The shadow banking system is rich. What is their currency? IOUs, backstopped with public money in a crisis, because the Fed buys their IOUs when the market devalues them.

So a few people are living very well off of "leaves" that are just promises to pay, and are often (in the case of CDS, etc.) lies. But the government steps in to make good the promises backing up those lies.

So one way is to simply substitute what the huge cash pools really want, which is T-bills. But there aren't enough T-bills so they create "quasi T-Bills" which end up tanking, and the Fed backstops them.

Instead, just let the government create more T-bills.

The government/Fed is going to end up paying for the privately-created IOUs anyway, when the next crisis comes. Why not simply create the government debt now, which is what the huge cash pools are looking for anyway, and use the T-bills to spend on social services? Backstop individuals now instead of corporations later.

References:
http://www.treasury.gov/initia...

http://ftalphaville.ft.com/201...

And republicans turned the stars upside down on their logo to appeal to Satanists.

This is a very disingenuous response. Economics makes assumptions about rational behavior, marginal value, scarcity, and other purely psychological characteristics. How does marginal value apply to gravity, for example? Will a star profit less by acquiring more mass per unit? Gravity doesn't work that way. And the idea of "profit" is purely human, and intricately tied to money, a human invention.

Trying to apply such economic assumptions to biology results in a gross misinterpretation of nature.

Doug and Dinsdale Piranha, using a combination of violence and sarcasm!

I fear your ideology blinds you to the evidence of history.

Free market traders calling each other up on the phone to ask a favor in changing the interest listing so they can make millions, is the essence of the free market.

There were many crashes and panics before the US created the Fed. The private system evolved Clearninghouses to act as centralized authorities. But clearinghouses were in a position to help their friends and hurt their enemies, regardless of the assets of the friends/enemies. So the Fed was created to act more equitably so we wouldn't have to rely on J.P. Morgan again as we did in 1907.

The market is all about inefficiencies and personal relationships and inflicting pain without any thought of the General Welfare. Government swears to provide for the General Welfare, but no CEO does.

Economics rests on assumptions that don't apply in the real world. Thus, economics cannot model most real world phenomena.

Latest BIS report shows $710 trillion in derivatives. The Fed expanded its balance sheet from $1 trillion to $4 trillion. Money is not a scarce resource. Eliminate the debt ceiling and fund govt at zero cost.

From the Fed, rolling over loans for zero cost funding.

Fed funds and repo markets. The way the private sector borrows everyday to meet cash commitments. Borrowing is the life blood of the private sector.

In House of Cards by Cohan, he describes a Bear Stearns executive characterizing the daily repo desk activity as "dialing for dollars." This is how much of the financial sector survives, by rolling over overnight loans, or "kicking the can down the road."

Government can be immune from private sector influences. It can and should use fiscal policy to provide each individual with a choice whether they want to enter the private sector, or pursue their own ideas outside of business. Challenges can stimulate individuals to create disruptive technologies on their own, which business is not so good at (being better at incremental innovations such as making computers smaller, rather than inventing computers in the first place).

Finance the fiscal policy of a basic income through the Fed, the same way it finances the private sector by rolling over loans at no interest forever.

Again, the cost of subsidizing housing was not the problem. Mortgage defaults by themselves were not enough to cause a crash. It was the inflation of mortgages by the private sector, with their innovations, that caused such a large amount of money to be taken out of the market suddenly. The Fed backed it up, and the banks who created the inflation didn't suffer.

A much better policy would have been to bail out the homeowners.

The point is, the "pay for it" part would only have reached $10.6 trillion, tops. That was not enough to tank the market as the fear of losing the inflated $62 trillion was. Kevin Puvalowski, assistant to SIGTARP, testified before Congress that the total amount of government support for the private sector was $23.7 trillion. That's far more than the total mortgage debt. It would have been much better to bail out the homeowners, instead of the banks.

How about bankers' rights to take away homes whose mortgages they don't own?

Wait, are you one of those economists that are the subject of this article?

The figures I found indicate the US by 1876 still hadn't produced the same cotton it had in 1860: http://www.sailsinc.org/durfee...

Note also how you cleverly cite a figure from 1850 to 1870, which includes the Civil War. Most of the "doubling" took place before 1860, thanks to the (enforced) productivity of slaves.

From http://www.history.upenn.edu/e...:

Our scaffolding is built on the solid foundation of over 600 thousand daily cotton picking observations drawn
from the archives of over 110 slave plantations. We show that in the 60 years preceding the Civil War the
average amount of cotton picked per slave in a day increased about four-fold.

That productivity was not matched by post-war cotton producers. Capitalism is best when it is immoral and doesn't respect unalienable rights.