Key parts of the world’s financial affairs have been hi-jacked by self-serving financial organisations, bureaucracies, country leaders and individuals. The outlook is dire.
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- How Central Banks Made the Covid Panic Worse By Kristoffer Mousten Hansen, Mises Institute, 5 August 2020
- Welcome To The Crazed, Frantic Demise Of Finance Capitalism By Charles Hugh Smith, via OfTwoMinds blog, 20 July 2020
- Central Banks Driving Gold By Jim Rickards, for The Daily Reckoning, 2 July 2020
- The Sneaky Covid War on Cash By Viv Forbes, saltbushclub.com, 19 June 2020
How Central Banks Made the Covid Panic Worse
How Central Banks Made the Covid Panic Worse By Kristoffer Mousten Hansen, Mises Institute, 5 August 2020
Historical events are complex phenomena, and monocausal explanations are therefore by definition wrong when explaining history. Many factors go into explaining why people and the world’s governments reacted as they did to the coronavirus. It is, however, my contention that examining the inflationary policies pursued by central banks and governments are fundamental to understanding how the current corona hysteria developed.
Calling it hysteria may sound harsh. When the coronavirus first started to draw attention back in February, and when most Western countries instituted extremely restrictive measures in March, one could make a plausible argument that the world was dealing with an unknown and seemingly catastrophic disease and that therefore extreme measures were justified. To be sure, this does not mean that the measures implemented were in any way effective, nor that the sacrifices imposed were morally justified; but there was at least an argument to be made.
At this point in time, however, the Centers for Disease Control and Prevention (CDC) has repeatedly cut the COVID-19 fatality rate, and it is now comparable to a bad year of the seasonal flu (see the useful aggregation of studies and reports by Swiss Propaganda Research). The glaring question therefore is: Why do governments across the West act as if they were still dealing with an unprecedented threat? It is no good to simply reply that what politicians really want is power and that they are just using coronavirus as an excuse for extending government control. While a plausible claim, it does not explain why vast majorities in most countries support whatever policies their rulers have thought good. Given the extreme restrictions placed on social and economic life and the mendacious, ever shifting narrative used to justify them, one would think that there would be widespread opposition after four months. So why is there practically none?
Inflation in the Age of Corona
We can better understand this strange phenomenon if we consider the inflationary policies pursued by central banks across the world. I’ll here cleave to the old definition of the term inflation and the one still favored by Austrian school economists: an increase in the quantity of money. The rise in prices which is commonly referred to as inflation is simply the effect of such an increase. While the complexities of modern central banking can sometimes obscure the realities of the process, there can be no doubt that the last couple of months have seen very high levels of inflation.
Modern central banks are no longer content with the classic role of lender of last resort. As the financial system has evolved, central banks have assumed the role of market maker of last resort—that is, they have either implicitly or explicitly assumed the responsibility of making sure that there is always a buyer for financial assets—and first of all government bonds. Thus the Federal Reserve’s balance sheet has ballooned from just over $4 trillion at the beginning of March to now just below $7 trillion; the Bank of England’s has increased from about £580 billion in March to about £780 billion; and the European Central Bank has increased its holdings from about €4.6 trillion to about €6.3 trillion. The balance sheets of the largest central banks thus expanded by between 35 and 75 percent in about five months.
Inflated central bank balance sheets suggest inflation is coming, but actual inflation of the money supply naturally lags behind, since central bank purchases of bonds and securities do not necessarily result in an immediate expansion of the stock of money. The American money stock (measured by the monetary aggregate M2) grew from $15.5 trillion to $18.4 trillion (March–July 13), the British one from £2.45 trillion to about £2.67 trillion (January–May) and the euro area money stock from €12.4 trillion to almost €13.2 trillion (January–June). The annualized rates of inflation in the major monetary areas during the corona episode is then between about 13 (eurozone) and about 50 (USA) percent, well above the norm.1 If we look at the Austrian, “true” measure of the money supply (TMS) for the United States, we see a similar picture, as the TMS in June grew 34.5 percent year over year (YOY).
The Effects of the Present Inflation
Inflation is not an act of God; it is the outcome of a determined policy on the part of governments and central banks. Such a policy has both long-run and short-run effects, which brings us to the first and most obvious way in which inflation has fueled corona hysteria: by essentially putting freshly printed money at the disposal of governments, these latter have been able to first shut down their countries and then pose as saviors as they distributed largesse to workers and businesses. The states have often reimbursed the costs of furloughing employees, either directly or through (sometimes forgivable) loans to companies, or they have distributed generous unemployment benefits to the workers. This, and not any economic collapse, is the story behind the unprecedented spike in unemployment claims in the United States. The central bank has also created facilities to lend to municipal governments and the Main Street Lending Program to “support lending to small and medium-sized businesses and nonprofit organizations that were in sound financial condition before the onset of the COVID-19 pandemic.”
The effect of these programs and policies and others like them in other countries has been to mitigate the direct impact of government-imposed shutdowns. Businesses may have no revenues, but government aid and loans allow them to meet their contractual payments; workers may be unemployed, but generous unemployment subsidies allow them to maintain themselves comfortably; government support of furloughing schemes hides the true extent of unemployment caused by the shutdowns. And all this seemingly at no cost, since no one notices the inevitable dilution of the purchasing power of the monetary unit.
In the absence of these inflationary policies, the consequences of the shutdown would be much more immediately apparent. Workers would have to spend out of their saved cash and liquidate their savings, while businesses earning no revenues would start to default on their contractual payments. A drastic fall in the prices of real and financial assets would have resulted. The pressure to end the restrictions would have been much stronger. Instead, it looks to most people as if they can go on at their old standard of living indefinitely—or at least as long as they continue to receive their government checks. The economic effects of the shutdown are still the same, however: dislocation of the production structure and capital consumption on a vast scale, but these have been hidden—papered over by inflation and government support.
To the individual business owner and worker, the economic reality is hidden. Inflation leads to a fundamental disconnect with reality. Paul Cantor has previously described “the web of illusions endemic to the era of paper money” and how inflation destroys people’s sense of reality.2 In our case, inflationary monetary policy has hidden the costs of engaging in pandemic hysteria, and hence people do not—indeed, cannot—take account of economic realities when assessing the coronavirus and the shutdowns. Governments at all levels can continue to pose as saviors, inventing new mandates and restrictions to combat the nonexistent threat. Germophobes and busybodies can obsess over other people trying to go about their normal lives, since both the costs to them personally and to society as a whole are completely hidden. How many Karens would have the time to boss peaceful citizens around if they had to actually work to earn a living?
Eventually and pretty quickly, these policies will result in price inflation and a hollowing out of the standard of living. Not only has production been severely restricted, as seen in the drastic fall in US GDP figures; insofar as the newly printed money is used on unemployment compensation in different forms, it will quickly reach normal consumers and be spent on consumer goods. If the programs go on much longer, consumer price inflation, as a result of the fiat money inflation, cannot be far off. Once that happens, only increased rates of inflation can keep the programs going—for a time.
The Effects of the Inflationary System
The effects of the inflationary system as such are much more far-reaching than economic dislocation and destruction, however. Fiat money produced out of thin air by central bankers leads to a long-run change in social attitudes and personal character. Joseph Salerno in a stimulating paper discusses how hyperinflation leads to the destruction of personality,3 and following Guido Hülsmann,4
I would argue that fiat inflation entails the erosion of culture and character. This is perhaps most fully in evidence in Japan, where people have suffered under artificially low interest rates for decades. What are some of the consequences of an inflationary fiat standard and the culture it brings about, and what is the connection to the corona crisis? There is first of all a change in time preferences, as inflation leads to repressed interest rates and hence less incentive to save and invest. People’s time horizons change, as they increasingly discount long-run value creation and instead focus on present enjoyments and short-run yields. The changing role of central banks only intensifies this development. Instead of “lenders of last resort,” central banks are now “market makers of last resort.” That is to say, stock markets and bond prices cannot be allowed to fall, and it is the role of the banks to make sure they don’t. As a consequence, investors increasingly turn to the pursuit of short-run yields.
This change in time preference has effects beyond the market. Since a premium is placed on short-term thinking in market affairs, naturally people transfer the same attitude to their nonmarket pursuits. Present benefits and present dangers are both emphasized at the expense of future costs and benefits, respectively. It is not hard to see the connection to the virus: since there is a possibility that the virus may potentially be very dangerous, people get frightened and act to make the fear go away. No matter the future consequences of their actions, the present danger of the virus trumps all.
Closely connected to this change in time preferences is a skewed perception of reality. Inflation alters what constitutes successful action, since it is increasingly no longer productive endeavors but closeness to the source of inflation that determines the individual’s success in life. Since the ability of the central banks to create paper wealth seems virtually boundless, naturally people come to have unrealistic expectations of what is possible. Of course we can have a shutdown. We’ll have a central bank–fueled “v-shaped” recovery once it’s over. Of course governments can and should do whatever it takes to protect us from the virus. They can just finance spending with paper money for however long it takes. Whatever costs there are to these courses of action are hidden or far in the future.
There are many reasons for the corona crisis and the present almost total government control of the economy and society. But if we want to understand why states across the Western world have met virtually no resistance in their quest for power, we need to understand the role of inflation in enabling governments: directly through hiding the real costs and pain of the shutdowns, but also more fundamentally by distorting culture and personal character.
- Trading Economics, www.tradingeconomics.com; Federal Reserve Bank of St. Louis, FRED, www.fred.stlouisfed.org.
- Paul A. Cantor, “Hyperinflation and Hyperreality: Thomas Mann in Light of Austrian Economics,” Review of Austrian Economics7, no. 1 (1994): 3–29.
- Joseph T. Salerno, “Hyperinflation and the Destruction of Human Personality,” Studia humana2, no. 1 (2013): 15–27.
- Jörg Guido Hülsmann, “Cultural Consequences of Monetary Interventions,” Journal des économistes et des études humaines22, no. 1 (2016).?
Kristoffer Mousten Hansen is a PhD candidate at the University of Angers and a Mises Institute Research Fellow.
Welcome To The Crazed, Frantic Demise Of Finance Capitalism
Welcome To The Crazed, Frantic Demise Of Finance Capitalism By Charles Hugh Smith, via OfTwoMinds blog, 20 July 2020
The cognitive dissonance required to ignore the widening gap between the real economy and the fraud’s basic machinery–speculation funded by “money” conjured out of thin air–has reached a level of denial that can only be termed psychotic.
When scams start unraveling, the scammers become increasingly frantic to maintain the illusion of legitimacy and the delusion of guaranteed gains that are the lifeblood of every scam. One sure sign that the flim-flam is about to collapse is the manic rise of FOMO, fear of missing out, as the scammers jam the Ponzi scheme’s stellar returns to new extremes.
What greedy human can resist guaranteed gains, especially of the enviously grandiose variety?
The greatest scam of the past century is unraveling before our eyes. I’m calling it finance capitalism as a general descriptor of the dominant form of what’s called “capitalism” because calling it what it actually is–a fraud that’s destroyed the foundations of our economy and society–is, well, a much more difficult sell than “capitalism,” which still has some faint echoes of the open markets, etc. that characterized traditional capitalism, which I call naive capitalism because it is incapable of differentiating between the parasitic, predatory finance version cloaking itself as “capitalism” and actual capitalism, in which capital is put at risk, markets are transparent, etc.
There are many labels for the distorted, corrupted “capitalism” that dominates our economy and society: I’ve long used state-cartel capitalism, others prefer monopoly capitalism or crony capitalism.
I now favor finance capitalism because the heart of the fraud is finance: printing “money” out of thin air without creating any value or any goods and services. If you can’t print “money,” then borrow it into existence–that’s just as profitable a fraud as printing it.
As I explained in Our Wile E. Coyote Economy: Nothing But Financial Engineering (June 11, 2020), the fairy tale that America has a truly capitalist economy no longer aligns with the reality that the U.S. economy is now a decaying billboard of “producing goods and services” behind which the real money is made in financial engineering, a.k.a. legalized fraud.
I’ve discussed this fraudulent distortion of capitalism for years:
Has “Financial Innovation” Capitalism Run its Course? (June 22, 2010)
When Capitalism Turns to Cannibalism (July 15, 2015)
Just as Communism was a god that failed, finance capitalism is also a god that failed, an extreme version of crony-capitalism that is nothing more than a mechanism for concentrating wealth and power at the expense of everyone toiling in the real-world economy.
And if we understand this, then we also understand that with its stock buybacks, high-frequency trading and after-hours manipulation, the stock market is nothing more than finance capitalism’s primary mechanism for increasing the concentration of wealth.
How did outright fraud come to dominate our economy? The answer is simple: infinite greed plus the decline of gains from “real capitalism,” i.e. increasing productivity via producing goods and services. The appeal of something for nothing is irresistible when “money” can be printed / borrowed out of thin air and used to run a fraud that exploits human greed.
Like every good Ponzi scheme, those invested in the scam promote the fraud and cajole new marks to sink their cash into the “guaranteed gains” scheme because everyone already in the fraud will lose if there aren’t enough new marks joining to keep it from collapsing. That perfectly describes the entire financial media, the financial “industry” and everyone in it.
Unfortunately for everyone invested in the scam, all the “wealth” created by financial engineering / legalized fraud is fictitious, i.e. phantom. All Ponzi schemes collapse once the supply of greed-blinded marks dries up, and so the “solution” in our finance capitalism fraud is for the central bank, the Federal Reserve, to become the mark with an infinite checkbook: the Fed is busily conjuring “money” out of thin air to buy corporate junk bonds and other “assets” (ha-ha, as if these are actually worth anything–the joke’s on you) to prop up the Ponzi scheme.
This works until it doesn’t, of course. In the meantime, the folks running the fraud are pulling out all the stops to keep it from imploding–goosing the FOMO frenzy, printing and throwing trillions into the scam to maintain the illusion of legitimacy and the delusion of guaranteed gains and talking up the god-like powers of the Fed to prop up the fraud indefinitely.
Despite these massive manipulations, the cracks are increasingly visible. Volatility refuses to sink back to near zero, and the swings in the skimming machine, a.k.a. the stock market are becoming more extreme.
The cognitive dissonance required to ignore the widening gap between the real economy and the fraud’s basic machinery–speculation funded by “money” conjured out of thin air–has reached a level of denial that can only be termed psychotic.
All bubbles pop, all frauds implode, all scams collapse. That ominous clicking coming from behind the tattered billboard is the sound of dominoes falling.
As Mark, Jesse and I discuss in Salon #13: The “Phase Shift” everyone is worried about has already happened, the meteor triggering the demise of finance capitalism has already hit.
Central Banks Driving Gold
Central Banks Driving Gold By Jim Rickards, for The Daily Reckoning, 2 July 2020
Gold as an asset class is confusing to most investors. Even sophisticated investors are accustomed to hearing gold ridiculed as a “shiny rock” and hearing serious gold analysts mocked as “gold bugs,” “gold nuts” or worse.
As a gold analyst, I grew used to this a long time ago. But, it’s still disconcerting when one realizes the extent to which gold is simply not taken seriously or is treated as a mere commodity no different than soy beans or wheat.
The reasons for this disparaging approach to gold are not difficult to discern. Economic elites and academic economists control the central banks. The central banks control what we now consider “money” (dollars, euros, yen and other major currencies).
Those who control the money supply can indirectly control economies and the destiny of nations simply by deciding when and how much to ease or tighten credit conditions, and when to favour (or disfavour) certain types of lending.
When you ease credit conditions in a difficult environment, you help favored institutions (mainly banks) to survive. If you tighten credit conditions in a difficult environment, you can more or less guarantee that certain companies, banks or even nations will fail.
This power is based on money and the money is controlled by central banks, primarily the Federal Reserve System. However, the money-based power depends on a monopoly on money creation.
As long as investors and institutions are forced into a dollar-based system, then control of the dollar equates to control of those institutions. The minute another form of money competes with the dollar (or euro, etc.) as a store of value and medium of exchange, then the control of the power elites is broken.
This is why the elites disparage and marginalize gold. It’s easy to show why gold is a better form of money, why it’s more reliable than central bank money for preserving wealth, and why it’s a threat to the money-monopoly that the elites depend upon to maintain power.
Not only is gold a superior form of money, it’s also not under the control of any central bank or group of individuals. Yes, miners control new output, but annual output is only about 1.8% of all the above-ground gold in the world.
The value of gold is determined not by new output, but by the above-ground supply, which is 190,000 metric tonnes. Most of that above-ground supply is either owned by central banks and finance ministries (about 34,000 metric tonnes) or is held privately either as jewelry (“wearable wealth”) or bullion (coins and bars).
The floating supply available for day-to-day trading and investment is only a small fraction of the total supply. Gold is valuable and is a powerful form of money, but it’s not under the control of any single institution or group of institutions.
Clearly gold is a threat to the central bank money monopoly. Gold cannot be made to disappear (it’s too valuable), and it would be almost impossible to confiscate (despite persistent rumors to that effect).
If gold is a threat to central bank money and cannot be made to disappear, then it must be discredited. It becomes important for central bankers and academic economists to construct a narrative that’s easily absorbed by everyday investors that says gold is not money.
The narrative goes like this:
There’s not enough gold in the world to support trade and commerce.(That’s false: there’s always enough gold, it’s just a question of price. The same amount of gold supports a larger amount of transactions when the price is raised).
Gold supply cannot expand fast enough to keep up with economic growth.(That’s false: It confuses the official supply with the total supply. Central banks can always expand the official supply by printing money and buying gold from private hands. That expands the money supply and supports economic expansion).
Gold causes financial panics and crashes.(That’s false: There were panics and crashes during the gold standard and panics and crashes since the gold standard ended. Panics and crashes are not caused or cured by gold. They are caused by a loss of confidence in banks, paper money or the economy. There is no correlation between gold and financial panic).
Gold caused and prolonged the Great Depression.(That’s false: Even Milton Friedman and Ben Bernanke have written that the Great Depression was caused by the Fed. During the Great Depression, base money supply could be 250% of the market value of official gold. Actual money supply never exceeded 100% of the gold value. In other words, the Fed could have more than doubled the money supply even with a gold standard. It failed to do so. That’s a Fed failure not a gold failure).
You get the point. There’s a clever narrative about why gold is not money. But, the narrative is false. It’s simply the case that everyday citizens believe what the economists say (usually a bad idea) or don’t know enough economic history to refute the economists (and how could you know the history if they stopped teaching it fifty years ago).
The bottom line is that economists know that gold could be a perfectly usable form of money. The reason they don’t want it is because it dilutes their monopoly power over printed money and therefore reduces their political power over people and nations.
To marginalize gold, they created a phony narrative about why gold doesn’t work as money. Most people were too easily impressed by the narrative or simply didn’t know enough to challenge it. Therefore the narrative wins even if it is false.
If gold is viable as a form of money, what does gold’s recent price trading range combined with fundamental factors tell us about its investment prospects?
Right now, my models are telling me that gold is poised to breakout of its recent narrow trading range.
As always in technical analysis, the term “breakout” can mean sharply higher or sharply lower prices. Using fundamental analysis, a breakout to sharply higher prices is the expected outcome. This may be the last opportunity to buy gold below $2,000 per ounce.
For the past three months, gold has been trading in a range between $1,685 per ounce and $1,790 per ounce (it’s trading at about $1,782 today). For most of those three months gold was trading in a fairly narrow band.
When trading a volatile asset narrows to that extent, it’s a sign that the asset is ready for a material technical breakout. The question is will gold breakout to the upside or downside?
To answer that question, we can turn to fundamental analysis. (Technical analysis is data rich and is useful for spotting patterns, but it has low predictive analytic power).
One of the most important fundamental factors forcing gold higher is shown in Chart 1 below. This shows central bank purchases of gold bullion from 2017 to 2020 (each year is shown as a separate line measured in metric tonnes on the left scale).
Chart 1 – Central Bank purchases of gold
(in metric tonnes) 2017 – 2020
Chart 1 shows significant purchases of gold with 2019 running ahead of 2017 and 2018 at about 500 metric tonnes.
The chart also shows over 150 metric tonnes of gold purchases through April 2020, which puts 2020 on track to show 450 metric tonnes purchased for the year if present trends hold.
Of course, the actual result could be higher or lower. Cumulative central bank purchases from January 2017 to April 2020 are approximately 2,050 metric tonnes.
In fact, central banks went from being net sellers to net buyers of gold in 2010, and that net buying position has persisted ever since. The largest buyers are Russia and China, but significant purchases have also been made by Iran, Turkey, Kazakhstan, Mexico and Vietnam.
Here’s the bottom line:
Central banks have a monopoly on central bank money. Gold is the competitor to central bank money and most central banks would prefer to ignore gold. Yet, central banks in the aggregate are net buyers of gold.
In effect, central banks are signaling through their actions that they are losing confidence in their own money and their money monopoly. They’re getting ready for the day when confidence in central bank money will collapse across the board. In that world, gold will be the only form of money anyone wants.
Central banks are voting with their printing presses in favor of gold. What are you waiting for?
Here’s a once in a lifetime opportunity to front run central banks and acquire your own gold at attractive prices before the curtain drops on paper money.
for The Daily Reckoning
The Sneaky Covid War on Cash
The Sneaky Covid War on Cash By Viv Forbes, saltbushclub.com, 19 June 2020
The modern road to
Mulberry Money, Shin Plaster and Cubic Currency.
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Today’s world is awash with Fiat Money.
“Fiat” means “let it be so”.
Fiat money is token currency supplied and regulated by governments and central banks. Its value relies on a government decree that it alone must be used as “legal tender” in paying for anything in that country. Its value falls as its supply increases.
Fiat money is not new – Marco Polo described its use in China over 700 years ago. Travellers and traders entering China were forced by Kublai Khan to exchange their real money (gold and silver coins and bars) for his coupons, made from mulberry bark, each numbered and stamped with the Khan’s seal. The Khan decreed that local traders were forced to accept them (“legal tender”). Foreigners got the goods, the great Khan got the bullion and the Chinese traders got the mulberry bark (a bit like getting the rough end of a pineapple). By controlling the supply and exchange rates for mulberry money, he became fabulously wealthy, and his citizens were impoverished.
During the American War of Independence, the colonial rebels had no organised taxing power so they printed the Continental dollar to finance the war. As the war dragged on, they printed too many dollars, and its fast debasement gave rise to the phrase “Not worth a continental”. Later, in the American civil war, confederate paper money used to support the army also became worthless. It was widely referred to as “shin-plaster”, after its highest value use in helping to bandage wounds.
Many dictators over the years tried the fiat money trick, but so many lost their heads or their thrones that it fell into disuse, being replaced by trusted real money such as English sovereigns, Spanish doubloons, Austro-Hungarian thalers and American gold eagles. Only in wartime (or in a Covid panic) are people sufficiently distracted or scared to allow rulers to secretly tax everyone who holds their depreciating pretend money. (Keynesian academics promote this destructive policy for peace time use.)
Financing Big Wars
The last century or so has seen the explosion of big governments and big wars – race wars, class wars, world wars, regional wars, the war on want, the war on drugs, the war on inflation, the war on terrorists, the war on carbon and now the COVID world war.
All wars cost heaps of money. They are so expensive that to raise the full cost from honest taxes alone would cause a revolt.
The monetary watershed was World War I, which saw governments mobilise all community resources to the war effort. Money printing plus ration cards were their main tools. Money creation destroyed currencies everywhere. The cost of the war destroyed the German currency and the replacement papier mark was subject to the terrible German inflation of 1923 which gave rise to the Marxists followed by the Nazis.
Even the mighty pound sterling was fatally weakened and the discipline of the gold/silver standard was gradually destroyed. The British gold sovereign, first minted by Henry VII in the 16th century, disappeared from circulation at the height of the Great War in 1917. The British pound became a fiat currency in 1931 and silver started to disappear from British and Australian currency in 1945 after the Second Great War. Even the mighty US dollar started on the road to ruin during the Vietnam War and gold convertibility was suspended by Richard Nixon in 1971.
We have seen the death of much of the world’s funny money in just the last 40 years. For example, in Peru, one million Intis would buy a modest home in 1985; five years later it would not buy a tube of toothpaste. Brazil had so many new banknotes they ran out of heroes to print on them.
In Vietnam in the 1980’s, factories had to hire trucks to carry the bags of dongs to pay the Tet (New Year) workers’ bonuses. In 1997 in Zaire, it took a brick-sized bundle of 500,000 notes of the local currency to pay for a meal – no one bothered to count them. On the Yugoslav border in 1989, tourists foolish enough to change “hard” currency for Yugoslav dinars got 14 cubic metres of dinars. “Dinars can no longer be measured in millions or billions, but only in cubic metres”. It had become a cubic currency. These grim records were eclipsed in November 2008, when Zimbabwe suffered inflation of 98% PER DAY.
Most governments are good at destruction – concentration camps, gulags, dictatorships, genocide, mob rule, world wars and . . . the destruction of sound money. Fiat money is their underhand method of official larceny and few people realise that robbery is happening until it is too late.
Future generations will look back in wonder at modern monetary madness. Words like peso, rouble, rupiah, baht, won, rouble, ringgit, inti, dinar, tolar, ostmark, dong, lira, zloty, cordoba, sole, cruziero, and yuan will join “shin-plaster” as descriptions of worthlessness. The Euro, Pound, Renminbi, Yen and Dollar are on the same slide to oblivion (the Australian dollar has lost over 90% of its purchasing power in the last 70 years).
“You Can’t Print Gold.”
Real money is always measurable by weight, such as pounds, grams, pennyweight and ounces of gold and silver, or carats of gemstones. It cannot be counterfeited or corrupted easily. But fiat money relies for its value on the honesty and openness of the rulers.
What is the cause of inflation and devaluations? It is simply loose monetary policy (watering the monetary milk). With the spread of democracy and more violent forms of mob rule, governments try to pretend they can satisfy the demands of the mob/electorate without taxing anyone. Today’s Covid cash splash is an extreme example.
Even a monetary fool such as Castro could see what caused Cuba’s inflation. In 1993 he stood up at a rally and declared: “There are nine billion too many pesos in Cuba”.
Dictators solve this problem by regular currency recalls. They declare yesterday’s shin-plaster worthless and issue a new lot, favouring their cronies, bankers and patrons. Eventually, none of their paper money is acceptable, even with legal tender backing, and barter or a foreign currency like the US dollar gains circulation.
Fiat money allows politicians to secretly steal your savings to fight yet another war on someone or something. Next we will see a war on “speculators”, or “hoarders” and calls for a world currency.
UN One-Worlders will not let this Covid crisis go to waste. They dream of one-world government (the “National Cabinet” writ large) with no circulating cash and mandatory use of Digital Money (Credit Card currency.) The Climate Alarmists would also like to use a digital money monopoly to promote their war on carbon. They could control and ration what we buy and consume – lettuce, tofu, bicycles and green energy only, with no overseas trips and no secret buying of diesel, bacon or beef.
We have already seen the start of their war on cash – Digital Money will join Mulberry Money, Shin Plaster and Cubic Currency in the long history of failed political money. While people are focussed on Social Distancing and Contact Tracking one-worlders are secretly planning to recall banknotes and abolish cash. Then they can ration the “money” available to each of us each month (cutting it off for white males once they reach their “Use by Date”?).
Does anyone believe the Euro would have survived World War II? Would the Islamic world or China accept a currency based largely on political promises of an enemy such as America? Only real money like gold, silver and barter goods are universally acceptable across all borders.
The Euro has been weakened by Brexit and the Climate Wars – it will not survive a real crisis. The Soviet Rouble block, established by force and maintained by official counterfeiting, could not survive withdrawal of the Red Army. And the Globo-dollar? Never.
Imagine the future of credit card electronic money when hackers or a neutron bomb destroys the electrons backing it. Or when the green energy grid collapses and the swipe-and-go terminals go blank? What will you use to buy food or petrol on the day after tomorrow?
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What is the solution?
Will Cash be the Biggest COVID Casualty?
We should oppose all sly moves to ban cash transactions in favour of the universal use of credit cards on the flimsy excuse that handling cash may spread the COVID virus. Don’t let our cash money become the biggest COVID casualty. Swapping paper money for a monopoly of electronic money is a bad deal.
And we should always be free to save our cash and protect the value of our savings by investing in real assets or sound money like gold and silver. No tin-pot dictator, when he fled, took his own currency. For many people in the world, a store of gold coins, silver coins, gem stones or a bit of productive land has allowed them to survive or escape when their government became too oppressive or lost a war, and the local fiat money became a cubic currency.
18 June 2020
Washpool Qld Australia 4306
- The biggest experiment in money creation ever By Peter Schiff, Via Zerohedge, 28 May 2020
- 18 Signs That We Are Facing A Record Breaking Economic Implosion In 2020 By Michael Snyder, The Economic Collapse, 7 May 2020
- The Real Reason Why the Government Shutdown Caused an Economic Collapse By David Stockman, International Man, 25 April 2020
- Losing Faith in Fiat, The Collapse is Underway Greg Hunter interviews Michael Pento, 20 April 2020
- A Debt Jubilee Is the Only Way to Avoid a Depression By Michael Hudson, Unz Review, 14 April 2020
- The Future Of What’s Called CapitalismBy Charles Hugh Smith, via Zerohedge, 24 January 2020
- The Biggest Stock Market Melt Up In US HistoryBy Michael Snyder, Zerohedge, 21 January 2020
- The Century Of Total War Coincided With The Century Of Central BankingVia The Mises Institute, 2 November 2019
- Ludwig Von Mises explained the world’s adoption of faulty economics By Richard Ebeling, The Heartland Institute, 8 September 2019
- Billionaires, Bezos, And The Real Big Brother By Eric Zuesse, via ConsortiumNews.com & Zerohedge, 30 August 2019
- US Dollar’s Achilles heel, and gold to soar By Dr. Jim Willie, 13 August 2019
- Former Lehman Brothers chief economist warns ‘risk incentives’ could cause new crisis By Adam Creighton, The Australian, 22 October 2018
- Ten signs we’re heading for economic Armageddon By Liam Dann, Herald News Business Editor, 11 February 2018
- The Greatest Bubble Ever, Why You Better Believe It – Part 1 and 2 By David Stockman via Contra Corner blog, ZeroHedge, 31 December 2017
- This Is What A Pre-Crash Market Looks Like By Michael Snyder, The Economic Collapse blog, 14 November 2017
- The Economic End Game Continues By Brandon Smith via Alt-Market.com, 5 November 2017
- Get Ready for a World Currency by 2018 By Jay Syrmopoulos, 13 July 2017
- Without Glass-Steagall America Will Fail By Paul Craig Roberts, 10 June 2017
- Creating another ‘crash of 1929’ By Jeff Thomas, Editor, International Man, 20 April 2017
- Why Investors Deserve to Get Mauled By Vern Gowdie, Daily Reckoning, 21 March 2017
- Bubbles always burst, eventually By Vern Gowdie, The Daily Reckoning, 16 March 2017
- This Global Debt Bomb Is Ready To Explode By Michael Snyder via The Economic Collapse blog, 14 March 2017
- Great Political and Social Leaders Always Call Out Bankers By Waking Times, 16 February 2017
- What Will President Trump Do About The Central-Bank Cartel By Thorstein Polleit, via The Mises Institute, 14 February 2017
- The Deep State’s Doomsday Bug By Bill Bonner, Bonner and Partners, 1 February
- Only Glass-Steagall Can Save the U.S. from Another Epic Crash By Pam Martens, 31 January 2017
- This could be the biggest ‘black swan’ of 2017 By Nick Giambruno, International Man, 24 January 2017
- Banks Owned or Controlled by the Rothschild Family From HumansAreFree.com, 23 January 2017
- The ‘Axis of Gold’ is launching an attack on the U.S. dollar By Jim Rickards, 29 December 2016
- rickards-the-global-elites-secret-plan-for-the-next-financial-crisis By Jim Rickards, Editor, Currency Wars Alert, 28 October 2016
- we-are-living-on-borrowed-money-time By Vern Gowdie, The Daily Reckoning, 13 October 2016
- deutsche-bank-in-dire-straights From Zerohedge, 30 September 2016
- big-banks-a-culture-of-crime By Jeff Nielson, Bullion Bulls Canada, 30 September 2016
- jim-rickards-there-will-be-a-war-on-gold From Tekoa De Silve at Sprott Thoughts, 14 September 2016
- supervisor-of-massive-fraud-at-wells-fargo-leaves-bank-with-125-million-bonus From Zerohedge, 13 September 2016
- The-end-game-of-central-banking-is-nigh By David Stockman via Contra Corner blog, Zerohedge, 8 September 2016
- Are Central Bankers Coming To A Bitter End By Martin Armstrong via ArmstrongEconomics.com, Zerohedge, 30 August 2016
- Pentagon Cannot Account For $6.5 Trillion Dollars By Jay Syrmopoulos, Global Research, 17 August 2016
- IMF, An Inheritance of Incompetence By John Mauldin | Aug 13, 2016
- Abolish the FOMC By David Stockman, from Zerohedge, 11 August 2016
- Memo To The Donald – 10 Great ‘Deals’ To Save America Before It’s Too Late By David Stockman, via Zerohedge, 10 August 2016
- The War on Cash is still being planned in the background By Jim Rickards, Editor, Rickards’ Gold Speculator, from The Crux, 5 August 2016
- IMF admits disastrous love affair with the euro and apologises for the immolation of Greece By Ambrose Evans-Pritchard, The Telegraph, 31 July 2016
- Central banks hell-bent on a currency debauch Lenin would love By Maurice Newman, The Australian, 22 July 2016
- Financial collapse, the trigger is inconsequential By Jim Quinn, Zerohedge, 7 July
- The global monetary system is collapsing From Sean Goldsmith, Editor-in-Chief, Stansberry Research, 3 July 2016
- Marc Faber, clear message to sick political elite From Zerohedge, 29 June 2016
- Australia faces danger as politicians ignore danger signs By Maurice Newman, The Australian, 23 June 2016
- Australian Labor’s amazing economic magic pudding By Nick Cater, The Australian, 21 June 2019
- During the Next Crisis, Entire Countries Will Go Bust By Phoenix Capital, 16 June
- Criminal Bankers Threaten Entire World Economy By Greg Hunter, USAWatchdog, 25 May 2016
- Keynes must die so the economy may live By Llewellyn Rockwell, 24 May 2014
- In praise of the gold standard Via The Mises Institute, 16 May 2016
- “A scramble for gold has begun” By Jim Rickards, Editor, Currency Wars Alert, 22 April 2016
- The Keynesian House Of Denial By David Stockman, 19 April 2016
- Dick Smith retail chain failure gives capitalism a bad name Article 20 March
- China’s economic doomsday machine By David Stockman, Zerohedge, 11 March 2016
- The European Depression Was A Deliberate Act From Zerohedge, 3 March 2016
- Syria’s state-owned central banks By ‘anonymous’, 18 February 2016
- 22 Signs of global economic turmoil By Michael Snyder, Zerohedge, 6 February 2016
- Will Bitcoin of similar replace fiat currencies when confidence dies By David Uren, The Australian, 29 January 2016
- The deflation monster has arrived By Chris Martenson, 17 January 2016
- The Big Short, a must-see movie about Wall St From ZeroHedge, 24 December 2015
- Iceland shows how to treat criminal banksters From Zerohedge, 25 October 2015
- By David Stockman via Zerohedge, 17 Dec 2015
- Bankers will be jailed in the next financial crisis By Mike Kreiger, Zerohedge, 16 September 2015
- Marc Faber warnings Interview with Mark Faber, Zerohedge, 3 September 2015
- Global financial crash, 12 signs By Michael Snyder, 13 August 2015
- How a glitch nearly crashed the global financial system
- The bankruptcy of the planet accelerates
- “Central banks are out of control”
- How a glitch nearly crashed the global financial system From Zerohedge, 10 August
- Most of the world’s banks are headed for collapse By Doug Casey, 16 July 2015
- How much of the Greek debt is legitimate By Kurt Nimmo, 7 July 2015
- Greek debt, ‘illegal, illegitimate, odious and unsustainable’ From Zerohedge, 18 June
- The perils of populist democracy and debt By Gary Johns, 17 June 2015
- The FED knows the financial sun revolves around the financial earth By James Rickards, The Daily Reckoning, 12 June 2015
- Lessons for Australia are stark By Henry Ergas, The Australian, 8 June 2015
- The Perfect Storm Approaches James Rickards, Contributing Editor, The Daily Reckoning, 3 June 2015
- “Central banks are out of control” By David Stockman, Zerohedge, 25 May 2015
- Terminal phase of the global financial system David Stockman interview, by Eric King, Contra Corner blog, 19 May 2015
- Grexit jingle mail By Charles Hugh-Smith, OfTwoMinds blog, Zerohedge, 16 May 2015
- Massive bank crimes receive the usual token slap From Zerohedge, 13 May 2015
- Deutsch banks decade of ‘lying, cheating and stealing’ From Zerohedge, 6 May 2015
- How this debt-addicted world could go the way of the Mayans By Satyajit Das, MarketWatch, 28 April 2015
- None dare call it a fraud, it’s just a ‘savings glut’ By David Stockman, 13 April 2015
- “The UK economy is a ticking time bomb” By Simon Black, Sovereign Man, 8 April
- Banks will be obsolete within 10 years By Simon Black, Sovereign Man, 5 April 2015
- No Fed bets from the IMS From Silver-Coin-Investor.com, 2 April 2015
- USD dominance is dying rapidly From Zerohedge, 26 March 2015
- Austrian bank Black Swan From Zerohedge, 16 March 2015
- SWIFT and the de-dollarization axis From Zerohedge, 10 Mar 2015
- China’s fiscal cliff By Ambrose Evans-Pritchard, The Telegraph, 6 Feb 2015
- The real economy is about to implode By Brandon Smith. 5 Mar 2015
- EU financial suicide, extend and pretend By Charles Hugh-Smith, 19 Feb
- Financial Parasites and Debt Bondage Interview, Prof Michael Hudson, 16 Feb 2015
- Audit The Fed, And Shackle It Too By David Stockman, Contra Corner, 13 Feb 2015
- GREECE should exit the eurozone ASAP By Alan Kohler, The Australian, 10 Feb 2015
- Greece, the EU and crony capitalism By David Stockman, Contra Corner, 5 Feb 2015