Meet Damon Vrabel. JohnG doesn’t like him, Be like Damon Vrabel, not like JohnG


  • Roger February 4, 2016 at 10:30 am #
    Damon has had two fairly different lives—one as an overachiever serving the financial empire, and another as a hopeful advocate for the victims of the empire: local community, indigenous population, the American republic, and the individual heart. He graduated from the United States Military Academy, served as an officer in the US Army, then graduated from Harvard Business School, took a short detour on Wall Street, and had a career in Silicon Valley in several leadership positions in technology corporations. Since leaving empire service, he became a mountaineer, attended Mars Hill Graduate School, and now works toward redemption as a writer and post-neoclassical economic philosopher.
    Damon can be reached at:
    This series of posts in comments to Keens article are interesting I believe the commentor is probably the author of the Videos Damon Vrabel. linked to the first of which is above.
    All Risk No Reward 10 months ago
    Hi Steve,
    While the question you set out to answer is a common misconception, there is a much simpler way to explain the reality of the mechanism at play.
    Simply put, the bank accrues the interest on all new money (created from nothing) as an asset as the borrower accrues the interest liability. The interest is created, but it is **controlled** by the bank.
    Using your example as a guide, there is the Bank, the Firm, and the Workers. The Bank is the lender, The Firm is the borrow and the Workers work for the borrower. The Bank lends $100 million at 5% interest to the Firm (the only loan in this system). Double entry bookkeeping demands that an interest liability ($5 million in the first year) is accrued by the Firm and an interest asset is accrued by the Bank. Therefore, after one year, there monetary assets and liabilities balance at $105 million… the interest is absolutely create – AS AN ASSET ON THE BANK’S BALANCE SHEET.
    After 1 year, there is $95 million in the Firm / Worker system and $5 million in the Banker system.
    Now, in your scenario, you assumed something totally unrealistic – and Susana brought this out. The Banks don’t spend all their money back into society. They retain earnings (both the shareholders and the banking company itself.
    Since you assume this reality out of existence, your conclusion is incredibly misleading.
    Assuming the banks only spend half their $5 million back into the economy (leaving $2.5 million as retained earnings for the company and its shareholders), in 40 years there is exactly $0 money left in the economy ($2.5 million *40 = $100 million in Bank and Banker retained earnings).
    Now, how do you propose that the Firm in this economy, given this much more realistic basic scenario where reality isn’t assumed away, can generate profits greater than their $5 million in accrued interest liability when $0 is available in the economy and $100 million is controlled by Banks and Bankers… or is that Banksters.
    This is the prima facia fraud inherent in debt-money systems and you give the appearance that this very real mechanism is a myth. It is only a myth if the arguer assumes reality out of existence.
    The truth is actually very simple. Debt-money is a zero sum game. Money is effectively a debt receipt and only debt receipts can pay back the debt-money debts. One person’s net positive debt-money receipt position is someone else’s, or some other group’s, inextinguishable debt.
    This little video does an excellent job explaining this very simple to comprehend aspect of debt-money systems…
    Poverty – Debt is Not a Choice
    My next post will address this issue from a different angle, and one that contains 1/100 the conplexity of your example without losing the essence of truth.
    Top Comment
    All Risk No Reward
    All Risk No Reward 10 months ago
    Hi Steve,
    In order to make this issue as simple as possible, assume two segments of society: 1) The Money Lenders and 2) The Money Borrowers.
    The Money Lenders lend the Money Borrowers $100 million at 5% interest. In one year, the Money Borrowers owe $105 million due to double entry bookkeeping adjustments that add a $5 million interest expense to their balance sheet and a $5 million interest asset to the Money Lender balance sheet.
    How can the Money Borrowers pay the $105 million debt when they only have access to $100 million and the lender to whom they owe the money controls the only $5 million available to pay back the debt? WHO has the POWER in this scenario – the private Money Lender or the government, business (ex-banking), and citizenry Money Borrower? WHO finances the political apparatus?
    “When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes. Money has no motherland; financiers are without patriotism and without decency; their sole object is gain.” ― Napoléon Bonaparte (Napoleon was a bad man, but he was no dummy! He took Sun Tzu’s advice and learned to know his enemy!)
    There are only two ways the debt can be paid after one year. Make the unrealistic assumption that the Money Lender voluntarily gave all $5 million (not keeping back one red cent!) back to the borrower because Mr. Lender is so charitable (really? Really?? Really???) OR CREATE MORE DEBT MAKING THE PREVIOUS DEBT PAYABLE.
    Now, you claim to have debunked this claim, but you haven’t until you can rationally address the issue above. Since the Money Lenders retain earnings (personally, through their corporate banking fronts, through their multinational corporate fronts, through their foundation fronts, etc…), society, by definition, doesn’t have access to the money required to pay their debts.
    It is true that I have assumed 100% retained earnings by the Money Lender. But I don’t need to. As I said, if they hold back even 1 cent, that loan can’t be paid back in full… it will be 1 cent short and the default assured. No matter how you slice it ALL POWER is in the hands of a privately operated banking cartel and in the hands of the Money Borrower (in reality, that is government, business outside the money creating banking cartel, and the every day citizen).
    By definition, the retained and closely held monetary wealth of the Bankers and their “club” are the INEXTINGUISHABLE DEBTS OF EVERYONE ELSE!
    Now, given the reality of Banker controlled retained monetary assets into the trillions, how do they manage the unpayable debts?
    They issue new debt in a closely controlled exponential manner. There very thing you claim to debunk is the very thing they actually do in order to keep the inextinguishable debts from collapsing Main Street before their “chosen time.”
    As you, the Bankers, and I well know, exponential debt growth is unsustainable. So the Bankers aren’t growing debt-money exponentially to “save the system,” rather, they are blowing the world’s biggest debt-money bubble in anticipation of eventually bankrupting and seizing the assets of others to the maximum extent possible.
    In closing, I’d like to share a clear insight the essence of a “bailout” with you and your audience.
    Continuing with the $100 million example, a “bailout” is when $100 in debt-money is created by the Big Banks out of thin air, the proceeds of which are stuffed into the pockets of the Banking corporate fronts, and the $100 million debt obligation is offloaded onto the general public even though they never received the $100 million in debt-money proceeds.
    Read that as many times as necessary to comprehend the Machiavellian evil that underlies “bailouts.”
    They are doing this in Europe, too. The Big Banks made bad loans to Greece, but the Big Banks want to get paid out. So they “bailout” Greece with money guaranteed by German and other pension funds and pay off the private Big Banks that made the bad loans in full, or at least nearly so.
    In essence, the Big Banks stole the pension funds of Germans and others, the Germans just haven’t figured it out yet. But they will.
    This stuff really isn’t that complex.”
    The basic objection I have to MMT is that it accepts that Governments are actually sovereign, I do not believe that that is the case. Governments should assert sovereignty and then if one then accepts that the debt based system can become benign with the primary objective of a job guarantee, then a case may be possible except that it does not address the questions related to infinite growth in a finite system these are aspects of the question which lietaer summarises here.
    re watching this at the moment
    “Princes of the Yen: Central Banks and the Transformation of the Economy” reveals how Japanese society was transformed to suit the agenda and desire of powerful interest groups, and how citizens were kept entirely in the dark about this.
    Based on a book by Professor Richard Werner, a visiting researcher at the Bank of Japan during the 90s crash, during which the stock market dropped by 80% and house prices by up to 84%. The film uncovers the real cause of this extraordinary period in recent Japanese history.
    Making extensive use of archival footage and TV appearances of Richard Werner from the time, the viewer is guided to a new understanding of what makes the world tick. And discovers that what happened in Japan almost 25 years ago is again repeating itself in Europe. To understand how, why and by whom, watch this film.
    “Princes of the Yen” is an unprecedented challenge to today’s dominant ideological belief system, and the control levers that underpin it. Piece by piece, reality is deconstructed to reveal the world as it is, not as those in power would like us to believe that it is.
    “Because only power that is hidden is power that endures.”
    A film by Michael Oswald
  • JohnG February 4, 2016 at 10:51 am #
    I know who Damon Vrabel is. Although it isn’t his real name.
    He’s a spook.
    And it’s just really bad accounting.Interest payments to banks aren’t bank assets.
    They’re income.
    And yet again, sovereign currency issuers don’t borrow their money from banks.
          • Roger February 4, 2016 at 12:31 pm #
            Generalisations do not cut it with specifics Johng,
            ”If you wish to attack ideas that is fine but then you have to provide an argument and engage with the discussion. Simply saying: “what are you on?”; “this is a mass generalisation”; “you f**kwit”, “this site sucks” etc are not engaging in discussion”’ Bill Mitchell
            Roger January 30, 2016 at 4:40 pm #
            Bill Mitchells Comments policy.
        • Wesley – Balanced! February 9, 2016 at 7:12 am #
          Vrabel’s balance sheet explanations are clean and simple. Very sensible indeed! His insights are useful. Thanks!
    1. Roger February 4, 2016 at 11:34 am #
      ”I know who Damon Vrabel is. Although it isn’t his real name.
      He’s a spook.
      And it’s just really bad accounting.Interest payments to banks aren’t bank assets.
      They’re income.
      And yet again, sovereign currency issuers don’t borrow their money from banks.””
      John g,
      Saying someone is a spook does not address the substance of their argument, even calling someone an idiot and proving that they are an idiot does not address the substance of their argument.
      The possibly fictitious alleged spook Damon is not the only one that challenges Steve Keens article , it is interesting that Steve does not respond to the posts made in the name All Risk No Reward.( who I allege is the alleged spook whose name Damon Vrabel also allegedly false) Who´s on first base?
      Even should one concede the ”spooks´´arguments there are also the point’s raised by Leitaer and his 11th round parable and 3 effects of money at interest. ”
      ”Three consequences of interest as a built-in feature of our monetary system are that (1) it encourages systematic competition among the participants in the system; (2) it continually fuels the need for endless economic growth; and (3) it concentrates wealth by transferring money from the vast majority to a small minority.”
      If one reads the 11th round parable, which ends with this concluding paragraph
      ´´In the current national currency paradigm, one reason why so much attention is paid to central bank decisions is that increased interest rates necessitate more bankruptcies in the future. The economic pie must grow that much faster just to break even. The monetary system obliges us to incur debt and compete with others in order to perform exchanges and pay the resulting interest to the banks or lenders. No wonder “it is a tough world out there,” and that those who live within a competitive monetary system so readily accept Darwin’s supposed “survival of the fittest.”
      One has to ask in answer to the question ´´What functional finance advocates first and foremost is that policy be based on an understanding of the monetary and financial system in which we live, and not some idealized vision of some other system, or some system that may have existed at some other time. ´
      The system we have now is decidedly not one founded on the monetary sovereignty of Nation States see ; ´´Princes of the Yen: Central Bank Truth Documentary 『円の支配者』’ .”’, For details .
      examining your two statements further
      1. ´´And it’s just really bad accounting.Interest payments to banks aren’t bank assets.
      They’re income.”
      is it?
      sorry formatting will not trasfer its easier to see at the link.
      A credit note is issued to a customer Account Debit Credit
      Revenue XXX
      Accounts receivable XXX
      To write off an accounts receivable as a bad debt Account Debit Credit
      Bad debt expense XXX
      Accounts receivable XXX
      To set up an allowance for doubtful debts Account Debit Credit
      Bad debt expense XXX
      Allowance for doubtful debts XXX
      To use the allowance for doubtful debts to write off an accounts receivable Account Debit Credit
      Allowance for doubtful debts XXX
      Accounts receivable XXX
      To record cash received after an accounts receivable has been written off Account Debit Credit
      Cash XXX
      Accounts receivable XXX
      Accounts receivable XXX
      Allowance for doubtful debts XXX
      This exchange can tell us a lot about accounting conventions.
      2. ”And yet again, sovereign currency issuers don’t borrow their money from banks.”
      Under the current system this is an arguable point. There are two questions here,
      2.1.Should Governments re-assert sovereign control ?Indeed can they without being invaded?
      2.2. If Governments assert sovereign control is an interest based debt money the most democratic and sustainable currency solution.
      • JohnG February 4, 2016 at 11:58 am #
        You’re just being played, dude.
        You’re just too stupid to realise it.
        When people come along and point it out you yell at them.
        You’re your own worst enemy.
    2. JohnG February 4, 2016 at 1:29 pm #
      How can someone who claims to understand Minsky then turn around and promote Vrabel’s view?
      It’s nuts.
      Roger is insane.
    3. Roger February 4, 2016 at 1:55 pm #
      John G,
      Which aspect of Vrabels story are ficticous? All of it clearly is not.
      If one looks at Werenrs story regarding ´´Princess Yen´´one would argue , I would contend convincingly, that Vrabel has the dynamic between Government and Banking sector about right as regards which hand is on top. Who bails out who if one follows the money.
      fitzy103 said…
      I think this is the cirlce of debt…
      1. “Spain is not Greece.”Elena Salgado, Spanish Finance minister, Feb. 2010
      2. “Portugal is not Greece.” The Economist, 22nd April 2010.
      3. “Ireland is not in ‘Greek Territory.’”Irish Finance Minister Brian Lenihan.
      4. “Greece is not Ireland.”George Papaconstantinou, Greek Finance minister, 8th November, 2010.
      5. “Spain is neither Ireland nor Portugal.”Elena Salgado, Spanish Finance minister, 16 November 2010.
      6. “Neither Spain nor Portugal is Ireland.”Angel Gurria, Secretary-general OECD, 18th November, 2010
      If you understand this lot, you havent been paying attention…
      31 May 2011 18:49
      First Fitzy I am chuckling away even as I write this that’s a slam dunk very very funny.
      Here is Davids original blog called a peoples debt jubilee
      If Governements were not happy to maintain a subservient position as Vrabel Claims why were the banks bailed out both with Tarp in US and with the UK nationalisations and the conversion of the whole thing into a ´´Soverieghn Debt Crisis´´. There are surely a lot of smoke and mirrors in all of this I think Vrabels explanation of a sort of soft fascism morphing into a more overt hard fascism is very credible actually.
      Consider this.
      I mention Umberto Ecos UR Fascism earlier as well also a blog I did called Narcissism of small differences is related to this
      Johng I think it is you that presents a fictitious view of the Monetary system the empirical evidence as to what it is and more importantly what it does is doing and has done tends to throw up too many questions to accept the Government is in the driving seat.
      • Roger February 4, 2016 at 5:20 pm #
        Richard Werner
        First empirical test in 5000 years of banking on whether each individual bank can create money out of nothing is out …
        Since the tenets of this theory are never stated in Eatwell et al. (1989), the chapter on ‘Cranks’ ends up being a litany of ad hominem denigration, defamation and character assassination, liberally distributing labels such as ‘cranks’, ‘phrase-mongers’, ‘agitators’, ‘populists’, and even ‘conspiracy theorists’ that believe in ‘miracles’ and engage in wishful thinking, ultimately deceiving their readers by trying to “impress their peers with their apparent understanding of economics, even though they had no formal training in the discipline” (p. 214). All that we learn about their actual theories is that, somehow, these ill-fated authors are “opposed to private banks and the ‘Money Power’ without their opposition leading to more sophisticated political analysis” (p. 215). Any reading of the highly sophisticated Soddy (1934) quickly reveals such labels as unfounded defamation.
        To the contrary, the empirical evidence presented in this paper has revealed that the many supporters of the financial intermediation theory and also the adherents of the fractional reserve theory are flat-earthers that believe in what is empirically proven to be wrong and which should have been recognisable as being impossible upon deeper consideration of the accounting requirements. Whether the authors in Eatwell et al. (1989) did in fact know better is an open question that deserves attention in future research. Certainly the unscientific treatment of the credit creation theory and its supporters by such authors as Keynes, who strongly endorsed the theory only a few years before authoring tirades against its supporters, or by the authors in Eatwell et al. (1989), raises this possibility.
        5.4.2. Implications for government policy
        There are other, far-reaching ramifications of the finding that banks individually create credit and money when they do what is called ‘lending money’. It is readily seen that this fact is important not only for monetary policy, but also for fiscal policy, and needs to be reflected in economic theories. Policies concerning the avoidance of banking crises, or dealing with the aftermath of crises require a different shape once the reality of the credit creation theory is recognised. They call for a whole new paradigm in monetary economics, macroeconomics, finance and banking (for details, see for instance Werner, 1997, Werner, 2005, Werner, 2012, Werner, 2013a, Werner, 2013a and Werner, 2013b) that is based on the reality of banks as creators of the money supply. It has potentially important implications for other disciplines, such as accounting, economic and business history, economic geography, politics, sociology and law.
        5.4.3. Implications for bank regulation
        The implications are far-reaching for bank regulation and the design of official policies. As mentioned in the Introduction, modern national and international banking regulation is predicated on the assumption that the financial intermediation theory is correct. Since in fact banks are able to create money out of nothing, imposing higher capital requirements on banks will not necessarily enable the prevention of boom–bust cycles and banking crises, since even with higher capital requirements, banks could still continue to expand the money supply, thereby fuelling asset prices, whereby some of this newly created money can be used to increase bank capital. Based on the recognition of this, some economists have argued for more direct intervention by the central bank in the credit market, for instance via quantitative credit guidance ( Werner, 2002, Werner, 2003b and Werner, 2005).
        The view of the author, based on more than twenty-three years of research on this topic, is that it is the safest bet to ensure that the awesome power to create money is returned directly to those to whom it belongs: ordinary people, not technocrats. This can be ensured by the introduction of a network of small, not-for-profit local banks across the nation. Most countries do not currently possess such a system. However, it is at the heart of the successful German economic performance in the past 200 years. It is the very Raiffeisen, Volksbank or Sparkasse banks – the smaller the better – that were helpful in the implementation of this empirical study that should serve as the role model for future policies concerning our monetary system. In addition, one can complement such local public bank money with money issued by local authorities that is accepted to pay local taxes, namely a local public money that has not come about by creating debt, but that is created for services rendered to local authorities or the community. Both forms of local money creation together would create a decentralised and more accountable monetary system that should perform better (based on the empirical evidence from Germany) than the unholy alliance of central banks and big banks, which have done much to create unsustainable asset bubbles and banking crises (Werner, 2013a and Werner, 2013b).



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