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Roadtester wrote:Considering Iran needs all the friends it can, isn't this just winding up other arab nations?

If adhminejad, had just concentrated on jobs for the people and signed the oil/nuke fuel deals with russia (so they get to annoy USA but not the world) they would be sitting pretty now.

What do you mean? Everyone loves Iran. It has more friends than any other country in the world. I heard His Excellency President Admahdinejad say it

melika969 wrote:TJ,

As I said if you are igonrant about nationalism and history, keep it to your own and don't preach persians about it!

Indian Ocean was a joke, sorry if u didnt get it!

No Melika, I am not ignorant about nationalism and history, I know all about it, much more than you think.…..

You can sit and talk all day about nationalism, history, heritage….and how great you were hundreds or thousands of years ago.....…….but then what???

Tell me something. How is all that talk about your great past going to solve your problems of today??

And not just you dear. The Arabs and Moslems also do the same thing every day.

We need to concentrate on the present and the build the future, not daydream about how great we once were!

As to the name of the Gulf, you can call it anything you want as far as I am concerned, but to try to force your neighbors to call it the same thing, and to threaten them by banning their airlines from coming to Iran, is a bit ridiculous.

My point is: The Arabs have been calling it “The Arabian Gulf,” for at least 50 years (correct me if I’m wrong), and they are not about to change. Either live with it (as you have been doing until last week), or sit down with the Arabs to find a resolution to this dispute, or take inflammatory measures that will create more problems for Iran and the region, which, as we all know too well, is the last thing Iran needs at this time!!!

Roadtester wrote:Considering Iran needs all the friends it can, isn't this just winding up other arab nations?

If adhminejad, had just concentrated on jobs for the people and signed the oil/nuke fuel deals with russia (so they get to annoy USA but not the world) they would be sitting pretty now.

You can't blame the Iranians for showing a bit of nationalism. Its only sad that its leadership is binding support for their cause over this. But hey, history won't change, regimes do.

First, what on earth do u know about What Iran need in this time?!!

Second, defending our heritage and history is not daydreaming! Future will be built on the past history’s infrastructure!

Third, Arabs can call it anything, important is their naming is not acceptable anywhere but in their Arab world!

Fourth, we never LIVED with their calling it Arabian Gulf, you just were not aware of our objections.

End of.

melika969 wrote:First, what on earth do u know about What Iran need in this time?!!

Second, defending our heritage and history is not daydreaming! Future will be built on the past history’s infrastructure!

Third, Arabs can call it anything, important is their naming is not acceptable anywhere but in their Arab world!

Fourth, we never LIVED with their calling it Arabian Gulf, you just were not aware of our objections.

End of.

I learned about I ran and what it needs from you, on this forum!!!!

Well, it appears your government’s latest move has actually worked. You’re supporting it now!!!

(I’m just teasing you!!! Mel…. !)


I’m tired of talking about the Gulf, let’s put an end to it!!

Perhaps they should be more concerned with their "Palestine" instead of trying to offend a whole nation by manipulating their heritage & history.

I always make it clear to everyone .. If Arabs calling it "Arabian Gulf", let it be so ..
But on the other hand, I'm calling it "The Jewish State of Israel" instead of "Palestine", and I live to see the Israeli flag rise upon it's embassay here! And let Israel expand towards Jordan, Syria, and Egyption desert! Let them continue on manipulating the natives history & heritage and let the Arabs live with it

If it's taking them too long (60 years) to free their so called "occupied lands" & the continous humilation, then let the Arab politicians live with the fact of ISRAELI's existance and I request from all the world not to give any sympathy to the spoiled Arabs who wants to claim something that they dont own.

No more double standards, welcome to reality.

symmetric wrote:Perhaps they should be more concerned with their "Palestine" instead of trying to offend a whole nation by manipulating their heritage & history.

I always make it clear to everyone .. If Arabs calling it "Arabian Gulf", let it be so ..
But on the other hand, I'm calling it "The Jewish State of Israel" instead of "Palestine", and I live to see the Israeli flag rise upon it's embassay here! And let Israel expand towards Jordan, Syria, and Egyption desert! Let them continue on manipulating the natives history & heritage and let the Arabs live with it

If it's taking them too long (60 years) to free their so called "occupied lands" & the continous humilation, then let the Arab politicians live with the fact of ISRAELI's existance and I request from all the world not to give any sympathy to the spoiled Arabs who wants to claim something that they dont own.

No more double standards, welcome to reality.

Good argument.

symmetric wrote:Perhaps they should be more concerned with their "Palestine" instead of trying to offend a whole nation by manipulating their heritage & history.

I always make it clear to everyone .. If Arabs calling it "Arabian Gulf", let it be so ..
But on the other hand, I'm calling it "The Jewish State of Israel" instead of "Palestine", and I live to see the Israeli flag rise upon it's embassay here! And let Israel expand towards Jordan, Syria, and Egyption desert! Let them continue on manipulating the natives history & heritage and let the Arabs live with it

If it's taking them too long (60 years) to free their so called "occupied lands" & the continous humilation, then let the Arab politicians live with the fact of ISRAELI's existance and I request from all the world not to give any sympathy to the spoiled Arabs who wants to claim something that they dont own.

No more double standards, welcome to reality.

I totally agree.

The Arabs should stop “daydreaming” about “liberating” all of Palestine.

It seems every time the Arabs go to war against Israel, they sadly lose more land.

If they make peace with Israel, the Middle East will be a better place, and both Israel and the Arabs will benefit from mutual economic trade, and from having more money allocated to development instead of military spending!!

I’m not saying the Palestinian plight is not just, but whether we like it or not, the realities of today say Israel is more powerful than the Arabs, and is here to stay.

Eventually, the Arabs will have no choice but to accept this reality, and deal it. But the sooner they do that, the better!!

TJ - you may be surprised to hear that the Arabs have indeed adopted the course of action you have outlined - they have indeed offered Israel peace, recognised it as a state within the expanded borders it won in 1948 (going from 55% of the land to 78% of the land, with Palestine dropping from 45% to 22% of the combined land allocated to Israel and Palestine by the UN).

It offered all this in 2002 in the 'Arab Peace Intiative' which is still the basis of all peace plans.

Israel is very good at spinning a story and the current fallacies are that it is the Palestinians who are not talking peace (when in fact it is the Israelis that are continuing to build on the 22% of the land they captured in 1967 - illegally according to all legal judgements), and another example of blatant lying was the myth they put out that Hamas were the ones who broke the truce in 2008 (when it was actually Israel who broke it on the day the US went to vote).

In the thread - Palestine- Push for Independence, you will see that the Palestinians are trying to make a diplomatic breakthrough by declaring independence for the 22% of the land that the world does not recognise as being part of Israel. In my discussions there with FD, I summarised the issues discussed by stating the following facts:

1. Israel has made no concessions in the peace negotiations - it has been all the Palestinians
2. Israel broke the truce and lied about why it was bombing Gaza and killing civilians (by saying Hamas broke the truce)
3. Israel have 78% of the land and Palestinians are settling for 22% - but Israel is reluctant to settle for this and seems to want more - specfically building more illegal colonies in the 22% that is not Israel.
4. Israel is unequivocably breaking international law in East Jerusalem by annexing it.
5. B'tselem say Israel in East Jerusalem is discriminating against the non-Israeli residents.

(Sorry, now you can go back to the Persian/Arabian Gulf debate - I've nothing more to add on that topic)

Cheers,
Shafique

shafique wrote:TJ - you may be surprised to hear that the Arabs have indeed adopted the course of action you have outlined - they have indeed offered Israel peace, recognised it as a state within the expanded borders it won in 1948 (going from 55% of the land to 78% of the land, with Palestine dropping from 45% to 22% of the combined land allocated to Israel and Palestine by the UN).

It offered all this in 2002 in the 'Arab Peace Intiative' which is still the basis of all peace plans.

Israel is very good at spinning a story and the current fallacies are that it is the Palestinians who are not talking peace (when in fact it is the Israelis that are continuing to build on the 22% of the land they captured in 1967 - illegally according to all legal judgements), and another example of blatant lying was the myth they put out that Hamas were the ones who broke the truce in 2008 (when it was actually Israel who broke it on the day the US went to vote).

In the thread - Palestine- Push for Independence, you will see that the Palestinians are trying to make a diplomatic breakthrough by declaring independence for the 22% of the land that the world does not recognise as being part of Israel. In my discussions there with FD, I summarised the issues discussed by stating the following facts:

1. Israel has made no concessions in the peace negotiations - it has been all the Palestinians
2. Israel broke the truce and lied about why it was bombing Gaza and killing civilians (by saying Hamas broke the truce)
3. Israel have 78% of the land and Palestinians are settling for 22% - but Israel is reluctant to settle for this and seems to want more - specfically building more illegal colonies in the 22% that is not Israel.
4. Israel is unequivocably breaking international law in East Jerusalem by annexing it.
5. B'tselem say Israel in East Jerusalem is discriminating against the non-Israeli residents.

(Sorry, now you can go back to the Persian/Arabian Gulf debate - I've nothing more to add on that topic)

Cheers,
Shafique

Personally, I dislike Israel not because of it's conflict with Palestineans only, but for their sick mentality and thoughts which is not different than the mentality of the nationalist Arabs by the way.

Nationalist Arabs caused themselves all this mess and they deserve all this humilation. They tortured and humilated other people of different ethnicity in the region (like the Kurds) for nothing just to Arabize some land that they DONT OWN. People already got Arabised and changed eventually be it by force or choice, it just happened.

And now history is repeating itself, as we see a bunch of intruders (non-native jews) who think they are the chosen nation are Jewnizing or Israelinizing the Levant region by killing, humilating, stealing, and kicking out the Arabs from their land. Why do Arabs seek sympathy? Why did they believe and support their nationalist leaders? It's even .. 1/1.

You really think Iraq (atleast N.Iraq) is of Arabian backgrounds? Or even Lebanon and Syria? Let alone North Africa region. How different can the Palestinans be from the native Assyrians of Iraq, or Kurds of Kurdistan region, or Pheonicians of Lebanon, or Amazighs of North Africa?

Zionists = Nationalist Arabs
Same filth

Despite that Arabs are so weak now, yet they still got some nerve to offend a neighbouring nation by trying to change a historical name, the Persian Gulf to the Arabian Gulf. Untill people learn from their mistakes, let the humilation & torture continue.
Looking forward to see a moderate NON-nationalistic Arab leader to fix this mess in a proper way to bring back the dignity of the Arab people.

That is my point of view from a secular political prespective.

But if you want my Islamic thoughts, I will simply put it in one sentence ..
"Revive a moderate & modern Khilafa, but keep it in the hands of a non-Arab".

Interesting viewpoint Symmetry. I tend to agree with your secular perspective.

Symetric - I too don't dislike Israel's actions because of the religion of the one's occupying Palestinian land - but rather because of the actions themselves.

Arab Nationalism, interestingly, actually arose in Lebanon because the Christian Arabs were concerned that the 'Arab' Identity was being subsumed into an 'Islamic identity' (recommend a book on Lebanese history 'A House of Many Mansions' by Salibi).

The abuses of minorities is a relatively recent phenomenon - and whoever does it is condemned by me. In fact Arabs were at the brunt of 'colonial powers' from the decline of the Arabic Islamic empire when the baton passed to the Ottomans. The desire for an Arab homeland and autonomy is what Britain exploited in the first world war (TE Lawrence etc)

Zionists are no different from other groups who oppress minorities, from Arab oppression of Kurds to Indonesian atrocities in East Timor, Chinese in Tibet etc etc

What does set the Israeli actions apart though is the spin that it is a clash of religions, when in fact it's all about the land and matters of international law. The fact that many prominent Palestinian politicians are Christian (and the fact that Fatah/PLO is secular) is conveniently glossed over.

Cheers,
Shafique

shafique wrote:TJ - you may be surprised to hear that the Arabs have indeed adopted the course of action you have outlined - they have indeed offered Israel peace, recognised it as a state within the expanded borders it won in 1948 (going from 55% of the land to 78% of the land, with Palestine dropping from 45% to 22% of the combined land allocated to Israel and Palestine by the UN).

It offered all this in 2002 in the 'Arab Peace Intiative' which is still the basis of all peace plans.

Israel is very good at spinning a story and the current fallacies are that it is the Palestinians who are not talking peace (when in fact it is the Israelis that are continuing to build on the 22% of the land they captured in 1967 - illegally according to all legal judgements), and another example of blatant lying was the myth they put out that Hamas were the ones who broke the truce in 2008 (when it was actually Israel who broke it on the day the US went to vote).

In the thread - Palestine- Push for Independence, you will see that the Palestinians are trying to make a diplomatic breakthrough by declaring independence for the 22% of the land that the world does not recognise as being part of Israel. In my discussions there with FD, I summarised the issues discussed by stating the following facts:

1. Israel has made no concessions in the peace negotiations - it has been all the Palestinians
2. Israel broke the truce and lied about why it was bombing Gaza and killing civilians (by saying Hamas broke the truce)
3. Israel have 78% of the land and Palestinians are settling for 22% - but Israel is reluctant to settle for this and seems to want more - specfically building more illegal colonies in the 22% that is not Israel.
4. Israel is unequivocably breaking international law in East Jerusalem by annexing it.
5. B'tselem say Israel in East Jerusalem is discriminating against the non-Israeli residents.

(Sorry, now you can go back to the Persian/Arabian Gulf debate - I've nothing more to add on that topic)

Cheers,
Shafique

As you said, this topic is about Iran, so I’ll say it quickly and briefly.

Shafique, your points are all good and valid!!

But what do we do??

The way I see it, with every passing day, the Arabs lose more…and their negotiating position gets weaker and weaker. Why? Because they themselves are much weaker than Israel, and they are hopelessly divided. As such, their bargaining chips are dwindling to nearly zero.

Even the Palestinians themselves are divided (fighting with each other), and can’t agree on who should represent them!!

Hate to say it, but they are all pathetic!!!

Tom Jones wrote:

shafique wrote:TJ - you may be surprised to hear that the Arabs have indeed adopted the course of action yo
As you said, this topic is about Iran, so I’ll say it quickly and briefly.

Shafique, your points are all good and valid!!

But what do we do??

The way I see it, with every passing day, the Arabs lose more…and their negotiating position gets weaker and weaker. Why? Because they themselves are much weaker than Israel, and they are hopelessly divided. As such, their bargaining chips are dwindling to nearly zero.

Even the Palestinians themselves are divided (fighting with each other), and can’t agree on who should represent them!!

Hate to say it, but they are all pathetic!!!

Well, the first thing we should do is separate out the Israeli spin from reality.

The solution is really quite simple - the Arab peace plan is on the table, and the Palestinians and Arabs have already agreed to peace. It is only the Palestinian side which has made any concession according to international law and it is the Israelis who are dragging their feet and who want to continue to hold the illegal colonies they've built.

Once we establish that there should be a just, negotiated solution and chastise the side who is not negotiating in good faith (but is blaming the other side in the media), the issue resolves itself.

Even the divisions in the Palestinians is manufactured - first Israel help set up Hamas, then - more recently - the US fomented the 'civil war' in Gaza that led to Hamas taking over (see article below). Again, beware of swallowing the spin without questioning:
http://www.vanityfair.com/politics/feat ... gaza200804


So, with all the concessions made ONLY by the Palestinians - I think its unfair to blame those being occupied for the current state of affairs, especially as they HAVE shown they can make a truce work, are willing to negotiate and have very reasonable demands (that Israel stops building illegal colonies before resuming talks, doesn't unilaterally take more the 22% of the land remaining etc)

Cheers,
Shafique

Shafique, you really need to read Noam Chomsky's - Failed States, as this book provides crystal clear information and commentaries from defense analysts and policy planners how the status quo is maintained and how superpowers gain the critical leverage they need to access strategic resources in the ME over time.

I talked about the absence of Arab democracy recently. I initially thought it was solely due to Arab leaders and their autocratic and non-secular movements, which is the main reason. But when I read how Arab states are supported (bought) by subsidies and technology for the tripolar world powers...you start to understand why democracy in the Middle East is never interesting enough for a superpower who needs to secure resources for its existence.

Just put the puzzle together with US/Israeli policy funding Hamas as a reason to maintain the status quo. Also, since the 1990's Osama Bin Laden has grown his terrorist movement Al Qaida in the ME but without the succes he wanted it to be, that is until Bush and Cheney/Wolfowitz invaded Iraq. Bin Laden's movement soared after the fatwa was released from Cairo's oldest islamic institute that opposed US forces on Islamic grounds. The growing terrorism that resulted from this fatwa is now used a motive for preventive warfare.

In the 1980's, Sadam Hussein received 5 billion dollar in aid to buy American technology which included nuclear, viral strains for chemical warfare and what not else.
During the Iraqi invasion in 2003, American forces secured the infrastructure and oil wells but guess what, some 100+ nuclear/viral facilities that were guarded properly under Saddam, where left for looting! A Jordanian journalist gave notice of information that traces of nuclear material were heading into Jordan, where the trace went lost.

To me it becomes clear that this seems all an effort to strategically move the pawns where they will be used in some later stage to attack nations with nuclear aspiration like Iran. It doesn't matter who got the material looted from Iraq (perhaps followed by the CIA, who knows) but countries that are sponsoring terrorist movements will be subject to manipulation and threat of force. I bet you a penny on it that Iran is going to be bombed in the future. I even care to speculate that towers (as in chess pieces) are being moved to facilitate that outcome just as Iraq was covered under WMD, only from Reagan's nuclear reactor agreement in 1982. It turns against you one way or the other if you are not of use to a superpower anylonger...

The status quo is maintained because short term power and wealth are way more interesting than survival of human lifes, even if it affects one own people as can be seen from multiple reports of chemical risks in the US and the lack of investigation in the 9-11 tragedy. This Palestine crisis will not be solved. From a superpower perspective, peace in the ME is like giving up your own prosperity for the benefit of another. Why lose the leverage?

Thanks RobbyG - I will indeed read Chomsky's book asap.

The frightening thing is how many swallow hook, line and sinker the spin that is used to cover up these facts. Eg - the 'other' hates our liberty, 'it's a clash of civilisations', 'we are spreading liberty' etc etc!

Cheers,
Shafique

Well you should nuance it a bit more in the sense that neither every soul in the CIA nor the American government all agree on US policies that are pursued. Most people are either ignorant about world matters or just don't care. Others, like the CIA senior officials that left the job under the Bush adminstration was a real blow to the CIA. Some top officials didn't want to paint a picture that wasn't based on the obvious intelligence! So its not a problem of integrity and warmongering on all levels, its the hierarchy that is the problem and the nutjob that rules the level in the hierarchy.

The more power some people get, especially under some ideology are extremely dangerous. Elite's only think of more power, more this and more that. Its an addiction that normal people will never really understand. For a leadership in a superpower you do have to focus on getting your resources, just as the Chinese are now all-in on Africa. They also have contracts with Iran. Russia has enough resources of its own, but is using the same leverage on the ME region to try and stop the USA in closing in on its borders. Don't think Communist China is any better that the US or Russia.

The US is now in control of Iraq, which is the second largest in untapped oil resources in the world. It has big leverage in the center of the ME. So when you look at the interests of China and Russia, they are obviously not happy with so much US leverage. It wouldn't surprise me if China and Russian are funding Hezbollah to counter the American insurgency.

Its a dangerous game of great covert forces. You don't want to be a benevolent puppet standing in between them. Thats for sure. Eisenhower once said in the '50s that you have to be aware of the military industrial complex. Intelligence and private corporations in the 'defense' industry are unbelievably powerful in lobbying Congress. Ron Paul is also spot on when it comes to analyzing what is happening in the USA of today. He wants to restore the Constitution so that the US becomes a true democracy once again, with all the liberties it once had. He knows the CIA is way too powerful and that the public, nor its representatives even know what its real agenda is up to.

Fascinating stuff. Anyway, I have managed to get a copy of Failed States and will report back when I've finished it.

As for your analysis in your last post - it is totally in accord with what I've read so far as well. Chomsky argues the same in his other books - IIRC - and the illusion of democracy in the States is a theme that surprised me when I read about it first.

Cheers,
Shafique

shafique wrote:Fascinating stuff. Anyway, I have managed to get a copy of Failed States and will report back when I've finished it.

As for your analysis in your last post - it is totally in accord with what I've read so far as well. Chomsky argues the same in his other books - IIRC - and the illusion of democracy in the States is a theme that surprised me when I read about it first.

Cheers,
Shafique

I have a feeling you will agree with the analysis of the former post also, after reading Chapter 1 of Failed States. You'll be amazed how much sense it all makes.

Edit: You have to see the rants from George Carlin - A Comedian... he's straight to the point so be aware as it contains foul language.

Who Really Controls America: http://www.youtube.com/watch?v=hYIC0eZY ... r_embedded
America Loves War: http://www.youtube.com/watch?v=sDkhzHQO ... r_embedded

Shafique my man, I got something for ya. Something that will set the hairs up from your back.

This video (50min.) is and endgame scenario from prominent strategists about Israel and the ME region. Its a Dutch documentary with written translation below in english. I think you'll find this fascinating, even though its horrific in outcome.

Watch on Youtube:

shafique wrote:Fascinating stuff. Anyway, I have managed to get a copy of Failed States and will report back when I've finished it.

As for your analysis in your last post - it is totally in accord with what I've read so far as well. Chomsky argues the same in his other books - IIRC - and the illusion of democracy in the States is a theme that surprised me when I read about it first.

Cheers,
Shafique

To add to the transparancy controversy of 5 billion dollar 'aid' to Saddam Hussein in 1982, prior to the war with Iran, there recently was evidence introduced by Ron Paul during the inquiry of Ben Bernanke in the House of Rep's that the Federal Reserve (FED) was involved with that money transfer!

View at around 1:50 onwards here:

Bernanke responded:
“These specific allegations you’ve made I think are absolutely bizarre, and I have absolutely no knowledge of anything remotely like what you just described,”

Now Barney Frank (Chairman Financial Committee) wants to probe into this matter of FED involvement in foreign affairs.
http://www.bloomberg.com/apps/news?pid= ... VRck&pos=8

They'll probably destroy the books on this one, but its quite a momentum now that the FED's authority and secrecy is being questioned. That bodes well for future dollar stability and less war efforts backed by FED created money.

Scary stuff.

Unfortunately the man in the street is going to think that this is all 'conspiracy theory' stuff and that's how they'll get away with it.

The more I read into it - the more I'm beginning to agree with the argument that financial system of interest is at the root of the troubles world wide. I mean, I used to think it was wars and desire to get hands on the resources, but it seems it's more and more interdependent with the availability of finance.

I recommend you read the chapter on Finance in a book (actually based on a speech) given in the 1990s - called 'Islam's Response to contemporary Issues' (I may have recommended this before, apologies if I have) - but there he lays out the link between interest based systems and wars.
http://alislam.org/library/books/Islams ... Issues.pdf

Cheers,
Shafique

shafique wrote:Scary stuff.

Unfortunately the man in the street is going to think that this is all 'conspiracy theory' stuff and that's how they'll get away with it.

The more I read into it - the more I'm beginning to agree with the argument that financial system of interest is at the root of the troubles world wide. I mean, I used to think it was wars and desire to get hands on the resources, but it seems it's more and more interdependent with the availability of finance.

I recommend you read the chapter on Finance in a book (actually based on a speech) given in the 1990s - called 'Islam's Response to contemporary Issues' (I may have recommended this before, apologies if I have) - but there he lays out the link between interest based systems and wars.
http://alislam.org/library/books/Islams ... Issues.pdf

Cheers,
Shafique

Yes, I already have that document stored on my PC. I've read it.

I don't agree with the premise of interest being the root of all evil. I do agree that the manipulation of interest rates are the root of all evil! Thats a big difference.

Interest rates are merely the spot price of the supply and demand of money. In a free capitalist economy (forget the USA) interest rates are determined by the need of capital in a part of that economy. If capital is widely available then interest rates are low. If capital is scarce, then interest rates go up to attract that capital. Under the gold standard this was a cyclical phenomenon with a inelastic amount of gold as basis.

After 1971, when the gold standard was abandoned, the amount of fiat money in circulation was completely at the will of setting interest rates per FED decree. Thats the problem of the massive inflation during after the 1960's until now. The gold standard was abandoned because the War in Vietnam was too inflationary and countries that invested in US bonds wanted to be redeemed in gold at $35 an ounce. The absence of monetary and fiscal restraint in the US was worrying the external creditors so that gold seemed suddenly a better store of value, so they demanded the collateral. That meant gold leaving the US, so they had to abandon that standard. In technical terms, the US defaulted in 1971.

Since then, US monetary policy is based on setting interest rates on core inflation rate (absent volatile prices from food and energy prices). This doesn't make sense to someone who thinks logically. The major price effects of inflationary monetary policy are explicitly visible in assets like oil and food! So why exclude that from monetary policy indicators?
Its all an effort to finance wars by eroding the debt by debauching the currency undetected from the publics eye. Also it avoids deflation as per Keynesian school of thought. The side effect of inflationary policies is that politicians are keen to support it, as they don't have to show fiscal restraint as inflation will erode our debt obligations over time. That is, if you don't spend more than you inflate...

The system is flawed in that interest rates should be set by the market. THATS the invisible hand people talk about. At current situation in our world, interest rates are set by Central Banks like the FED and have ruined our financial system on the back of the taxpayers.

Its a long story, but interest rates aren't the problem. Its just who controls the interest rate that matters. To keep capital flowing where it needs to flow to, you need the free market to set interest rates. Not manipulative government policymakers who are so called 'independant' from special interests and politicians/corporations like WallStreet.

I recommend reading into Austrian Economics. It all makes sense, if you really let it work as it is intended to work in a capitalistic system. In our world, the fiat paper system is a US doctrine based on manipulation by the most important monetary body in the world, the FED in collaboration with other central banks in the world.

Niall Ferguson has some interesting views on the Rothschilds and their initial manipulation of bond prices to change the outcome of war in other countries through manipulating the availability of capital. Paper money is just a paper that can be printed without restraint in unlimited amounts. Gold cannot be printed. You have to perform intensive labour to get it out from the ground. Thats effort gives it a value relative to other available assets. The Rothschild family knew this very well and essentially controlled all the finances from governments the world over. If you start from there and study the developments in finance onwards then you will find out exactly how far we've gone to the credit based society of today, and that its doomed to fail.

I agree that if interest rates are allowed to be set by the 'market' you won't get manipulation by governments. However, aren't you then just handing over the reins of this powerful economic tool to those who own capital? (Also, it's a bit 'chicken and egg' with an interest based economy, money naturally accumulates with those with capital - rather than with those who produce actual goods - a point graphically shown in the 'documentaries' 'Money as debt')

But, without getting into the macro-economics too deeply, just think about what the alternative proposal is - a negative interest rate environment. (It is actually a tax on capital that is unused, which can be thought of as a negative interest rate).

What would the implications of a negative interest rate be? First, I'd argue - it would encourage real investments and more responsible lending - the only way to get good returns is to invest in ventures that produce real returns. It will encourage those with capital to invest (for if they don't, it's taxed).

With a negative interest rate, there's also the advantage of low inflationary pressures.

And wouldn't you +also+ get all the benefits of a free market economy you listed abovel? (The owners of capital will just have to share in the risks of the investments - i.e. what venture capitalists and those who invest in stocks and shares do now anyway)

Another benefit is that asset bubbles caused by lending for consumption/speculation will not happen.

There's something crazy about governments borrowing money (and giving interest) and paying it back by money they print. Of course, if there is a 'gold standard' or equivalent, there isn't this problem of manufacturing money out of thin air. But today, the bulk of 'money' is not actually what is printed by governments, but what is conjured out of thin air by banks when they provide credit (as a result of fractional reserve banking) - so perhaps that is also another source of the problems?

So, perhaps another way of looking at the argument - perhaps doing away with interest rates (and fractional reserve banking?) is a potential cure (if you don't believe interest rates is the root of the problem)?

Cheers,
Shafique

Let me clear my view about money and interest rates with an analogy.

Lets visualize a room with a fixed (inelastic) amount of money, like in a gold standard. The room has four corners, each representing a part of the economy. So lets say that in one corner of the room, some entrepreneur discovers an oil field. Suddenly investors start investing in that booming corner, resulting in a rising asset price, called inflation.
At the same time, money has to come from other parts of the room, so in those corners where money moves out there is per definition (some) deflation.

A room based on fractional reserve banking is a room with a money printer in its center, controlled by Ben Bernanke, setting interest rates at which banks can loan money from the FED.
In an economy (room) based on fractional reserve banking, there is the possiblity of leverage. So when an entrepreneur needs a loan for his oil company investments, he borrows $100.000 from his communal bank. The bank asks for a collateral (a deposit, or a claim on his oil company assets) and determines the interest rate based on the risk it sees with the borrower.
When the entrepreneur (the investor) buys goods and services for his oil company, he electronically pays a counterparty the $100.000, thus creating a new deposit at the (same or another) bank. The banks are allowed by the regulatory body (FED) to leverage at a maximum of e.g. 12:1. Therefore, the second bank has to keep $8333 at the FED in order to be able to lend out the difference of $100.000 minus $8333 which is a loan amount of $91.666 for someone else. So each time, money is created, with little collateral at the bank.

So fractional reserve banking goes well when the investment prices keep rising (inflation) but this reverses when price levels continue to decline (deflation). This results in margin calls and bigger loan-loss facilities to keep the banks solvent (assets to liabilities ratio). The company can also go bankrupt when it defaults on its interest paying obligations (e.g. because oil revenues decline) and the investor loses his money.

With deflation, the amount of money in circulation decreases (since credit is destroyed as loans go bad) and less money in circulation chasing the same amount of goods means a stronger currency (if the room has no doors open and money doesn't flow out to other rooms as in other countries). For a creditor, who has savings at the bank, this is great as his purchasing power increases. But for a debtor, who carries a loan amount, inflation will erode his obligations away over time, but the oppossite happens when deflation occurs. After all, his nominal loan amount still has to be paid off.

So once you are locked in debt and inflation decreases (disinflation) or even turns negative, as in deflation, then you have a hard time working your way out of debt. So people and businesses, but also politicians, like inflation as it erodes debt obligations over time.

But your recommendation was to install negative interest rates. So what that means is that the FED is not charging interest to banks to obtain money, but now it pays! the banks money to get their money at the FED. Also, that would mean that you and I are going to get paid interest for loaning money FROM the bank while at the same time the savers who deposit money at the bank for interest, will have to pay the bank! for storing their money at the bank! That doesn't make sense from a capitalist perspective. After all, you want your efforts aimed at improving your personal situation. And when banks can't attract savings capital to lend out, then the economy stops functioning.

So negative interest rates won't work as a solution. The problem is credit creation through fractional reserve banking. Lower gearing ratio's are needed, but if you do it at once, the system would collapse immediately as all banks would be insolvent. As a matter of fact, most banks ARE insolvent, were it not for the FED and ECB to spray money in the economy for practically zero interest rates.

The situation we have today, in the world, is that the private sector is contracting and repaying its huge debtload, while monetary authorities are printing money like madmen to counter that deflationary force of credit contraction. So in a dynamic situation as our global economy, that means huge volatility in markets. Prices go up and down and essentially this means that with near zero interest rates, the markets are incapable of determining value and pricing the assets. After all, with so much money being printed, when that money finds its way from the banking sector into loans on the ground (real economy) then you would have exploding prices, as in hyperinflation.

The only force that keeps that development at bay is the private sector, which is deleveraging by repaying debt loads and behaving rationally. The one body that causes these disturbances is the FED who sets interest rates and hereby supplies the wrong incentives to the market place.

To give an analogy of people as in the amount of money, consider the following:

You own a restaurant in your small town. Each year you get a little more customers in organic population growth, say 3 percent. Suddenly a Circus comes to town without your knowledge, and you get a huge increase of customers so you expand. You build an additional section to your restaurant with a loan from the bank to cope with the increased demand for your services. Suddenly the Circus moves out. Now you overinvested and the market returns to normal. You were given the wrong incentives to expand your business.

Wallstreet got drunk because the FED lowered the cost for obtaining the punchbowl. Same happens in the rest of the economy. Interest rates must be higher to be able for businesses to respond rationally and determining value over the long run.

Negative interest rates are not a solution. Capitalism doesn't work that way.

I can't do your excellent post justice on my blackberry - so will wait write a fuller reply next week.
My view is that you need to go back to even more basic economics - and examine the definition of money.

As a store of wealth and as a means of exchange - money is a tool or proxy for something else.

Taxing unused capital (the negative interest rate) and forcing real investments (where returns come from profit) increase the amount of wealth in the society (the value of goods has increased). With fixed amounts of fiat money (eg gold standard) this means you can buy more with the same gold - the value of the money you hold has increased.

Overall owners of capital are better off because they are getting higher returns (and to a large extent they do this now anyway) - and borrowers pay back loans with capital plus profit share - the risk remains with the lender though (as no interest can be charged)

There's no need to create imaginary money which is what is done with frbanking.

Capital is real and gets used to produce real things, and there's a beneficial spiral.

Cheers
Shafique

Oh bte - almost finished ch 4 - sheeeeeeeeeeeeeeeeeet it's bloody unbelievable!!!!!! I'm fuming (as you can imagine)