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Ok, fair enough (and it was I who posted the critique.)

But, two points.

First, there's no interest to compound if there is no debt.  Therefore, if we stop deficit spending there is no debt to service and thus no interest to compound.  If One Dollar of Capital is implemented in the banking system then private banks cannot play their games in the private sector and devalue the currency via that method either, so the issue is effectively neutered.

Second, if you have a debt-free currency and issuing nations are free to issue it as they wish deficit spending can be simply printed into existence.

This is nearly as evil as debt-financed deficit spending.  The reason is found in arithmetic -- when you issue more "moneyness" into the economy irrespective of how you do it the devaluation takes place right then and there -- it is immediate.  While in a debt money system there is a second order effect in the form of compounding interest (which is inevitably financed, and thus gets rolled into the devaluation over time) it is a small percentage of the devaluation.  By the time it compounds sufficiently to become the primary issue destruction of your economy has already taken place in the gross sense (as is shown by Greece; the problem isn't the interest, it's the €300-odd billion principal and its refinancing-or-principal-payment requirement!)  It is deficit spending itself that is the major element of the problem because it expands geometrically in order to "keep pace" with the size of the economy that is being goosed by that act while the compounding interest expands as a percentage of that geometric expansion.  By way of example if your blended interest rate is 5% and you have a $15 trillion economy the point at which 10% of your economy is consumed by interest payments doesn't occur until you have $30 trillion in debt accumulated -- way beyond the "event horizon" of your economic destruction as you will be in permanent negative real GDP territory before that time arrives as a result of the direct exponential devaluation.

Therefore, yes, we must prohibit deficit spending because it is always and forever mathematically unsound and if practiced will always and forever eventually blow up your economy and nation's fiscal health.

But to be clear, it must be prohibited irrespective of the means by which it occurs, whether through "debt-free money" issuance or borrowing.  The sole instance where it can be justified is in true national extremis (e.g. during a declared, actual war such as if you are being invaded) as if you fail to prevail in that case there will no nation left to repay the debt or absorb the devaluation anyway.

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The latest from the ECB suggests that they have raised the ELA "haircuts" on collateral tendered by Greek banks to 45%.

That's obscene -- unless the so-called "assets" are in fact worth nothing.

So let's take the two possibilities:

  • The assets are good.  The Greek banks should take them back from the ECB and sell them into the market to repay the ECB, keeping the rest of the funds from the sale.  With a 45% haircut currently being applied if the prices the banks are holding them at are not frauds then they can easily do this and pay the depositors who wish to withdraw funds while having plenty left over.  The amount of collateral (bonds) involved is relatively small compared against the totality of the EU debt marketplace; there would be zero (or nearly so) move in price caused by such a sale.  Doing this would shrink the size of the banks involved (perhaps to extinction), but so what?  No depositor would lose a nickel and there might be created new business opportunities for new bankers to spring up to fill consumer and business demand.

  • The assets are worthless, or at least worth far less than claimed -- and most-importantly, worth less than the haircut marks!  If this is the case then the Greek banks have been and are today committing fraud.  In this case every one of their executives and managers should be arrested, tried and publicly executed.  Yes, in this case the depositor money has been impaired and some will be lost but the people responsible will be properly punished for what they have done, deterring a future similar event.

So which is it?

Either the ECB has no bullets in this gun with their "haircut expansion" because the assets can be easily taken back and sold for more than the haircut value and this is what any rational business person would do or the assets are either worth far less than the haircut value or worse, entirely worthless.

AGAIN: Is this entire charade smoke and mirrors or is the Greek banking system a fraud-laced enterprise that needs to have virtually all of its participants face the harshest possible sanction?

One of these two must be true.

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The Supreme Court’s recent blessing of Obamacare has precipitated a rush among the nation’s biggest health insurers to consolidate into two or three behemoths.

The result will be good for their shareholders and executives, but bad for the rest of us – who will pay through the nose for the health insurance we need.


Insurers are seeking rate hikes of 20 to 40 percent for next year because they think they already have enough economic and political clout to get them.


The alternative is a government-run single payer system – such as is in place in almost every other advanced economy – dedicated to lower premiums and better care.

Oh really?

Well, let's see.  These other advanced economies appear to spend about half of what we do on a percentage of GDP basis.  Is this where a market solution would wind up?

The evidence is NO.

The evidence is that single payer may gouge you less, but it still gouges you and since it's a forced transaction it's not hard to see why.  The government pays and you consume; there is no connection between the two.  Nor is there any competition.

What does a market system look like?

We have plenty of examples.  We can start right here in this country with procedures that really haven't changed at all.  How about ordinary, uncomplicated vaginal childbirth?  There is no difference between how this was performed in the 1960s and how it is performed today.  We're not talking about the complex case, we're talking about the usual, every day, ordinary birth of a baby.  You have a hospital room, an epidural, a doctor and a couple of nurses.  Mom pushes out the kid, the medical folks pay attention just in case something goes wrong but since this is an uncomplicated birth nothing does, the cord is cut, the kid is cleaned up and swaddled and there you have it.

If you take the bill for such a birth from 1963 and advance it by the CPI to today you find that you should be able to have an ordinary, uncomplicated birth in a hospital with a three night stay (the standard then) for approximately $1,000.

It's virtually impossible to actually have that procedure in the United States today and not be billed for at least 10x that much.

Note that there's no difference whatsoever between these procedures and you get less, specifically, Mom is typically tossed out of the hospital in as little as 12 hours -- not three days.

Then there is The Surgical Center of Oklahoma.  They are a cash business and print prices.  On average the same procedure in a hospital in the same general area will cost five times as much as it does at their center.

If you think this is unique or somehow an unfair comparison I have another example being posted tomorrow.

The situation we have in America today with health care, the very situation that animates Robert Reich and many others in their proclamation insisting on even more socialism and government control is intentional and, I argue, constitute violations of the Sherman, Clayton and Robinson-Patman acts (collectively 15 USC) and state consumer protection laws.

You cannot take your car in for an oil change, new tires, or to fix a knock in the engine without being quoted a price.  That price, once quoted, must be honored for the work quoted.  If the service center tries to bilk you (say, by billing for work not performed or charging double their quote) that's treated as a crime, as it should be.  The price of an oil change is a routine service and is printed on big signs outside service centers all over your town.

Now try to get the price on a routine diagnostic medical test.  Even better, go ahead and try to shop and buy one on your own.  In virtually all states (the exception being in tomorrow's ticker, with the cost results) you can't without a doctor "ordering" the test which creates collusive opportunities and, it appears, results in prices that are as much as 500% of the free market price for the exact same service.

We do not need "health insurance" for any but the most-catastrophic events, and perhaps not even then -- if we do something about these scams.  The reason is simple -- the price will fall by 80%; that is, you'll be able to buy medical care for one-fifth of what it costs today or what you currently spend on your deductible.

Can the average poor consumer manage to come up with $1,000 for a childbirth?  Certainly, if you look at their living rooms -- that XBox and bigscreen TV add up to that much, and you have nine months to plan for the kid.  Or just look outside at the nice set of rims and tires on the car; again, there's $1,000.  Or, if you prefer, that $100/month cellphone bill that is paying for the $600 iPhone in said poor person's pocket.

Now on the other hand in the system we have today that birth is $10,000.  Now we're in a realm that the poor and middle class cannot afford, and thus there arises a need for "insurance."  That need is entirely artificial; it has exactly nothing to do with the actual cost of the service being provided if you get rid of the monopolistic and price-fixed games played in the medical industry.

So what's it going to be, Robert and the rest of you?  Why don't we have an honest discussion about this issue and go where we should with it, which is demanding that those who violate the clear language in the Sherman, Clayton and Robinson-Patman acts, along with state consumer protection statutes that mandate that goods and service sellers post prices and charge on a non-discriminatory basis either cut the crap or we start sending them to prison and asset-stripping the companies and persons involved -- all of them -- down to their respective birthday suits?

Finally, were we to do this we'd also fix the entire federal budget deficit problem at the same time as the cost of Medicare and Medicaid would fall by that same 80% and we'd resolve most if not all of the state and local pension-based budget problems as well.

Last year we spent $1,113 billion between Medicare and Medicaid, to put numbers to it.  That's roughly a quarter of the entire federal budget.

Virtually all of the Medicare spending, and 80% of Medicaid spending, would have been unnecessary but for these medical monopolies, price-fixing and other activity that in virtually any other line of work is a prosecuted crime.  Note that since Medicare is an 80/20 program the elderly person on it would pay the same 20% but that would be the cash, paid-in-full price for their medical care so there would be no need for them to pay a Medicare premium at all.  For those who want a catastrophic policy they could buy one for less than their current Medicare premiums -- and those who choose not to could pocket and spend the money instead.

"Single Payer" won't fix any of this because it doesn't change the dynamic; the same "providers" will still argue that they're entitled to a "reasonable" profit margin (10% is quite reasonable) but the gross amount will remain jacked up to the moon just as it is in other nations with single-payer systems.

We can solve this problem tomorrow by simply enforcing existing laws.

So why don't we?

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Come and get it!

Click here to listen or right-click to download...

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Oh oh.... the dam is cracking...

On second thought, however, one is inclined to put the blame mainly on the nation’s business, health-industry and political leaders who over the past half century have joined forces to structure our health system so that U.S. health care now is twice as expensive on a per capita basis than health care in any other industrialized nation. Most of that differential cannot be explained by differences in the use of health care. It is driven mainly by much higher prices of health care in the U.S.

And what drives "higher prices"?  The absence of market forces, which only happens when unlawful things occur since it is explicitly illegal to attempt to restrain trade or fix prices (15 USC, if you care to read on it.)

Oh, and in fact, prices aren't twice as high as they would be under a market system where the rule of law was actually enforced.

They're five times higher, which means that with the typical 20% deductible you should be able to buy the care you need with no insurance at all.

This scam only continues because you, America, allow it -- you refuse to demand that long-standing law that makes such practices as refusing to quote prices, quoting a price and then billing 2, 3, 4 or 5x more later, billing for things never done and charging based on what you think someone can pay instead of charging everyone the same amount for the same service illegal be enforced and everyone who violates said law gets to inhabit a prison cell for a couple decades while being asset-stripped to their birthday suit.

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