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QUESTION: Mr. Armstrong; It seems few people even understand that there have been two-tier monetary systems. Do you think this can be a possible tool in the currency crisis you are forecasting for 2021?

Thank you;

Looking forward to Rome and meeting Mr, Farage as well

ANSWER: Various countries used to mint trade dollars in silver with different weights for external trade with China. That was a two-tier monetary system for trade during the 19th century. But there have been instances where there were two separate currencies that were also used as capital controls to isolate the domestic economy from the external international capital flows. This was the case with South Africa.

An important example of an official deliberate two-tier monetary system is the modern monetary history of South Africa. Until the late 1960s, South Africa had a fixed exchange rate for its currency. The rand was pegged to major foreign currencies, as was the case under the Bretton Woods system.

It was during 1979 when the South African government switched to a system that formally expressed parity against the dollar. The value of the rand followed changes in the balance of payments and moved roughly with sterling and other weaker currencies until 1985 when the dollar soared and the birth of the Plaza Accord took place.

The foreign debt crisis of 1985 caused the rand to depreciate at a spectacular rate and the dollar rose in value. The rand fell to an all-time low of less than 40 cents to the US$. The rand recovered somewhat in 1987, reaching 43 cents, but it declined steadily thereafter into 1998. The rand collapsed to about 26 cents against the US$ in late 1995. Between February 1, 1996 and May 1, 1996, the rand lost roughly 16% of its exchange value, falling from R3.7 to R4.33 = US$1, or a value of about 23 cents to the US$.

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

“Globalization is the Demise of Humanity”: Towards an “Economy of Peace” with an Alternative Monetary System

January 20, 2019

“Globalization is the Demise of Humanity”: Towards an “Economy of Peace” with an Alternative Monetary System

Globalisation is the demise of humanity. That being said, if we want peace, solidarity, harmonious cohabitation, justice and equality – we have to defeat globalisation. And to be able to defeat it, countries which strive to take back autonomy and sovereignty may want to move away from the oppressive fist of the west.

BREXIT offers Europe and the world a formidable opportunity to break loose from the rigged, dollar-based fiat monetary system. BREXIT opens the door for other European Union (EU) nations to do likewise. Different polls indicate that between 60% and 80% of all EU citizens are fed up with the corrupt EU, wanting to leave. In France, whose Mr. Hollande has reached the attribute of least popular President of all times and who is openly called a traitor of the people, a recent survey says more than 85% of the French are against the EU.

Europeans are also worried about the gradual but steady integration of the EU with NATO. A militarisation of Europe with a US-led war machine moving ever closer towards Moscow is a strong and present danger for WWIII – meaning Europe may become again the theatre of war and destruction the third time in 100 years. Encircling China with two thirds of the US Navy fleet in the South China Sea, provoking territorial conflicts via the Philippines, a former colony and a US vassal; and presenting a constant menace with uncountable military bases in the area, all the way to Australia, are no signs of peaceful cooperation by Washington.

Bringing down the EU would break up the Euro and may also break up NATO. This, of course, is non-coherent with Washington’s hold on power over Europe and aggression against Russia.

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

Money: How Its Past Predicts Its Future

January 11, 2019

Money: How Its Past Predicts Its Future

What is money, where does it come from and more importantly where does it go?

At first glance, it might appear inexplicable and bizarre that our governments and our rulers have managed to keep their stronghold over the monetary system for 2000 years, especially when one thinks about the countless ways in which they abused that power and used their monopoly to the detriment of their own citizens. It was a mass delusion that facilitated this, a blind belief that they, and they alone, can be trusted with this vital task while looking out for our best interests as well. However, now, as mistrust against our rulers is justifiably deepening, it is becoming increasingly clear that only we as individuals can ensure our best interests and it is only a matter of time before the entire ill-founded edifice comes crumbling down.

To answer all these questions about money, we need to first understand its history — keeping in mind that those who don’t know history are condemned to repeat it. Everything started when people settled down and instead of living off nature they started adding value to it; this was the beginning of private property rights. In addition, men started to realize that some people are better at performing specific duties than others and thus set into motion what we today understand as the division of labor. This increased economic output and in general terms, everyone became better off. This transition in how work was performed in an economy made trade between individuals a necessity. Thus barter, or the exchange of real goods and services against other real goods and services, became commonplace. Barter also had its disadvantages, because it required what is known as a “double coincidence of wants” in order to function.

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

Money is no Object

January 11, 2019

Money is no Object

Chances are, most of what you’ve learned about taxes and the economy is wrong. In fact, the key principles at work in our economic system are very different from what we’re taught.

If you find you’re one of those who’s been misled, it’s not your fault. A system such as ours – where eight individuals control as much wealthas half of all humanity – can only be maintained with force and deception. As the industrialist Henry Ford is said to have opined, “It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”

It’s commonly believed that:

• Today’s money has intrinsic value. (It doesn’t.)

• Taxes fund government spending. (They don’t.)

• Automation inevitably threatens jobs. (It doesn’t have to.)

• Federal budget deficits must saddle future generations with debt. (Not so.)

In fact, to fund needed social programs – like free national healthcare, free education, jobs for all, a reduced work week with no reduction in pay, cleaning up the environment, rebuilding infrastructure, converting the economy from fossil fuels to renewables, and more – the federal government could simply print more money. Wait a minute, you say, it can’t be as simple as that! But read on. The enormity of the deception promoted by those at the top is that funding human needs really is that simple.

One of the biggest misdirections of all time is expressed in the well-known aphorism: “Money doesn’t grow on trees.” While it’s true that wealth doesn’t grow on trees, money and wealth are not the same thing. Money itself is available in whatever quantity society needs.

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

Money –Some points for revolutionaries to think about

November 8, 2018

Money –Some points for revolutionaries to think about

The monetary system we have is a fundamental cause of our problems, and setting up new systems is crucial in the development of alternative economies. However some popular initiatives are sadly mistaken and can have few if any beneficial effects. The goal must be to set up a system that enables previously idle people and resources to begin producing necessities for the locality. This is easily done.

First, let’s look at the main faults in the present system.

The present monetary system … works for the rich.

Money is puzzling stuff. It should just be little more than something that facilitates economic exchange, the safe keeping of savings, and the keeping of accounts. But in our system it is also a commodity, something that can be “hired” for a fee, i.e., borrowed and paid back with interest. Thus there is now a vast industry managing this lending, recently so big that it was making 40% of US profits. Kennedy (1995) estimated that 40% of what we pay for goods gets siphoned off into interest payments.

What’s wrong with the system? There are four major faults.

1. In a market system things go to those who are able and prepared to pay most for them. That explains most of what is wrong with the world. For instance there is enough food produced to feed everyone in the world but about one third of world grain is fed to animals in rich countries while at least 800 million are hungry all the time. Why? Simply because it is more profitable in the market to sell the grain to feedlot beef produces etc. In a market economy, need is irrelevant and ignored; the rich can take resources and goods because they can afford to pay more for them.

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

The Degrading Facts of a Fake Money Hole in the Head

September 1, 2018

The Degrading Facts of a Fake Money Hole in the Head

Squishy Fact Finding Mission

Today we begin with the facts. But not just the facts; the facts of the facts. We want to better understand just what it is that is provoking today’s ludicrous world. To clarify, we are not after the cold hard facts; those with no opinions, like the commutative property of addition. Rather, we are after the warm squishy facts; the type of facts that depend on what the meaning of ‘is’ is.

Fact-related pleas… [PT]

The facts, as far as we can tell, are that we are presently living in a land of extreme confusion. The genesis of this extreme confusion is today’s fake money system. And the destructive effects of this fake money system have spread out like a virus into nearly all aspects of daily life.

Plain and simple, central bank fiat money creation, multiplied by commercial banks through fractional-reserve banking, propagates financial and economic chaos. The experience of long periods of money supply expansion punctuated by abrupt, episodic contractions, has the effect of whipsawing the working stiff’s efforts to get ahead. This trifecta of offenses has debased the rewards of hard work, saving money, and paying one’s way.

Quite frankly, these facts are insulting. In particular, they are insulting for those running in the rat race for their family’s daily bread. These facts are also insulting for retirees, who worked for four decades only to have their life savings extracted by the depredations of the fake money system.

Early rat race conditioning [PT]

Short-Sighted Decisions

The facts are that on August 15, 1971, Tricky Dick Nixon stiffed the world unconditionally. He defaulted on the Bretton Woods system, and terminated the agreement that allowed member nations to redeem their paper dollars, acquired through trade, for gold. But that’s not the half of it…

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

Why A Dollar Collapse Is Inevitable

April 7, 2018

Why A Dollar Collapse Is Inevitable

“Naturally, the smooth termination of the gold-exchange standard, the restoration of the gold standard, and supplemental and interim measures that might be called for, in particular with a view to organizing international credit on this new basis, will have to be deliberately agreed upon between countries, in particular those on which there devolves special responsibility by virtue of their economic and financial capabilities.”
-General Charles de Gaulle, February 1965

We have been here before – twice. The first time was in the late 1920s, which led to the dollar’s devaluation in 1934. And the second was 1966-68, which led to the collapse of the Bretton Woods System. Even though gold is now officially excluded from the monetary system, it does not save the dollar from a third collapse and will still be its yardstick.

This article explains why another collapse is due for the dollar. It describes the errors that led to the two previous episodes, and the lessons from them relevant to understanding the position today. And just because gold is no longer officially money, it will not stop the collapse of the dollar, measured in gold, again.

General de Gaulle made himself very unpopular with the international monetary establishment by holding the press conference from which the opening quote was taken. Yet, his prophecy, that the gold exchange standard of Bretton Woods would end in tears unless its shortcomings were addressed by a return to a gold standard, turned out to be correct shortly after. What the establishment did not like was the bald implication that it was wrong, and that the correct thing to do was to reinstate the gold standard. Plus ça change, as he might say if he was still with us.

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

The environmental consequences of monetary dysfunction

March 29, 2018

The environmental consequences of monetary dysfunction

Dysfunction of the money-system underpins the problems of the world’s multiple converging crises. Discuss.

Might that assertion be taking an ideological position, encouraged by the echo chambers of like-minded twitterati? This piece is an attempt to tease out the nature of the underlying connection, and in doing so describe some of the attack surfaces that are available to those bent on change.

From an environmental perspective the most damaging money-system dysfunction is the misallocation of credit. Commercial banks have been given the responsibility of deciding who should receive loans – for capital investment, mortgages and asset purchases for example – and the privilege of charging interest on those loans. They are largely unconstrained in this process – while there are theoretical constraints, in practice their main concern is making sure they get their full whack of interest due over the term of the loan. They therefore generally prefer lending secured against an asset that they can repossess if necessary than against the uncertain (and difficult to assess – at least for today’s disconnected and centralised account managers) future productive capability of entrepreneurial projects. This is borne out by figures for productive investment which tend to show lending for productive use at about 15%.

The first consequence of this preference is that the banks find themselves in an unholy alliance with asset owners, with a joint interest in ever rising asset prices and a reluctance to moderate activity in asset markets lest their loans lose collateral value. They all know in their hearts that this will eventually mean painful busts. But they also know that when the time comes they will be bailed out by the government, that many of their more savvy and comfortably-connected friends will have disposed of their assets ahead of the peak, and that the greater part of the associated pain will be experienced by less well connected ‘outsiders’. There is no real sanction on the banks or their senior management from buying into this toxic cycle. So we should not be surprised when it repeats. They operate in any case with a sort of herd mentality, and taking a heterodox stance would fail the wine-bar peer-reviews. There is no way that this cycle can avoid the progressive concentration of wealth. (In passing we might note that this in turn puts a misplaced emphasis on philanthropy and volunteerism as means to address society’s ills.)

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

The degenerative impacts of our money system

March 27, 2018

The degenerative impacts of our money system

“The way that a national economy preys on its internal colonies is by the destruction of communities”

— Wendell Berry

The creation of money with interest has two main impacts on the operation of today’s economies.

Our monetary system creates the need for economic growth by design

One of the most important lessons of the economics dimension of Gaia Education’s online course in ‘Design for Sustainability’ is to understand that the current design of our money system has an inbuilt growth imperative. Let’s go over this again: Consider that over 90 per cent of the money in circulation has been created by banks as debt. Borrowers are obliged to repay both the capital and interest. The only place more money can come from in order to pay this interest is an expansion in the money supply overall — new loans issues and debts entered into in order for the system to keep functioning.

For economic growth to take place new investments have to drive further loans (debts) to be issued and this in turn stimulates more rapid economic growth. To keep the wheel spinning, consumption has to keep growing. We have created a material culture that is addicted to the rapid exploitation of non-renewable natural resources and levels of fossil fuel consumption that are driving us beyond humanity’s safe operating space, beyond planetary boundaries and towards a future of catastrophic climate change. The spiral of degeneration and decrease in whole systems health and viability will continue, if we do not respond promptly, globally collaboratively, and decisively as one humanity.

The creation of a money system that pays differential interest to lenders and borrowers, by design creates a system that needs exponential growth in order to keep going This is because, as the size of the economy grows year on year, so the volume of required interest repayments increases, even if the interest rate remains the same. This is called the compounding of interest, or compound interest. As a result of compound interest, our money necessarily follows an exponential growth pattern: at 3% compound interest, it doubles in 24 years; at 6%, it takes 12 years; at 12%, 6 years (Martenson 2011).

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

Currency Exchange Value Dynamics

March 6, 2018

CURRENCY EXCHANGE VALUE DYNAMICS

In a recent article I postulated that the dollar could lose all its purchasing power with a rapidity that will come as an unpleasant bombshell, even to those who already see inflation as society’s greatest problem in the future. The key to understanding why this may be so lies in human reactions to the monetary consequences of the next credit crisis. The undermining of the dollar as a currency affects all other fiat currencies, because it is the reserve currency and all financial markets use it as the pricing medium for commodities and for much of international trade.

A comprehensible analysis of currency exchange dynamics must therefore concentrate on the dollar, only bringing in the broader picture when appropriate. In this article’s context, currency exchange dynamics refers primarily to events that lead to a change in the dollar’s purchasing power.

The dollar has suffered monetary inflation ever since the Federal Reserve Board was created, both in terms of the expansion of base money and of bank credit. The effect in terms of loss of purchasing power has so far come in two shifts. The first was in 1934, when the dollar was devalued against gold by 40%, and the second following the collapse of the London gold pool in the late 1960s, since when the dollar has lost a further 97.4%.

The precedent has therefore been set for a continuing trend, that will eventually conclude with the destruction of the current monetary system. We know this because monetary regimes come and go, leaving gold and silver as the only solid forms of money throughout human history. Therefore, the end of the dollar, along with the whole fiat currency system, just like the end of empires, is one of the monetary certainties. But only a small minority of analysts are conscious this is so and appear to assume the current monetary state will continue indefinitely.

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

A Bedtime Story

December 31, 2017

A Bedtime Story

We are explaining our money system to our grandson, James, now 14 months old…

His mother tries to get him to go to bed at 9 p.m. But the little boy’s internal clock is still on Baltimore time; it tells him it is much too early to go to sleep.

Bill’s living room transformed into a makeshift nursery

Grandpa takes over, drawing out the monetary system like a general spreading a map on a field table. “Here is the enemy,” he says gravely. “They have us completely surrounded. We’re doomed.”

James grumbles. He squirms. He has a sunny, optimistic temperament. But we think our explanations are sinking in.

He seems to understand…

…that money is not wealth; it just measures and represents wealth, like the claim ticket on a car in a parking garage.

…that our post-1971 money system is based on fake money that represents no wealth and measures badly.

…that this new money enters the economy as credit… and that the credit industry (Wall Street) has privileged access to it. The working man still has to earn his money, selling his work, by the hour. But Wall Street—and elite borrowers connected to the Establishment—get it without breaking a sweat or watching the clock.

…that a disproportionate share of this new money is concentrated in and around the credit industry—pushing up asset prices, raising salaries and bonuses in the financial sector, and making the rich (those who own financial assets) much richer.

…that this flood of credit helped the middle class raise its living standards, even as earnings stagnated. But it also raised debt levels throughout the economy.

…and that it allowed the average American family to spend American money that Americans never earned and buy products Americans never made…

Instead, Walmart’s shelves were stocked with goods “Made in China.” The middle class lost income as factories, jobs, and earnings moved overseas. Debt stayed at home.

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

Expect Desperate and Insane Behavior From Government in 2018 – Part 2 (Bitcoin)

December 5, 2017

Expect Desperate and Insane Behavior From Government in 2018 – Part 2 (Bitcoin)

The financial crisis of 2008/09 was the most significant event to happen in my lifetime. That episode, coupled with the deeply unethical and corrupt response to it, led to a direct delegitimization of governments and institutions worldwide. It’s precisely this self-inflicted destruction of credibility which opened up the window for the birthing of a new monetary and financial system in the wake of Bitcoin’s emergence in early 2009.

Bitcoin is a system designed to be everything the status quo isn’t. Decentralized, transparent, permissionless, with a well-defined and restricted monetary supply curve. Given the backdrop upon which it emerged, it’s unsurprising that as more time passes, the more popular it becomes.

Humanity is desperate for a major reboot and an entirely different way of doing things. Bitcoin and other crypto assets offer exactly that opportunity in the realm of finance and money, thus capturing the imagination of millions of the most brilliant and passionate people around the world. Since the status quo stubbornly refused to reform and change the system after the financial crisis, humanity had no choice but to take charge and do it independently at the grassroots level.

One thing that’s become increasingly clear to me as I’ve added years and experiences to my life, is that governments, generally speaking, hate freedom. It’s why something as beneficial and benign as cannabis remains illegal throughout the world, and why people like Jeff Sessions still want to criminalize it even in states where the actual people living there voted to make it legal (see Part 1 of this series). While the fairytale we’re conditioned to believe tells us government exists to protect us and create an environment in which humans can thrive, the reality is quite clearly the opposite. The crooked response to the financial crisis demonstrated this in spades to anyone paying even the slightest amount of attention.

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

Debt-Based Money Corrodes Society

June 11, 2017

Debt-Based Money Corrodes Society

We open today’s reckoning with a hypothesis:

The current monetary system debauches the culture.

Long-suffering readers are familiar with our… diminished regard for paper money.

Paper money — or digital money nowadays — is the great bogeyman of the boom/bust cycle. It inflates bubbles of every model and make.

Meanwhile, paper money fuels big government… as oxygen fuels fire.

But paper money’s effects on the culture?

“It has a very important impact on our culture,” writes economist Jorg Guido Hulsmann.

Under “natural money” like gold Hulsmann explains, prices tend to fall over time.

So natural money encourages the virtues of saving… thrift… deferred gratification. It sets the mind to the future:

In a free economy with a natural monetary system, there is a strong incentive to save money… Investments in savings accounts or other relatively safe investments also play a certain role, but cash hoarding is paramount.

Before the 20th century, explains Hulsmann, debt was a cultural taboo… a big scarlet “D.”

Credit for households was virtually unknown, he says. And only the poorest households resorted to debt-financed consumption.

Ah, but then the 20th century came along with its wars… its social movements… and its cranks…

Gold is a famously uncooperative agent of change.

It resists social uplift, in the same way an old man resists a new pair of shoes.

It turns away from the sound of trumpets.

“You go over there,” gold says. “I’m staying here.”

“The trouble with gold is that it turns its back on world improvers, empire builders and do-gooders,” wrote Bill Bonner and our leader Addison Wiggin in Empire of Debt.

“The nice thing about gold is that it is so unresponsive,” they continued. “It neither laughs nor applauds.”

And that’s why it couldn’t last…

Only a debt-backed system of paper money could finance the great wars, the social improvements and the fevered dreams of the 20th century.

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

Blind Robbery! How the Fed, Banks and Government Steal Our Money

June 20, 2016

BLIND ROBBERY! HOW THE FED, BANKS AND GOVERNMENT STEAL OUR MONEY

Editor’s Note: Philipp’s terrific new book “Blind Robbery! How the Fed, Banks and Government Steal Our Money” is now available (Publisher: FinanzBuch Verlag (June 6, 2016)). You can find it at Amazon here. Below is the introduction. The book gives an excellent outline for beginners as to how our monetary system works and how it extracts wealth from the people.

Blind Robbery! How The Fed, Banks And Government Steal Our Money

“The biggest disaster in human history.”

That is how economist Roland Baader (1940–2012) describes the state’s control over the money supply. This is a bold statement — because almost no one dares to question the state’s monopoly on money creation these days.1

How about you? Have you ever questioned the monetary system we have? No? Do you think that monopolies are bad? Economists usually describe them as leading to waste, inefficiency, and higher prices. So why should it be any different when it comes to money? Is not money that keeps its purchasing power over time something of great value to everyone? Would you let a state monopoly decide what and how much you eat every day? Of course not. But that is exactly what is happening with money!

If our money is so secure in the hands of the state, then why does it keep losing its purchasing power? You may object that a monetary system controlled by the state is still better than leaving such an important function to the so-called free market. But are you sure? Why is the central bank (the Federal Reserve in the U.S., or the European Central Bank in the eurozone) allowed to create more and more new money? Why does the state allow the commercial bank around the corner from you to create money out of thin air in the form of credit (loans)?

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

Economic Collapse Logistics For The Government

May 14, 2016

Economic Collapse Logistics For The Government

When a national currency collapses, the government goes into survival mode and does what is necessary to insure its continued existence. The state power becomes all important and citizens become expendable. The state exists for it’s own fulfillment.

When the monetary system collapses along with the banks, the government will still need a way to pay government employees to insure they continue enforcing the governments will. If all government employees suddenly decided to stay home the few officials that remained at their desk would be ordering 300 million people around with no way to enforce their orders. To maintain control of the population it is necessary for government minions to continue doing their job of enforcement.

This means the government would need the means to continue fulfilling the needs of government employees to insure their compliance and obedience. As long as people get the things they need to survive day to day they will continue to do as ordered to continue that supply.

The government would need to insure that a payment system and banking system would remain functioning after a collapse. The banking system may not look like the current one but something would have to take it’s place. Once the currency has failed it would be necessary for the government to issue a new currency. It may not be accepted by the majority but it is only necessary for it to be accepted by the government minions. This would allow the government to remain in control.

If the government employees know they will still be able to get food, clothing, gas and other items they need when normal citizens cannot, they will be inclined to stay on the job and do the governments bidding in order to maintain their standard of living. This would be a necessary control mechanism in the event of a collapse.

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

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