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- The Case of Murawiec and Marc Rich -
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This is the same kind of phenomenon.
Now, the United States has a larger relative monetary and financial base, than Germany did in 1923. Therefore, the reaction was not quite as fast, but that's it. So, at this point, when these characteristics show, with this change in relations, under the conditions of a continuing and accelerating plunge in physical output, real output, this means the system is finished. You've got to change the system. There is no bounce- back; there is no recovery. Never! Germany recovered from 1923, because of the U.S. intervention of the Dawes Plan, to bail the German economy out. Then, in 1928, with the collapse of the Mueller government, over the question of the Young Plan, this led to an unfolding situation in Germany, which led into the U.S. and British putting Hitler into power in January of 1933.
So, this is the kind of phenomenon we're looking at. We're looking at a kind of crisis, a terminal crisis of a system, which is the most {dangerous} kind of thing you can have, where a system can blow out, and wars and all other kinds of terrible things like Hitler, can happen, if you don't deal with this thing, in a timely fashion, as Roosevelt did in the United States.
So, let's get the third chart igure 3]. This is a reflection of the actual statistics from this period, from 1996 on. And you see exactly the same thing. You see that the amount of the aggregate--the physical product is collapsing, and that the amount of money being printed and issued by the U.S. government or by the Japanese government, in the form of overnight loans, is now galloping ahead of the amount of financial assets that are being rolled over. {That's} what's happened. And, the attempt to maintain that system, is what is the immediate cause of the present collapse we're experiencing this month, in the United States, Europe, and elsewhere. Okay, these are the facts. I'll come back to this again.
Now, let's get into this: How did I forecast? I do not believe, as these charts should illustrate, there is no necessary relationship between money, monetary emission, and real economic value. That is, any system which is based on money--money does not determine, automatically does not pre- determine the amount of wealth produced. It does not determine the health of the economy. An apparently healthy market--that is, a stock market, financial markets that are booming--does not mean that the economy's healthy! It may mean that the economy is dying, as it happened to us.
The point is, a health economy is one, in which money and financial relations are {regulated}, by government, and by custom, in such a way, that this kind of thing doesn't happen. That is, the growth of money, should not exceed the growth of real wealth produced. That's called "protectionism." That's called "regulation." To make sure that the financial system does not become cancerous! Does not have a runaway growth of money! And, to keep the money in circulation, the money accounts, within the bounds of relative, physical reality. That is: If the financial accounts are to show, that there has been growth and profitability in a national economy, in a year, you must show, there has been a {physical improvement}, to do that.
Now, what they do in the U.S. government today, they commit a fraud. It's called the "quality adjustment factor." I first attacked this in 1983. The Reagan Administration was having a problem trying to impress people that their system was good, their financial system, so they put a fakery in, which was done by the Federal Reserve System, and the Commerce, and the Council of Economic Advisers. They called it the "quality adjustment factor." It's a fraud! It runs through a very large denomination; it runs into tens of percentile, or even up to 40 percentile in categories. They keep telling you, the market is better, because the "appetite" of the customer for the product is improved. Therefore, if they take away three wheels of your automobile, and the customer likes it, that means it's an improved one. Or, if you like the food, even if it poisons you, that's an improvement in the economy. The "quality adjustment factor": It's based on a marginal utilitarian doctrine in economics.
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