Home » Posts tagged 'fiat currency'

Tag Archives: fiat currency

Today’s Contemplation: Collapse Cometh XXXII–Greenwashing, Fiat Currency, and Narrative Management: More On Climate Change and Elite Confabs

December 1, 2023

Today’s Contemplation: Collapse Cometh XXXII

November 6, 2021

Greenwashing, Fiat Currency, and Narrative Management: More On Climate Change and Elite Confabs

Today’s missive was motivated by a former student’s (and eventual colleague) question regarding a Facebook Post I made regarding COP-26.

Here’s what I posted:

COP-26. Be aware…

These elite confabs are not about climate, except to leverage the fear factor over it to meet the primary concern of the ruling class: control/expansion of the wealth-generating systems that provide their revenue streams. It’s additionally a marketing expo for ‘green’ energy products; a mechanism for helping to steer the mainstream narratives; and a justification for further enrichment of the elite via massive expansion of fake fiat currency.

It is not about saving the planet.

And here is the comment I am responding to:

The greenwashing of society is ridiculous. People continuing to buy useless things they don’t need that will not help the environment and now feeling good about draining their own pockets. The elite lining their pockets and masterminding it all. Curious, what do you mean by fake flat currency?

My response to Michelle:

Thanks for the question. It has motivated me to write a rather lengthy response that I have ‘published’ with my ongoing ‘series’ on Medium. You can find it below:

Basically, the currency we use is supposed to carry with it a number of ‘qualities’: use as a medium of exchange; a measure of ‘wealth’; and, a store of ‘value’. As with virtually everything the ruling class touches, our ‘fiat’ currency has become a tool of control and wealth extraction through its creation and distribution mechanisms (just another in a long line of examples that have lead me to believe that the primary motivation of our ruling class is the control/expansion of the wealth-generating systems that provide their revenue streams; everything they do seems to serve this purpose in one way or another).

Our ‘money’ has always been problematic in the ability to be manipulated, but became even more exploitive in nature once removed from its tie to physical commodities, such as gold and silver, that served to constrain somewhat the level of abuse — thanks Richard Nixon and fellow politicians of the time. Since then, money (with the aid of the monetary policies of our central banks) has been able to be created from thin air in staggering amounts. This exponential growth in currency destroys it as a store of ‘value’ — the quality that most significantly impacts the ‘average’ user.

The term inflation actually refers to this growth in currency but has been twisted (as language often is by the-powers-that-be, think about the notion of ‘clean/green’ energy and the greenwashing that has and is occurring) to represent something ‘beneficial’ when it is for the ‘average’ person actually quite detrimental (classic Orwellian doublespeak). When the term inflation is now used it usually refers to the increase in the price of consumer products, and those running the fiat currency system market this price increase as beneficial to the economy and pursue it believing they can control it and its consequences (the belief that one can control/predict a complex system is perhaps one of humanity’s greatest shortcomings).

In reality, this currency expansion is primarily beneficial to the creators and distributors of money, and those first in line to receive this newly ‘minted’ money — usually governments and wealthy elite who can more or less avoid the impact of price inflation by getting access early, thus the lack of resistance by governments and large businesses to reign it in; to say little about the banking system that creates the currency and then charges interest on its product made from nothing. Once this flood of currency filters down to the ‘average’ person, its ‘value’ has decreased significantly because of consumer price inflation (what we witness as a loss of purchasing power — which of course is drastically underreported by the government institutions that ‘measure’ it; primarily because of the way they manipulate the statistics with the actual price increases people experience multiple times higher than the value reported and broadly regurgitated by the uncritical establishment media).

The issue is far more complex and convoluted than I could summarise in a few paragraphs, and I am sharing my ever-changing view based on relatively limited reading and experience. There are a myriad of books written about the subject.

And I haven’t even touched on the ‘narrative managers’ (academics, private economists, government bureaucrats, journalists, etc.) that steer the public perceptions of this gargantuan scam for that is what our monetary/financial systems have become (and thus our entire economic system): they have morphed into the largest Ponzi scheme ever created. In fact, we have entered a time where without constant growth (thus exponential in nature) the entire scheme collapses — the classic definition of a Ponzi scheme, one in which we are all embroiled.

For a long time, the growth needed to ‘fuel’ our economic system was provided by our exploitation of the planet and its relatively preserved and seemingly limitless resources. That changed, however, as we began encountering diminishing returns on our investments. For the past 50 years or so this growth has been predicated upon the expansion of debt/credit (i.e., fiat currency creation) and has, unfortunately, entered a very dangerous territory where debt repayments are exceeding people’s ability to even pay for their interest, let alone principal. To say little about the fact that debt/credit is in essence stealing from the future in the form of claims on future resources (especially energy) that are not only increasingly difficult to procure but in many cases don’t or won’t exist in the future because we live on a finite planet.

Our ‘prosperity/wealth/growth’, therefore, is in a sense all ‘fake’. A Potemkin village if you will. It appears solid and real on the surface but behind the façade is nothing but the ‘promises’ of our feckless ‘leaders’ — and we should, by now, know how much integrity these class of people have and how much of the ‘truth’ they spew. Zero, except perhaps some kernel of it that can be manipulated and leveraged to their advantage.

Confetti Dollar End of Ponzi Scheme – Bill Holter

November 30, 2023

Confetti Dollar End of Ponzi Scheme – Bill Holter

Precious metals expert and financial writer Bill Holter says the recent underreported announcement by the UBS CEO Sergio Ermotti in Switzerland that his bank might need a “rescue” is yet another sign on the short road to the end of the global Ponzi scheme backed by the US dollar reserve currency. Holter points out, “You’ve got a sick bank (Credit Suisse) that is being bailed out by another bank (UBS) that may turn out to be sick. My question is who is going to bail out these central banks? You have got the Fed with a $9 trillion balance sheet. The last time, the Fed went from $900 billion to $9 trillion. Can the Fed now go from $9 trillion to $90 trillion? Who is going to bail out the Fed? Who is going to bail out the US Treasury? Who is going to bail out the Bank of England, the ECB or the Bank of Japan? These central banks have completely blown up their balance sheet and have no ability to save anything. My question is who is going to save them?”

Can’t they cut interest rates again like they did in 2009? Holter says, “If they cut interest rates from here, you would see the dollar absolutely crash. The only reason the dollar has not crashed is interest rates have basically gone from 0% to 5%. They have done that in a year and a half which is the fastest increase in interest rates in all of history.”

So, rate cuts will devalue the dollar. Can you pay trillions of dollars borrowed in Treasury Bond back in confetti dollars? Holter says, “Yes, you absolutely can pay back your debt in confetti. It’s been done many, many times before as currencies get lost…

…click on the above link to read the rest…

Today’s Contemplation: Collapse Cometh CLXI–A Self-Sufficient Community — Better Than Precious Metals or Fiat/Digital Currencies

November 6, 2023

Today’s Contemplation: Collapse Cometh CLXI

A Self-Sufficient Community — Better Than Precious Metals or Fiat/Digital Currencies

Today I’m sharing a conversation with others via the Comments section for a post on the website Zerohedge — as well as a preamble to the conversation to set the context for my part in the conversation. The article is focused upon the future of fiat currency but comes via the website Schiffgold that for all intents and purposes markets precious metals, warning of the perils of fiat currency.

For anyone who follows such sites, you will be cognizant of the ongoing debates regarding precious metals and fiat/electronic currencies. Essentially, the disagreements are founded upon differences of opinion regarding the best avenue for storing one’s ‘wealth’, particularly surplus wealth, to help avoid the inevitable collapse of current fiat currencies.

I have written a bit about such topics, particularly as they pertain to growth and collapse, in these posts:
Feeding the Growth Monster: Fiat Currency and Technology Blog Medium
Fiat Currency: Debasement and Infinite Growth Blog Medium
Fiat Currency, Infinite Growth, Finite Resources: A Recipe For Collapse Blog Medium
Greenwashing, Fiat Currency, Narrative Management: More On Climate Change and Elite Confabs Medium
Ruling Caste Responses To Societal Breakdown/Collapse Medium

When I first fell down the rabbit’s hole that is Peak Oil and began to explore all the issues related to this most fundamental of predicaments for our societal complexities, storing surplus wealth was a concern for me[1]. My wife and I were still both working full-time in relatively secure and well-paying careers (we’re both since retired), our house was paid off, and our two children were still in high school. We had always been relatively frugal in our consumption and were privileged enough to be in a situation where our income almost always exceeded our expenditures — early in our marriage, when we were both still students, was the exception. But, once we paid off our mortgage (which we did as expediently as possible after our student loans were paid off, that carried 14+% interest on them when we graduated) we were spending far less than we were earning.

As I dug deeper into the complexities of energy and its implications for our globe, I worried more and more about the future and how to best insulate my family from what may come. I was drawn towards precious metals given my educational background in archaeology and the presence of it as a means of exchange throughout recorded history. But as I delved deeper and deeper into the cyclical recurrence of societal ‘collapse’ it became clear that without local self-sufficiency/-resiliency having a hoard of precious metals (many of which have been found by archaeologists, and thus unused/abandoned) or an electronic wallet holding digital currency was probably moot and not a secure means of ‘preserving wealth’.

I have come to understand/believe that community resiliency and a focus on our fundamental needs may be the most appropriate response to the coming storm that is a loss of surplus energy and the consequential breakdown of energy-averaging systems (i.e., long-distance trade). This is why I now suggest that relocalising food production, potable water procurement, and regional shelter needs may be one’s best approach to help insulate one’s community and thus family.

I have spent the better part of a decade exploring and practising how to produce as much food as possible on our relatively small, suburban piece of land north of Toronto and initiated a food gardening guild in my community. These are by no means a ‘solution’ to our predicaments and I could currently feed our household of five adults for about two weeks on our garden harvest — if we’re lucky. I take solace, however, in the fact that each year the gardens produce a bit more and my ongoing experiments meet with success more often than failure (from which I try to learn from).

My fledgling attempts are far, far behind others I communicate with or read about online, but I am far, far ahead of almost my entire social circle. Apart from my blood siblings, none are pursuing any form of self-sufficiency but are hip-deep in ignorance, denial, and bargaining — carrying on with their ‘modern’, relatively affluent lifestyles.

My much younger sister (who has put her career as a gynaecological oncologist on hold as she is home with three young children) has been experimenting with food production and chicken raising the past couple of years. And my younger brother — who is months away from retiring as a fire station captain — has recently purchased a remote property (relative to the densely populated southern Ontario where he and I reside) in northern Ontario where I spent a week this summer helping him get some neglected raised beds cleaned up — there were surprisingly a plethora of well-established perennial food plants present.

Anyways, without further ado, here is the conversation that reflects some different perspectives…

Me: While precious metals or crypto may be a store of wealth as argued by many, I think I’d sooner ‘invest’ what little surplus I have in physical tools/supplies to help my family/community become more self-sufficient and resilient. As the saying goes, you can’t eat gold. Physical materials that will help in food production, procurement of potable water, and regional shelter needs may be a much better focus for folks than either fiat, electronic wallets, or metals at this point in the fourth turning…oh, and a means to protect what you have may be wise as well — from community cohesiveness to armaments of some kind.

Weirdly: Saving money is for excess value. You have it right. Tools, businesses, friends, community until you are limited, then save in bitcoin.

Me: I think I’d sooner save excess in silver/gold than bitcoin. Chances are high that grid-down scenarios are likely to increase in frequency and size as the center loses control making electronic-based ‘wealth’ about as useful as our politicians…but as price inflation is quickly eating away any excess for me, this may be a moot point.

JudgeSmails984: Grid down scenarios? Are you high? I live in Northern California where they shut the power off when it’s windy and ask you not to charge your EVs in the summer when everybody is using their AC, and still, the power never goes out for more than a few hours, anywhere.

your “increasing frequency of grid down occurrences” statement is idiotic and not based on real world reliability data. Outside of natural disasters and yahoos shooting up transformers here and there, the electrical grid is a highly distributed architecture of critical infrastructure, and there are almost no significant outages, anywhere that matters in the US.

Also-almost all critical facilities like hospitals and law enforcement all have backup diesel generators-our electrical system is very robust and resilient.

how so many people plan their investments around something that never happens, has never happened but might happen, is beyond me. It’s like taking a parka into the desert at noon because it might snow while you are there…it could happen, the next ice age could begin today.

JudgeSmails984: I have a 3 month instability limit. You shut the lights off and leave the humans without food to fend for themselves, I have one bullet for myself in that unlikely scenario.

Given that my current GF is diabetic, she’d probably check out a month after the CVS stores ran outta insulin.

I have freeze dried food, some gold, silver, cash to get through a short period of disorder, but I have no interest in living rough, like indefinitely, for years without security, food, comfort etc. through a new, post apocalyptic dark age.

I’ve had 50 good years, rather go out with a bang than suffer slowly and watch those I love perish.

Good luck with your long term ambitions though. Hope nobody you love gets a tooth abscess or bacterial infection…once cured at the clinic on the corner, now likely fatal.

Me: Living ‘rough’ is completely subjective in nature and our species has done so for many, many millennia in the past; and by all accounts (despite the misconceptions of many due to a focus upon what befell the ruling elite upon previous societal collapses) lived fulfilling lives.

Yes, some of our complex conveniences will be absent but a lot of what befalls a complex society during its ‘collapse’ will actually be an improvement for many; that’s why and how collapses happen, it’s an economic/political choice by people who abandon the systems imposed by the ruling caste of a society for what they perceive as an improved situation — read archaeologist Joseph Tainter’s The Collapse of Complex Societies.

If your local community is self-sufficient and can get through the initial chaos of faltering/declining complexities, there’s no reason a ‘dark age’ cannot be avoided.

HardKnoxKid: Totally agree…… My yard is full of estate sale tools….. lots of hoes, shovels, metal rods, rolls of electrical wire….. great buys at some of these sales……. one day, all those nice electronics folks have will not do them poop….. watched a 30 year old black woman in my country meat market….. had 3 kids under 10…. she walked in right before me…. got out of an old Corolla, but clean….. kids very well mannered. She was looking at the meat, and telling the kids maybe they would have beef for dinner…. and picked up a couple packages of stew beef…… As I shopped, I saw her being very wise. After I paid for my small cart, I found her adding up her few items….. I gave her a $50……. told her to buy steak or whatever she wanted….. she was very reserved and cried lightly…… I could tell that “she” had a rough upbringing….. and if I could help her just for an evening, then that is my pleasure…… And yet, we send trillions over seas for all the crooks………Don’t have any vehicle or mortgage or credit card payments….. don’t give to big charities…… this is my way of giving…… It feels good.

Surreality: That’s good in the community. I think do both. We and our communities also need to preserve our wealth as well as have resources to be resilient.

A handful of interesting articles to ponder:
The Energy Crisis is Here to Stay
Debt, Currency Debasement & War — The Timeless Pillars of Failure
The System Isn’t Designed to Help You
The Cycle of Evil
Today’s Energy Bottleneck May Bring Down Major Governments
Why Civilization Would Collapse Even Without Climate Change
Climate Disaster Is Here — and the State Will Never Save Us

Bonus:
50 Books About the Collapse of Civilization

If you’ve made it to the end of this contemplation and have got something out of my writing, please consider ordering the trilogy of my ‘fictional’ novel series, Olduvai (PDF files; only $9.99 Canadian), via my website or the link below — the ‘profits’ of which help me to keep my internet presence alive and first book available in print (and is available via various online retailers).

Attempting a new payment system as I am contemplating shutting down my site in the future (given the ever-increasing costs to keep it running).

If you are interested in purchasing any of the 3 books individually or the trilogy, please try the link below indicating which book(s) you are purchasing.

Costs (Canadian dollars):
Book 1: $2.99
Book 2: $3.89
Book 3: $3.89
Trilogy: $9.99

Feel free to throw in a ‘tip’ on top of the base cost if you wish; perhaps by paying in U.S. dollars instead of Canadian. Every few cents/dollars helps…

https://paypal.me/olduvaitrilogy?country.x=CA&locale.x=en_US

If you do not hear from me within 48 hours or you are having trouble with the system, please email me: olduvaitrilogy@gmail.com.

You can also find a variety of resources, particularly my summary notes for a handful of texts, especially Catton’s Overshoot and Tainter’s Collapse: see here.

The Future for Fiat

November 4, 2023

The Future for Fiat

The day of reckoning for unproductive credit is in sight.

With G7 national finances spiraling out of control, debt traps are being sprung on all of them, with the sole exception of Germany.

Malinvestments of the last fifty years are being exposed by the rise in interest rates, increases which are driven by a combination of declining faith in the value of major currencies and contracting bank credit. The rise in interest rates is becoming unstoppable.

Do not be surprised to see a US Government deficit exceeding $3 trillion this fiscal year, half of which will be interest payments. And in the run-up to a presidential election, there’s every sign of deficit spending increasing even further.

We now face America and her allies being dragged into another expensive conflict in the Middle East, likely to drive oil and natural gas prices higher; far higher if Iran becomes a target. With the Muslim world united against Western imperialism more than ever before, do not discount the closure of Hormuz, and even Suez, with unimaginable consequences for energy prices.

The era of interest rate suppression is over. G7 central banks are all deeply in negative equity, in other words technically bankrupt, a situation which can only be addressed by issuing yet more unproductive credit. These are the institutions tasked with ensuring the integrity of the entire system of bank credit.

This is not a good background for a dollar-based global credit system that is staring into the black hole of its own extinction.

The end for the dollar is nigh

There are a number of events coming together that suggest we are about to undergo a major upheaval in world economic, financial, and monetary affairs…

…click on the above link to read the rest…

The Specter of Hyperinflation Looms over the Economy

October 29, 2023

The Specter of Hyperinflation Looms over the Economy

The threat of hyperinflation has haunted fiat money economies throughout history. Although past empires crumbled under the weight of unrestrained money printing, modern bankers at the Federal Reserve assure us that today’s financial system is immune to such a fate. Austrian business cycle theory, however, reveals that current economic stimulation may be propelling us toward a crisis of catastrophic proportions: a crack-up boom that marks the dramatic end of this boom-and-bust cycle. When a central bank expands the money supply to reinflate bubbles, it destroys the currency’s purchasing power. This endgame, in which the monetary system crumbles beneath a weak economy, represents the ultimate failure of interventionism. Once the public expects prices to keep rising, hyperinflation becomes a self-fulfilling prophecy.

The Expanding Boom-and-Bust Cycle Ends in a Crack-Up Boom

To comprehend the precarious state of America’s monetary system, we must first review the boom-and-bust cycle as formulated by Ludwig von Mises and the Austrian school. The Austrians observed that the artificial suppression of interest rates by a central bank initiates an unsustainable economic boom by promoting malinvestment. Pushing rates below natural market levels sends a distorted signal to businesses that long-term capital investment is more profitable than the economy can actually support. In the euphoric boom phase, jobs multiply and GDP grows with investment. But the investments lack economic merit, so the house of cards eventually collapses.

With the liquidation of malinvestments, the bust phase emerges: unemployment soars, output contracts, and a recession begins. Since the investments were built on quicksand, they must unwind. Each failed business further curtails consumer spending, rippling the bust through the economy. But rather than letting liquidation and market corrections occur, policymakers add stimulus, setting up a larger bubble and more painful bust down the line.

…click on the above link to read the rest…

Today’s Contemplation: Collapse Cometh XI–Fiat Currency, Infinite Growth, Finite Resources: A Recipe For Collapse

October 10, 2023

Today’s Contemplation: Collapse Cometh XI

Fiat Currency, Infinite Growth, Finite Resources: A Recipe For Collapse

Yet another in an increasing collection of comments I have posted to the online media site The Tyee. This time it is a commentary on an article that reviews a book arguing in favour of the implementation of Universal Basic Income.

“No stone is left unturned in their thorough and convincing argument…”

I’m not so sure this is true. My personal focus for the past decade+ has been on the unsustainability of our complex society, particularly as it is impacted by our propensity to chase growth — especially population and economic, for these both have a significant connection to our ever-increasing drawdown of finite resources and ecological destruction of our planet. If we are not correcting this tendency to ‘grow’ in any way, shape, or form, then we are just creating more ways to kick-the-can-down-the-road of our wasteful and ruinous path; and place the significant burden of our misinformed ways on future generations.

One of the key arguments of archaeologist Joseph Tainter’s thesis regarding societal collapse as presented in his text The Collapse of Complex Societies is that a society becomes increasingly susceptible to collapse once it encounters diminishing returns on its investments in complexity. It is not a stretch at all to argue that we have been on the path of such decline for decades, particularly once we began creating a purely fiat currency that has allowed an explosion in debt/credit. If one looks at the ‘growth’ of our world since the late 1960s when central banks/governments shifted the world to a monetary system that creates money from thin air with no connection to physical commodities that could constrain our growth somewhat, it is almost all predicated on debt/credit expansion; a conundrum since debt repayment necessitates the growth imperative to continue (yes, basically a gargantuan Ponzi scheme).

Why is this connection to fiat currency important? Primarily because money is basically a claim on future resources and such resources are in terminal decline. So, the more money we ‘print’ (regardless of the reason for its printing), the more claims there are on future resources; resources that not only are disappearing quickly and getting more costly to access (because we always retrieve the easiest and cheapest to get to first), but whose retrieval results in monumental ecological destruction.

And on top of all this is the whole overshoot conundrum we have led ourselves into because of the above. Again, it is not difficult to argue that we have far surpassed the natural carrying capacity of our environment and only been able to ‘sustain’ our population by increasing our drawdown of resources through technology, energy-averaging systems (based on trade/geopolitical conquests), and this explosion of debt.

So, if we want to support our most vulnerable in society in a world that must pursue degrowth (the antithesis of our current pursuits and its expansion of debt/credit), then we need a much more complex discussion of how to do this. I see zero mentions of these complexities in the article. Just creating more money to distribute to a portion of our society is not a solution. In fact, the creation of more and more fiat is likely to have the negative consequence of our ruling class pursuing (more than they already do) increasing and significant price inflation, something that tends to hurt the majority of society more so than the elite at the top of the monetary/financial/economic system.

Unwinding the Financial System

October 6, 2023

Unwinding the Financial System

This article looks at the collateral side of financial transactions and some significant problems that are already emerging.

At a time when there is a veritable tsunami of dollar credit in foreign hands overhanging markets, it is obvious that continually falling bond prices will ensure bear markets in all financial asset values leading to dollar liquidation. This unwinding corrects an accumulation of foreign-owned dollars and dollar-denominated assets since the Second World War both in and outside the US financial system.

Furthermore, collapsing collateral values, which are increasingly required backing for changing values in over $400 trillion nominal in interest rate swaps are a new driver for the crisis, forcing bond liquidation, driving prices down and yields higher: we are in a doom-loop.

What action can the authorities take to ensure that counterparty risk from widespread failures won’t take out inadequately capitalised regulated exchanges?

It seems that they acted some time ago by giving central security depositories (The Depository Trust and Clearing Corporation, Euroclear, and Clearstream) the right to pool securities on their registers and lend them out as collateral. Your investments, which you think you may own can be absorbed into the failing financial system without your knowledge.

This seems particularly relevant, given the appointment of JPMorgan Chase as custodian of the large gold ETF, SPDR Trust (ticker GLD). In a test case in the New York courts concerning Lehman’s failure, JPMC was given legal protection should it seize its customer’s assets.

This important erosion of property rights is poorly understood. But as the financial distortions are unwound, leading to unintended consequences such as bank failures and ultimately the collapse of the dollar-based fiat currency regime, the implication is that holders of physical gold ETFs will be left owning an empty shell at a time when they might have expected some protection from the collapse of the value of credit.

…click on the above link to read the rest…

Today’s Contemplation: Collapse Cometh IV–Fiat Currency: Debasement and Infinite Growth

October 3, 2023

Today’s Contemplation: Collapse Cometh IV

Fiat Currency: Debasement and Infinite Growth

Sep 24, 2020

My comment on an article in The Tyee about our federal government’s latest throne speech by Prime Minister Justin Trudeau (https://thetyee.ca/Analysis/2020/09/24/Throne-Speech-Stew/).

_____

The idea that a sovereign nation can never run into trouble financially because it can create its own currency is certainly the dominant narrative amongst government and ‘mainstream’ economists/bankers. After all, who benefits the most from this storyline?

But is it in fact true?

Scratching below the surface of this ‘experiment’ suggests it is not.

If printing one’s own money were a panacea, then nations like Venezuela, Zimbabwe, or the German Weimar Republic (and countless other nations throughout history) would never have experienced the hyperinflation and/or currency debasement that they have. They would be the richest nations ever to have existed.

One could counter that this is because they had to use their debased currency to import goods. True, but if one is debauching one’s currency through exponential ‘printing’, then this may be true for any nation dependent upon imports, which almost every nation is in our globalised, industrial world.

The solution that nations have rested upon given this reality is that the central banks collude to all print at relatively the same rate, so currencies don’t fall/rise too drastically compared to their trading partners.

Fine, but what does endless money/credit creation due to the purchasing power of this fiat currency created from thin air?

Previous trials in this approach indicate that it totally debases/debauches the currency, significantly reducing the ‘wealth’ of the people holding/using it because of the inflation that it creates.
Here’s what John Maynard Keynes had to say about this: “By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens.”

And while it’s interesting to note ‘official inflation’ is subdued, the manipulation that goes into creating this gauge of price inflation makes the official number meaningless to people’s real-world experience (look up hedonic adjustments to get a sense of how manipulated these numbers are; and then compare your experience in price increases to official numbers — my family’s utilities, food, health, housing, transportation, insurance, education, etc. expenses far, far outpace ‘official’ inflation; by several times).

Then there’s the whole issue of continuing to chase the infinite growth chalice and pulling substantial growth forward through debt/money creation. We live on a finite planet despite hopium narratives to the contrary and all this push for growth does is get us further and further into overshoot by quickening our exploitation of finite resources.

There is no consideration whatsoever of the limits imposed upon us. There is only more growth to try and address our dilemmas that are created by us pursuing growth in the first place.

Despite the story that these policies are being used to solve our problems and help people, the reality is that they are very much probably doing the exact opposite.

In fact, a good argument could be made that the ‘all in’ aspect of this is further evidence that the planet is reaching the endgame of overshooting our natural carrying capacity and the fallout is quickening towards its obvious conclusion: collapse of the complex systems we have come to depend upon.

To paraphrase Canadian economist Jeff Rubin in his book Why Your World is About to Get a Whole Lot Smaller: things are going local and simpler, whether we want them to or not.

Prepare accordingly.

Today’s Contemplation: Collapse Cometh II; Feeding the Growth Monster: Fiat Currency and Technology

October 1, 2023

Today’s Contemplation: Collapse Cometh II

August 8, 2020

Monte Alban, Mexico (1988) Photo by author.

Feeding the Growth Monster: Fiat Currency and Technology

My response to an ongoing discussion regarding debt-/credit-based fiat currency and it’s impact on our pursuing the infinite growth chalice.

_____

Yes, credit-/debt-based fiat is certainly one of the most significant causes of our pursuing the infinite growth chalice. Not the only one, but one of the main ones, certainly. And having ‘sound’ money that was not created and distributed by private interests may help, but there are no guarantees especially if it were in the hands of the political class who, much as they do now, would very likely use such ‘power’ to ‘buy’ votes, ‘pay off’ supporters, and fund boondoggles.

I honestly don’t know if there is any ‘solution’ to this monetary conundrum. In the words of Men Without Hats in their song ‘Unsatisfaction’: I’m never satisfied when the answers could be real. I may not know what’s right but I know this can’t be it.

Regardless of what change occurs with our monetary system, I’ve reached the conclusion that if we don’t begin pursuing degrowth strategies as of, like yesterday, we are destined to experience the collapse that always accompanies overshoot.

We are well into the diminishing returns fiasco that archaeologist Joseph Tainter outlines in his monograph Collapse of Complex Societies, and sets the stage for sociopolitical (and economic) collapse; and it is likely no amount of ‘tinkering’ in our business-as-usual trajectory is going to prevent collapse/decline at this point.

All of our debates are probably quite academic and moot at this point. Making one’s local community/neighbourhood/family as self-sufficient/-reliant as possible may be the only way to ensure some of us make it through the other side of the inevitable transition since our society’s collapse will be unlike every other one in pre/history as virtually none of us have the skills/knowledge to survive without modern society’s energy-intensive technology and long-distance supply chains.

This is one of the main motivations for me to transition our yard towards food production rather than monoculture grass and begun helping family and neighbours do the same.

We have painted ourselves into a corner from which there is unlikely any escape route and we are beginning, quite vociferously and violently in some cases, to fight over a shrinking economic pie.

Arguments over how to ‘fix’ things abound (the ruling class has latched onto infinite money printing to ‘paper’ over things, much like the Romans did when they began clipping coins during their decline) but most of these are not ‘fixes’ to our unsustainable trajectory but part and parcel of our attempts to reduce the cognitive dissonance that arises from realising we cannot continue business as usual but the path we need to follow is ‘unthinkable’ for it would mean sacrificing almost everything we hold dear in ‘modern’ society.

Most of us want to believe that technology and human ingenuity will ‘save’ us (thus arguments from academics/educators about focusing more resources into education, not realising that there isn’t the time nor agreement over ‘solutions’ for education to play a role) but it is most likely that our efforts at greater and greater technological ‘solutions’ are just expediting our journey over the cliff since technology speeds the exploitation of finite resources, much as money printing does, and creates a host of negative consequences we conveniently ignore.

If people believe the world is in chaos now, just wait a few years…

_____

Please consider purchasing my novel trilogy to help support my continuing online presence. Click HERE.

The Hard Asset Inflation / Paper Asset Deflation Theory

September 21, 2023

The Hard Asset Inflation / Paper Asset Deflation Theory

All fiat currencies are no more than floating abstractions of value. Society has put its faith in fiat currency issued by governments. These government-issued currencies are not backed by a physical commodity, such as gold or silver, but rather by the promises from the government that issued it. A difficult question investors today face is determining which assets will appreciate most thus rising in value and which form to hold their wealth.The value of fiat money is derived from supply and demand and the stability of the government that issues it. Over the years many promises have been made that simply cannot or will not be honored. History and many real-life examples exist that indicate that promises are easier to make than keep.

It is very possible in the near future we may see a strong bifurcation of the financial system. The Hard Asset Inflation / Paper Asset Deflation Theory laid out below is based on the idea that as wealthy individuals begin to realize the fragility of the current financial system they will shift their investment preferences to items of substance.

This repositioning of wealth in assets could occur rather rapidly during a period of inflation. If such a revamping of how the wealthy invest takes place it could drastically add to any inflationary trends. In short, some investments would fall like a stone while others soar. Imagine real estate doubling in value while pensions are cut and stocks falter. This dovetails with my theory t he Fed should be ecstatic so many people have been willing to invest in intangible assets because it has helped to minimize inflation.

…click on the above link to read the rest…

The Coming Collapse of the Global Ponzi Scheme

September 19, 2023

The Coming Collapse of the Global Ponzi Scheme

It won’t be long before governments around the world, including the one in Washington, self-destruct.

Strong words, but anything less would be naïve.

As economist Herbert Stein once said, “If something cannot go on forever, it has a tendency to stop.” Case in point: fiat money political regimes. Interventionist economies of the West are in a fatal downward spiral, comparable to that of the Roman Empire in the second century, burdened with unsustainable debt and the antiprosperity policies of governments, especially the Green New Deal.

In the global Ponzi scheme, thin air and deceit substitute for sound money. As hedge-fund manager Mitch Feierstein wrote in Planet Ponzi, “You don’t solve a Ponzi scheme; you end it.” Charles Ponzi and Bernie Madoff

made some of their investors a whole lot poorer, but the world didn’t come crashing down as a result.

For that‌—‌for a Ponzi scheme that would threaten to bankrupt capitalism across the entire Western world‌—‌you need people much smarter than Ponzi or Madoff. You need time, you need energy, you need motivation. In a word, you need Wall Street.

But Wall Street alone doesn’t have the strength to deliver a truly cataclysmic outcome. If your ambition is to create havoc on the largest possible scale, you need access to a balance sheet running into the tens of trillions. You need power. You need prestige. You need a remarkable willingness to deceive. In a word, you need Washington.

As Gary North wrote in a brief review of Feierstein’s book, “The central banks have colluded with the national governments in order to fund huge increases of national debt, beyond what can ever be paid off. In other words, [Feierstein] has described government promises as part of a gigantic international Ponzi scheme.”

…click on the above link to read the rest…

Hedging the End of Fiat

August 28, 2023

Hedging the End of Fiat

It is slowly coming clear that the fiat dollar’s hegemony is drawing to a close. That’s what the BRICS summit in Johannesburg is all about — rats, if you like, deserting the dollar’s ship. With the dollar’s backing being no more than a precarious faith in it, it is bound to be sold down by foreign holders. Being only fiat, it could even become valueless, threatening to take down the other western alliance fiat currencies as well.

How do you protect your paper wealth from this outcome? Some swear by bitcoin and others by gold.

This article looks at what is likely to emerge as a replacement currency system, and concludes that from practical and legal aspects, bitcoin and the entire cryptocurrency industry will fail with fiat, while mankind will return to gold, as it has always done in the past when state control over currency fails

Introduction

It is gradually dawning on market participants that the era of fiat currencies is drawing to a close. Monetarists, who first warned us of the inflationary consequences of the expansion of money and credit were also the first to warn us that the slowdown in monetary expansion would lead to recession, and since then we have seen broad money statistics flatline, with bank lending beginning to contract. This is interpreted by macroeconomists as the end of inflation, and the return to lower interest rates to stave off recession.

Unfortunately, this black-and-white interpretation of either inflation or recession but never both has been challenged by bond yields around the world which are rising to new highs. And the charts tell us that they are likely to go considerably higher. Consequently, conviction that inflation of producer and consumer prices will prove to be a temporary phenomenon is infected with doubt.

…click on the above link to read the rest…

Why the dollar is finished

July 23, 2023

Why the dollar is finished

Last week in my Goldmoney Insight, I analysed the rationale for a new gold backed trade settlement currency on the agenda of the BRICS summit in Johannesburg on 22—24 August. This article is about the consequences for the dollar-based fiat currency regime.

There is strong evidence that planning for this new trade settlement currency has been in the works for some time and has been properly considered. That being so, we are witnessing the initial step away from fiat to gold backed currencies. Without the burden of expensive welfare commitments, all the attendees in Johannesburg can back or tie their currency values to gold with less difficulty than our welfare-dependent nations. And it is now in their commercial interests to do so.

We have been brainwashed with Keynesian misconceptions and the state theory of money for so long that our statist establishments and market participants fail to see the logic of sound money, and the threat it presents to our own currencies and economies. But there is a precedent for this foolishness from John Law, the proto-Keynesian who bankrupted France in 1720. I explain the similarities. That experience, and why it led to the destruction of Law’s livre currency illustrates our own dilemma and its likely outcome.

It’s not just a comparison between fiat currency and gold. America’s financial position is dire, more so than is generally realised. The euro is additionally threatened with extinction because of flaws in the euro system, and the UK is already in a deeper credit crisis than most commentators understand.

Introduction

On 7 July, news leaked out and was then confirmed by Russian state media that the BRICS meeting in Johannesburg would have a proposal on the agenda for a new gold-backed currency to be used exclusively for trade settlement and commodity pricing…

…click on the above link to read the rest…

The bell tolls for fiat

July 16, 2023

The bell tolls for fiat

The importance of Russia’s announcement that a new gold-backed trade currency is on the BRICS meeting agenda for August 22—24 in Johannesburg seems to have gone completely over everyone’s heads, with mainstream media not even reporting it.

This is a mistake. China and Russia know that if they are to succeed in removing the dollar from their sphere of influence, they have to come up with a better alternative. They also know they have to consolidate their trade partners into a formidable bloc, so plans are afoot to consolidate BRICS, the Shanghai Cooperation Organisation, and the Eurasian Economic Union along with those nations who wish to join in. It will be a super-group embracing most of Asia (including the Middle East), Africa, and Latin America.

The groundwork for the new currency has been laid by Sergei Glazyev and is considerably more advanced than generally realised.

This article explains why Russia and China are now prepared to fully back Glazyev’s expanded project. For Russia, it is also now imperative to destabilise the dollar as a deliberate escalation of the financial war against America and NATO. China’s priority is no longer to protect her export trade, but to ensure that her African and Latin American suppliers are not destabilised by higher dollar interest rates.

Introduction

“The BRICS’s introduction of a gold-backed currency, which is supported by 41 countries with large and influential economies, will weaken the dollar and the euro and will benefit countries such as Iran, while Iranians in possession of gold will experience a wealth increase,” Mousavi added [the head of the South Asia Department at Iran’s Foreign Ministry]. The Russian government confirmed a day earlier that Brazil, Russia, India, China, and South Africa would introduce a new trading currency backed by gold.

…click on the above link to read the rest…

Role Reversal: The Collapse of the Dollar-Enforced Empire

April 10, 2023

Role Reversal: The Collapse of the Dollar-Enforced Empire

The Soviet empire started to crumble around 1989. The time period between the forming of the North Atlantic Treaty Organization (NATO) in the late 1940s and the retreat of Russia from Eastern Europe with the eventual collapse of communism in Russia is known as the Cold War. There was a great power confrontation in Europe that did not result in war.

Essentially, US-led NATO stood its ground to prevent further Soviet expansion from the territory it occupied at the end of World War II and waited for the inevitable collapse. Now, perhaps not everyone saw the collapse of the Soviet empire as inevitable. But all one had to do was view the Soviet empire for oneself, up close and personal, which is what I did in the early 1970s as a young Air Force officer.

The State of the Communist Economy

The Russian economy at that time is painful to describe. Moscow and Leningrad (Saint Petersburg), the so-called jewels of the Soviet Union, were depressing. Everything was shoddily built. There were very few cars on the streets. There were no retail shops deserving of the name. Lines formed in the middle of the night awaiting the opening of the few bakeries. I saw this for myself from my hotel window on the Nevsky Prospekt in Leningrad. GUM, the “world’s largest department store” near Moscow’s Red Square, sold nothing that was equal to what could be found in any garage sale in the West.

Actually, that should not be a surprise since at one time all those garage-sale goods were marketable. I did not visit Berlin, but those who did say that crossing the Brandenburg Gate from West Berlin to East Berlin was shocking…

…click on the above link to read the rest…

Tag Archives: fiat currency

Content

Post categories

Economic Links

Energy/Resource Links

Environmental Links

Geopolitical Links

Liberty Links

News Links

Other Links

Survival Skills

Post Archives by Category

Today’s Contemplation: Collapse Cometh XXXII

Today’s Contemplation: Collapse Cometh CLXI

The Expanding Boom-and-Bust Cycle Ends in a Crack-Up Boom

Today’s Contemplation: Collapse Cometh XI

Today’s Contemplation: Collapse Cometh IV

Today’s Contemplation: Collapse Cometh II

Feeding the Growth Monster: Fiat Currency and Technology

Post navigation

Latest Posts