© 2006 , 2007 Greg Kaiser

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Exposé: The Migration from Real to Imaginary Economy

“The trade of the petty usurer is hated with most reason: it makes a profit from currency itself, instead of making it from the process which currency was meant to serve. Their common characteristic is obviously their sordid avarice.” - Aristotle

Morons don’t know they’re morons because they don’t know the difference between to know and to believe. They aren’t smart enough to distinguish imagination from evidence. Such is the common wisdom and the challenge to acceptance of the truth. Growing beyond puerile denial is our only hope and salvation.

May 15, 2007
      When I was in elementary school in the 1950s, the economy was based more on real production of real goods. There was an overhead of managers and investor/owners but more people did real work. At the other end of the spectrum, when someone built their capital to the point where they no longer could or wanted to invest more in the enterprise that made their fortune, or take part in its day to day operations, they would migrate their excess cash to finance. Some, like Rockefeller, started banks and lent money to consumers, as well as creating abstract profits by investing in other’s ventures. The process must accelerate the concentration of wealth by giving established capitalists control over and profit from the later generation of entrepreneurs, who must go to them for financial assistance, in order to get into business. The cost of finance must be added to the cost of goods. In a world where bankers, such as those of Federal Reserve Board who run the non profit central bank, can create legal tender by fiat, which is then passed on to their subsidiary banks to be loaned to US at interest, the finance and its profits must also inflate the money supply. Such abstract economic activities, or financial services, have grown as a proportion of GDP over time.
      All services, useful, necessary or purely parasitic, burden the real economic productivity for the goods the service pushers and their employees consume. For-profit financial service is a purely parasitic burden on the community. Our economic activity has grown increasingly abstract, after thousands of years of mildly fluctuating wealth distribution and frequency of occurrence of nonproductive income generation schemes. For most of those millennia, the parasitic burden on economy remained nearly static w.r.t. the percentage of the population engaged in such activity. Their ravages and damage to the community waxed and waned by individual leader and locale, but the relative number of parasites involved remained about the same, as did the average amount of the community’s wealth of production that they took for themselves. The ratio of service to productive economic activity, if you can call variations on the theme of economic tyranny by elites a service, remained approximately fixed.
      Today we make few real goods in America. Our economy is now 80% service. Twenty-five percent of that is financial service. In 1957 it was 60 percent service according to the Office of Service Industries of the U.S. Department of Commerce.
      “Fifty years ago, the service sector accounted for about sixty percent of U.S. output and employment. Today, the service sector's share of the U.S. economy has risen to roughly 80 percent. . .
      “. . . The remarkable economic prominence of services is no less impressive when the sector's various components are considered one by one: -- Wholesale trade, retail trade, and transportation & public utilities each contribute over half a trillion dollars to annual U.S. output.
      “Construction, the smallest subsector, now accounts for a higher share of economic output than either agriculture or mining (construction is counted among the subsectors here because it is viewed as a service in the context of international trade).
      “And each of the two largest subsectors -- finance, insurance, & real estate, and Services, the catchall category covering all other private services -- contributed over one and a half trillion dollars to GDP in 1997, i.e., more than the 1.4 trillion dollars in output produced by the manufacturing sector of the economy.” - Commerce Department, Office of
Service Industries
      We had an $8.91 trillion GDP in 1999. How much of the 1.4T in “manufacturing” was really service overhead? And 1.4 is only 16% of 8.9. What other non productive service are they pretending is real and useful economic activity? If we accept their numbers and stipulate that it’s only 80% service today, extrapolating backward on a line, the economy would have been it would have been about 25% service 200 years ago. I suspect that’s not too accurate. But we don’t need to be concerned with precise numbers just now. I think it would be helpful, though, to define and differentiate between useful and purely parasitic and unnecessary service, as well as speculating about some of its probable evolution as part of the economy.
      Coincidentally, at the same time service was growing to 80% of the economy, the inflation of GDP and prices were roughly tracking one another. I heard it said recently that the Iraq war, funded with money borrowed from China that we spent there due to outsourcing et al has reduced the value of the dollar to 4 cents. The speaker cited Ron Paul. So Ron Paul presumably can remember when t-bone steak was 40 cents/pound. When was t-bone steak priced at $0.40/pound? It’s up to $9.99 this week. I remember in the late ‘60s when it was 89 cents. I know that the price of homes had doubled since the mid 1950s, when my parents paid $15,000 for a home that was valued at $30k by 1968. So it actually makes sense now that I think about it. In the same 50 years that have seen the growth of the service industry and debt, and the twenty--five fold increase in prices, the reported GDP, 457.2 billion in January, 1957 has increased 29 fold to $13632.6 billion [13.633 trillion] by 01/01/2007. GDP, 1947- 2007 That’s almost all inflation folks, due to service costs that return nothing but their burden on the community that supports them. We don’t have the goods to back up our empty dollars. They’ve sold the farm to China and stashed the cash in the Cayman Islands.
      And that’s about all the service economy has done for US. It’s inflated and devalued the dollar while decreasing the quality and quantity of goods to increase the profits. It’s made the elite investors richer and a few CEOs too, while the rest of US are inexorably impoverished. That is imaginary money it created by service, because we make no goods to buy with it. That’s why inflation due to usury and service devalue the currency. We have to borrow our money back from China because we make no real goods that we can trade for it. That’s how the service economy defrauds US. Corporate managers get ahead by devising ways to cheat the public.
      Packaging and weights and measure frauds have bothered me for some time. For instance: processors inject water into meat to increase the weight, while they claim its intended to make the product more moist. The water is expressed during cooking and actually causes the meat to be dried and tough. All the corporations find analogous scams and all the products suffer. And the morons who move up the corporate ladder this way or by outsourcing or loan sharking don’t care that the entire community is defrauded and suffers, because they’ve advanced individually far enough that they can shop at exclusive outlets that offer quality products that we can’t afford and aren’t sold by lowlife corporations like their own. All who open their eyes and perceive the truth, all but corporately cloned fools and criminals like the rich, will see the dead end path they’ve put US on.
      Remember! All that this service activity makes is money. It doesn’t make goods for that money to represent. Goods are the only things that we have to trade, despite the conservative/libertarian assertion that we can export service. Our military will never be strong enough to gain by intimidation, support for the implementation of such a delusional theory. Thus we have the trade deficit and the need to artificially support the value of the dollar. We actually live by borrowing our money back from China. We exacerbate the economic disaster by paying the interest on that and all the rest of the debt kite. That attempt at perpetual motion by shuffling worthless dollars and stupid corporate clones about in pursuit of foreign trade goods, while producing nothing to give our money real value, is all that keeps our economy flying.
      Neo-cons, conservatives, libertarians and liberals, who believe in the magic market, are morons. Neither debt nor service are assets. They’re liabilities and a burden on the community. They can only inflate the money supply but we cook the national books by claiming services as real growth of the GDP. These dissipative activities take from the community, as certainly as any illegal fraud. They return nothing more substantial than words lost in the economists’ wind. But we must have some service. So we must differentiate between necessary and unnecessary service and determine how to reduce the cost to the well being of the community that all service imposes.

      It’s not too hard to imagine a clan of hunter gatherers who live and work together as a community. They are led by consensus, which is formed of the need to cooperate in order to survive. This is the basic economy, in which no one lives by service. That is: everyone must contribute to the material wealth, in order for the community to work, and for the individual members to remain in good standing. After a while, those adept at healing, remembering and disseminating clan knowledge, dealing with conflicts and the group psyche, and communing with other spirits too, became service providers. They didn’t stop working altogether, but were probably enabled to perform their necessary and useful services by material gifts from other members of the clan, who benefitted by the shaman’s skill and knowledge. This time of low impact and burden on the economy by service lasted for millions of years, until displaced by civilization starting about 8-10 thousand years ago.
      So from a negligible burden on the almost 100% productive members of communities to a 60% service economy that must consume real goods though it does no hands on work, took less than one tenth of one percent of the time that Humans have been living in successful communities on the Planet Earth. In the past fifty years, the burden of service on the community has grown by 1/3 to 80%. It doesn’t take a genius to see that a 100% service economy will not work. Funny though, that obvious upper bound to the economic integral failed to be noticed by the gurus of the Chicago school. They just blather on with their libertarian/neo liberal, delusional conservative theories about freedom and choice in the magic marketplace.
      High on the list of truths that neo aristocratic economists deny is that the freedom to choose poverty wages or death for more of US each day is a mockery of American liberty and justice. Worse, the freedom of the rich to dominate US is destroying the population who buy the products on which the profits of the elites are made. (Nor do they knowingly reveal their desire to undo the American Revolution by reasserting shades of a feudal aristocracy. A principal tool of the neo-aristocrats is privatization of the public domain and common property. Thatcher and her lap dog, Reagan, have set US to a dead end.) Freedom and choice are only for the rich. They are a cruel lie for the rest of US. The conservative moron’s sacred dogma of supply and demand is obviated by their economic manipulations to increase the price that the market will bear by creating false demand through even more deceitful advertising. The elimination of competition from the “market equilibrium” formula, by verbal agreement reached on the golf course, must also be mentioned, if we’re to understand the overall deception.
      Instead of contributing to the community for the common well being and the survival of the Human Race as God and/or Nature intended, our leaders take our common wealth for their private property and destroy our society and common livelihood in the furtherance of their individual greed. The service economy is the acme of fraud to be achieved by those who mislead communities for individual gain. That is the larcenous nature taken on by services that are useful, necessary or somewhat useful and/or necessary, when consigned to private business and/or ownership. The service economy is an onerous and intolerable fraud. Common needs must be done by and for the people of the community on a non profit basis. The private control of our necessities by for profit business threatens our health and safety. The investors and their corporate clone minions care only for their profit. In their stupidity and greed they are destroying the community that they employ to produce their wealth. It is dissipative to the economy that is the livelihood of the Human Race. It’s not only evil. It’s also broken. In fact it’s flawed in its conception and just can’t work. And then it gets worse
      It’s the abstract activities of for profit banking, insurance and finance that are the most useless and harmful services. What we need in common we must do in common on a non profit bases, in order to reduce the cost to the community. Do not jump to the conclusion that communitization is nationalization that requires a centrally planned economy. The lowest level of community organization, the closest place to the People, where a thing can be done, is the place to do it. The central bank and the military are obviously national projects. Local transportation, communication, energy production and medicine are for the city, county or state tools of our community. In any case, it will be less centrally controlled than the economy is by the cabal of monster corporations that rule our lives today.
      But we’re moving in the wrong direction. The corporations are growing more powerful. The People and our government are declining. The purely parasitic usuries are growing to an ever greater and more unsustainable portion of economic activity. They are the heart and chamber of darkness of the pyramid scam economy. The greater they grow the greater they will grow by the inexorable progress of compound interest. And our common and individual debt and poverty will increase proportionately, as it has been for the last thirty-five years, with the concentration of wealth in fewer and fewer hands. The American Revolution is almost undone by a neo-aristocracy.
      To see the impossibility of the perpetual motion pyramid scam of finance and debt, imagine a world in which we all loan each other money at a profit. The FED can print the money in our name, as they do, and loan it to everyone, not just their fellow [for profit] bankers, at the discount rate. Then we can all loan it to each other at a profit and no one must work to make any real product. That’s the obvious direction in which we’re moving. A culture that allows the rich to exist and places no check of the growth of individual wealth must come to this dead end! It took a long time but once they reached the threshold of bankruptcy through greed in about 1970, they’ve really accelerated the plunge.
      The theory was that we’d export services, when all the manufacturing had been moved and removed on the road to China in the pursuit of cheaper labor and higher profits. The service economy salesmen were as upbeat and as conscious of potential as a real estate agent with a run down shack that can be glossed over with fast talk, in order to sell it to the unconscious. Apparently, while the CEOs were busy, in the late 1980s, rounding up the knowledge and expertise they would export, after much the manufacturing of trade goods had been outsourced, the high tech industry was preparing to contract out the engineering and computer science to lower cost providers in India and Malaysia. Simultaneously, American students were redirected into business schools. Our engineering graduates, when not replaced by low cost foreign professionals dependent on visas attached to strings held by their employers, had changed careers or retired early because their jobs had been outsourced. Now the Chinese and Indians graduate many more engineers and scientists than we and their faculties are the returned students with advanced degrees issued here in the 80's and 90's. But Bush thinks we’re not graduating enough engineers because public school teachers, whom he believes should be upgraded with vouchers, have fallen down on the job.
      Except for Law, Economics and Business Administration, our graduate schools are still filled with Indians, Pakistanis, Mid Easterners and Orientals. Now we have no real products or useful services to sell. In less than a generation the conservative/libertarian greed and stupidity of the neo liberal vision of Milton Freedman have not only sold the farm but have lost the cash by inflation of their hot air flown debt balloon, which keeps the pyramid scam they call an economy moving towards the pie in the sky that we’ve been promised. Having nearly impoverished most Americans they’ve expanded globally, using the power of neo-liberal loans by the IMF and World Bank and the strings of free trade and privatization that are attached. Latin Americans and Muslims are rebelling. We acknowledge only senseless violence. And we make no trade goods to sell in order to get our money back from China in a way that’s not destructive to our economy . . . our livelihood. But the moron conservatives think they can flex our military muscle and intimidate all those who resist being plundered as they’ve done to US. They can’t contain the 25 million Iraqis who are violently resisting the looting of their country by Halliburton. But they think they’ll bluff Russia and China with missiles in Czechoslovakia and Poland. People's Daily
      The conclusion is that the richer they get the richer they will get until the dissipative pyramid scam that makes them rich ultimately destroys the economies that the Human Race relies on for our livelihoods. The childishly greedy and stupid fools who lead US are a threat to our survival. A preemptive act of self defense to neutralize that threat is demanded by Nature and Nature’s God. We are equipped by the Earth with survival and social instincts. The communities we form, for our common well being, enhance the survivability of the Human Race. The elite rich detract from the community by hoarding the wealth we produce. The abstract money making scams are the most harmful. While some sort of banking service is necessary to facilitate trade of real goods, it must be done on a non profit basis, by and for We the People who are served. Finance, banking and insurance are the most egregiously dissipative practices. They do the most damage to the community and should be the first industries to be communitized for the common well being and defense of the Human Race. All service is a burden whose cost must be minimized. Financial service is purely parasitic when done on a for profit basis.

“The People, United, Will Never Be Defeated!”

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