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Response: Money and Payments: The US Dollar in the Age of Digital Transformation

Implications from the Federal Reserve’s Paper

Our first comment is that every monetary change from the Founding of America through present has been to move away from free markets, and to adulterate our currency. An analogy could be made to the Ship of Theseus, with each good plank replaced with an unsound board. A Zombie Ship of Theseus, decaying, but still afloat.

Let’s walk through the Fed’s paper. The very firstparagraphon page 1 says, “The Federal Reserve, as the nation’s central bank, works to maintain the public’s confidence by fostering monetary stability, financial stability…”

Monetary stabilityis defined as2% debasement per annum, an Orwellian twist. Andfinancial stabilityin the Fed’s regime is a myth.Interest rates shot the moon between 1947 and 1981, and since then have been falling—with volatility—into the black hole of zero.Meanwhile debt grows exponentially, and the marginal productivity of debt—how much GDP is added for each new dollar of debt—falls decade after decade. It is not only unstable, but unsustainable, heading towards an ultimate heat death of the economic universe.

“CBDC is defined as a digital liability of a central bank that is widely available to the general public.” In other words, it’s like holding a paper dollar bill except it’s digital. Which implies several things:

  • The Fed could muscle out the banks from the demand deposits business
  • The Fed could buy all the assets, which the banks now finance with demand deposits
  • Thus, money and payment services could become more socialized
  • The government could declare paper is no longer legal tender, thus forcing everyone into CBDC
  • The government could track who spends their CBDC, and what they buy
  • This spending data could be used in a social credit score system

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

The Criminalization of Preppers in Turkey: Will Our Country Be Next?

The Criminalization of Preppers in Turkey: Will Our Country Be Next?

History has shown us that collectivism detests the individual. The man who can exist independent of the system, who thinks for himself, who is not easily swayed, and who has values rooted in absolute truth which he refuses to give up – this is the enemy of collectivism.

But if we take a closer look at one aspect of the individual – his ability to exist independent of the system – is it not clear this is an end goal of prepping?

Is that not what a prepper strives for – the ability to exist independent of the world around them so that disaster does not affect them in the way that it affects others?

It is, and this is why collectivism criminalizes preppers over and over again.

We’ve seen it before and we’re seeing it right now, most notably in Turkey.

Turkey is cooked, and we all know it.

For those who keep a fairly accurate pulse of world events, you know that the fiat currency of Turkey – the lira – is collapsing.

As of this year the lira has lost approximately 40% of its value, and from all appearances, it shows no signs of stopping its downward spiral anytime soon.

Inflation is rapidly leading to hyperinflation within Turkey and the Turkish citizens have recognized this. People began attempting to step away from the lira and delving into cryptocurrency in an attempt to protect themselves.

And then the Turkish government made crypto illegal as a form of payment on April 30, 2021. This was done to prevent “irreparable damage.” What’s ironic about this is that the Turks said this was because cryptocurrencies were “neither subject to any regulation and supervision mechanisms nor a central regulatory authority.” [source]

That’s a fun train of logic from the people that are in the process of destroying their own currency.

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

Printing and Borrowing Always Ends Badly

Printing and Borrowing Always Ends Badly

As more countries copy the Federal Reserve’s monetary policy without the global demand of the US dollar, financing trade and fiscal deficits printing a weakening currency, nations become more dependent on the US dollar.

Neither domestic nor international citizens demand local currency, and governments continue to build large fiscal and trade imbalances believing the magic money tree will solve everything. However, as confidence in their domestic currency collapses, global US dollar-denominated debt soars because very few investors want local currency risk and central banks need to build US dollar reserves to cushion the monetary debasement blow.

Implementing aggressive so-called expansionary policies almost always backfires because the impact on growth of large spending plans is minimal, and the destruction of purchasing power of the currency rises.

Governments always want to believe that they will be able to disguise their imbalances with monetary debasement, but the effect is the opposite.

It is, therefore, no surprise that most global currencies have depreciated against the US dollar even in a year of high Federal reserve injections and commodity price rises. When a commodity exporting country sees its currency collapse despite rising exports, you know that -again- the myth of modern monetary theory has evaporated.

As the domestic economy and currency in countries like Brazil, Argentina or Turkey get worse, governments turn the blame to the International Monetary Fund.

The relationship of countries with the International Monetary Fund (IMF) always makes the headlines when governments have already spent the money they borrowed and do not want to return it. Interestingly, few seem to criticize the IMF when it rescues governments from their fiscal imbalances, and harsh comments only surface when the money must be paid back.

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

Venezuelans Turn to Gold Nuggets as the Local Currency Implodes

Venezuelans Turn to Gold Nuggets as the Local Currency Implodes

nug

The Venezuelan government recently lopped off six zeros from its hyperinflating currency, the bolivar. The highest denomination currency note of 1 million bolivars, worth less than $0.25, was replaced by a one-bolivar note. At the same time, a 100-bolivar note, worth about $25.00, was introduced as the new highest denomination of the bolivar. The currency conversion was designed to spare the government the embarrassment of having to issue a 100-million bolivar note to enable people to purchases everyday items without having to carry around bundles of notes, given that the price of a loaf of bread had risen to 7 million old bolivars. Of course, the arbitrary scaling down of the denomination of the currency will not slow inflation, because the new currency notes can be printed just as cheaply as the old. The bolivar has already lost 73 percent of its value in 2021 alone and the IMF estimates the annual inflation rate will reach 5,500 percent by the end of 2021.

It is not surprising, then. that all but the poorest Venezuelans have abandoned the bolivar as a medium of exchange, let alone a store of value or unit of account. US dollars are the exchange medium of choice in Caracas and other large cities, while the Colombian peso dominates along the Colombian border, particularly in the regional city of San Cristobal. The Brazilian real is current along the southern border with Brazil and the euro and cryptocurrencies have also found niche uses.

What is wonderfully surprising is the spontaneous emergence of a pure gold currency in a remote region of southeastern Venezuela around the towns of Tumeremo and El Callao. The region abounds with precious metal ores and has a long history of luring prospectors and miners seeking their fortunes…

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

Shortages & Hyperinflation Lead to Total Misery

SHORTAGES & HYPERINFLATION LEAD TO TOTAL MISERY

At the end of major economic cycles, shortages develop in all areas of the economy. And this is what the world is experiencing today on a global basis. There is a general lack of labour, whether it is restaurant staff, truck drivers or medical personnel.

There are also shortages of raw materials, lithium (electric car batteries), semi-conductors, food,  a great deal of consumer products, cardboard boxes, energy and etc, etc. The list is endless.

SHORTAGES EVERYWHERE

Everything is of course blamed on Covid but most of these shortages are due to structural problems. We have today a global system which cannot cope with the tiniest imbalances in the supply chain.

Just one small component missing could change history as the nursery rhyme below explains:

For want of a nail, the shoe was lost.
For want of a shoe, the horse was lost.
For want of a horse, the rider was lost.
For want of a rider, the battle was lost.
For want of a battle, the kingdom was lost.
And all for the want of a 
horseshoe nail
.

Cavalry battles are lost if there is a shortage of horseshoe nails.

The world is not just vulnerable to shortages of goods and services.

BOMBSHELLS

Bombshells could appear from anywhere. Let’s just list a few like:

  • Dollar collapse (and other currencies)
  • Stock market crash
  • Debt defaults, bond collapse (e.g. Evergrande)
  • Liquidity crisis  (if  money printing stops or has no effect)
  • Inflation leading to hyperinflation

There is a high likelihood that not just one of the above will happen in the next few years but all of them.

Because this is how empires and economic bubbles end.

The Roman Empire needed 500,000 troops to control its vast empire.

Map of the Roman Empire.

Emperor Septimius Severus (200 AD) advised his sons to “Enrich the troops with gold but no one else”.

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

The funny-money game

The funny-money game

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

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”

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

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?

HF

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

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

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 1st 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

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”

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.

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Inflation as a Tool of the Radical Left

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

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…

Olduvai IV: Courage
In progress...

Olduvai II: Exodus
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