When Dreams Come True

I’ve always been extremely uncomfortable with the idea of the European Union since it was first postulated and formed. To me it is nothing more than Adolf Hitler’s insane dream come true. 
He wanted a united Europe under German leadership which he named The Thousand Year Reich to control all aspects of Europe, and its country’s populations. While Europe may not be the fascist state he hoped for, if he was still alive he would undoubtedly approve of Germany being the key player when it comes to what is said and done. 
With France agreeing with everything Germany says as you would expect of a weak kneed sycophant, while the rest simply tag along behind hoping for crumbs from the negotiation table, not wishing to upset the two most powerful members, Europe is fast becoming a collective of sick states. 
Why all politicians support such a warped concept defies all logic. Very few countries abstained from joining the union. Switzerland is the shining example of courage and common sense prevailing over blind stupidity. 
While the UK is technically in the union, we have not fully integrated into it thank goodness. We are subject to the EU’s mindboggling number of ridiculous laws – many of them simply defy all logic. Then there is the fact that as a nation we suffer from the totally legal freedom of movement by the EU’s citizens. While we have millions of our own out of work constantly harassed by our government for not gaining employment, people from other nations protected by the EU’s laws, freely enter to take up those self-same jobs, thereby denying our unemployed from earning a living wage – a situation we are powerless to prevent.
Despite all of this somehow or other we still retain a certain degree of autonomy, not to mention our own currency which many of our neighbours on the Continent dearly wish they still had since being force to accept the Euro. Our Prime Minister David Cameron recently went on record as saying that after the next election he will give the country a simple yes or no choice to stay or leave the EU in the form of a referendum. I’ll believe it when I see it. A week is a long time in politics let alone a couple of years…
While the idea of an amalgamation of states undoubtedly works in a relatively new country like the USA, wishing former sovereign countries to become nothing more than vassal states within a political alliance for the mutual benefit of all, as well as adopting one currency, is simply asking for trouble. Think about the recent financial collapse of Greece, Ireland and Spain if you need examples. Expecting various countries to all have the same approach to how their countries are run is plainly insane. Italy may be the next nation to fiscally fall by the wayside unless the EU is not careful. Here in the UK, all the indicators currently point to us still being in a triple dip recession, something which the average man on the street has known for ages even if our idiotic government vehemently denied it until it became the main headline on the BBC six o’clock news last night (25/01/2013).
To the rest of the world, I say only this –  be careful what you wish for, it may yet become reality…     

11 thoughts on “When Dreams Come True

  1. The problem with the EU is the Maastricht treaty. It's an arbitrary economic system meant to have a double standard. The austerity preached by Merkel and others is pure insanity. In order for the EU to function, it requires a surplus recycling system. The euro is a foreign currency for all states, including the eurozone states. Governments find themselves competing with the private sectors in order to acquire euros to make payments. It's idiotic to have german banks, greek banks, french banks, in a monetary union. The establishment as well as popular opinion follows certain economic myths, which are causing nothing more than economic and social strife, while encouraging extremist movements around Europe. Here's how modern money works. One man's income is another man's payments. One man's debit is another man's credit. One man's savings is another man's loans. One man's deficit is another man's surplus. These two things always balance themselves to 0. That's how the planet works. In order for the non-government sector (private sector/including households) to save, the government MUST run a deficit. Any state that is a net exporter, is automatically a net importer of aggregate demand. In order for the EU to survive and thrive, we need a surplus recycling system. The political elites of Germany don't understand this. The EU is dominated now by the surplus states, like Germany. Merkel and the austerity crowds lie when they say that deficit states required bailouts. That is untrue. If I have a trade surplus with you, and I don't recycle that surplus into you, then you won't be able to buy/consume my exports. If you can't consume, I can't sell. If I can't sell, I can't produce. I fire people. Unemployment rises, and pay checks get cuts. That's how the vice circle works. Debt and government deficits are irrelevant. They are not the yardstick, inflation is. Governments create fiat by spending money into existence, and it destroys it via taxation. Taxation is nothing more than a tool to train the system. Governments don't spend taxed money. Governments don't need to borrow in order to finance deficits. A state which has monetary sovereignty, and which is indebted in its own currency, can never go bankrupt, because it can never miss a payment. This is not the case for the EU countries. The Maastricht treaty, particularly article 104a robs all states of such sovereignty. We're not like the USA, Japan, China, Pakistan, Iran, Israel, Cuba, Venezuela, Turkey, etc.


  2. In order for the EU to work, we need a common debt, european banks, and a common fiscal policy. The problem is typified by the corrupt eurocrats, who want to see the continent in a permanent state of recession. All recessions come on the heels of government surpluses, while the trade balance is negative. A sustainable government surplus is one that's built on the shoulders of a trade surplus, like China for example. Whenever the government works to create a budget surplus, the private sector enters into a deficit. Households and business can no longer save. Governments should run deficits via increased spending and decreased taxation, until the desire of the private sector to save is satisfied, and all those who want and are able to work are employed. Ask any business what's inhibiting them from hiring people, and they'll give the sales figure as the main reason, and only afterwards invoke other things such as high taxes, or the high cost of a loan.That being said, close to 0% interest rates don't cause inflation. It's a myth that government deficits inhibit loans to the private sector. The opposite is true. The government money enters the system as excess reserves, which the banks compete to transform into savings and loans. Selling bonds isn't a financial operation to ensure financing the deficit, it's just a measure by which governments reach the overnight target interest rate. They can easily do this another way with the same result, by simply paying the banks the difference between the market rate and the target rate. Everything I've stated here is empirical fact. But it doesn't apply to the EU, because under the Maastricht treaty, the EU doesn't have monetary sovereignty.


  3. I encourage you to google MMT (Modern Monetary Theory), or chartalism. It explains everything. It's not an ideology, it's not a religion. It's based on empirical fact. The European Investment Banks sits on tons and tons of capital, but it can't give that money to projects, because of the EU rule of 50-50 contribution in order for the funds to be provided. The Maastricht treaty's pure arbitrarism prevents the states from accessing and using those funds. In order for the private sector to hire people, it needs to produce, it won't produce if it can't sale, and the only way they'll be able to sale is if there's adequate aggregate demand. How do you create aggregate demand? By running government deficits, until the desired level of savings is reached by the private sector. Seeing is believing, check out this chart of the USA. It shows the relations between government surplus/deficit and private sector surplus/deficit between 1951 to 2010. http://4.bp.blogspot.com/-jBU5MA0V-AI/T0V4jISptJI/AAAAAAAAADA/CiqZVT160d0/s1600/Financial+Balances.png


  4. "Chartalism may not be an ideology or religion yet Serban, but if Merkle and co get their way it could soon become either or both. :)"Haha, I agree. ^^ There are many starting to wake up, and turning into MMT evangelists. I'm particularly disappointed by the left. Their rhetoric is without vigor; they don't have a purpose. No wonder "third way" parties are starting to rise in popularity. Whenever social conditions deteriorate, the establishment uses the myths in order to divide the rest of the people, so they can look to the blame somewhere else, but not where it actually is. There's a cool article you would enjoy by Dan Kervick on neweconomicsperspectives.org entitled, "From Central Bank Independence to Democratic Public Finance"


  5. In Article 103 of the Maastricht Treaty, it states that “any … type of credit facility with the ECB or with the central banks of the Member States … in favor of Community institutions or bodies, central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of Member States shall be prohibited.” Article 104a further specifies that private banks are not permitted to provide credit to governments and other public institutions at discounted rates.On top of the failed economics of the union, we have the corrupt banking establishment. We truly need to rid ourselves of these co called "too big to fail" banking conglomerates. We need a Glass-Steagall for Europe. Separate commercial banks (depository institutions) from investment banks. There's an inherent conflict of interest between them. Not to mention that since the people's deposits are guaranteed by the state, the big investment banks will always overleverage themselves and be encouraged to take on more risk, because they're bad gambled are tied to depository institutions. When their bets go bad, they go to the treasury and the central bank and call for bailouts. Thus, the transatlantic system is really held hostage by the terrorist finance. The citizens of the Uk will only benefit from leaving the EU, if the government makes a 180 degree turn on austerity. The government needs to calculate the output gap of the national economy and adjust the deficit spending accordingly, via a mixture of increased spending and decreasing taxation, and of course, set the interest rate to near 0%. I'm a fan of reducing taxation on labor. The best ways to control inflation are fiscal means. Contrary to traditional wisdom, lower interest rates don't cause inflation. Since governments are net payers of interest, it makes sense that a lower interest on those payments brings less inflation than a higher interest on those payments. And lets not forget that the cost of business loans and consumption loans have a direct effect on prices. Higher rates tend to discourage consumption, but if consumption were to remain the same or increase, we'd see a rise in prices. It's been known since FDR's times that fiscal means are the best way to control inflation, not monetary means. And we don't have to worry about inflation, because there's no supply crisis in the world. Poverty is caused by abject unfair distribution of money wealth. If there is no aggregate demand for the poor, they can't buy. They can't buy, producers can't produce, because they can't sell.


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