Money Creation and Destruction

When you take out a loan, here's what happens:

1. Let's say that a bank's first and only deposit is $1000 cash. That cash becomes "reserves." 90% of that amount becomes "excess reserves." Banks can only create new loans when they have excess reserves available.

2. A potential borrower comes to the bank, and puts up some form of collateral, such the deed to their house or car. The maximum amount they can borrow is equal to the bank's excess reserves ($900 in this case).

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3. The borrower signs a note, which is a promise to back the loan within a certain time at a certain interest. The collateral is held by the bank in case the borrower defaults.

4. When the loan is funded, the proceeds are credited to the borrower's account. However, a very important point here: the loan is not funded from the bank's reserves. It is funded by creating new money, just for that purpose. As with all accounting transactions, there are two sides to this one. The other side in this case is the creation of an asset with the same value as the money created. That asset is the note.

5. The borrower makes payments on the loan. Interest goes to the bank as income, which they can then use to cover their expenses or to pay out to shareholders, as any company would. Principal goes to pay down the note. Banks don't just keep that money around and re-lend it at a later time. The money is destroyed when it's paid back, and then re-created later if/when needed for a new loan.

6. If the borrower defaults, then when the loss is recognized, the collateral is sold. If the collateral is worth less than the remaining value of the note, the difference is written off against bank earnings. In effect, the money representing bank earnings is destroyed. This happens because although banks can create money, they can't create their own earnings, and they are required to accept the consequences of making loans that don't get paid back (well, at least that's the theory, until gov gets involved via the FDIC, the Fed, TARP, etc).

Here's a video I made that gives a high-level view of the process:

http://www.youtube.com/watch?v=xNehYxy77RI

What is "good"?

When I talk and write, I try to use words to mean very specific things. Unless I spell out potentially ambiguous meanings in advance, I find that the people I'm talking to get easily confused often.

"Good" is one such word. What does it mean for something to be "good"? For me, it means that something rationally supports my life in the long term.

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For example, eating healthy food is good. Acting honestly is good. Being just is good. More generally, acting with rational principles and virtues is good. However, acting on a whim, or simply pleasure seeking is not. For example, getting drunk or high might feel good, but it's not good in the sense I'm talking about here. In fact, feeling good isn't the same as being good.

What about helping someone? If you act voluntarily, out of charity and not a sense of guilt or duty, then that's virtuous, and is therefore good. However, if you act mainly because you feel it's the right thing to do, then you are actually hurting yourself, and it is therefore not good. Giving is good; sacrifice is not.

What about music or art? They can feed my soul, and add enjoyment to my life. That, in turn, rationally supports my life in the long term, so they can be good. The same is true for friends, family and relationships.

What about lying or cheating? You might feel good about doing such a thing. However, it is unprincipled; it does not support your life in the long term, and is therefore not good. This is a big topic, and I'm planning to post more about it later.

Organic or not?

Pesticide residues are found in the flesh of fruits and vegetables, not just on the exterior--some foods are more susceptible to retaining residues than others.

Although many pesticides are initially sprayed on the surface of the plants, they are eventually rinsed off by rain or irrigation; they then flow into the soil and are absorbed by the plant’s roots.  Some “systemic” pesticides are applied directly to the soil, and not to the surface of the plant at all.  There are also gas “fumigants,” which can be applied after harvesting to help speed up ripening and to control rot and hard-to-kill pests; they generally need to penetrate the plant material deeply to be effective.

[[MORE]]“Organic” is not the same thing as “pesticide free.”  Many organic foods still use pesticides, although the ones used are generally considered to be “less toxic” (whatever that really means), and the detectable residues are generally lower than in conventionally grown food.  In fact, even food labeled “pesticide free” often isn’t free of residues (unless it’s labeled as No Detectable Residue [NDR]), due to drift and residues from previous crops in the same fields.  That’s yet another reason to grow (or raise) some of your own food, or to buy from a local farmer you trust, if you can.

Here’s a link to a paper with some details:
http://www.consumersunion.org/food/organicsumm.htm

Is fructose really that bad?

Here are links to a couple of papers about fructose:

Fructose consumption as a risk factor for non-alcoholic fatty liver disease
http://www.ncbi.nlm.nih.gov/pubmed/18395287

Fructose overconsumption causes dyslipidemia and ectopic lipid deposition in healthy subjects with and without a family history of type 2 diabetes
http://www.ncbi.nlm.nih.gov/pubmed/19403641

[[MORE]]Nonalcoholic Fatty Liver Disease in Humans Is Associated with Increased Plasma Endotoxin and Plasminogen Activator Inhibitor 1 Concentrations and with Fructose Intake
http://jn.nutrition.org/cgi/content/full/138/8/1452

Here’s a comment by Dr Kurt Harris about fructose:
http://www.paleonu.com/panu-weblog/2009/7/16/calorie-restriction-partial-restoration-not-enhancement.html

Large amounts of fructose (Fru) is one of the elements of our current (neolithic) diet that deviates substantially from the EM2 we evolved under. For a variety of reasons, Fru functions as a metabolic poison and is much worse than glucose.

Excess Fru raises your triglycerides, can cause inflammation in your liver, and causes insulin resistance independent of insulin levels. Big boluses of Fru are sometimes not digested completely. This can cause bacteria to grow in your upper bowel which is not good.

Look at Fru like cigarettes - if you smoke one cigarette a week it will probably not hurt you. The problem is not the one smoke, it is the reinforcement of the desire that leads you to smoke the whole pack.

If you can keep total carbs at 10% and some of that is sucrose, that may not be a problem. But, people like fruit because its sweet, and if you tell them fruit is healthy, they tend to eat a lot of it.

Fruit is not healthy, it is something that tastes good that you can tolerate in small amounts.

The vitamins in sweet fruits can't hold a candle to other foods. The "antioxidants" are probably more than balanced by Fru itself, which is actually an "oxidizing agent"!

As Kurt says, small amounts of fruit are OK.  As with all toxins or poisons, the issue is the dose; if it’s small enough, and if the body is given enough time to heal between doses, then it’s not a problem.  That’s also part of the logic behind only eating fruit in-season.

Another point about sweet tasting foods: even if they are sweet because of artificial sweeteners, they will still provoke an insulin response.  That’s even true for toothpaste.

Although liver disease as such isn't widespread, type 2 diabetes and obesity certainly are--and their underlying cause may be related to liver damage.  According to an MD I work with, elevated liver enzymes are very common with type 2 diabetics (also with Syndrome X), and that is generally a result of having a fatty liver.

What about honey, which is high in fructose?  Due to its carbohydrate content and sweetness, it also has a significant insulin-releasing effect.

Having said that, my great-great-uncle ate the stuff by the gallon and swore that it cured every illness under the sun—yet he lived well into his 90s (one of the oldest of my male relatives).

Of course, anecdotal information proves nothing, but even so I suspect that the jury is still out on the full range of health effects of honey.  I don’t eat much of it myself, but I do eat a little; I treat it like fruit, to be used occasionally, and only in relatively small quantities—as opposed to HFCS or cane sugar, which I avoid entirely.

Political platforms

Take a look at the following key points for a political platform:

WE DEMAND THAT THE GOVERNMENT UNDERTAKE THE OBLIGATION ABOVE ALL OF PROVIDING CITIZENS WITH ADEQUATE OPPORTUNITIES FOR EMPLOYMENT AND EARNING A LIVING.

THE ACTIVITIES OF THE INDIVIDUAL MUST NOT BE ALLOWED TO CLASH WITH THE INTERESTS OF THE COMMUNITY, BUT MUST TAKE PLACE WITHIN ITS CONFINES AND BE FOR THE GOOD OF ALL ...

WE DEMAND THE NATIONALIZATION OF ALL BUSINESSES WHICH HAVE BEEN AMALGAMATED (INTO TRUSTS).

[[MORE]]WE DEMAND THAT THE STATE SHALL SHARE IN THE PROFITS OF LARGE INDUSTRIES.

WE DEMAND THAT PROVISION FOR THE AGED SHALL BE MADE ON A VERY GREATLY INCREASED SCALE.

WE DEMAND A LAND-REFORM SUITABLE TO OUR NATIONAL REQUIREMENTS, THE PASSING OF A LAW FOR THE CONFISCATION OF LAND FOR COMMUNAL PURPOSES; THE ABOLITION OF INTEREST ON MORTGAGES, AND PROHIBITION OF ALL SPECULATION IN LAND.

WE DEMAND AN AGRARIAN REFORM SUITABLE TO OUR NATIONAL REQUIREMENTS; THE ENACTMENT OF A LAW TO EXPROPRIATE WITHOUT COMPENSATION THE OWNERS OF ANY LAND THAT MAY BE NEEDED FOR NATIONAL PURPOSES; THE ABOLITION OF GROUND RENTS; AND THE PROHIBITION OF ALL SPECULATION IN LAND.

...THE STATE SHALL ORGANIZE THOROUGHLY THE WHOLE CULTURAL SYSTEM OF THE NATION ... THE CONCEPTION OF THE STATE IDEA (THE SCIENCE OF CITIZENSHIP) SHALL BE TAUGHT IN THE SCHOOLS FROM THE VERY BEGINNING. WE DEMAND THAT SPECIALLY TALENTED CHILDREN OF POOR PARENTS, NO MATTER WHAT THEIR STATION OR OCCUPATION, SHALL BE EDUCATED AT THE COST OF THE STATE.

IT IS THE DUTY OF THE STATE TO HELP RAISE THE STANDARD OF THE NATION'S HEALTH BY PROVIDING MATERNITY WELFARE CENTRES, BY PROHIBITING JUVENILE LABOUR, BY INCREASING PHYSICAL FITNESS THROUGH THE INTRODUCTION OF COMPULSORY GAMES AND GYMNASTICS....

(WE) COMBAT THE MATERIALISTIC SPIRIT WITHIN AND OUTSIDE US, AND ARE CONVINCED THAT A PERMANENT RECOVERY OF OUR PEOPLE CAN ONLY PROCEED WITHIN ON THE FOUNDATION OF "THE COMMON GOOD BEFORE THE INDIVIDUAL GOOD."

Sound familiar?

This was the platform of the National Socialist Party in Germany in 1922. It came from the "25 point program," which was authored by Hitler and other socialists / fascists of the time.

End game: Detroit

In case you have any doubt about the end game, here's a link to some sobering pics of Detroit:

http://www.marchandmeffre.com/detroit/index.html

Managing toxic overload

Organohalides (including pesticides) and many other organic toxins are lipid soluble, both in animals and in man -- and some of those chemicals are thryo-toxic (the thyroid gland is particularly sensitive to many xenobiotics); some are also carcinogenic.

So, when you eat more fat, everything else being equal, you are also increasing your intake of fat-soluble toxins.  Eating organic helps, but it isn't a cure-all, due to the prevalence of toxins in the environment.

[[MORE]]The situation is compounded if you start losing weight or when you begin exercising after a long period of not doing do, because the toxins that your body has worked hard to sequester in your fat get released into the blood, which can result in fatigue, brain fog, skin rashes, immune system issues, and a number of other problems.

One way to address this issue (other than donating blood, which clearly only addresses part of the problem) is to stimulate the activity of certain detox enzymes, such as gluthathione S-transferase, and to increase excretion of bile (a fat-rich compound that transports fat-soluble toxins). This can be done by introducing coffee into the lower part of the large intestine (low-volume coffee enema), where caffeine and several related compounds are absorbed into the portal vein and carried directly to the liver, bypassing full-body circulation.  Once in the liver, the choleretic effect and the associated increase in enzyme activity rapidly clears the blood.  This can be particularly effective after exercising, and can also help shorten recovery time.

As with iodine supplements, coffee enemas are another key component of Dr Max Gerson's successful (and controversial) cancer treatment program.  Here's a link to an article with some background:

http://www.gersonhawaii.us/gersonarticle5.html