The personal savings rate according to the U.S. Bureau of Economic Analysis is the “percent of disposable personal income.” It was very stable from 1951 to 1984 at an average of 9%. In the last 25 years, it has quickly approached 0%, diving negative for one quarter in 2005!
World War I combat dead: 9 million
World War II combat dead: 15 million
Total War combat dead in the 20th century: 35 million
Democide (governments killing civilians [their own or prisoners]) in the 20th century: 262 million
The most authoritative sources, widely relied in the field of war studies, are the statistical books of J. David Singer (search under COW Project). His figure for World War II war dead is 15,000,000. Now, you may think he is in error, since that often given for the U.S.S.R. alone is about 20,000,000, and 50,000,000 to 60,000,000 is the total for the war often cited. What has caused these massive disparities is the confusion between those killed in combat and its crossfire, and those murdered by governments during the war (democide). Aside from battle or military engagements, during the war the Nazis murdered around 20,000,000 civilians and prisoners of war, the Japanese 5,890,000, the Chinese Nationalists 5,907,000, the Chinese communists 250,000, the Nazi satellite Croatians 655,000, the Tito Partisans 600,000, and Stalin 13,053,000 (above the 20,000,000 war-dead and democide by the Nazis of Soviet Jews and Slavs). I also should mention the indiscriminate democidal bombing of civilians by the Allies that murdered hundreds of thousands, and the atomic bombing of Hiroshima and Nagasaki. Most of these dead are usually included among the war-dead. But those killed in battle versus in democide form distinct conceptual and theoretical categories and should not be confused. That they have been consistently confounded helps raise the toll during World War II to some 60,000,000 people, way above the estimated 15,000,000 killed in battle and military action. And that the almost universally accepted count of genocide during this period also is no more than “6,000,000″ Jews, around 13 percent of the total wartime democide, has further muddled research and thought.
Overall, both World War I and World War II had about 24,000,000 (combat) war dead. This leaves still many, and smaller, wars to go to reach my approximate 35,000,000. I did a through search of the estimates of war dead for each nation, 1900-1987, and you can find them in my books Lethal Politics for the U.S.S.R., China’s Bloody Century, Democide for Nazi Germany, and for all others, Statistics of Democide.
Democratic Peace Q&A, R.J. Rummel, Honolulu: Department of Political Science, February 20, 2005, http://www.hawaii.edu/powerkills/QA.V2.HTML.
SEIB: So, the central bankers [in the late 1920s] essentially adopted this strategy of trying to defend, at all costs, a monetary system that really had become an anachronism at that point.
AHAMED: Exactly.
SEIB: And the policy mistakes were in defense of something that they should have just let go.
AHAMED: Exactly.
SEIB: And in the U.S., that policy mistake took the effect of very low interest rates, designed to help the Europeans by keeping the interest rates low, so that they could handle these massive bills that they had to pay [from World War I].
AHAMED: Yeah, and the signature moment was in the middle of 1927, and the pound was coming under increasing pressure, and the central bankers organized a secret meeting. In an unusual place… Long Island [NY]… It was actually at the estate of Ogden Mills in Westbury, Long Island. And they sort of tried to stitch together a deal to keep the structure going. And the deal was that the U.S. would ease interest rates. And you can almost date the beginning of the stock market bubble from the day The Fed eased in July 1927. Within three months, the stock market was up 20% and it never looked backed thereafter.
SEIB: That has a familiar ring to it, doesn’t it? Very low interest rates produce an inflated stock market. Is that the same scenario that we just saw over the last say five years in the United States today?
AHAMED: Yeah, I mean I think less so the stock market and more the real estate this time. But yeah, the similarity is, that then and now, we had a bubble. Then it was in the stock market, this time it was in real estate. Both bubbles were caused by a mistake in Fed policy. Interestingly enough, both bubbles were exasperbated, and some would say even caused, by a malfunctioning international financial system. Then, it was the decision to ease to prop up the pound. This time it was the consequences, or the effects, of massive accumulation of dollars in the hands of Asian central banks. And both bubbles, as they always do, eventually burst.
C-SPAN Book TV, After Words: Lords of Finance: The Bankers Who Broke the World, Gerald Seif from the Wall Street Journal interviews Liaquat Ahamed author of Lords of Finance: The Bankers Who Broke the World, 12:40, May 2, 2009, http://www.booktv.org/Program/10194/After+Words+Lords+of+Finance+The+Bankers+Who+Broke+the+World.aspx.
Background:
Drawing on a wide range of recent empirical research, we find the following: (1) The Fed’s full history (1914 to present) has been characterized by more rather than fewer symptoms of monetary and macroeconomic instability than the decades leading to the Fed’s establishment. (2) While the Fed’s performance has undoubtedly improved since World War II, even its postwar performance has not clearly surpassed that of its undoubtedly flawed predecessor, the National Banking system, before World War I. (3) Some proposed alternative arrangements might plausibly do better than the Fed as presently constituted. We conclude that the need for a systematic exploration of alternatives to the established monetary system is as pressing today as it was a century ago.
http://www.cato.org/pub_display.php?pub_id=12550
For a successful technology, reality must take precedence over public relations, for nature cannot be fooled.
Appendix to the Roger’s Commission (Presidential Commission on the Space Shuttle Challenger Accident) Report on the Space Shuttle Challenger Accident, Richard Feynman, Physicist, June 9, 1986, http://science.ksc.nasa.gov/shuttle/missions/51-l/docs/rogers-commission/Appendix-F.txt.
I rise to speak on the concept of competing currencies. Currency, or money, is what allows civilization to flourish. In the absence of money, barter is the name of the game; if the farmer needs shoes, he must trade his eggs and milk to the cobbler and hope that the cobbler needs eggs and milk. Money makes the transaction process far easier. Rather than having to search for someone with reciprocal wants, the farmer can exchange his milk and eggs for an agreed-upon medium of exchange with which he can then purchase shoes.
This medium of exchange should satisfy certain properties: it should be durable, that is to say, it does not wear out easily; it should be portable, that is, easily carried; it should be divisible into units usable for every-day transactions; it should be recognizable and uniform, so that one unit of money has the same properties as every other unit; it should be scarce, in the economic sense, so that the extant supply does not satisfy the wants of everyone demanding it; it should be stable, so that the value of its purchasing power does not fluctuate wildly; and it should be reproducible, so that enough units of money can be created to satisfy the needs of exchange.
Over millennia of human history, gold and silver have been the two metals that have most often satisfied these conditions, survived the market process, and gained the trust of billions of people. Gold and silver are difficult to counterfeit, a property which ensures they will always be accepted in commerce. It is precisely for this reason that gold and silver are anathema to governments. A supply of gold and silver that is limited in supply by nature cannot be inflated, and thus serves as a check on the growth of government. Without the ability to inflate the currency, governments find themselves constrained in their actions, unable to carry on wars of aggression or to appease their overtaxed citizens with bread and circuses.
At this country’s founding, there was no government controlled national currency. While the Constitution established the Congressional power of minting coins, it was not until 1792 that the US Mint was formally established. In the meantime, Americans made do with foreign silver and gold coins. Even after the Mint’s operations got underway, foreign coins continued to circulate within the United States, and did so for several decades.
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The first step consists of eliminating legal tender laws. Article I Section 10 of the Constitution forbids the States from making anything but gold and silver a legal tender in payment of debts. States are not required to enact legal tender laws, but should they choose to, the only acceptable legal tender is gold and silver, the two precious metals that individuals throughout history and across cultures have used as currency. However, there is nothing in the Constitution that grants the Congress the power to enact legal tender laws. We, the Congress, have the power to coin money, regulate the value thereof, and of foreign coin, but not to declare a legal tender. Yet, there is a section of US Code, 31 USC 5103, that purports to establish US coins and currency, including Federal Reserve notes, as legal tender.
Historically, legal tender laws have been used by governments to force their citizens to accept debased and devalued currency. Gresham’s Law describes this phenomenon, which can be summed up in one phrase: bad money drives out good money. An emperor, a king, or a dictator might mint coins with half an ounce of gold and force merchants, under pain of death, to accept them as though they contained one ounce of gold. Each ounce of the king’s gold could now be minted into two coins instead of one, so the king now had twice as much “money” to spend on building castles and raising armies. As these legally overvalued coins circulated, the coins containing the full ounce of gold would be pulled out of circulation and hoarded. We saw this same phenomenon happen in the mid-1960s when the US government began to mint subsidiary coinage out of copper and nickel rather than silver. The copper and nickel coins were legally overvalued, the silver coins undervalued in relation, and silver coins vanished from circulation.
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In the absence of legal tender laws, Gresham’s Law no longer holds. If people are free to reject debased currency, and instead demand sound money, sound money will gradually return to use in society. Merchants would have been free to reject the king’s coin and accept only coins containing full metal weight.
The second step to reestablishing competing currencies is to eliminate laws that prohibit the operation of private mints.
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The final step to ensuring competing currencies is to eliminate capital gains and sales taxes on gold and silver coins.
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In conclusion, Madam Speaker, allowing for competing currencies will allow market participants to choose a currency that suits their needs, rather than the needs of the government. The prospect of American citizens turning away from the dollar towards alternate currencies will provide the necessary impetus to the US government to regain control of the dollar and halt its downward spiral. Restoring soundness to the dollar will remove the government’s ability and incentive to inflate the currency, and keep us from launching unconstitutional wars that burden our economy to excess. With a sound currency, everyone is better off, not just those who control the monetary system. I urge my colleagues to consider the redevelopment of a system of competing currencies.
Statement on Competing Currencies, Congressman Ron Paul, U.S. House of Representatives, February 13, 2008, http://www.house.gov/paul/congrec/congrec2008/cr021308h.htm.
Estimated foreign holdings of U.S. Treasury marketable and non-marketable bills, bonds, and notes (i.e. securities) = Total = $3.2 trillion, with China being the largest holder at $763 billion, or ~23%. http://www.treas.gov/tic/mfh.txt
Total Public Debt Oustanding: $11.4 trillion (June 24). http://www.treasurydirect.gov/NP/BPDLogin?application=np
“The Debt Held by the Public is all federal debt held by individuals, corporations, state or local governments, foreign governments, and other entities outside the United States Government” and “Intragovernmental Holdings are … securities held by Government trust funds, revolving funds, and special funds.” http://www.treasurydirect.gov/govt/resources/faq/faq_publicdebt.htm#DebtOwner
Daily Treasury Statement: http://fms.treas.gov/dts/index.html
Financial Report of the United States: http://www.fms.treas.gov/fr/index.html. 2008: http://www.fms.treas.gov/fr/08frusg/08frusg.pdf.
A Glossary of Terms Used in the Federal Budget Process: http://www.gao.gov/new.items/d05734sp.pdf.
Budget of the United States: http://www.gpoaccess.gov/usbudget/. 2010 budget: http://www.gpoaccess.gov/usbudget/fy10/pdf/fy10-newera.pdf. Citizen’s Guide to the Federal Budget (2002): http://www.gpoaccess.gov/usbudget/fy02/pdf/guide.pdf.
In 1861, Secretary of the Treasury Salmon P. Chase recommended the establishment of a system of federally chartered national banks, each of which would have the power to issue standardized national bank notes based on United States bonds held by the bank. In the National Currency Act of 1863, the administration of the new national banking system was vested in the newly created OCC and its chief administrator, the Comptroller of the Currency.
The law was completely rewritten and re-enacted as the National Bank Act. That act authorized the Comptroller of the Currency to hire a staff of national bank examiners to supervise and periodically examine national banks. The act also gave the Comptroller authority to regulate lending and investment activities of national banks.
One of the reasons Congress created a banking system that issued national currency was to finance the Civil War. Although national banks no longer issue currency, they continue to play a prominent role in the nation’s economic life. The OCC regulates and supervises about 1,600 national banks and 50 federal branches of foreign banks in the U.S., accounting for nearly two-thirds of the total assets of all U.S. commercial banks (as of March 31, 2009).
The U.S. Office of the Comptroller of the Currency (OCC), About the OCC, http://www.occ.treas.gov/aboutocc.htm.
Congressman Ron Paul introduced an amendment in 2002 to resolution 114, to make a declaration of war on Iraq rather than ceding the power to declare war to the President under whatever conditions the President chooses. Chairman Hyde then calls the U.S. Constitution “no longer relevant to a modern society” and “Inappropriate, anachronistic, it isn’t done anymore.”
Mr. PAUL. Mr. Chairman… As I mentioned before, in the resolution that we have before us, we never mention war. We never mention article I, section 8 [of the U.S. Constitution]. We only talk about transferring the power and the authority to the President to wage war when he pleases. I consider that unconstitutional. Of course, we cite the U.N. 25 times as back-up evidence for what we are doing, so I think it is appropriate for us to think about our oath of office and the Constitution, what America is all about. Because, quite frankly, I think we have suffered tremendously over the last 50 or 60 years, since World War II, since we have rejected this process, because we don’t win wars but men die. One hundred thousand men have died in that period of time, and many hundreds of thousands wounded, and many ignored… We are supposed to be very up-front in doing this as we have been obligated to do.
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Now, let me quote from James Madison. Madison said in 1798:
“The Constitution supposes what the history of all governments demonstrate, that the Executive is the branch of power most interested in war and most prone to it. It has accordingly, with studied care, vested the question of war in the legislature.”
We have now just carelessly over the years, and today once again, easily given this up.
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It is interesting to note that in the United Nations Charter, you do not have a provision that says well, when you want to declare war, here you come, and these are the procedures. When the United Nations gets involved, we are always declaring the use of force for peace. But it gets difficult and it gets muddied, and it is murky under today’s conditions because there is no war going on in Iraq. Yet we have not exhausted the vehicle of negotiations and other things that could be done. So, this is why, unfortunately, I have very little faith and confidence this will be the solution to solve the problem in Iraq and the Middle East. As a matter of fact, if that happens, this is a dramatic reversal of 60 years of history. It is not going to happen. We have not dealt with the unintended consequences, what we are dealing with today in the sense that the wars continue, but the unintended consequences. And I disagree with the previous speaker who said that this resolution is not dealing with preemptive strikes. That is what the whole thing is about, allowing the President the authority to do a preemptive strike against a nation that has not committed aggression against us. This is the whole issue.
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Some have argued that in this case what you are saying is we would tie the hands of the President. We would tie the hands of the President. Well, that sounds a little strong. But you know what? That is what was intended in the Constitution. That is what Madison is talking about, tying the hands of one person to make the decision to go to war. Therefore, I think—I want and desire so much to think more seriously, because if there a declaration of war, we will fight to win it and it won’t drag on and be endless and lead to another one.
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Chairman HYDE. All right. The Chair yields himself the 10 minutes in opposition to this. It is fascinating to go back in history and see how our Constitution was drafted and what it means. There are things in the Constitution that have been overtaken by events, by time. Declaration of war is one. Letters of mark and reprisal are others. There are things no longer relevant to a modern society. The problem with a declaration of war is that is a formal step taken by a nation.
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Now, the Congress always has the last word in war and peace because we control the purse strings. We could introduce a bill and rush it through that would say no funds appropriated herein may be used to pay for an expedition to France or to the Caribbean. Congress always has the last word because we control the purse strings. But now this resolution we are dealing with today does not declare war. It does not approach war. War may never happen. If we mean what we say and we say what we mean and we have a reasonably tough posture, we may avoid war. Why declare war if you don’t have to? We are saying to the President, use your judgment. We know you have tried to have inspections work. We have tried the U.N., they have been made a fool of for 11 years now. The League of Nations was muscular compared to the U.N. That is the situation we are in now. So to demand that we declare war is to strengthen something to death. You have got a hammerlock on this situation, and it is not called for. Inappropriate, anachronistic, it isn’t done anymore.
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Chairman HYDE. …
The clerk will report the rollcall.
Ms. RUSH. On this vote there are 0 yeas and 41 noes.
Chairman HYDE. The amendment is narrowly defeated.
United States House of Representatives, Authorization for use of Military Force against Iraq on H.J. Res. 114, Committee on International Relations, 107th Congress, Second Session, October 3, 2002, Page 125, http://www.foreignaffairs.house.gov/archives/107/82194.pdf.
The Bank for International Settlements was established in 1930. It is the world’s oldest international financial institution and remains the principal centre for international central bank cooperation.
The BIS was established in the context of the Young Plan (1930), which dealt with the issue of the reparation payments imposed on Germany by the Treaty of Versailles following the First World War. The new bank was to take over the functions previously performed by the Agent General for Reparations in Berlin: collection, administration and distribution of the annuities payable as reparations. The Bank’s name is derived from this original role. The BIS was also created to act as a trustee for the Dawes and Young Loans (international loans issued to finance reparations) and to promote central bank cooperation in general.
The reparations issue quickly faded, focusing the Bank’s activities entirely on cooperation among central banks and, increasingly, other agencies in pursuit of monetary and financial stability.
Bank for International Settlements, BIS History, http://www.bis.org/about/history.htm.
As per its charter, the BIS puts out an annual report:
This sudden change in financial conditions was blamed by some on shortcomings in the extension of the long-standing originate-to-distribute model to new mortgage products in recent years. Others, however, noted that the sudden deterioration in both financial and macroeconomic conditions looked more like a typical “bust” after a credit “boom”. Indeed, several factors seem to support this second hypothesis: the previous rapid growth of global monetary and credit aggregates; an extended period of low real interest rates; the unusually high price of many assets (both financial and real); and the way in which spending patterns in different countries (the United States and China in particular) reflected their different stages of financial development (encouraging consumption and investment respectively).
While central banks in all the major financial centres took action to reliquefy financial markets, the setting of policy rates diverged markedly in light of domestic macroeconomic circumstances. Some central banks were more concerned about actual inflation and raised policy rates, whereas others focused on the disinflationary pressures likely to emerge as growth slowed, and lowered policy rates instead.
Bank for International Settlements, BIS 78th Annual Report, June 30, 2008, http://www.bis.org/events/agm2008/ar2008o.htm.
As of April 30, 2009, with 1 SDR = $1.496, the BIS has $381 billion in assets; 8.6% in gold (~36 million ounces): http://www.bis.org/banking/balsheet/statofacc090430.pdf?noframes=1.
It is my view and that of many other observers that the CDS market is a type of tax or lottery that actually creates net risk and is thus a drain on the resources of the economic system. Simply stated, CDS and CDO markets currently are parasitic. These markets subtract value from the global markets and society by increasing risk and then shifting that bigger risk to the least savvy market participants.
Seen in this context, AIG was the most visible “sucker” identified by Wall Street, an easy mark that was systematically targeted and drained of capital by JPM, GS and other CDS dealers, in a striking example of predatory behavior. Treasury Secretary Geithner, acting in his previous role of President of the FRBNY, concealed the rape of AIG by the major OTC dealers with a bailout totaling into the hundreds of billions in public funds.
Indeed, it is my view that every day the OTC CDS market is allowed to continue in its current form, systemic risk increases because the activity, on net, consumes value from the overall market – like any zero sum, gaming activity.
Statement by Christopher Whalen, Committee on Banking, Housing and Urban Affairs, Subcommittee on Securities, Insurance, and Investment, United States Senate, Page 6, June 22, 2009, http://banking.senate.gov/public/index.cfm?FuseAction=Files.View&FileStore_id=1f354557-7b1f-4ffd-9014-e80435bc55b8.
The heavy reliance on employer-sponsored insurance in the United States is, by many accounts, an accident of history that evolved in an unplanned way and, in the view of some, without the benefit of intelligent design. “If we had to do it over again,” says economist Uwe Reinhardt, “no policy analyst would recommend this model.”…
Two historic events prepared the way for the emergence of this system of insurance. The first was the decision by President Franklin D. Roosevelt after his election in 1932 not to pursue universal health care coverage. The second was a series of federal rules enacted in the 1940s and 1950s on how employer-sponsored insurance should be treated with respect to federal taxes and in labor negotiations.
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President Roosevelt’s decision left a pressing need for alternative forms of protection against the growing costs of illness. Private insurance emerged to fill this gap in the early 1930s in the form of the nonprofit Blue Cross and Blue Shield plans. Commercial insurers subsequently entered the business, once they saw that the Blues were successful. The resultant private insurance industry was therefore ready to sell insurance to employers when the opportunity to do so emerged during World War II.
This opportunity arose because, to control inflation in the overheated wartime economy, the federal government in 1942 limited employers’ freedom to raise wages and thus to compete on the basis of pay for scarce workers However, the federal government allowed employers to expand benefits for workers, such as health insurance, which resulted in a rapid increase in employer-sponsored insurance. Several additional federal rulings followed that increased the attractiveness of the provision of employer-sponsored insurance to workers and their unions.
The New England Journal of Medicine, Employer-Sponsored Health Insurance in the United States — Origins and Implications, David Blumenthal, M.D., July 6, 2006, http://content.nejm.org/cgi/content/full/355/1/82?ijkey=4MnhqQBve7qv.&keytype=ref&siteid=nejm.
