Home » Posts tagged 'currency debasement' (Page 2)

Tag Archives: currency debasement

The sense of general unease that I detect among those I meet and discuss economics and financial matters with is increasing —with good reason. Clearly, what everyone calls inflation, rising prices or more accurately currency debasement, will lead to higher interest rates, threatening markets which are unmistakably in bubble territory.

The consequences of rising prices and interest rates are still being badly underestimated.

In this article I get to the source of the inflation problem, which is the monetary debasement of the dollar and other major currencies. An important part of the problem is that mathematical economists have lost sight of what their beloved statistics represent —none more so than with GDP.

I explain why GDP is simply the total of accumulating currency and credit which is wrongly taken reflect economic progress – there being no such thing as economic growth. Once that point is grasped, the significance of this basic error becomes clear, and the fiat currency paradigm is revealed for what it is: a funny-money game that will go horribly wrong.

There is only one escape from it, and that is to own the one form of money that is no one’s counterparty risk; the one form of money that always comes to humanity’s rescue when fiat fails.

And that is gold. It is neglected by nearly everyone because it is the anti-bubble. The more that people believe in fiat-denominated assets, the less they believe in gold. That is until their funny-money games implode, inevitably triggered by sharply rising interest rates.
Introduction

Those of us with grey hairs gained in financial markets can, or should, recognise that after fifty years the funny-money game is ending. Accelerated money printing has led to what greenhorn commentators call inflation…
…click on the above link to read the rest of the article…

Central Banks Are Now in the Endgame

August 19, 2021

Central Banks Are Now in the Endgame

The $2 quadrillion debt bubble will be the central bank endgame

Central bankers were handed the Midas curse half a century ago. Midas turned everything that he touched into gold– even his own food. Exactly 50 years ago (15 Aug, 1971) central bankers were handed a much worse curse by Nixon. But instead of turning everything into gold, their curse was to turn all real assets, including gold, into worthless paper, creating the perfect setup for this central bank endgame.

Nixon had of course not studied history. Because if he had, he would have understood that his lie was $100s of trillions worse than the Watergate lies:

“THE EFFECT OF TODAY’S ACTION will be to stabilise the dollar”

Hmmmmmm!

As the chart below shows the dollar has lost 98% in real terms (GOLD) since 1971. Just a one hour history lesson would have taught Nixon that no currency has ever survived in history since all leaders without fail have done what Nixon did.

Reminds me of the line in Pete Seeger’s song “Where have all the flowers gone”:

“WHEN WILL YOU EVER LEARN, WHEN WILL YOU EVER LEARN?”

The fall of the dollar after Nixon eliminated Bretton Woods.

Well, they will never learn of course. History has taught the very few who are willing to listen that there is no exception.

Every single currency throughout history has been debased until it has reached ZERO as I outlined here.

It seems incomprehensible that presidents and central bankers have not learnt they will all play the role that their predecessors have, in destroying the nations currency.

With their arrogance, they are all obviously hoping that they can pass the baton on so that it won’t happen on their watch. And because most leaders have a relatively short reign in relation to the lifespan of a currency, they often escape even though guilty.

…click on the above link to read the rest of the article…

Dollar’s Demise And Doom Predictions Are “Over Hyped”

May 17, 2021

Dollar’s Demise And Doom Predictions Are “Over Hyped”

A lot of people including Americans have come to the conclusion the dollar is about to collapse. Predictions of the dollar’s demise are likely premature and overblown. Recently a combination of factors has caused people to become concerned about storing their wealth in the dollar. This has created huge interest in both precious metals and cryptocurrencies. Several things are driving the trend to diminish the dollar and other fiat currencies. One is the idea governments have targeted cash and wish to move us towards a “cashless” society where they control our every move. Another is rooted in the idea inflation is about to raise its ugly head as currencies are debased. The Sounding Line recently ran an article about how Stanley Druckenmiller, who made his name on highly successful currency trades including ‘breaking’ the Bank of England, says that he expects the U.S. Dollar to lose reserve currency status within 15 years due to a “totally inappropriate” combination of radical monetary and fiscal stimulus. Many people agree with him, the big question is how soon a major adjustment will take place. Clearly, 15 years is not tomorrow and it is difficult to look out that far.

I contend that currencies have been trading in a hyper-manipulated state for several years. Fiat money tends to create a shelter from volatility. This is because once wealth is placed into this rather closed system, it tends to remain there. After all, laws and rules discourage it from breaking free. It is the coordinated collusion of the major central banks that have allowed this charade to exist. The fact it has not been recognized or acknowledged does not alter or guarantee the system will continue. The failure or major repricing of any of the world’s four major reserve currencies will destroy the myth that major currencies are immune to the fate that has haunted fiat money throughout history.

…click on the above link to read the rest of the article…

The Most Lethal Act that Kills Governments

May 12, 2021

The Most Lethal Act that Kills Governments

QUESTION: Mr. Armstrong. I heard you are the best when it comes to monetary history and systems. I found your comment that it was not the printing of money that created the German hyperinflation but they first confiscated 10% of everyone’s assets. My question is this the only such example? I have listened to two interviews you have done and you used the same example. Can you point to any other such events?

ANSWER: You can buy the German bonds of December 1922 probably on eBay if you would like a piece of history. I probably have the best reference collection with respect to monetary history in the world. I do not makeup stuff, and I do not rely on modern history books. I prefer to also collect the reference materials of the era. I have bought newspapers bound in annual volumes from libraries over the years before digital. I have an extensive collection of both US and British materials. You will often see in my writings I publish articles from that period to show what they really said back then, not someone else ignoring or altering it to fit their agenda.

I have stated many times that I had to read Galbraith’s “Great Crash” in school. He was really a Socialist and never mentioned anything about a Sovereign Debt Crisis. Only when I found a rare copy of Herbert Hoover’s “Memoirs” in a London book store did I see all the evidence he put forth. My subsequent search of contemporary newspapers confirmed that the history books were all written by Socialists who supported Stalin back then. WHEN YOU DO THE RESEARCH TO DISCOVER WHAT HAPPENED, instead of trying to support a theory, you actually discover some very interesting facts. Hoover’s words applied to the 2007-2009 Financial Crisis and the collapse of Greece in 2010. Capital acted the very same way.

…click on the above link to read the rest of the article…

Keep It Simple: Gold vs. a Mad World

May 11, 2021

Keep It Simple: Gold vs. a Mad World

Psychologists, poets and philosophers have written for centuries that many who have eyes refuse to see, and many who can think, refuse to think clearly–all for the simple reason that some truths, like the sun, are just too hard to look straight into.

Or as others have said more bluntly: “Truth is like poetry—everyone [fricking] hates it.”

When it comes to bloated markets, debt orgies and helicopter money, the rising fun of such “stimulus” is embraced, yet the template for its equally market-tanking, social-destroying and currency-debasing consequences are simply ignored.

The same is true when it comes to the “great inflation debate,” which is simply no longer a debate but a neon-screaming reality playing out in real time and growing more pernicious before eyes otherwise blinded by calming Fed-speak and bogus inflation scales.

Each passing day, the evidence of the inflationary cancer beneath the smiling surface of our still rising markets and “recovering/opening” economy increases, and thus, like it or not, the inflation topic just won’t and can’t be over-stated enough.

In short: Here I go again with the inflation thing…

From the Grocer to Buffet: Inflation is Obvious

Extreme US “stimulus,” vaccine rollouts, Europe’s eventual reopening, and rising commodity costs are accelerating the inflationary tailwinds which everyone from grocery store clerks and home builders to Warren Buffet can no longer deny or ignore.

As facts rather than theories confirm, commodity prices have surged from steel to copper, or corn to lumber while precious metals steadily rise against COMEX price fixers, CPI lies and other unsustainable boots to the neck of a coiled gold market positioned for big moves into late 2021 and beyond.

…click on the above link to read the rest of the article…

It’s time to start thinking about inflation

April 25, 2021

It’s time to start thinking about inflation

In the year 215 AD, the young Roman Emperor Caracalla, then just 27 years of age, decided to ‘fix’ Rome’s perennial inflation problem by minting a brand new coin.

Caracalla’s predecessors over the previous several decades had ordered an astonishing debasement of Roman currency; the silver content in Rome’s ‘denarius’ coin, for example, was reduced from roughly 85% in the early 150s AD, to less than 50% by the early 200s.

And with the silver content in their currency greatly reduced, government mints cranked out unprecedented quantities of coins.

They spent the money as quickly as they minted it, using the flood of debased coins, for example, to finance endless wars and buy up food supplies for their soldiers.

Needless to say this caused rampant inflation across the empire.

Egypt was a province of Rome at the time, and the one of the Empire’s major agricultural producers. Its local provincial coin, the drachma, had also been heavily debased.

A measure of Egyptian wheat in the early 1^st century AD, for example, cost only 8 drachmas. In the third century that same amount of Egyptian wheat cost more than 100,000 drachmas.

Caracalla tried to fix this by simply creating a new coin– the antoniniamis.

It was originally minted with 50% silver content. But the antoniniamis was debased down to just 5% silver within a few decades.

Caracalla’s undisciplined attempt at controlling inflation was about as effective as Venezuela trying to ‘fix’ its hyperinflation by chopping five zeros off its currency.

In fact this same story has been told over and over again throughout history:

Governments who spend too much money almost invariably resort to debasing the currency.

In ancient times, ‘debasement’ meant reducing the gold and silver content in their coins.

In early modern times, it meant printing vast quantities of paper money.

Today, it means creating ‘electronic’ money in the banking system.

…click on the above link to read the rest of the article…

Japan’s Economy Is Again Struggling

March 29, 2021

Japan’s Economy Is Again Struggling

Japan. the world’s third-largest economy is highly dependent on exports and the reality it is still struggling even after a great deal of America’s stimulus money leaked into buying imported goods speaks volumes. While it feels a bit like ancient history, Japan’s GDP contracted at an annualized rate of 28.8 percent in Q2 of 2020, the biggest decline on record. Even after bouncing back 21.4 percent quarter-on-quarter in Q3 and 12.7 percent in Q4 Japanese national accounts are still lagging behind mid-2019 levels. For all of 2020, spending by households with at least two people fell 5.3% due to the hit from the pandemic. It was down 6.5% for all households, the worst drop since comparable data became available in 2001.

https://cdn.statcdn.com/Infographic/images/normal/22583.jpeg

All in all, this means the country is still playing catch up, partly because Japan also experienced two additional quarters of negative growth in Q1 of 2020 and Q4 of 2019. Adding to the problem is Japan’s household spending fell for the first time in three months in December, in a sign consumer sentiment was weakening even before the government called a state of emergency to control a new wave of the coronavirus. Lower demand for services such as travel tours also weighed, as the pandemic forced the cancellation of domestic tourism promotions. Last year, spending on accommodations fell 43.7%, while overseas and domestic tour travel expenditure slumped 85.8% and 61.9%, respectively.Not only is Japan again struggling to stay out of recession, but it also faces a wall of debt that can only be addressed by printing more money and debasing its currency. This means they will be paying off their debt with worthless yen where possible and in many cases defaulting on the promises they have made. Japan currently has a debt/GDP ratio of about 240% which is the highest in the industrialized world. With the government financing almost 40 percent of its annual budget through debt it becomes easy to draw comparisons between Greece and Japan.

…click on the above link to read the rest of the article…

japan, bruce wilds, advancing time blog, exports, recession, currency debasement, debt,

“In America Money Does Grow on Trees”

October 5, 2020

“In America Money Does Grow on Trees”

Full Commitment

This week provided additional confirmation that America is fully committed to a program of currency destruction. Decades of terminal intelligence have gotten us to this special place. We will have more on this in a moment. But first some words on being fully committed.

Say hello to the provider of bacon… lots of bacon, in this case. [PT]

We have never gutted a hog. But we hear it is a bloody mess. The volume of blood that gushes out – as in, ‘bleeding like a stuck pig’ – is profuse.

Contemplating a bacon and egg breakfast plate reveals two types of commitments. That of the chicken. And that of the pig. You may know this allegory. The chicken is involved in providing for the breakfast. It provides the eggs. But the pig is fully committed to it. For the pig must perish to provide the bacon.

America is presently bleeding like a stuck pig. Public and private debts are hemorrhaging a bloody mess. For example, the budget deficit for fiscal year 2020 which concluded on September 30 was $3.3 trillion. By this, the federal government spent double what it generated via tax receipts and other confiscatory measures. And the federal debt held by the public is now well over 100 percent of GDP.

The federal budget deficit, quarterly, as of Q2 2020. [PT]

There is no way the debt will be honestly paid. It is mathematically impossible. Nor will it be paid through an honest default. That is politically unacceptable.

The debt, however, will be paid dishonestly. It will be paid through dollar debasement. America is fully committed to this. Here’s why…

Words of Omission

Tuesday’s presidential debate has been called many things. Most descriptions have cast it in a negative light. Some political pundits used French to describe, in colorful terms, what type of show it was.

…click on the above link to read the rest of the article…

Inflation as a Tool of the Radical Left

September 21, 2020

Inflation as a Tool of the Radical Left

dollars

“Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch its currency….Lenin was certainly right. There is no subtler, no surer way of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”1

Keynes does not provide a concrete source backing his words but deliberately used the phrase “is said to have declared.” For a good reason. As Frank W. Fetter (1899–1991) pointed out, there is no evidence at hand that Lenin actually said or wrote these words, and anyone quoting Lenin on inflation would be indeed be referring to Keynes’s opinion.2

Be that as it may, it is pretty obvious that Lenin had a good understanding of the evils of inflation caused by the issuance of large amounts of unbacked paper money. He writes:

There is another side to the problem of raising the fixed grain prices. This raising of prices involves a new chaotic increase in the issuing of paper money, a further increase in the cost of living, increased financial disorganisation and the approach of financial collapse. Everybody admits that the issuing of paper money constitutes the worst form of compulsory loan, that it most of all affects the conditions of the workers, of the poorest section of the population, and that it is the chief evil engendered by financial disorder.3

Indeed price inflation caused by the increase in the quantity of money does not only cause serious economic problems. It also brings severe sociopolitical problems. Inflation makes most people poorer, degrades their social status, destroys their dreams of a better life. People become desperate and open to radical political programs.

…click on the above link to read the rest of the article…

This Analyst Says Gold’s Pullback is Proof that Higher Prices Are to Come

August 29, 2020

This Analyst Says Gold’s Pullback is Proof that Higher Prices Are to Come

Precious Metals Soaring

This week, Your News to Know rounds up the latest top stories involving gold and the overall economy. Stories include: Gold has more room to run, why central banks have been buying gold for over a decade, and two massive gold nuggets worth $250,000 found in Australia.

Standard Chartered: Gold has more to show this year despite hitting a new all-time high

For a steady asset such as gold, a rapid breach of its decade-old all-time high is quite a showing. Yet, according to multiple analysts, the metal could stagger market watchers some more by the end of the year. Since blazing past $2,000, gold has pulled back as some expected, yet seems unwilling to go below the $1,940 level if the previous two weeks are any indicator.

Standard Chartered Private Bank’s Manpreet Gill attributes gold’s correction to a slight recovery in the 10-year Treasury yield amid an increase in risk sentiment. If this is indeed the reason for the pullback, the development is actually positive for gold, as the general consensus is that sovereign bond yields are on a firm downwards spiral, with no central bank showing any inclination towards elevating its benchmark rate.

“We have quite a bit of one-sided positioning in gold and I think, you know, that’s actually unwound quite quickly. A lot of our proprietary indicators are telling us exactly that,” said Gill, while acknowledging that central bankers are favoring a cap on their bond yields.

In a recent note, Fitch Solutions’ analysts likewise said that gold should keep moving up for the rest of the year and pass its August high in doing so in the absence of any notable headwinds. “We expect gold prices to remain supported in the coming months with rising geopolitical tensions and an uneven and slow global economic recovery,” said the team in the note.

…click on the above link to read the rest of the article…

Gold’s Record Price Is All About Currency Debasement

July 28, 2020

Gold’s Record Price Is All About Currency Debasement

Gold broke its all-time price record on Monday and held above that level throughout the day.

So, what is this telling us?

It’s easier to understand gold’s record-breaking move up if you look at it from the other side of the equation. The dollar is now at its all-time low compared to gold.

In simple terms, the dollar is losing value.

This is a direct result of US government borrowing and spending backed by Federal Reserve money printing.

TD Securities reiterated that dollar debasement is driving gold in a note.

The USD weakens amid massive fiscal and central bank stimulus, a bloating debt pile and a slow growth environment.”

Since the economy crashed thanks to the governments’ shutdowns in response to the coronavirus, the federal government has borrowed trillions of dollars for its stimulus program. The June budget deficit was bigger than all but five of the yearly deficits in history. Meanwhile, the Fed is monetizing a big chunk of that debt through its government bond purchase program. In effect, it is buying up US debt and paying for it with money printed out of thin air.

All of this money creation is inflation. The rising price of gold reflects the inflationary pressure.

As more dollars go into circulation, each individual dollar is worth less, all other things equal. That’s why the price of gold is going up in dollar terms. We have more dollars chasing roughly the same amount of gold. That means it takes more dollars to buy an ounce.

This isn’t mere speculation. Money supply growth hit a new all-time high for the third month in a row in June. The only time we’ve seen money supply growth anywhere near this level was during the inflationary years of the 1970s. In June, year-over-year growth in the money supply came in at 34.5%. That was up from 29.5% in May.

…click on the above link to read the rest of the article…

The Wealth Redistribution Scam that Is “Inflation”

December 25, 2019

The Wealth Redistribution Scam that Is “Inflation”

The world over people are told that central banks pursue “price stability” by making sure that consumer goods prices do not rise by more than 2 percent per annum. This is, of course, a big sham. If the prices of goods rise over time, it does not take that much to understand that prices do not remain stable. And if the prices of goods increase over time, it necessarily means that the purchasing power of the money unit declines.

As money loses its purchasing power, income and wealth are stealthily redistributed. Some individuals and groups of people are enriched at the expense of others. Savers and workers are swindled out of their deserved income and retirement benefits, while those who own goods that rise in value or who borrow money typically reap a windfall profit. Clearly, the banking industry is a major beneficiary of monetary debasement.

“Inflation” Is a Rise in the Quantity of Money

Central banks are the very source of the phenomenon that all prices of goods tend to rise over time. They hold the money production monopoly and increase — in close cooperation with commercial banks — the outstanding quantity of money through credit expansion, an increase in the supply of credit that is not backed by real savings. It goes without saying that it is rather profitable to be active in the money-production business.

The increase in the quantity of money results, and necessarily so, in higher prices compared to a situation in which the quantity of money has not been increased. This is no arbitrary assertion but stems from logical reasoning: a rise in people’s money holding lowers the marginal utility of the additional money unit, meaning that the marginal utility of other goods that can be exchanged against money rises.

…click on the above link to read the rest of the article…

The Surrender of Liberty in the Name of Security

September 2, 2019

The Surrender of Liberty in the Name of Security

QUESTION: It seems that as we get closer to a change-over of economic systems that as a society we are more willing to give up our rights to the State. Is that part of a pattern during these types of events? Was it seen as Britain, Rome, and other countries lost power after their peaks?
DS

ANSWER: Unfortunately, the trend first materializes when people need the government to protect them usually from an external force. The British used this tactic against both the French and the American colonists. That prompted Ben Franklin to comment on this trend.

After the 3rd Century Monetary Crisis bottomed in the Roman Empire in 268 AD, there was a surge to build a wall around Rome by Emperor Aurelian following the same pattern. Aurelian saw the corruption that led to the debasement of the currency because those minting the coins were robbing the treasury. Aurelian moved to DRAIN THE SWAMP in Rome. When Aurelian returned to Rome in 271 AD after fighting off barbarians, he had to pacify a terrified city. He immediately halted the rioting and restored order to the capital. The controller of the mint in Rome began a rebellion over the monetary reforms laid out by Aurelian. He ordered that all the debased currency be purchased back and replaced with a new currency of higher content in silver. The rebellion was led by Felicissimus.

It appears that those who had been running the mint were embezzling the intended silver and issuing the debased coinage at least in part on their own authority. Obviously, any reform to the monetary system that called for an increase in silver content would have been unprofitable for those running the mint for personal gain.

…click on the above link to read the rest of the article…

We’ll Pay All Those Future Obligations by Impoverishing Everyone (How to Destroy Our Currency In One Easy Lesson)

August 6, 2018

We’ll Pay All Those Future Obligations by Impoverishing Everyone (How to Destroy Our Currency In One Easy Lesson)

The only way to pay all these future obligations is by creating new money.

I’ve been focusing on inflation, which is more properly understood as the loss of purchasing power of a currency, which when taken to extremes destroys the currency and the wealth/income of everyone forced to use that currency.

The funny thing about the loss of a currency’s purchasing power is that it wipes out every holder of that currency, rich and not-so-rich alike. There are a few basics we need to cover first to understand how soaring future obligations–pensions, healthcare, entitlements, interest on debt, etc.–lead to a feedback loop which will hasten the loss of purchasing power of our currency, the US dollar.

1. As I have explained many times, the only possible output of the way we create and distribute “money” (credit and currency) is soaring wealth/income inequality, as all the new money flows to the wealthy, who use the “cheap” money from central and private banks to lend at high rates of interest to debt-serfs, buy back corporate shares or buy up income-producing assets.

The net result is whatever actual “growth” has occurred (removing the illusory growth that accounts for much of the GDP “growth” this decade) has flowed almost exclusively to the top of the wealth-power pyramid (see chart below).

2. Much of the “growth” that’s supposed to fund public and private obligations is fictitious. Please read Michael Hudson’s brief comments for a taste of how this works: The “Next” Financial Crisis and Public Banking as the Response.

The mainstream financial media swallows the bogus “growth” story without question because that story is the linchpin of the entire status quo: if it’s revealed as inaccurate, i.e. statistical sleight of hand, the whole idea that “growth” can effortlessly fund all future obligations goes up in flames.

…click on the above link to read the rest of the article…

Meet the Italian government’s Orwellian new automated tax snitch

February 21, 2018

Meet the Italian government’s Orwellian new automated tax snitch

By the end of the 3rd century AD, the finances of ancient Rome were in terminal crisis.

Years and years of debasing the currency had resulted in severe hyperinflation– a period of Roman history known as the Crisis of the Third Century (from AD 235 through AD 284).

During the time of Julius Caesar, for example, the Roman silver denarius coin was nearly 98% pure silver.

Two centuries later in the mid-100s AD, the silver content had fallen to 83.5%.

And by the late 200s AD, the silver content in the denarius was just 5%.

As the money continued to be devalued, prices across the Empire skyrocketed.

Wheat, for example, rose in price by over 4,000% during the first three decades of the third century.

Rome was on the brink of collapse. And when Emperor Diocletian came to power at the end of the third century, he tried to stabilize the economy with his ill-fated Edict on Wages and Prices.

Diocletian’s infamous decree fixed the price of everything in the Empire. Food. Lumber. Salaries. Everything.

And anyone caught violating the prices set forth in his edict would be put to death.

Another one of Diocletian’s major policies was reforming the Roman tax system.

He mandated widespread census reports to determine precisely how much wealth and property each citizen had.

They counted every parcel of land, every piece of livestock, every bushel of wheat, and demanded from the population increasing amounts of tribute.

And anyone found violating this debilitating tax policy was punished with– you guessed it– the death penalty.

Needless to say, Diocletian’s reforms didn’t work.

Every high school economics student knows that wage and price controls don’t work… and that excessive taxation bankrupts the population.

…click on the above link to read the rest of the article…

Tag Archives: currency debasement

Content

Post categories

Economic Links

Energy/Resource Links

Environmental Links

Geopolitical Links

Liberty Links

News Links

Other Links

Survival Skills

Post Archives by Category

Words of Omission

Post navigation

Latest Posts