Donald Trump Grifter, losing money by stealing it
Trump lost a gargantuan $1.17 billion over that period. Avoiding paying any taxes for 8 of the ten years! He would call himself the 'debt king' because of things like that. He knew he could make money by borrowing money and then not paying it back.
https://www.vanityfair.com/news/2019/05/trump-new-york-state-tax-returns
Trump Admits he lost that money:
Trump thinks that making a billion dollars by unloading debts and losses onto marks is just good business.
But where it gets dicey is that, despite our country setting itself up as a responsible. It is not. Trump is typical in this.
General Principles of debt
I started this post nearly 3 years ago, to answer the question via thought experiment. I am exploring broader questions than whether Trump is a crook. It just happens that his criminality illustrates some points I've been making about our Piratical Privateering traditions in commerce and colonialization.
Who has the power? “Creditors” or “Debtors?”
Nothing illustrates this question like our corrupt President. Trump has built his business by bankrupting clients, customers, contractors, workers and those who trusted him. He is called “the debt king” for a reason. Like a King he has managed to avoid paying debts he owed, converted debt to his own hands, and built a reputation based on borrowed money. He illustrates a principle that used to apply to Kings during the pre-modern period.
- It is a truism, axiom, maybe a principle that:
- “If a commoner owes more money than he can pay, the King will lock him away.”
- “If the King owes more than he can pay, then the State will make the debt go away.”
- “We need fear the King, whether we owe him or he owe us.”
Trump is adept at making others pay for his mistakes. Like a Medieval King Trump can punish those he owes as easily as he punishes those who owe him.
- The reality is that:
- Money is not the root of all evil, debt is.http://www.minyanville.com/businessmarkets/articles/occupy-wall-street-demands-how-occupy/11/3/2011/id/37707?page=full
Countries have power over their coinage, debt. The sovereign power regulates markets in countries that are sovereign over their own affairs. Feudal Societies operated an exchange of promises between lords and their vassals, creating a hierarchy of mutual obligations of service. Modern societies exchange promises in the form of contracts. At one time money was coined gold or silver, copper or bronze. Societies with sovereign power could fix the value of coins in terms of the commodities they bought or sold. But sovereign or not, the issue in most countries is not treasure, loot or coins, but debt. Debt is the original sin of a banker based system. Capitalism professes to be about actual capital, but it is actually about debt and ownership.
The Original Sin in Central Banking
Thus where economics get dicey is that, what drives the business cycle is borrowing. What really drives recessions and depressions is whether people can borrow or attract investment without losing their property. In a sovereign country, if debt got to be so onerous that wealth was being concentrated and the people enslaved, the government would declare a Jubilee and cancel or zero out all debts. This like modern bankruptcy, would free up debt based businesses to borrow again. A society based on debt creates a lot of virtual wealth. When that wealth falls into few hands, so does the power of that country. People think that Republics exist to protect everyone from abuses of power, but aristocratic people want republics to protect the wealthy from being held to account.
despite our country setting itself up as a responsible. It is not. Our US Treasury is technically sovereign over money. But thanks to the influence of Alexander Hamilton and J. P. Morgan we privatized our banking system and put the pirates in charge of it.“The UK government took banker debt and made it our debt while letting bankers off. Then told us: You're living beyond your means.” ― Fuad Alakbarov https://www.goodreads.com/quotes/tag/debt?page=3
The Exercise of Power by Oligarchs
“If you or I owe, say 100,000$, the people we owe own us. ”
Economics is Testable
But economics is testable theory.
Those claiming it is untestable, like Von Mises and his praxeology crowd (see Faulty Assumptions Post), turn economics into a side show at best, or a collection of faulty dogma's at worse. The current "tax reform" will lead to disaster, will have to be reformed, and is not reform.
But it does represent an exercise in power by our wealthiest incipient Oligarchs. Our side-show discussion, never made it into the national debate, but they gave me grist to analyze our system. I wish the money discussions were national. Because I learned something. And that was:
Money does not belong to the Money Men
Money is not the property of "the money men". They've had that conceit off and on through history. The "Capitalist" era, wasn't really solely a time when investment in factories and actual capital made the world prosperous, it was also a time when the concept of property was enforced by armies and police worldwide, through piracy and privateering, expressed in colonialism, neocolonialism, dictatorships and even in socialism. But the place of the money men has always been fragile. Their origins as pirates meant that they could be robbed as easily as they robbed others. Their dependence on debt and interest.
Was reading today about the but had it done so, might have helped allay the anxiety people have about the costs of governing in the public interest. That subject is our money Power. The debate we had then continued among economists I know and in my own thought experiments.
The Necessity of Sovereignty over money
The importance of sovereignty over the money supply is illustrated by the lessons of colonialism and neo-colonialism. Most people don't understand the subject. Most wealthy people have a different view of even what money should be from the rest of us.
Money as Promises to Pay
Almost all money that can be exchanged in modern societies takes the form of "promises to pay", notes, tokens or accounting entries. The result is that those who are owed a lot can lend even more. Those who owe a lot have trouble borrowing.
Intrinsic Value Money
The wealthy claim to prefer that money either be coins with intrinsic value. But when that happens, Gresham's law operates and the coins with intrinsic value are withdrawn from circulation. Only the desperate or the acquisitive spend their intrinsically valuable coin. They prefer to hoard it for difficult times. The wealthy create a kind of currency in order to put at least some of their money to loose. They loan it or invest it as capital.
There is never enough currency to fuel an economy, so it is really in the best interest of the wealthy that token, note and accounting money be available. Their gold and silver is lost when they have to spend it or when desperate people break into their treasure vaults. When the official money is gold or silver, the wealthy wind up creating accounting money anyway. When the wealthy back their notes with gold, they have a tradition of absconding with the gold and leaving note holders holding worthless paper.
Treasure and Loot
The reason the monied prefer tokens with intrinsic value is that they need "treasure." They need valuables that are portable, valuable and can be sold in an emergency. Hence they prefer gold, jewels, valuables both as a display of wealth, prowess, virility and as a substitute for money while travelling or running from the law. Many of the wealthy, especially nouveau wealth, but also old money, never have enough wealth. They know people won't always be able to pay back their debts in a timely fashion, so treasure is also kept as something to either back their own borrowing or barter efforts.
Indeed, treasure is what usually backs "private money", at least nominally.
Pirates and Loot
Thus the difference between a pirate and a nobleman, is that a pirate has to use violence to acquire loot. Nobility own property that they can extract rents from, borrow against and lend at interest, or invest with an expectation of earning income from. The wealthy can acquire loot either through charging economic rent on the use of property they control, or by taking property that borrowers pledge as surety when they can't pay. The wealthy earn unearned income during good times, and acquire property and treasure from desperate people in hard times.
The United States has had paper currency for most of it's history. Much of it printed by private banks and unreliable. Promises to pay are only as good as their promises. Token money, accounting money & notes can be rendered worthless with the stroke of a pen or the fall of a government.
But that doesn't mean that modern privateers don't know that The writer/economist John T. Harvey, in an article, "Can America Afford Bernie Sanders' Agenda?" talks about Sovereign Money:
Privateering with the Money Power
From Hamilton to the present, who controls the money power has been vital to the survival and union of our country. To the extent it has operated in the common interest and funded communications and commerce it has been beneficial. To the extent it is operated for the benefit of the few it has created large fortunes, while dispossessing and enslaving masses. The Money power has been a source of both liberty and tyranny. It's been a key fight from before the constitution and was one of the fights that wracked the administration of our first President; George Washington, as one faction of our founders reacted suspiciously to Alexander Hamilton's proposed policies, another decided to take them over and use them for corrupt purposes, and a third faction went to war with the very idea of a central bank.
Who has the Money Power Keeps the Money
The surface issue then was whether the Federal Government should possess the money power fully or in tandem with the states. But the real issue was which private cabal -- one dominated by money men in the Northeast of the Country (Boston and Manhattan) -- or one dominated by diverse private banks dispersed around the country would control the money supply. And both factions, operated under the illusion that "hard money" (gold or Silver Commodity money) was real money and despised and abused paper money. Banks would print paper money and issue it with debt, establishing a win/win situation for themselves as long as no one caught on to their conversion of the reserves backing the paper. If the customer couldn't pay they'd take the property of the customer. If the customer paid back the debt they'd get interest from the customer. As my friend John Turmel pointed out, that interest constitutes a rent on money that leads to the bank acquiring much of the value of the economic activity leant money creates. Accounting money disappears when the debt is paid. It also disappears when the bubble created by its use, collapses.
He who has the money power winds up with unearned wealth and rental income.
The Original Alternative Schema
British privateers, operating through their Tory and Whig agents in Parliament first made the States subject to external money power by forbidding them to coin currency or issue their own credit money (paper money). Benjamin Franklin defended the States power to produce its own money. They ignored him, and that is one reason for the Rebellion.
“This is so because, unlike in Greece, every single penny of it is denominated in our currency. We don’t need to raise dollars from taxation, exports, or bake sales–we make them.” Harvey
“Don’t take my word for it. Here are just a few folks from across the political spectrum and in different walks of life saying the exact same thing:” Harvey
“In the case of United States, default is absolutely impossible. All U.S. government debt is denominated in U.S. dollar assets.” Peter Zeihan, Vice President of Analysis for STRATFOR” Harvey
“In the case of governments boasting monetary sovereignty and debt denominated in its own currency, like the United States (but also Japan and the UK), it is technically impossible to fall into debt default.” Erwan Mahe, European asset allocation and options strategies adviser” Harvey
“There is never a risk of default for a sovereign nation that issues its own free-floating currency and where its debts are denominated in that currency.” Mike Norman, Chief Economist for John Thomas Financial” Harvey
“Central banks can issue currency, a non-interest-bearing claim on the government, effectively without limit.” Alan Greenspan, Chair of the Federal Reserve (1987-2006)” Harvey
“There is no inherent limit on federal expenses and therefore on federal spending…When the U.S. government decides to spend fiat money, it adds to its banking reserve system and when it taxes or borrows (issues Treasury securities) it drains reserves from its banking system. These reserve operations are done solely to maintain the target Federal Funds rate.” Monty Agarwal , managing partner and chief investment officer of MA Managed Futures Fund” Harvey
“As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e., unable to pay its bills. In this sense, the government is not dependent on credit markets to remain operational.” Federal Reserve Bank of St. Louis” Harvey
“The necessity for a government to tax in order to maintain both its independence and its solvency is true for state and local governments, but it is not true for a national government.” Beardsley Ruml, Chair Federal Reserve Bank of New York (1937-1947)” Harvey
“I am not worried about the deficit. It is big enough to take care of itself.” Ronald Reagan, President of the United States (1981-1989)” Harvey
“Reagan proved that deficits don’t matter.” Dick Cheney, Vice President of the United States (2001-2009)” Harvey
“A sovereign government can always make payments as they come due by crediting bank accounts — something recognized by Chairman Ben Bernanke when he said the Fed spends by marking up the size of the reserve accounts of banks.” L. Randall Wray, Professor of Economics at the University of Missouri-Kansas City, Senior Scholar at the Levy Economics Institute, and Co- Editor of the Journal of Post Keynesian Economics” Harvey
“Mind you, that doesn’t mean there cannot be other consequences. Inflation, for example, is a possibility. Also from Dr. Wray:” Harvey
“Government needs to be concerned about pressures on inflation and the exchange rate should its spending become excessive. However, with high unemployment and idle plant and equipment, no one can reasonably argue that these dangers are imminent.” Harvey
“In other words, if all of our resources are fully employed–which is our real budget constraint, not dollars–then this can cause the demand for goods and services to outstrip supply and thereby drive up prices. This was precisely the situation during World War Two. Of course, that period was hardly one of economic malaise because that kind of inflation is a problem in the same way that having six people ask you for a date on Saturday night is a problem–you are so popular you can’t keep up with demand. Things could be worse.” Harvey
“That’s not our problem today, however, when the standard measure of unemployment is 5.1% and the broad one is 10.3% (the latter includes discouraged workers and those who have taken part-time employment but wanted full-time). And this is why we have seen neither hide nor hair of even moderately high inflation during the current run up of the debt.” Harvey
“But returning to the main point, anyone who says the federal government doesn’t have the budget to manage Sanders’ (or anyone else’s) programs doesn’t understand how modern macroeconomies work. The federal government’s budget is not analogous to your own and it cannot run out of money (for a longer explanation of this, see The Big Danger In Cutting The Deficit). If they want to say instead that his agenda (Bernie Sanders: Agenda for America) will push us to the point that our resources will be fully employed, that’s possible.” Harvey
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