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Farewell to Paper Money?
Farewell to Paper Money?
A decade or more ago, I began to discuss with associates the possibility of governments and banks colluding to eliminate physical cash. Back then, the idea struck most everyone as poppycock, that governments could never get away with it.
I didn’t write on the subject until 2015, when several countries had begun to limit the amount of money a depositor could extract from his bank account. At that point, the prospect that central banks might conceivably eliminate cash was looking less like an alarmist fantasy, and it became possible to write on the nascent issue.
In a nutshell, today, in most of the world’s most prominent countries, the people who control banking are the same people who pull the strings in government. A cashless system therefore seemed to me to be a natural, as it dramatically increased both profit and power for both banking and government – an opportunity that can’t be passed up.
The Benefit to Banking
Some banks have been delving into negative interest rates, which is a euphemism for charging you to keep your money in the bank, so that they can loan it out for their own profit. You actually lose money annually by having it on deposit.
Of course, some people accept negative interest rates in order to retain the imagined safety of having their cash in a bank vault, rather than at home. Others tolerate it because they value the convenience of using ATMs and chequing.
But anyone else may simply decide to store their money at home and save the “reverse interest” charges.
But what if cash were eliminated? No one would have a choice. They’d have to have a bank account and use it for all transactions, or they couldn’t purchase goods or pay bills.
…click on the above link to read the rest of the article…
Democracy Is the Ideal Distraction
Democracy Is the Ideal Distraction
In the days of yore, there were kings. Everybody could agree to hate the king because he was rich and well-fed, when most of his minions were not.
Then, a more effective system was invented: democracy. Its originators had in mind a system whereby the populace could choose their leader from amongst themselves – thereby gaining a leader who understood them and represented them.
In short order, those amongst the populace who wished to rule found a way to game the new system in a way that would allow them to, in effect, be kings, but to do so from behind the scenes, whilst retaining the illusion of democracy.
The formula is to create two opposing political parties. Each is led by someone who’s presented as being a “representative of the people.”
You then present the two parties as having opposing views on governance. It matters little what the differences are. In fact, you can have the differences be as obscure and arbitrary as, say, gay rights or abortion, and they will work as well as any other differences. What matters is that your two parties object to each other strenuously on the declared issues, working the electorate into a lather.
Once you have each group hating the other group “on principle,” you’re home free. At that point, you’ve successfully completed the distraction. The electorate now believe that, whatever the trumped-up issues are, they’re critical to the ethical governance of the country.
Most importantly, the electorate actually believe that their future well-being depends on the outcome of the next election – that it will decide whether their own view on the issues will prevail.
…click on the above link to read the rest of the article…
The Greatest Swindle in American History… And How They’ll Try It Again Soon
The Greatest Swindle in American History… And How They’ll Try It Again Soon
International Man: Before 1913 there was no income tax, and the United States was a much freer country. Initially, the government sold the federal income tax to the American people as something only the rich would have to pay.
Jeff Thomas: Yes, exactly. It always begins this way. The average person is always happy to see the rich taken down a peg, so this makes the introduction of the concept of theft by the government more palatable. Once people have gotten used to the concept and accept it as being perfectly reasonable, then it’s time to begin to drop the bar as to who “the rich” are. Ultimately, the middle class are always the real target.
International Man: The top bracket in 1913 kicked in at $500,000 (equivalent to around $12 million today), and the tax rate for it was only 7%. The government taxed those making up to $20,000 (equivalent to around $475,000 today) at only 1% – that’s one percent.
Jeff Thomas: Any good politician understands that you begin with the thin end of the wedge, then expand upon that as soon as you feel you can get away with it. The speed at which the tax rises is commensurate with the level of tolerance of the people. And in different eras, the same nation may have a different mindset. The more domination a people have come to accept from their government, the faster the pillaging can be expanded.
As an example, the Stamp Tax that King George III placed upon the American colonies in the eighteenth century was very small indeed – less than two percent – but the colonists were very independent people, asking little from the king in the way of assistance, and instead, relying upon themselves for their well-being. Such self-reliant people tend to be very touchy as regards confiscations by governments, and even two percent was more than they would tolerate.
…click on the above link to read the rest of the article…
All It Takes Is a Slipup or a Nudge
All It Takes Is a Slipup or a Nudge
Just prior to a war, the majority of people in the nations that are about to become involved tend to assume that another nation is threatening theirs, whist their own leaders are doing all they can to avoid conflict. This is almost never the case.
The “etiquette” of starting wars is for leaders to claim to their people that the last thing they want is war, but the enemy is goading them into armed conflict and, at some point, retaliation becomes “unavoidable.”
The reason for this etiquette is that, almost invariably, the people of a nation have no desire to go to war.
But if that’s the case, why is world history filled with warfare taking place on a regular basis?
Well, truth be told, there are two groups of people who tend to relish war – the military and the political leaders.
I’ve often quoted Randolph Bourne as saying, “War is the health of the state.” He was quite correct. The larger the nation, the greater the need political leaders have for warfare. After all, there’s no situation in which a people feel more greatly that they need their leaders to take charge, than in a time of war.
Political leaders, after all, thrive on taxation and the oppression of basic rights. And they can get away with taxing a people more heavily during a war. They can also remove basic freedoms “temporarily” in order to keep the people “safe.”
Then, when the war is over, taxes never seem to return to their previous low and freedoms never fully return. With each conflict, the state ratchets up its power over the people.
…click on the above link to read the rest of the article…
Will They Take All Your Money?
Will They Take All Your Money?
Why not? It’s not yours.
Most people assume that, if they have money on deposit in a bank, they own that money. That’s not necessarily the case. Decades ago, some of the world’s most powerful countries began to pass legislation that, if you deposit money in the bank, it becomes the property of the bank. In those countries, if you open a bank account and make a deposit, you sign off legal title to that cash. It becomes an asset of the bank.
The reason they got away with this obvious “theft through legislation” was that the banks were required to henceforth regard your deposit as a debt in your favour. So, technically, you were still owed the money as a bank liability, even though it was no longer truly yours.
On the surface, the change of ownership may seem to be a moot point, as, surely any bank would allow you to withdraw whatever you have deposited, or there would be a run on the bank and the bank would fail.
Well, that’s a definite “maybe.”
What if there were a financial crisis, such as in Greece, where an anticipated run on the banks was circumvented by freezing all accounts, then partially reopening them? If that were the case, the bank in question could allow small amounts of cash to be withdrawn by its depositors each week or each month until the crisis had been safely averted.
Surely, that would be a good thing to do, yes?
Well, there might be a problem there. It’s just possible that the bank would decide that it was enjoying the revised relationship, that it would like to continue to take in deposits the normal way but only pay out “allowances” to depositors as it saw fit.
…click on the above link to read the rest of the article…
The Economic Bubble Bath
The Economic Bubble Bath
At the end of a long, tiring day, we may choose to treat ourselves to a soothing bubble bath. Surrounded by steaming water and a froth of sweet-smelling bubbles, it’s easy to forget the cares of everyday life.
This fact is equally true of economic bubbles. When the markets are up, we’re inclined to feel as though life is rosy. Unfortunately, it does seem to be the norm that investors fail to recognize when a healthy up-market transforms into a dangerous bubble. We tend to be soothed into overlooking the fact that we’re in hot water, and economically, that’s not an advantageous situation to be in.
Periodically, any economy will experience bubbles. It’s bound to happen. Human nature dictates that, if the value of an asset is on the rise, the more success it experiences, the more we want to get in on the success.
Sadly, the great majority of investors have a tendency to fail to educate themselves on how markets work. It’s easier to just trust their broker. Unfortunately, our broker doesn’t make his living through our success; he makes it through brokering transactions. The more buys he can encourage us to make, the more commissions he enjoys.
It’s been said that a broker is “someone who invests your money until it’s gone,” and there’s a great deal of truth in that assessment.
And so, we can expect to continue to witness periodic bubbles in the markets. They’ll occur roughly as often as it takes for us to forget the devastation of the last one and we once again dive in, only to be sheared once again.
But we’re presently seeing an economic anomaly – a host of bubbles, inflating dramatically at the same time.
…click on the above link to read the rest of the article…
All That’s Missing Is a Black Swan
All That’s Missing Is a Black Swan
“There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.”
– Ludwig von Mises
The Federal Reserve chart above only goes back to 1970, but its message is clear, nevertheless. The velocity of money has dropped below that which was necessary to maintain a productive economy in 2009 and has never recovered.
The velocity of money can be defined as, “the rate at which money circulates or is exchanged in an economy in a given period.” It’s generally measured as a ratio of gross national product (GNP) to a country’s total money supply.
No money turnover… no economy.
But, if that’s so – if the chart is correct and the money turnover is by far the lowest since 1970 – why did the economy recover after 2010 and why are we in a bull market? Surely, the quantitative easing programme initiated by the Fed corrected the problem and happy days are here again.
Well, actually, neither of those commonly-held assumptions is correct. Quantitative easing didn’t pump money back into the failing economy and, more to the point, it wasn’t intended to. Most of the money that was created through quantitative easing never actually hit the streets.
To back up a bit, in 1999, the Fed, then under Alan Greenspan, convinced the US government, then under President Bill Clinton, to repeal the Glass Steagall Act, an act created in 1933 to assure that banks would never again recklessly create loans to the public that could never be repaid.
…click on the above link to read the rest of the article…
The French Revolution (The Sequel)
The French Revolution (The Sequel)
Here we have an eighteenth century depiction of two-thirds of the motto of the French Revolution – Liberté, Égalité, Fraternité, or “Liberty, Equality, Fraternity.”
It’s significant that Karl Marx was inspired by the French Revolution to form his concept of a utopian society. He envisioned a worldwide revolution in which all people everywhere would do away with the rich and everyone would then be equal. He felt that this could be achieved by peaceful means in England and America, but would require force in Germany and Russia, and a “temporary” dictatorship by the proletariat in order to create the ideal society. The utopia, he said, would from then on be self-sustaining.
As we now know, his utopia was a bit naïve, as revolutionary leaders, once exposed to the heady thrill of achieving power, are extremely reluctant to then give it up. They tend to become far more autocratic and ruthless than their predecessors and, rejecting socialist abnegation for themselves, ultimately become the next aristocracy.
It’s a pity that Mr. Marx didn’t see this coming. It was certainly evident during the French revolution, as is seen in the contemporary banner above, with its prominently featured skull and crossbones. (In case the observer didn’t get the point, the artist further accentuated his composition with the addition of two guillotines.)
Had Mr. Marx been paying attention to the actual results of the revolution, he might have noticed that the “Liberty” was never intended to be liberty for all, merely for some. (The others were meant to offer up their heads to the cause.)
…click on the above link to read the rest of the article…
Police State in Slo-Mo
Police State in Slo-Mo
For many years, I’ve forecasted that the US will evolve into a police state; that it will begin slowly; then as more and more freedoms are removed, the creation of the police state will accelerate.
We’re now seeing that acceleration, as more and more Americans are detained, questioned, and having their property confiscated than ever before.
As an example, in 2016, some 20,000 travellers in and out of the US were stopped, often at random. Typically, their baggage was searched, their documents photocopied, access codes to their electronic devices demanded and their files copied. In most cases, no explanation was given, but they were advised that if the search was refused, they would be detained indefinitely.
The following year, in 2017, the numbers of people detained rose by 50%, to 30,000.
It’s important to note that the travellers were not threatened with arrest, which suggests that the authorities were working on the basis that the Patriot Act of 2001 allows all of the above activities—without cause being given, without a warrant being obtained, without access to a phone call or legal representation being allowed, and that the individuals in question may be detained, indefinitely.
This, of course, is in direct violation of the Fourth Amendment to the Constitution, which states that people have the right “to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures.”
However, when people travel, they are particularly vulnerable, so the travellers in question are extremely unlikely to refuse. They understand that, “indefinitely” means, “until a Supreme Court ruling is passed, overturning the Patriot Act as unconstitutional.” If it hasn’t happened yet and isn’t under consideration, it’s safe to say that the level of police state allowed under the Patriot Act is permanent.
…click on the above link to read the rest of the article…
The Cycle of Freedom
The Cycle of Freedom
A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship.
The average age of the world’s greatest civilizations has been about 200 years. These nations always progressed through this sequence:
From Bondage to Moral Certitude;
from Moral Certitude to Great Courage;
from Great Courage to Liberty;
from Liberty to Abundance;
from Abundance to Selfishness;
from Selfishness to Complacency;
from Complacency to Apathy;
from Apathy to Dependency;
from Dependency to Bondage.
Tytler had it right. There is a Freedom Cycle. It’s not an accident. It’s based upon human nature, which is perennial. And it’s not something that can be manipulated to suddenly reverse itself, just because the citizens of a country are unhappy when they find themselves living in the declining stages. It has to play itself out.
Tytler was quite a scholar and had come to his conclusion, based upon the rise and fall of many nations, over the ages, with particular emphasis on the Athenian Republic.
Since Tytler’s time, we’ve been able to witness many formerly free countries slide inexorably into their final stages of decline. For example, the countries in the EU are further gone than the countries in North America, and Venezuela is further gone, still.
…click on the above link to read the rest of the article…
