My unpublished (100,000 word) book “The Financial Jigsaw”, is being serialised here weekly in 100 Issues by Peter J Underwood, author
Quote of the Week: “Dwell on the beauty of life. Watch the stars, and see yourself running with them.” – Marcus Aurelius
In this issue we look at the failings of the central banking model and how markets always adjust eventually to meet the needs of the populations regardless of politics or law. This article clearly describes the coming crisis whilst most remain oblivious to the facts:
https://gnseconomics.com/en_US/2019/10/15/towards-the-crisis/
And the following article by Charles Hugh Smith describes how labour will never be valued under our current system. Quote: ” I’ve been pondering a comment long-time correspondent Drew P. emailed me in response to my post, What’s Holding Up the Market?: “Our time/labor is finite, but money is infinite.” Drew explained that creating new fiat currency and injecting it into a closed system (our financial system) controls and restrains the value of our time and labor, past, present and future. This is a profound insight into why our financial system is inherently exploitive and why it is unsustainable.
http://charleshughsmith.blogspot.com/2019/10/our-timelabor-is-finite-but-money-is.html
Here is the link to last week: Issue 73
Now that Brexit may be coming to a final conclusion, I will continue to provide weekly updates as events progress:
Brexit Update – 18th October 2019
The Brexit deadline remains 31st October 2019 and stays in place unless Boris can get Parliament to agree his new exit plan or he is forced to apply to the EU for an extension of Art 50 yet again. This week is turning out to be crucial for Boris’s proposed final solution and Parliament is due to sit and figure it all out on Saturday 19th October. We are approaching a climax but the outcome is anybody’s guess.
https://www.zerohedge.com/geopolitical/pound-soars-eu-uk-agree-new-brexit-deal
Details of Parliament’s deliberations when sitting can be found here:
CHAPTER 13
The New Emergent Economy
“Winning is a habit. Watch your thoughts, they become your beliefs. Watch your beliefs, they become your words. Watch your words, they become your actions. Watch your actions, they become your habits. Watch your habits, they become your character.” – Vince Lombardi
“Everything is determined, the beginning as well as the end, by forces over which we have no control. It is determined for the insect as well as the star. Human beings, vegetables, or cosmic dust, we all dance to a mysterious tune, intoned in the distance by an invisible piper.” – Albert Einstein
“The Chinese use two brush strokes to write the word ‘crisis.’ One brush stroke stands for danger; the other for opportunity. In a crisis, be aware of the danger — but recognize the opportunity.” ― John F. Kennedy
Centralised governments and their central banks have failed us
Ludwig von Mises tells us that the way to control government is through the budget which is necessary in a free society. We can only do this by dictating how much money the government will have available to meet their policy objectives.
Ludwig von Mises believed that those who pay the taxes need to specifically limit the size of the government budget. If we abandon a strict connection between what the citizens pay and what government spends we move away from rule by the citizens, who are being taxed, and towards rule by the elites which is the situation we find ourselves in today and we know it’s not working.
Furthermore when the government goes into debt, as is all too common, a new group arises, who are those extending credit to the government, further weakening the relationship to the citizens being taxed and allowing the government to spend more money than would have been possible with taxation alone.
Through these means of funding government revenues over and above directly taxing the population we have seen that fiat money allows for an extension of government activities unconnected to the willingness of the population to actually support tax increases as well as incurring an ever-growing mountain of unpayable debt.
A fundamental change in the way we organise government is required if controls on the budget are to be established. There is such a government system which is generally known as the Libertarian Model. This model establishes a small central state and low taxes and is influenced by the writings of Robert Nozick 1938-2002.
In a modern technological society there needs to be a minimal central state to maintain defence and to maintain a stable framework of justice to provide the enforcement of contracts.
A real-life example is that of Sir John Cowperthwaite (1915-2006) as Financial Secretary of Hong Kong from 1961 to 1971. He introduced free market economic policies which were widely credited with turning post-war Hong Kong into a thriving global financial centre.
There is already a political party in the UK (https://libertarianpartyuk.com) which promotes libertarian policies tracing its roots back to the classical liberal ideas of John Locke 1632-1704.
The Party does not consider itself anarcho-capitalist but campaigns for a constitutional settlement based on the Swiss model of direct democracy and referenda. It holds that ‘representative democracy’ has run its course today creating not only political elite but also a bloated centralised bureaucracy supported by a central bank.
The growing wealth disparity can only be corrected by a major change in the way we do things. It is expected that in the New Emergent Economy, which we will find after the coming crisis, will be constructed on a model along the libertarian lines and which will emphasise freedom as one of its main pillars.
The War on Cash and Black Markets
My friend, Jeff Thomas (http://www.internationalman.com/authors/jeff-thomas) has penned and article about distorted markets and here is a quote from him:
“Many in the Western world—the former “free” world—fear that the War on Cash will result in their accounts in banks being frozen and possibly confiscated. They also fear that their safe deposit boxes will be raided. Finally, they fear that the day will come that they can no longer perform any monetary transaction without a bank being the middleman, as a result of electronic currency that’s only available through the banks. This fear is quite justified, as this is clearly the direction in which the banks are headed.
However, as history attests, human beings continue to be inventive whenever banks or governments put on the monetary squeeze. The more arrogant the banks and political leaders are of their omniscience over the populace, the less likely they are to credit the populace for finding ways to worm out of this one-sided deal.
At first, it’s always those who already live on the wrong side of the law who create black markets. But when we reach that point mentioned above—the point at which food for the family and fuel for mobility are at stake—the average man will join the black market. Soon after that point, it becomes ubiquitous and, in some cases, becomes the primary market, as it has in Zimbabwe. Governments will always oppress their minions if they can. The greater the pressure, the sooner the minions create a solution.
Note:
Zimbabwe’s hyperinflation provides an important lesson about what really happens when a currency collapses. We think a financial crisis is coming to the US. It’s going to be much worse, much longer, and very different than what we saw in 2008 and 2009.”
Jeff makes the point that at some stage a currency collapse will occur which will be part of the general global financial crisis as it unfolds. In the New Emergent Economy I expect that local markets and their associated common currencies will play a large part in the recovery of the economic system. Holding precious metals like gold and silver might prove useful during this phase because I believe that the intrinsic value accorded to these items by Homines Economici, will never change.
To be continued next Saturday
I don’t think that after the banks “fail”, things will return to a simpler better way. Central Banks, Politicians and CEOs will implement Chips and Rothschild e-money; getting around it will be as easy as finding a job that doesn’t send your check to a bank, a car without a touch screen and Big Brother monitoring system, a washing machine that adds enough water, a business that will barter, and a woman who is not a programmed Feminist Useless Idiot.
Thanks Robert and I can’t disagree with your pessimistic conclusions, I prefer to add some hope that the next iteration of a control system will be an improvement! But I suspect that your prediction will carry the day.