective functioning of the economy, the basic tenets of capitalism, and the foundations of democracy.
Unfortunately, the housing crisis and now the housing settlement increasingly look like an example of how this mechanism works.
One of the central characteristics of highly unequal societies is that two sets of laws develop: One set for the rich and powerful and one set for everyone else. The more unequal societies become, the more easily they accept the unacceptable, and with each unrebuked violation, the powerful actors at the top of the society gain an ever greater sense of entitlement and an ever greater sense that the laws that govern everyone else don’t apply to them. As a result, their behavior becomes increasingly egregious.
In contrast, sustainable capitalism requires that all participants in a contract or bargain believe their interests will be enforced equally by the courts: Capitalism requires that Lady Justice wear a blindfold. When powerful players are permitted to alter established rules at will, capitalism ultimately collapses. Contracts and the idea of a fair bargain become meaningless as less powerful parties to an agreement know their rights will not be enforced.
Over time, citizens lose faith in government and their own ability to thrive in what becomes a corrupt economy. This uncertainty leads the small businesses, which are so often cited as important to our economy, to shy away from new activities that might put them at the risk of unequal treatment...
Modern monetary theory (often, "MMT") is applicable to countries that use fiat, non-convertible currency with a flexible exchange rate.
Modern monetary theory believes that countries that issue their own sovereign currency do not ever face a risk of being unable to pay their debts (the solvency constraint) but may, under certain circumstances, face undesirable inflation if a deficit is run in excess of the needs of the economy (the inflation constraint).
The "Debt"
In contrast to the deficit, the amount of so-called debt a government has is irrelevant. Government bonds, when issued in the currency of the country issuing them, can never be involuntarily defaulted on.
The government can always create currency, at no cost, to meet any obligation. The "debt" is merely the sum of the government's previous deficits and surpluses.
This is of course different than a household or business, who cannot create currency. As currency users, rather than currency issuers, their debt must be serviced by currency raised through economic activity. This is an example of the fallacy of composition.
Because the government can always simply print currency, a country that controls its own currency does not need to sell bonds to "borrow" funds. A government's decision to issue bonds is voluntary.
Taxes
Taxes serve two main purposes in the economy:
1. Creating demand for currency. The government accepts its currency, and only its currency, as payment for taxes owed. People must hold currency to pay taxes or they are faced with penalties, including prison.
2. Regulating inflation. Inflation occurs when aggregate demand exceeds the productive capacity of the economy. Taxes reduce the amount of money in the hands of the private sector, and thus reduce demand.
Countries that control their own currencies do not need to tax in order to spend. Such countries can always issue currency to purchase any good or service for sale in the economy. Taxes do not fund the government.
"Paper money eventually returns to its intrinsic value -- zero."And there are some very good reasons for this tendency to over print money without a system of checks and balances, transparency and restraints.
Voltaire