Posts Tagged ‘karl marx’

About the Union of Socialistic States of America

Friday, October 10th, 2008

Government is Nationalizing the Banking Industry. This is just what Karl Marx wanted to do after the Proletariat had taken over Society. Is the US becoming a Communistic State?

When the Economy is Going Up Investors take on Risk. They start to Lend. The longer the Economy is going Up the more risk they take the more they lend until they’ve taken too much.

Eventually, they reach a point where the cash generated by their assets no longer is sufficient to pay off the mountains of debt they took on to acquire them. When this Happens we are at the Turning Point. From that time on the Economy is going Down.

The big problem is that you have to Pay Back the money you Lend with Interest. To Pay Back you have to Earn money. When the Economy is going Down you will earn less money so why should you lend money even when the interest rates are low?

When you expect that your income will go down you will reduce your spending behavior. You will certainly not lend money and the bank will not lend you money either because the banks want to be sure that you will be able to pay back the money and the interest. The Recession will deepen.

When Everybody Expects the Economy will move into a Recession the Economy will move into a Recession.

What You Expect to Happen will Happen.

The Central Banks are not only telling to watch out for a Deep Recession. They are telling we are moving into a Worldwide Recession. This is a completely new phenomenon.

When people believe a recession is near many of them will start to build up an emergency fund. The amount of money in the emergency funds will rise but to make money you have to invest money in something. Most of the time a part of the World is going Up and the other part is going Down. You just have to move your money to the place Where The Action is.

When the whole World is going into a recession nobody knows where to invest money.

We are not only encountering a Worldwide Recession, we are also encountering a “burn-out” of the Worldwide Financial Infrastructure. When you have created an Emergency Fund and the World Economy is going down and the Banking System is failing you really don’t know where to go.

The underlying assumption of all these models is the Power of the Market. The only thing Government has to do is to create the conditions and after some time the Market will restore itself.

Government is lending money for a very low price to the Financial Companies and they will propagate this advantage to their customers. The Customers will start to spend and the Economy will rise again but the Financial Institutions don’t propagate the advantage.

They add a Risk Premium to Save Money for Customers who are not able to Pay Back the Money. When Everybody believes the Whole World is Going Down this premium will be very high.

In essence Banks are Brokers. They have been very successful in bringing two parties (the Savers and the Spenders) together. The savers and the spenders are the Customers of the Bank. They are also the Customers of Government.

Why is Government helping the Financial Institutions and not the Customers of the Financial Institutions?

They believe the Market is able to recover by itself.

Why is the Market not able to recover?

The Market is an Illusion, a Theoretical Construction. The Market consists of Humans. When Humans believe a Theory (a Believe) they will act according to this Believe. If the Market will recover they will Wait until the Market will recover. If everybody Waits nobody Acts. Not-Acting leads to a Recession.

What is wrong with Economic Theory?

The Scientists believe Humans are Rational Beings but Humans are Emotional Beings. Most Humans are doing what other Humans are doing. When they don’t know what to do they just wait until the Markey recovers. The Fear of Losing drives Human Behavior. When this Fear Takes over Control Humans Act without Thinking. They Sell Everything they have to avoid a Higher Loss.

In essence the Government is confirming all the time that we are heading to a Huge Crisis. When we go on the way we are going the Crisis will be the Most Spectular Crisis the World has Ever Seen. The World Economy will come to a complete standstill.

Why is Government not Acting as a Broker?

This could be a simple solution. Just put Your Money where the Action is and the Action in Society is performed by Entrepreneurs. Entrepeneurs are very different from Investors. Investors invest their money in Entrepeneurs. Entrepeneurs Act. They put Ideas into Practice.

Entrepeneurs are Practical people. They know that You have to Earn Money to Invest Money. Their big problem is the Cash Flow. Their Customers have to pay their bills. When Customers don’t pay their Bills they need the Support of a Bank. When Entrepeneurs want to lend money to balance their cash-flows lend money to Entrepeneurs directly.

When Customers want to lend money to pay their Bills lend them the money they really need. You don’t need Banks to do this.

Every Economic Scientist is agreeing on point. Small businesses are the Pillar of the Economy.

There are many reasons why Small Businesses are the Motor of the Economy. The owners are responsible for their own actions. They get broke when their Business Fails. In Big Business You are able to spend or waist money without any consequence. You even get money when you fail. When you own a Small Business you are unable to create big Staff Departments. Big Staff Departments waist money and play Political Games. Small Businesses are the most effective and efficient Economic Instruments. They are also the Source of Innovation.

Why is Government not Supporting Small Businesses?

Government always supported Small Businesses until the Big Malls and the Big Companies were created. The Big Companies are paying a Lot of Money to influence the Politicians. Politicians were able to make big money when they started to do what the Lobbyist were telling them to do. It is time we get rid of Politicians who only want to make big money. To be a Politician is an Honor. You are serving the Whole and not Yourself.

Is US Government doing what Karl Marx wanted to do?

This is the most interesting point. According to Karl Marx, the first action after the take over of the Proletariat would be to Nationalize Banks. There are more parallels with the USSR. The USSR Controlled and Manipulated the Media, Gathered a Lot of Data about his Citizens, Spend a lot of money to Build and Maintain an Army, Occupied many Countries, Created an Elite (The Communist Party) and controlled the State with a huge Almighty Secret Service.

Are we finally moving to the Union of Socialistic States of America (the USSA)? or even worse to World Government.

LINKS

The vision of Karl Marx

About the Broker State and Small Business