My unpublished (100,000 word) book “The Financial Jigsaw”, is being serialised here weekly in 100 Issues by Peter J Underwood, author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: “The mediocre teacher tells. The good teacher explains. The superior teacher demonstrates. The great teacher inspires.” – William Arthur Ward
NOTE – If anyone would like a free updated, 3rd edition, electronic copy of the complete book, I should be pleased to email a free pdf on request to: [email protected]. The book has many footnotes linking to relevant and explanatory Appendices, websites and videos.
FIRST A note about the present problem with the ‘Repo’ market and the Fed’s continued ‘NotQE’ and lowering of interest rates. I suspect that the central banks are losing control and Wolf Richter feels the same way. His article is technical but well worth the read:
https://wolfstreet.com/2019/11/20/fear-of-reversal-rates-sets-in-says-the-fed/
This week we are looking at how governments deflect the scrutiny of the people thus obviating high taxation by debt issuance and avoiding resultant rioting in the streets. Only when we change the fiat currency system can the people exercise control of their government via the budget. We have to stop governments printing money. One way to do this is to restore the gold standard. Chris Hamilton has a great article describing how central banks enable governments to borrow from the markets without limit it seems:
https://econimica.blogspot.com/2019/11/putting-monetization-into-perspective.html
However the downside of a gold standard is that expansion of the economy would be limited due to the scarcity of gold resources, which is why it was abandoned in the first place when net energy surplus was extant during the last 100 years and growth exploded. What we need now is a happy medium with the ability to issue sovereign debt but limited and controlled by the people and balanced against the real, energy-based economy. This video explains how the real economy is currently far out-balanced by a false, imaginery financial economy as global economic growth slows:
https://www.youtube.com/watch?v=5WPB2u8EzL8&feature=youtu.be
The problem today is that central banks are controlling all economies but are trapped in a NIRP/ZIRP environment and need to continue with QE because they can’t allow interest rates to rise – there would a catastrophic implosion worse than 2008 if they did raise rates. Saxo bank has a full explanation via ZeroHedge:
Here is the link to last week: Issue 79
Now that the Brexit final conclusion has been delayed yet again, I will continue to provide weekly updates as events progress:
Brexit & Election Update – 29th November 2019
The Brexit deadline remains 31st January 2020 and Boris still needs to get Parliament to agree his new exit plan (WAB) during this period: https://www.bbc.co.uk/news/uk-politics-50125338 . You may follow a daily run-down on the current situation from my friend, Dr Richard North as the election fever progresses: http://eureferendum.com/
The Tory party launched their Manifesto last Sunday and since they are likely to win the election, here is what the Brits can expect in the next 5 years if it is to be believed:
“No matter how one slices or dices the polls, unless they change dramatically and suddenly, Corbyn is going to lead Labour into the abyss.” The Telegraph has some interesting stats regarding the ComRes Poll.
- The Savanta ‘ComRes’ research found that the Conservative Party is current polling at 42 per cent of the vote, the highest lead the polling company has registered since before the last election.
- Of those who cast their ballot for Jeremy Corbyn in 2017, 17 per cent would now think about supporting the Tories.
- That is three times the amount of Tory voters who would think about switching allegiances to Labour, with just five per cent saying they’d vote for Mr Corbyn.
- The Tories have the most consistent support among their base, with 94 per cent of their voters from 2017 thinking about backing them again this year.
AND also from ‘Mish’ a revealing article via ZeroHedge:
AND – This article by Hugh Charles Smith is most revealing about UK and its relationship with the global economy:
“……Does a fully globalized economy serve the national interest, which is fundamentally social and political? Or does globalization hollow out the nation to benefit the few who gain the most from the sloshing around of globalized private capital?”
http://charleshughsmith.blogspot.com/2019/11/we-can-only-choose-one-our-national.html
Parliament has been dissolved and there will be no government in charge until the new one is formed on 13th December although administration will continue as normal because our astute civil service will carry on working essential elements of our economy and social responsibilities.
Details of Parliament’s deliberations when sitting can be found here:
PART 2
INTRODUCTION
(The need for Personal Transformation)
“There is no such thing as a problem without a gift for you in its hands. You seek problems because you need their gifts”
Richard Bach – “Illusions”
“We really cannot change the external world nor can we change other people. We CAN change how we perceive the world, how we perceive others and how we perceive ourselves”
Gerald G. Jampolsky, M.D. – “Love is Letting go of Fear”
“People who work together will win, whether it be against complex football defences, or the problems of modern society.”
Vince Lombardi
A limited budget minimises government and transforms the peoples’ response
Ludwig von Mises tells us the way we control government is through the budget, and that this is necessary in a free society. In a democratic system, at least, we elect certain people to govern us, and they often enter office believing that they have a mandate to do certain types of things while in office.
But it’s not sufficient that the people tell government officials what they should be doing. It is equally important, if not more important, to dictate how much money the government will have to achieve those ends. So, it is not enough to tell the government that it will only protect private property.
This mandate could be pursued with £100,000 or a billion depending on what the people are willing to pay. So if the budget it not controlled, a limited mandate in itself offers no limitation on taxation or how much money governments spend.
Mises believed that those who pay the taxes would need to specifically limit the size of the government budget. The mission of the government does not by itself determine the amount of resources to be used in pursuing the mission. In response, many will complain that if budgets are tightly controlled, then we will never have an increase in government services because people hate taxes and might refuse to pay them.
If we abandon a strict connection between what the citizens’ pay in taxes and what government borrows and spends, then we find that we move away from rule by the citizens who are being taxed and toward greater rule by the elites.
At this point it is clear that we, the people, have been disempowered in all respects which subconsciously raises a degree of suppressed anger; a natural response to such a condition.
Given enough time this awareness transfers into behaviours which focus more on our own individual needs at the expense of that of the society at large. There is a tendency to withdraw from public life which often goes together with not bothering to vote in elections, reflected in recent low turnouts, and generally not taking an interest in what is going on around us except within our immediate, extended family context.
Social media now has a role to play in encouraging even more reason to opt out. However, we can change how we react to these influences by taking a positive attitude, engaging in local enterprise initiatives and perhaps entering local politics where governance is more transparent.
Governments can go into debt to avoid their budget responsibilities
One way politicians can avoid control by the people is by allowing the government to go into uncontrolled debt. Financial relationships then shift toward the new group that is funding the government (the bankers and global corporations, namely those who are extending the credit. This then weakens the relationship to the citizens who are being taxed, and it also allows the government to spend more money than would otherwise have been possible with taxation alone.
Fiat money allows government to take out loans provided through the bankers to an unlimited extent because fiat money by definition can be produced without moral limitation, without commercial limitation or technological limitation and can be produced in whatever amount is desired and digits in a computer. In this way the government benefits from the support of a central bank which itself in turn depends on the legal framework of monopoly provided by the government.
Through these means of funding government revenues outside of directly taxing the population we see that fiat money allows for an extension of government activities unconnected to the ability of the population to actually influence revenue increases. In turn, through this disconnect, the government’s rule becomes rule by elites such as central bankers and financiers rather than rule by the taxpayers; thus the government’s ability to spend becomes more dependent on the ability to access fiat money than the ability to convince the citizens to accept a higher tax burden. Now the people are even further removed from the centres of government which engenders even more frustration and angst within the general population.
To be continued next Saturday
Extra current commentary:
Brexit or not, London remains the preferred destination for the super-rich elites when securing their hard assets:
“There is a simpler reason why demand for safe deposit boxes will only grow: we now live in a world in which assets only have value because of constant central bank intervention. If one day an apparatchik forgets to push the correct button, or if we have another Lehman moment and faith in the monetary system evaporates, the value of hundreds of trillions in assets could evaporate in an instant. It’s a risk the worlds ultra-rich no longer want to live with.”
ZeroHedge has more information:
No gov’t should be able to borrow money. Full stop. Whatever the brainiacs deem necessary they should be forced to extract the funds from the population to gauge their response. It is gov’t debt that is killing the world’s economies and destroying people’s livelihood.
No war could be started if the funds weren’t approved by the population. No idiotic space program could exist to waste billions on boondoggles like looking at the dirt on Pluto. No funds would be spent keeping hundreds of thousands of malingerers and murderers on the US’s military payroll to topple gov’ts. etc, etc, etc.
It is the ability to borrow that makes the worst in gov’t possible.
Once a gov’t is ‘allowed’ to borrow, the sky is the limit.
“I wish it were possible to obtain a single amendment to our Constitution. I would be willing to depend on that alone for the reduction of the administration of our government to the genuine principles of its Constitution; I mean an additional article, taking from the federal government the power of borrowing.” – Thomas Jefferson
Thank you so very much SAO for a very well reasoned explanation of the government debt problem. I agree with all you say and it is good to know that at least there are some out there that understand how corrupt our governing systems are.
I am sure it will all change when the next crisis hits but the problem remains: will the central bank find ways of working a Reset to their advantage once again? The elites hold all the cards at present so any change to the constitution either here in UK (which isn’t written down) or in USA is unlikely in my life-time at least:
https://www.youtube.com/watch?v=QBDtIfJWr2A
As long as people believe the lie that gov’t is necessary and that democratic gov’t is it’s best expression, there will be a political class of intelligent sociopaths to steer the voting morons in the proper direction.
“The whole aim of practical politics is to keep the populace alarmed and hence clamorous to be led to safety, by menacing it with an endless series of hobgoblins, all of them imaginary.” – H. L. Mencken
The reset won’t be imaginary, but TPTsB will at least attempt to steer it.
I hold out hope that the Federal USA will disintegrate during my lifetime setting the states free to reassemble political boundaries that are smaller and offer distinct characters and philosophies that will spur people to vote with their feet to join like minded individuals in a contest to see who has the better ideas.
Let California become the leftists nirvana and Texas the domain of gun toting deplorables that aren’t going to take shit from anybody. I’d consider retiring my expat status should Texas secede or become an independent country by whatever means.
Good on you SAO, and thank you for sharing. We in UK have a small group dedicated to changing the fascist system we have here and which has lasted for many centuries. The House of Lords is but one totally out-dated group of ‘upper class twits’. Have a look a our 6 Demands:
http://harrogateagenda.org.uk/
AND the 18 min video presentation by our leader/director
The Revelation 12 sign prophecy is an apocalyptic belief that an astronomical alignment on September 23, 2017 fulfilled the first two verses of Revelation 12. This date coincided with the Autumnal equinox and the end of the Catholic September Ember Days.
https://www.express.co.uk/news/weird/856530/End-of-the-world-September-23-2017-Nibiru-Planet-X
The ZOG and Deep State were funded by their Federal Reserve money printing system, and the Elite are prepared for Chaos with their thousand plus well stocked DUMBs. They hate Trump and are trying to dispose of him because he has stopped their Global Warming and other Goy control and extermination New World Order Plans; and because given a couple more years, Trump will clean out the SCOTUS, the Justice Dept, FBI, CIA, State Dept, Homeland Security, IRS, etc, and start prosecuting Criminals and Traitors.
Your faith in Trump is unfounded.
He has authorized keeping the JFK docs locked up beyond their intended release date.
He signed the extension to the Patriot Act.
He has not closed Guantanamo.
He has not pulled troops out of Syria and the ME generally.
He has not done anything to ‘lock her up’.
He hasn’t pardoned Julian Assange and made him the lead in destroying the alphabet agencies that ARE the deep state.
Trump is a false prophet.
I agree with your list and add Mr 666 (Kissinger’s protege) who is joined to his hip. Granted Trump is not Andrew Jackson or George Patton. Pray he wakes up and grows a pair before he lets the New World Order hang him and Mike Pence.
Thanks for sharing this Robert but I must say that I don’t share your optimistic view of Mr Trump at this time. I do agree that he has achieved more than most over his term so far, but whether he will clean out the Deep State it yet to be witnessed. I feel that the power behind the throne is immensely strong – perhaps too much for any one mere man or woman regardless of their special attributes:
https://www.thedailybeast.com/the-deep-state-conspiracy-is-about-to-go-into-overdrive
More than most or more than anybody else by a country mile?
Yep, agree Robert, more than most by a large degree, even a country mile as you say – but whether it is enough to dislodge the deep state remains to be seen – fingers crossed! 2020 is going to be very interesting!
“demand for safe deposit boxes will only grow”
as long as one is aware that during the 30’s gold confiscation, safe deposit boxes could only be opened in the presence of a government agent to inspect the contents. gold folks know better how to secure personal possessions.
Thanks Credit, I couldn’t agree more, but I think the boxes they are talking about are not traditional bank ones but private establishments – but I could be wrong. Gold folks certainly know better – well said.