January 7, 2011

Kush Kush, Dang Dang 2

Looks like different people have different bones to pick with the movement.

Above is an excerpt of a comment I received pertaining to my previous blog about the claim that Zeitgeist is into the occult which is forwarded by a person named James Kush (on his website). A person named Paul made the comments (in quotes) and judging from the things he has to say I assume he's a friend of Kush. His opening statement is correct and I can't argue with that. There are a number of people who developed a beef with the Zeitgeist Movement. Being a supporter of the Venus Project I feel inclined at times to respond but I must also admit that from a psychological and sociological perspective I find these social mechanics absolutely fascinating. I enjoy a good debate at times, provided it doesn't turn into a shouting match, because in the end I believe you can learn something from the interaction. The foremost question in my mind is; 'why do some people have a bone to pick with the movement?' Answers to that question vary, but lets move on for now.

The movies have so many areas of nonsense, it's hard to choose a place to start. Zeitgeist bases it whole money comes from thin air nonsense on a huge misunderstanding of the whole process. Then it just goes on and on to dig itself into a huge pile of steaming poo.

Quite a mouthful but lets address the specific claim that 'money created out of thin air is nonsense.' Actually it's spot on because we use something called 'fiat currency.' Here's the definition from Wikipedia;

"Fiat money is money that has value only because of government regulation or law. Historically, money originated as commodity money, based on physical commodities such as cowrie shells, copper, gold, or silver, but fiat money is based solely on faith in the government issuing the money."

Meaning, fiat money is backed up by nothing of physical value but entirely on the belief that it holds value! Something more interesting is found further down the article under "loss of backing";

"A fiat-money currency generally loses value once the issuing government refuses to further guarantee its value through taxation, but this need not necessarily occur."

Basically what it says here is that the value of money is only guaranteed through taxation. One can not exist without the other and are profoundly connected. Since money relies on taxation you can already get to the concept that 'money is debt' simply because its creation demands an immediate obligation. A repayment through taxes, and what should be clear by now is that with that repayment interest must paid as well. The article also mentions this; "In monetary economics, fiat money is an intrinsically useless good used as a means of payment." Conclusion: money is paper and is entirely subjective and relative.

Zeitgeist Addendum, the second movie made by Peter Joseph is in fact accurate in more ways then you can imagine but he did make an omission regarding the Federal Reserve. As you know the Federal Reserve is the central banking system of the United States. It's structure however is not that transparent since it has both public and private aspects. It's quite easy to get lost in maze that is the Fed and all the regulations that go along with it but one thing to remember is that the previously mentioned private aspects is something that should get anyone's attention. Private, commercial banks such JPMorgan and Citigroup also make up the Fed.
Joseph was correct that when the U.S. government needs money they go to the Fed who prints the money. In turn government bonds are issued. A bond is in a fact a debt, an I.O.U. yet government bonds are deemed risk-free because the government can raise taxes to redeem the bond at maturity. (Money creation linked to taxation - money is debt.) What Peter Joseph didn't mention in Zeitgeist Addendum is that all proceeds made by the Federal Reserve are transferred back to the U.S. Treasury, but that's not the entire story (from the Wikipedia article);

"The U.S. Government receives all of the system's annual profits, after a statutory dividend of 6% on member banks' capital investment is paid, and an account surplus is maintained."

While the Fed gives up the appearance that no profit is made from the creation of money, there definitely is. The member banks such as Citibank and Chase Manhattan who put up capital in the Federal Reserve are getting 6% interest on their 'investment.' This completely supports the 'money is debt' scenario because with its creation an immediate debt (dividend) is paid. Money is created out of debt. What Zeitgeist Addendum portrays in its first section about the creation of money and the Federal Reserve is in fact spot on. Who actually pays that 6% dividend? The American taxpayer!

But lets get back to the notion that 'money is created out of thin air.' Yes, in fact it is. It's called Fractional-reserve banking. The Wikipedia article can be found by clicking on the link. Money creation is where it all happens;

"Modern central banking allows multiple banks to practice fractional reserve banking with inter-bank business transactions without risking bankruptcy. The process of fractional-reserve banking has a cumulative effect of money creation by banks, essentially expanding the money supply of the economy.[...] When a deposit of central bank money is made at a commercial bank, the central bank money is removed from circulation and added to the commercial banks' reserves. Simultaneously, an equal amount of new commercial bank money is created in the form of bank deposits. When a loan is made by the commercial bank (which keeps only a fraction of the central bank money as reserves), using the central bank money from the commercial bank's reserves, the money supply expands by the size of the loan. This process is called deposit multiplication."

A private commercial bank can create money out of thin air. They loan an amount from the central bank and are authorized to create more money on top of that. This is of course digitally. The money created (out of nothing) is loaned out to consumers who have to pay it back with interest. Money becoming debt once more. The only poo I see here is an inherently unstable monetary system which condemns people into economic slavery.

I think the problem James sees, is it's resemblance to a religion or cult. You have devoted followers, all following the magical handwaving of Jacques Fresco and Peter Joseph. Fresco and Joseph are in it for simply one reason: make plenty of money to retire on. It is so much like a religion and rather ironic that it's followers are what they often preach against.

When I said in the beginning of my blog that reasons vary for people who have a beef with the Zeitgeist Movement I wasn't kidding. In my opinion, claiming that the movement is a cult (or into the occult) is just a smear tactic. It's a convenient way of painting someone as faulty, and the aim is to intentionally undermine the movement's reputation and credibility. Many social groups could fall under the definition of a cult once you bring in the aspect of devoted followers. The thing is, I haven't seen Zeitgeist detractors employ the same tactic on lets say members of the Tea Party, or hardcore Republicans, or dressed up fans of the New York Mets. That inconsistency in applying the cult angle shows the lack of sincerity.

Claiming Peter Joseph and Jacque Fresco are in it for the money is also somewhat of a lame tactic. I believe that Peter Joseph is talented enough to secure a decent income in the corporate world if he would set his mind to it. He's a gifted speaker, an experienced filmmaker. He would have no problems earning a living outside the Zeitgeist Movement. Making money doesn't seem to be the dominant factor, otherwise he would sell his dvd's for $20 a pop. And what do you think Fresco will do should he earn a million dollars? Buy a new Hummer, a mansion and some bling? The guy is in his nineties. Playing the money angle is just another smear tactic.

Which brings me to the why. Yes, Zeitgeist ticked off some people. It's understandable why some folks would feel offended after the critique on religion in Zeitgeist 1. However, from what I've seen a number of detractors aren't religious at all. It's highly probable that a number of folks had their ego's bruised when they were kicked off the Zeitgeist forums after misbehaving. What happens next of course is that these folks develop a grudge and need to find something to strike back with. Hence the critique that the movement is a cult (or into the occult) and that Joseph and Fresco are in it for the money. Most of the time you can bring it back to psychology. What the Zeitgeist Movement and the Venus Project also do is to challenge a persons ideology which in turn can create an internal conflict, but lets be honest, how many people are aware of that?


Paul said...

You are misrepresenting money mechanics by your lack of understanding of economics. This page demonstrates some the major issues with Zeitgeist


Ed V. said...

The big question is; when the new money is created, is it loaned out? Secondly, has the loan be paid back with interest? Finally, does that promulgate the notion that 'money is debt?'

Perhaps I have a lack of understanding in economics, but wouldn't it be better if you showed me how it actually works instead of making blanket statements?
Also, you're going to have to do better then posting a link of a notorious ZG critic who's main occupation is to question everything the Zeitgeist Movement forwards. I did take a look at the page but I already detected some tippy-towing around the hot items. Winston doesn't address the fact that the deposits that were created are loaned out at interest. Is he an economic expert by the way?

Lastly, you may find this interesting. Go have a look at how James Kush is doing on the Conspiracy Science forums (owned by Edward Winston). Enjoy;

Ed V. said...

Oh and Paul, check out this site on fractional reserve banking;