How much of your wealth does the government want? How much do you have?
Guest post by Robert Gore at Straight Line Logic
There has been a progression through each iteration of monetary theft. A trial balloon launches, usually from academia, which proposes an “innovation” contrary to reigning practice and orthodoxy. A curmudgeonly minority reject it; the majority, securing their places on the intellectual fashion forefront, excoriate the old and after a suitable time for faux consideration and discussion, embrace the new.
The public, insufficiently appreciative of the arcane language, abstruse reasoning, and self-evident erudition and brilliance of the experts, sometimes presents an obstacle. It was hostile towards the US’s first foray into monetary theft: central banking. The anti-central bank contingent won battles for 137 years, but lost the war in 1913. J.P. Morgan and cronies laid the intellectual groundwork: conferences, scholarly papers, legislative proposals, and a Greek chorus of the day’s one-percenters singing at the top of their lungs that America needed to join the civilized world and establish its own central bank.
If you understand the main purpose of central banks, then notwithstanding obfuscatory “Fedspeak,” endless media drivel, and academics’ Greek-letter-laden equations, you know all you need to know about these larcenous institutions. They exist to make it easier for governments to steal, and everything else is window dressing. Gold is finite and requires real resources to find, mine, and mint; central banks’ fiat debt can be produced in infinite quantities at virtually zero cost and exchanged for the government’s fiat debt.
Substitute central bank “notes” for gold and the resources available to the government expand dramatically. It can, in conjunction with the central bank, conjure its own money. Couple a central bank with 1913’s other “innovation”—the income tax—and lovers of government had the wherewithal for their fondest dreams, one of which was American empire. World War I, the US’s first involvement in Europe’s wars, followed close after 1913’s depredations, notwithstanding President Wilson’s vow to stay out in his 1916 reelection campaign.
Franklin Roosevelt and Richard Nixon completed the switch from a gold-backed currency to fiat debt. After Nixon slammed shut the gold window in August, 1971, there have been no legal constraints (aside from the farcical debt ceiling) on either the creation of government debt or Federal Reserve purchases of that debt. The only constraints are political and those policy makers and central bank bureaucrats impose upon themselves, in other words none.
Whatever jolt debt monetization once might have given the economy has disappeared since the economy reached debt saturation before the last financial crisis. The increasing debt burden is slowing rather than promoting economic growth, and will soon, if it has not already, stop and reverse it. Elevation of financial asset and real estate prices (aka “bubble blowing”) supposedly promotes wealth effects that trickle down to the broader economy. The claim was dubious when first made during the housing bubble. Rising wealth inequality since then has revealed its absurdity. Whatever debt-based speculative “wealth” has been created has gone mostly to the financially well-connected who can borrow at negligible rates.
Quantitative easing was an application from central banking’s conventional tool kit—debt monetization—although its magnitude and global scale were unprecedented. More recent central bank “innovations”—zero and negative interest rates (ZIRP and NIRP) and now, proposed bans on cash—amount to outright theft. It is doubtful that even proponents believe their own transparently phony rationalizations for these measures. ZIRP and NIRP destroy the return on saving while rewarding debtors. And who are the world’s biggest debtors? Profligate governments, who are financing their unsustainable improvidence at history’s lowest interest rates and picking the pockets of individuals, companies, pension funds, insurance companies, and other entities that must generate a reasonable safe current return to meet future liabilities.
Proposed bans on cash, or even active discouragement of its use, are the next milestone in governmental larceny. Once all “money” (a misnomer, it’s really debt; there has been no “real money” in the global financial system since 1971) is forced into the banking system, it doesn’t take much imagination or foresight to see what comes next. The civil liberties’ implications of the government keeping track of everyone’s money and how it’s spent are of course ominous. However, the main reason the government wants financial assets confined to the banking and financial system is so that it can purloin them. Once bank accounts, brokerage accounts, insurance accounts, pension funds, and other easy-to monitor repositories of financial assets become the only stores of value, the government can partially or wholly nationalize—steal—assets and perhaps the repositories themselves.
At every juncture, the government runs into the self-defeating consequences of its policies; ongoing larceny threatens future larceny. Increase debt, taxes, and regulation enough and the economy collapses, putting a dent in government’s revenues. Nobody worries about grandpa and grandma eating cat food because ZIRP and NIRP deprive them of retirement income, but when those policies threaten the solvency of the insurance industry and pension funds and the government may be called upon to bail them out, it’s cause for concern. Any future moves by central banks to raise interest rates will be driven by that unacknowledged concern.
The financial system as a whole is heavily leveraged, its liabilities are many times its equity. Economic collapse would wipe out financial system equity, as it did in 2008, whether deposits are forced to stay in the system or not. The government has no equity to wipe out. Forced to stay, deposits will be expropriated by the government for its benefit or the benefit of the financial repositories (so-called bail-ins). That’s obviously only a one-time expedient that will temporarily forestall, but not prevent, ultimate insolvency for either the government or the financial system.
Governments can outlaw or seize any asset, including cash, precious metals, real estate, chattels, overseas accounts, or intellectual property. In its desperate rapacity nothing is off the table. For individuals, reducing deposits within the financial system and converting them to precious metals or cash while ownership is still legal makes some sense. However, outlawing the former has the weight of Roosevelt’s 1933 precedent, and outlawing the latter is under consideration, so their value as mediums of exchange may be set in the black markets that will inevitably arise as the government continues to expand its destructive domination of the economy.
Absent the kind of collective, preemptive measures described in “Revolution in America” to leverage the government and financial system’s indebtedness, bankrupting them before they bankrupt us, your assets are sitting ducks. If inertia, wishful thinking, the “you go first” problem, and fear of legal consequences prevent the revolutionary initiative, the government will still give up the ghost…but not before it makes you poor.
The sole capital that is 100 percent safe is intellectual capital: what you know. They can’t nationalize self-reliance and your self may be the only one on which you can rely. If you have not already started, expanding your knowledge of skills useful in a time of collapse and chaos would be well-advised.
Robert…a Tour De Force article .
The one thing that can’t take away as easily are the things that keep us free….guns . Our Forefathers knew that those who may govern us in the future weren’t angels ( They did know that the Banksters were EVIL ! ) and thus they re-enforced our right to be armed .
I wonder if hemp makes a good noose ?
I hope so.
yes it does, a crop people grew until the gov’t outlawed it
https://www.washingtonpost.com/news/wonk/wp/2016/09/13/the-middle-class-and-the-poor-just-had-the-best-year-since-the-end-of-the-great-recession/
But I just read that the middle class incomes are rising faster than ever before. Of course there is absolutely nothing in the article that actually says that other than the headline. The article says the median income went up by the largest percentage, but that statistically the increase is not discernibly different from previous increases. Not sure how the idiots at the Washington Post come away with middle class incomes are rising when actual results provided are for median income for the entire population. They actually do say in the article that the lowest income group in large cities really is what drove this as the poor outside big cities saw no gain. No mention on how much the median shifted because of the 0.01%’s continued rape of the country.
Mean. Median. Mode. The stick used to measure matters.
Mr. Gore, pretty good write up and timeline. Can I offer a little more history before 1913 that setup the chess board that currently keeps us in check until we checkmate ourselves?
In the 1860’s at the onset of the civil war, the banking system was in shambles with all of the wildcat banks and their sketchy bank notes. In order to kill the wildcat banks, consolidate the monetary system and fund the civil war a series of national banking acts was enacted along with the initial income tax.
The purpose of the income tax was to tax the wildcat banks note issuance (bank death tax) and tax those who used them. It also formed the national banking system consolidating the banks under federal control. States banks were taxed out of existence. Greenbacks were also authorized during this time.
The state banks were pissed and challenged this death tax in Veazie Bank v. Fenno (1869). The SCOTUS upheld the tax on wildcat note issue. Saying:
“To the same end, Congress may restrain (TAX/REGULATE), by suitable enactments (Taxing statutes), the circulation as money of any notes (wildcat notes/ federal reserve notes) not issued under its own authority. Without this power, indeed, its attempts to secure a sound and uniform currency for the country must be futile.”
11 years later in 1880 the SCOTUS said that taxing anyone’s income that is not issued by the Treasury directly can also be taxed. Springer v. U.S.
THIS formed the basis for the current iteration of the income tax we all suffer under today. NOT the 16th amendment.
Now return to 1913 and the creation of the Fed and all the pieces were in place to fuck us. The only thing left to do was to drive out all the Treasury issued moneys from circulation. 1933 gold went away, 1968 silver was gone, 1971 greenbacks were killed. The only Treasury issued money left in circulation is the base metal pennies, nickles, dimes, quarters, halves, and dollar coins….and who uses those in any significant amount?
In order to conceal and entice the people into this new trap, free shit was offered as bait. Social security 1937….medicare 1960’s…and now 0bamacare…..
Self-reliance can be nationalized, too. It is called slavery, though the government will call it a levy on your farm’s product.
Robert,
You have given us a harsh lesson and overview of the pickle we are in.
As an “informed” individual, with reasonable intelligence, I marvel at
the continuation of self-delusion I subject myself to. Perhaps it is a
self-preserving mechanism to prevent a screaming fit of rage. We KNOW
the bankers/gov. have already stolen all the money. What $ is left, in our
“savings” is only in our minds anyway. We may think “they” won’t have the
nerve/guts to tell us the paper promises have been “hacked” out of existence.
Sure they do, and then the blame is assigned and the war is on.
So what is a poor girl to do? Feverishly collect containers of dry food? Stockpile water
containers and filtering devices? Have a store of silver coinage with dreams of “A World Made
By Hand”…James Howard Kunstler?
Or, then again, maybe it won’t be so bad. At least until the big finale’ chem spray day.
Maybe that will be the final outcome.
@Suze: Live life to the fullest, laugh often and long, love sincerely and do it all where you can afford to enjoy it most bearing in mind we all end up in the same situation in the end. May your journey be long and happy!
Muck
Shop local stores and avoid online and chains. Make friends with loyalty. Share and be kind
My grandfather ran a Piggly Wiggly during the Depression. He handed produce and dented cans out the back to poor families. He avoided debt totally. My other grandparents had friends and family sleeping in the living room off and on for those years…I come from givers.
“Those whom God would not see destroyed, He makes compassionate.” Chinese proverb.
All this stockpiling of food and money doesn’t sound compassionate at all. In fact it sounds exactly like the selfishness that got our country in this mess. No Sale
Deanna, there is nothing in the “prepper” subculture that forbids you to share anything you want with anyone you want.
The choice should be yours, and yours alone; if you treasure your family, you will take steps to see to it that they eat when the store shelves are emptied by those who are not making any preparations now.
If you value your life, you will probably want to add weapons (and become familiar with their use) as well; the demagogues and fanatics will find easy allies among those who are watching their children starve because they BELIEVED the lies the demagogues and fanatics are telling them now. Would you peacefully and placidly admit your failures while watching your children cry from hunger because YOU failed them?
No, you will tell yourself the “evil hoarders” and “selfish preppers” took the supplies they have from YOUR family, because …. well, just because.
But don’t tell anyone you are prepping, or YOUR door (the prudent, prepared person’s door) will be the first broken down, and your supplies, paid for by your after-tax dollars, will be taken and given to those who did nothing to prepare despite YEARS (yes, literally years; I bought my first preps six years back) of time to remedy their failures. And no, I was a grad student back then, living on very little, and still managed to prepare some supplies. And if you resist the crowd determined to steal from you, you’d better be good with those weapons I mentioned earlier; now is the time to practice, not while your door is splintering.
Does this sound harsh, mean and mean-spirited? Why is it that when common sense proposals to eliminate immigration until every American citizen is gainfully employed, reduce welfare and subsidies so that there is motivation to work and improve one’s self, and reduce the size of government until it can live within its means, they are immediately dismissed and shot down?
Could it be that certain folks WANT us at each other’s throats? What is the solution?
I wish you the greatest gift of all: UNDERSTANDING what is being done to all of us, who it serves, and how to avoid it.
You cannot talk to “THEM”, “THEY” will ignore you and “THEY” will continue to pillage and plunder average Americans till there is nothing left !
Average Americans were thrown under the bus a long time ago ! Sadly violent revolution is the only path to enlightenment for many of the ohalgarchy coupled with the good book up side the head and when they attempt to tell us “THEY” feel our pain see that they do with a blunt stick ! Many in places of command and control of our country need to be locked up in cages feed with a shovel , hosed off occasionally and poked with sticks to amuse us ! We could sell tickets to wack a politician like wack-a-mole , we could cover the national debt in no time !
I don’t see violent revolution as the only option. With violent revolution we all lose our jobs, our comparatively safe and peaceful way of life in addition to many other negative things in the process. If you’re willing to go the violent revolution route why not try a peaceful one first?
I just saw an article that said the government has collected $20,000,000,000,000 (20 trillion) in taxes during the 91 full months that Obama has been in office in addition to running up the national debt by an additional $8,878,290,996,028. They have spent, lost, misappropriated or stolen ALL of this money. Modestly rounded, that’s 29,000,000,000,000 (TRILLION) dollars over 7.6 years.
All we need to do is develop a list of demands with an attached timeline and then petition the govt for redress of grievances. If that fails and you have a job, STOP GOING TO WORK. PERIOD! That includes, doctors, pilots, police, fire and every poor slob that keeps all the wheels, levers and machines humming. In effect, the PEOPLE should declare martial law on the government and all out war on the evil foreign interests that prop it up. This shit show would grind to a halt in weeks. Refuse to return to work until SUBSTANTIAL and CLEAR PROGRESS has been made on the list of demands. Sure, you’ll probably lose your job and things would damn sure get tougher but not near as tough as a violent revolution which you could still undertake if need be.
Whether we choose peaceful revolution of violent revolution, the most important part is to have a plan. Without a plan it will be suicide for us and success for them. The kind of change we are seeking is going to necessarily lead to enormous collateral damage. Peaceful or violent, it will mean an end to all welfare, entitlements, govt pensions FOR EVER. Everything will become scarce when the JIT delivery systems fail. Medical care, clean water, sanitation will be dramatically reduced or in many cases nonexistent. A well thought out plan may moderate the pain but every single life in this country will change forever overnight.
I’ve got a million ideas for a carrying out a peaceful transition back to our Constitutional form of govt but it would take days to write about. The fucksticks in charge live in mortal fear that we might wake up before they turn this planet into one big gulag. We still have the power and the moral high ground. We just have to take that step. Let’s make their fears a reality….but let us have a plan first.
dream on
Better yet, WRITE ON!
“I’ve got a million ideas for a carrying out a peaceful transition back to our Constitutional form of govt but it would take days to write about.”
Sounds like an article to me!
I’d get a season ticket.
I would give tickets as Xmas gifts.
Not really sure what poor is.. After mom sliced away her life in our bath tub and left us, I passed the GED and been slaving away ever since. This was in 83. Gonna be 50 b4 Dec 2016, our oldest is a senior and has early accepence to Dartmouth. If poor means giving your all for your kin, then I will take my kin. I never been up to New Hampshire before. Being from SoCal, its like a dream. Hell, I might just work at 7-11 up there by campus and fly fish off hours. Keep smiling. If we don’t take care of each other, who’s gonna take care of us?
Goofy – your kid does not have early acceptance to Dartmouth. Seriously, that is not possible. Perhaps they have so applied, but they have NOT been accepted. You may think they have, but they have NOT been accepted. Additionally, they have not been notified of their probability of being accepted. Someone is lying to you, or you have misunderstood.
Dartmouth does not issue early acceptances until December. They cannot. They will not.
Additionally, Dartmouth does not issue any notification of probabilities until October at the earliest.
Seriously, Goofy – do not rely on anything you have heard or believe at this stage, because your kid has not been accepted at this point. Whoever is giving you that info is not to be believed.
Here are the regs that govern Dartmouth re admissions. They must abide by them:
https://admissions.dartmouth.edu/apply/fine-print/common-ivy-league-agreement
If your kid is an athlete, be very careful of any commitment coaches make re admission – they do not control that, and the student still has to meet Dartmouth requirements.
That’s so different than when I went to UCLA. The admissions department had to meet the requirements of the athletic department.
Robert – athletes win the toss up at the Ivies, and get credit for being good athletes. And there are a hell of a lot of toss-ups. But that said, athletes will still need SATs of around 650+ in both math and English, plus near enough straight As to get in. There are thousands upon thousands of general applicants that meet those criteria – the athletes just move to the top of that pile.
I do not mean to burst Goofy’s bubble – but fact is, the Ivies have NOT made any offers – none – at this point for next year, and have not issued any official guidance as yet. And anything other than those two are worth zero. Anyone saying anything else is lying. Even the official guidance indication (ie you are a “likely” to be admitted candidate) means nothing.
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It only took him 6 years to figure that out.
I’m not very good at this but I know that it seems that all these smart people have lost their common sense
Ultimate insolvency for either the government or the financial system. That really is the nub, Robert. And it’s the financial system that’s going to go belly up, and get a lot smaller. It’s been bankrupt for eight years, and has been kept on life support, albeit a highly splashy one. Someone, somewhere in the world has to counterfeit 200 billion dollars a month, or the financial system is in crisis, instantly insolvent. Bug, meet windshield.
“How much of your wealth does the government want? How much do you have?”
Never underestimate the power of a question.
I like that: Never underestimate the power of a question.
Robert , you do realize you are on the list of …deplorables…?
Soon there will be no way to escape government control of everything we do.If you know and trust the bible then you know what’s coming.Satanic totalitarian police states .Scary stuff but good job explaining it.Thanks for taking the time to write.
I’m going to be darn upset if I’m not on that list of deplorables. I would take it as a professional insult. You work so hard to piss people off, and then the government doesn’t even notice? You can imagine how I’d feel.
Diamonds and other such gems, easily hidden, are a good store of wealth. The trick is to not choose obvious stores like gold and silver.
I think the real trick, whether you’re acquiring precious metals or gems, is to acquire them in such a way that it does not leave a paper or computer trail.
The problem is that all purchases leave trails, or else you will pay a huge mark-up for clandestine markets…and you have to be prepared to do it both directions (getting in and getting out.)
The monopoly on money exercised by the US government (it is not granted a monopoly in the Constitution, BTW) is all about taxes. The only item that is “tax neutral” in this world is “government money.” For all but 2 of the last 100 years, as money declined in value citizens were taxed on the loss (because as their incomes went up and they were paid interest that simply kept pace with inflation, this incurred “income” tax.)
There is only one time when a monetary event occurs where people holding money obtain a real gain that the extortionists can’t tax. It is holders of cash or surviving debts/money streams when there’s a decline in the money supply (AKA deflation.) This is also part of the war on Cash.
Items such as you mention as stores of wealth are not nearly as easily as disposed of when needed as old plain ordinary bullion gold and silver and coins.
Furthermore, The Government can confiscate anything it wants – not limited to gold and silver (although that’s all they’ve stolen from their citizens so far). In fact most U.S. citizens don’t realize that silver was nationalized at one time – the same thing FDR did with gold.
Muck
And to misplace them in a.boating accident.
Very good essay, Robert. I personally think the theft of intellectual property is a lot easier than you think. People demanding to share equally in the benefits you enjoy because of your intellect will steal it all. Including your “share.”
I read the GOVERNING THE DEPLORABLES thread first and all I could think of while reading this article was the comment I posted there:
“The biggest problem is that the best kind of people to lead are those that have little or no desire to lead. The worst kind of people to lead are the ones who want to lead.
Even with the best kinds of leaders in place, there are currently too many rats in the cage to ever hope that they can be “led” anywhere. The job would be much easier if we had sound money because many of our problems are caused by an infinite money supply and the power structure that develops around supplying and distributing that infinite money.
I think the government that our founding fathers intended to create with the Constitution was pretty close to ideal. Get back to the Constitution, add a few tweaks such as austere term limits and requiring that all laws be made and written in such a way that anyone with an honest high school education can interpret them and the Constitution could still work.”
Mr. Gore,
Good read!
Greetings,
I still do not see cash going away. First, the political/criminal class needs cash to fund all of their illegal activities. Take away cash and the wealthy will not be able to lie as much on their taxes. Take away cash and their crimes now leave a trail. Think about it – how hard would it be for the Army to “lose” 6.5 trillion dollars when there are no more dollars to lose? That buys a lot of hookers and blow.
Second, a big chunk of the economy is underground at the moment. This part of the economy, while not as rewarding as the rape of the middle class, still produces income for the .01% and the sociopaths in government.
Take away cash and the velocity of money falls dramatically. It would crash our economy.
To me the threat of a cashless society is not aimed at us but is probably part of a bigger fight between our rulers. Even the Nazi’s squabbled among themselves and we dont have anyone near that talented running things.
Take away cash and a big part of the economy evaporates or turns to barter. (Barter is the free market that exists outside of government control, which is why they hate it.) The evaporation of a big part of the economy is why the monsters proposing this cashless society still think that only the larger bills are to be eliminated. You would still have $1s and $5s to make small garage sale transactions. The robustness of an economy is determined by the number of transactions that occur on a daily basis, how many ‘needs’ are being fulfilled.
LOOK!!! Money belongs to the people especially those that produce and exchange their goods in the marketplace. Money DOES NOT belong to the government or the FED as they think.
Stealing the money from the people and giving them script is the biggest crime against mankind in history. Next to outright war, which destroys capital, the destruction of money has done more damage to civilization than anything else that would take third place.
Thou shalt not steal, period! It is not–Thou shalt not steal unless it benefits us! Stealing is the government’s business model.
Obama has penned an Executive Order that say the government can come in and take (steal) what ever it wants from you for the survival of the nation. I suppose that even includes your life. ‘Nation’s survival’ really means ‘the government’s survival’, it doesn’t mean you. It means them.
The M1 velocity has been below 1.0 since the Great Crash of 2008. Theoretically impossible until you consider QE and banks loaning the Treasury funds overnight for 0.25%. Technically speaking – the patient is already dead. Once money velocity returns it will be in multiples of 10. As in 10, 100, 1000, ….Zimbabwe! When this rubber band snaps it will be wicked.
Nope. You can’t have “Zimbabwe” with a bond market that’s worth a million billion dollars.
First things first. The bond market has to implode. THEN you can have your Zimbabwe, but the order really does matter.
dc–Of course you can. Venezuela had a rising stock market in the mist of a crumbling currency. A rising bond or stock market is no indication of a vibrant economy or the advent of ‘good times’ are here again.
Stocks and bonds go up in nominal value because they are demanded in lieu of a depreciating currency with the hope that these paper assets will preserve wealth. Of course they don’t preserve wealth because they’re not wealth but mere promises of wealth. The Tulip Mania should come to mind.
If the bond market explodes, that’s the END game for sure. But fiat money printed out of thin air will inflate the bond and stock market until the currency is completely repudiated by the people, then the deluge. Rising interest rates which will be force on the FED will give the illusion of gain and prolong the inevitable ‘crackup boom’ for a day.
A million billion dollars might not buy you a loaf of bread. Now that’s what I call currency depreciation on steroids! I guess you can also call it HYPER-INFLATION!
Look dear readers, an increase in the velocity of money is not hyper-inflation even tho people are trying to exchange paper for goods. Hyper-inflation is when currency goes ‘no bid’. I wouldn’t pay much attention to money velocity, but to the increases in the cost of goods, commonly called ‘price inflation’. For those who don’t know, inflation is the increase of credit (money) which causes ‘price inflation’ and hyper-inflation is a psychological event.
Exactly right, just floating a few trial balloons to see what happens, then later the concerted push to eliminate the last vestige of economic freedom. I wonder how many of these economists believe that it will work for the long run and how many are just in for whatever keeps the game going for a few more years. Just a wealth tax for the middle class.
Administrators, a new hack reveals that the DNC sold ambassadorships to the highest bidder:
http://www.zerohedge.com/news/2016-09-13/how-much-it-costs-get-ambassadorship-guccifer-20-leaks-dnc-pay-play-donor-list
Everything is for sale to the highest bidder,
or to good friends…if they are useful.
Ah Susanna! Thou are bitter at heart… Unfortunately all true (read E.O. Wilson)..
Muck
There is no need to take your 401k or IRA or other pensions. There is no need for ‘bail ins’ by the banks and government. There not any need for the Income Tax either.
Why is that, Homer?
To understand why, you need to understand Homer’s Teeter Totter theory of economics which I learned in kindergarten. Everything is supply and demand. On one side of the Teeter Totter is supply and on the other side is demand. For an economy to be in balance, supply must equal demand. That’s a healthy economy. When it is out of balance, demand is greater than supply, prices rise, and conversely, when supply is greater than demand, prices fall. It is just that simple.
Demand is the capacity to command supply. Demand is credit (money). Supply is all the goods produced in an economy and up for sale to the highest bidder. Economies are always ‘high bidder wins’ except where governments meddle in the economy and create distortions and which they do to win votes and reward their cronies. The political system called Socialism is the perfect example of distortions in the market place. Socialism creates a two tiered society, excessive demand, shortages of goods, cultural breakdown, and loss of freedom and civil liberties. See Venezuela for a modern confirmation of this reality. America is Socialism lite. The people demand Socialism because everyone wants something for free and politicians are quite willing to give it to you in exchange for your vote.
The government and it’s Federal Reserve Bank can print all the currency (credit money) it needs out of thin air to pay it’s bills. Today, the problem is not that there isn’t enough credit (demand) there is. It’s that there isn’t enough goods being produced to balance out that demand.
So, to balance the Teeter Totter, you must increase the goods being produced. It’s called ‘grow the economy’. But there’s a catch, a BIG CATCH. Goods don’t grow on trees. Someone labors to produce a good and wants to be compensated for his time and energy in producing that good.
It’ s called wages. Wages increases credit in circulation so it doesn’t really balance the teeter totter. It just drives up the nominal cost of goods and taxes paid to government. It’s called inflation.
So, the only alternative is to reduce demand (credit money). That’s called Deflation, a reduction of the credit money, with a collapsing market (the nominal value of commodities and stocks declining), an increase in the cost of managing debt, and general contraction of all the financial assets that were boosted by easy credit. That ain’t good! Deflation put the nation between a rock and a hard place. It’s called ‘hard times’ and ‘hard times’ is the direct result of the government and FED interfering with the free market.
Since increasing goods won’t work because of the damaged economy, despite Trump’s ‘Make America Great Again’ mantra, the only alternative is reduce demand without the disincentives to do so (hard times) with the government’s fingerprints all over it. That’s where ‘bail-ins’, pension theft, and cashless society come into play.
Your pensions, cash in the bank, cash in hand, and your ability to line up credit will be stolen and reduce by the government. It’s not that they need the money, they can always print more out of thin air. It’s to keep you from spending it. It is to reduce your demand for goods. Call it rationing and there might be real rationing on top of it all like during WWII and just like in Venezuela, today. The idea is to keep you from bidding on goods. This balances the Teeter Totter. The idea is to keep HYPER-INFLATION at bay for a time. Money in you pocket or bank or pension isn’t worth a damn if you can’t spend it and you won’t be able to do so. Most likely you will be given worthless government script called ‘bonds’ for your voluntary contribution to big government.
Fiat currency has allowed governments, the world around, to grow to unbelievable proportions telling you what rest room you can use, to govern you from outside your country (Brussels), to wage war in your name, to imprison your population for the most inane violations while corporations, bankers, and politicians go scott free for the most egregious crimes against the people.
Fiat currency is a great evil because it is based on theft which is why EVERY fiat currency has failed. Evil only rules for a time. Only good lasts!
If you are in the system or a part of the system, when the system dies, you are going to die with it. Make no mistake, it will die!
This is the way I see it.
Hey Homer! Good explanation. Another trick of the Gummint (and the Fed) is the trick of the petrodollar. By forcing other nations to transact petroleum purchases in dollars, we effectively exported huge chunks of inflation to foreigners. Every dollar they worked for was one less dollar to circulate here in the US — which means that the Gummint and the Fed could create and spend even MORE fiat without the people of the US noticing it.
Very true! Our inflation would have been so much higher with out the Petrodollar. What kind of people ship their inflation on to other people less ignorant than themselves. When others wake up to the crime, America will have stain so deep that it will take generations to wipe it clean.
In 1985, Howard Storm, an abject atheist, was told by Jesus and the Angeles in a near death experience the following:
“The United States has been given more of everything than any country in the history of the world and it has failed to be generous with its gifts.
If the United States continues to exploit the rest of the world by greedily consuming the world’s resources, it will have God’s blessing withdrawn. Your country will collapse economically which will result in civil chaos. Because of the greedy nature of people, you will have people killing people for a cup of gasoline.
The world will watch in horror as your country is obliterated by strife. The rest of the world will not intervene because they have been victims of your exploitation. They will welcome the annihilation of such a selfish people.
The United State must change immediately and become a teacher of goodness and generosity to the rest of the world.
Today, the United States is the primary merchant of war and the culture of violence that you export to the world. This will come to an end as you have the seeds of your own destruction with in you.” The scathing criticism of America goes on!
Does this ring a bell with you? It sure does with me. That’s why I pray (in the words of George Patton) every G*ddamn day!
Homer, you’re ignoring Say’s Law.
If people can enter the market without having first actually PRODUCED something others value, pretty soon people figure out, “why produce anything?”
This is what we approach.
dc–I haven’t ignored Say’s law. It’s as true today as when Jean-Baptiste Say pointed it out. Keynes lame attempt to refute Say’s law was just that a lame attempt.
The value of one’s production is measured in money and comparison of value between products is measured in money. The problem is that the yardstick measuring goods, today, is an elastic ruler. Once money had intrinsic value, was a real good that took work and investment to produce and that was gold and silver. Supply and demand set the price, as it always does.
Today, money is created out of thin air and has no value except what someone is willing to give you something of real value for it. There is no intrinsic value in the worlds currency or any backing of it by something that is tangible or real. This distorts Say’s law but in no way refutes it as Keynes had hope. Say’s law will reassert itself when the current demand is extinguished in a hyper-inflation and real demand (something that is tangible and real) is restored to the marketplace.
“As each of us can only purchase the productions of others with his own productions – as the value we can buy is equal to the value we can produce, the more men can produce, the more they will purchase.”–Say’s Law– Fiat money in the end always steals from the marketplace.
P.S.–Supply of goods does create demand for goods. I’m not talking about supply and demand in an economic sense. As an example, the computer and I-phone came first and the demand for the product by people came after. It doesn’t always work out this way. People may reject the product, but it usually does work that way. I mean people didn’t go down to Circuit City and say, “I want a machine the size of a toaster that has a television screen that I can store information on and retrieve it at will.” and then Apple said, “OK, we’ll get on it.” Say’s law is right in that regard to the idea that supply creates demand.
The ability to enter the market without having first produced something (other than the counterfeit currency) is revealed by Say’s Law as a crime, that’s all.
FIAT money allows the monetary authorities to steal. It’s that simple. That’s all I’m saying.
Money exists because barter is extremely inefficient and wasteful. It precludes the detailed specialization of a complex economy and thus precludes the possibility of the high living standards we’ve come to expect. Frankly, nothing above barbarism can exist without a money-lubricated economy.
The problem is when the cost of having a money system (e.g., when the monetary authorities tip it into outright highway robbery) begins to exceed the benefit of avoiding barter.
We’re fast approaching that point. The emphasis on obtaining gold and silver, which because they are NOT MONEY legally makes them approach barter, is evidence thereof.
Yes, YES, YES , dc, you get it!
dc–Money has no legal status and requires no government enforcement. The marketplace determines money, be it gold and silver or seashells. It’s all barter even with gold and silver. But gold and silver became the measuring stick of value in exchanges, not thru government edict but by common usage. The invention of money greased the exchange of goods and advanced civilization.
Only Fiat Currency requires government enforcement as to its use as money, which exposes it not as money but as a money substitute.
Numerous central banks are currently in the process of developing their own Central Bank Issued Digital Currencies (CBDCs). Modeled after Bitcoin, CBDCs will allow the central banks to achieve their cashless societies while keeping a firm grip on every stinking cent so as to extract as much as they want, when they want. While still a fiat currency, the central banks are still as free to manipulate the economy with their own crypto-currencies. It might not be that far off.
https://mises.org/blog/why-governments-want-central-bank-issued-digital-currency
nkit–It is all for rationing of goods. If the government controls digital currency, it can tell you what you are allowed to spend, for what you can spend it on, and who can spend. It can summarily punish you by taking some of your digital currency out of your account if you write a comment on TBP for example, and it can reward their cronies and it can enrich themselves, clandestinely.
The loss of your control over money makes you a SLAVE. The government doesn’t need you in chains on the plantation, they control your every move through the process of denying you the necessities of life if you fail to cooperate. The government yanks your digital chain. They have ultimate control over money if it is digitized. You end up begging, hat in hand, for a pittance. They will command your labor on collective farms for the good of the motherland when the supply of goods disappear, as it most certainly will.
If we’re lucky, those that survive, will start all over again, a bit wiser, but I’m not taking any bet on it.
Perhaps, we will get down to the 500 million population that the elites so desperately want and like the time of the ‘Black Plague’ of a bygone era, the survivors could live high on the hog for a hundred years on the capital that has been accumulated . But…Eventually that will rust away proving God’s admonition, “That by the sweat of your brow, you shall eat”, you shall live.
Good article. The government likes to use stacks of cash as well:
“…the Obama administration flew more than $400 million in cash to Iran in January 2016…And then there was the $12 billion in shrink-wrapped $100 bills that the U.S. flew to Iraq only to claim it had no record of what happened to the money. It just disappeared. So when government economists tell you that two-thirds of all $100 bills in circulation are overseas—more than half a trillion dollars’ worth—it’s a pretty good bet that the government played a significant part in their export.”
http://www.rutherford.org/publications_resources/john_whiteheads_commentary/your_money_or_your_life_whats_behind_the_latest_government_scam_to_rob
I agree with Indentured Servant: give the government a list of demands. If they don’t listen, stop going to work. I would also add: stop buying anything that’s not absolutely necessary. These two things we have in our power.
We could bring the government to its knees if we wanted. Get the ball rolling on Facebook or Twitter. Starve these mother*uckers!
backwardsevolution–Ha ha! I have long thought of that. A General Strike that would starve the government, BUT, and it is a big but, the government doesn’t starve, they take what they want and you starve. They can print as much money as they need to buy what they need until the money is rejected by the people at large. Then you will see the real face of government if you missed the lessons that governments of other countries have provided in similar straits. Besides which, it would be easier to organize a Chinese fire drill than to get your neighbors to cooperate and do this.
Human nature being what it is, there will be people selling life jackets on the Titanic. People only cooperate when it serves their goals. Have fun convincing them that their best good is to strike rather than collect their government welfare check.
“The government thinks of you as a milk cow, but when things are tough the government thinks of you as a beef cow!–Doug Casey
P.S. You won’t have to stop going to work. Government will destroy your jobs like all Socialist governments eventually do and you won’t have to worry about getting up every morning or filing a 1040.
Homer – well, the choice is always to do something or roll over. What’s it going to be? IF enough people (and you don’t need everybody) got together and had a general strike on buying anything, it would certainly get their attention, big time.
Let them go ahead and continue printing, continue pushing prices up. They’ll get so high that nobody will be able to afford anything. Bring it on.
Or just roll over and take it.
Those are the choices.
Robert, I agree down the line and only add a few personal preference nuances:
1. Cash (Federal Reserve Banknotes, AKA FRN’s) are simply zero-maturity debt securities that have physical existence, as opposed to all other forms of “money” which are either held inside banks (deposit accounts) or are longer-dated obligations of non-bank entities, from T-bills to Junk Bonds to the credit balances and untapped credit lines of credit cards.
2. The reason “they” hate cash is that the entire world is now drowning in the Bond Ocean; there’s too much debt (IOU-dollars) and the only path forward is to shrink that Bond Ocean. The PROBLEM is that the people running this Clown Brigade want it to be OTHER PEOPLE’S IOU-holdings that shrink, while THEIRS increase in purchasing power. CASH is the only aspect of this system not under their direct control. They can renege on bonds; they can “bail-in” bank accounts (which is nothing but admitting that the bank is insolvent and that depositors’ value was squandered and cannot be recovered.) What they can’t do, short of hitting the RESET BUTTON on all money, is decrement the value of FRN’s. They exist in the physical world beyond the direct control of bankers, central or not.
This is why there’s talk of trying to pull an FDR; they want to force all cash into the system where it will be “reconciled,” just as was gold when under FDR’s administration they forced all gold deposits into the banking system (including forcing open people’s safe deposit boxes under banker observation) and then devalued the dollar by raising the “peg” to the gold people could no longer withdraw or even legally own.
The world economy is addicted to debt. Everyone is like a heroin addict with regard to it. What are pensions (including Social Security) but overt or implied IOU-dollars (in the future)? They are all DEBTS! What are underfunded pensions (public or private) but systems from which involuntary loans were extracted?
The Monetary Madness of the last 50 years was boosted into orbit by the mania in social mood that began around 1981. That was when (Joe Citizen) Pollyanna began sailing the Bond Ocean and the Bond Vigilantes all were strangled by rising pathological trust. This was the rocket fuel that allowed total credit market debt to rise toward the Beyond-Reason-or-Imagination $1,000,000,000,000,000 where it now stands. The USA’s component of this is larger than (fatuous) GDP for 50 or 70 years! [This ignores that when the debt bubble bursts, GDP will shrink by perhaps 90%.]
When, not if, WHEN this era of maniacal trust and pathological optimism finally reverses toward its sine-wave opposite (extreme distrust and pathological pessimism), I’m not sure what will be left standing. Every prep I consider has its own three to five reasons it won’t work.
All I know is that Plan A (the system as we know it) is doomed by the madness already embedded in our lives.
PS: Everything about our lives is a lie. We now have smoking craters (not just guns) proving that the President of the United States was involved in auctioning off high offices like ambassadorships, and you and I know—we KNOW—not one thing will be done about it. The excuse is the same as for the Debt Ocean: “We know this is a huge problem, but if we try to make good on things it will only collapse the system, so instead we’ve decided to let it go, let the crooks (our buddies, our wives, our husbands, our kids, nieces, nephews and campaign contributors) get away with it. You should thank us for not ruining your lives by pursuing these crimes.”
We’re like the townspeople in Blazing Saddles when Cleavon Little’s character threatens to “shoot the nigga'”
The real problem is in you and me.
We consented to a system our neighbors accepted (because there was no alternative, which is why I believe history is impulsive, in that there’s really no changing the future…its path is already etched in stone by the fractal that is human social behavior) and what occurred is this:
1. Intellectuals hated the producers (the latter gathered the wealth, while the intellectuals starved.)
2. Intellectuals came up with a rationalization for universal theft.
3. Sociopaths among us seized on these rationalizations as a means to institute graft, corruption and theft on a scale never before imagined.
4. The boom in innovation of the last 150 years allowed for living standards to remain largely rising even as this enormous parasite subsumed 10%, 20%, 50%, and now 90% of all human productivity. Fewer than 10% of people today produce all the actual wealth we all enjoy; the rest of us are busy feeding at one of the Central State’s innumerable tits as the state is fed 93% of all production (note that our masters rake off 3%, compounded into infinity, for their “troubles.”)
My figures are just illustrations; I have no idea what the real vig is for this extortion racket. But when the Central (Administrative) state wishes to grow, those in the first ring of power surrounding it have no incentive to stop it. In fact, when the King wants more power, the Princes all enable it because each of the Princes expects to sit on the throne soon enough.
No wonder every limit on State Power since before the Magna Carta has been systematically destroyed. There is no brake. There is no feedback mechanism to stop this gargantuan parasite, a blood-sucking tick the size of Washington DC that spreads a share of the swag around to everyone, like a Chicago politician who passes a wad of cash to everyone all the way down to the Dog Catcher, in order to create a Permanent Patronage Army whose lives and livelihoods are dependent upon that politician.
The USA in which we live is One Big Company Town, run by Organized Criminals, and supported by all because EVERYONE is in on it.
Hey dc.sunsets! “supported by all because EVERYONE is in on it.”
Great comment! I think, though, that the near universal support is not because EVERYONE is in on it. True, we are all part of the system — whether we like it or not! — but most people do not see what the system is. YOU understand it. I understand it. Most of the people who post here seem to understand it, but the average person is only just now starting to wake up. Main stream media has been feeding the digital Rohipnol to the US for generations now, but increased access to information via the internet is gaining more and more traction against the MSM. 2016 looks to be the first election cycle where a large part of the public (a majority? who knows…) have at least opened their eyes enough to see that the current system is rigged. There is still a LONG way to go before the average person really understands how badly they have been robbed — but we are at least seeing the beginning of it.
I am not in on it. I left Washington, DC in 1980 disgusted with these shenanigans. Everyone wanted to “Do good” and “Do well”. It’s difficult to do both without personal sacrifice. Most were not up for personal sacrifice. I left the policy rat race and went home to the cottage industry family business and still practice–making a little money and helping whoever I can. Stewardship is the watchword. Sacrifice for the future–care take the present. Localism-austere and personal-is the goal. I am an optimist, we have some “troubles” to go through but the boomerang of history will return to my hand….
All this is coming to an end. The social mood mania that fueled it is waning, and I think both the Trump Phenomenon and recent hints of weakness in the world’s bond markets indicate that the Bond Vigilantes are rising from the dead. Zombie Apocalypse, indeed.
The system is Humpty Dumpty. Once it begins to fall apart in earnest, nothing will save it. The real question is what do we, as individuals, do to mitigate the tsunami of chaos in whose path we all stand?
The answers to that question (there are probably numerous good ones) are all that I care about.
Hey dc.sunsets! “The real question is what do we, as individuals, do to mitigate the tsunami of chaos in whose path we all stand?”
You raise good questions. It might be useful to take that question and follow it back one more step. Consider this: “Which of our actions have led to the inevitable result that a tsunami of chaos is coming?”
I have observed over the last five or six decades one particular change in the character of America which may be the biggest single cause of the chaos. It is the increasing disconnect between what people do and the consequences of their own actions. People commit crimes for which they are not punished. Other people work harder than ever and get to keep less and less of what they produce. People are arrested for crimes which have no victims. Misbehavior of children is allowed to pass uncorrected. Schools fail to educate while administrators receive bonuses. Celebrities break every form of morality and are applauded. Those who do not work are rewarded. Those who come to the country illegally are given benefits above those born and raised here. Those who are honest are insulted by those who lie. The list goes on and on…
The coming chaos is not the problem. The chaos is actually the cure. If we as a people have been so lax in our lives that we have allowed all our standards to be eroded away, what else than chaos should we expect? Lack of standards cures itself by bringing on turmoil. When things get bad enough, people will — finally! — remember why they had standards in the first place.
What should we do? Live honorably. Keep our word. Support our family. Forge friendships with others who share our values. Become a stable influence in our community. Place the long term above the short term. Value justice higher than peace. Value liberty higher than safety.
Any prepper can tell you all about survival, and Lord knows, it may come down to that. But long term, if we really want to mitigate the chaos, the only way to do so is to remove the chaos from how we act, and to live by some permanent set of standards.
Well put Jason.
Couldn’t agree more.
The catastrophe is in the present, not in the consequences.
Apocalypse NOW.
Carl Watner (of Voluntaryist fame) nails this, too. He basically says, be the change you want to see, and let the chips fall where they may.
I think there’s some good wisdom there.
dc–Start building your social network, pronto!