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Central banks are killing our currency to protect the already-rich

In our recent article It’s Time To Position For The Endgame, Chris Martenson explained how the US Federal Reserve and its sister central banks around the world have been engaged in the largest and most egregious wealth transfer in all of history — one that has been drastically exacerbated by the covid-19 pandemic.

The official response, tremendous monetary stimulus by the central banks paired with massive fiscal stimulus from national legislatures, has been pitched as “saving the system”.

Yet, in reality, it has merely served to accelerate the transfer of capital from the public into the pockets of the already-rich.

Anyone with eyes can see how the central banks have abandoned all pretense of monetary fiduciary responsibility and have simply cranked their printing presses up to “maximum”:

In concert with this surge of liquidity, national legislatures have added their own emergency measures. In the US alone, the CARES Act pushed nearly $3 trillion in fiscal stimulus into the system, and will highly likely soon be followed by another $1-3 trillion depending on which party’s bill gets passed.

Despite these staggering sums, the amount of money trickling into the average US household has been meager and is drying up.

Instead, these $trillions are mostly finding their way into the coffers and share prices of corporations. We have seen the fastest and most extreme V-shaped recovery in the history of the financial markets since the March swoon. The major indices are now back to record all-time-highs, despite the major carnage covid-19 has wreaked on the global economy.

So who benefits from that? Oh yeah, the people who own those companies. The already-rich.

Remember: 84% of all stocks are owned by the top 10% of households.

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

Central Planners At Work

August 25, 2020

Central Planners At Work

Consumption without Production

“Every man is a consumer, and ought to be a producer”, observed 19th century philosopher Ralph Waldo Emerson. “He is by constitution expensive, and needs to be rich.”

Ralph Waldo Emerson (May 25, 1803 – April 27, 1882), who inter alia opined on consumers and the need to not only consume, but also produce. The latter activity has recently become even more severely hampered than it already was. And yet, government is spending like a drunken sailor. [PT]

These days Emerson’s critical insight is being taken to its extreme. Consumers, many whom lost their jobs due to government lockdown orders, no longer produce. Yet they still consume. They are expensive. Not rich.

What’s more, this consumption is not funded through personal savings. Nor is it funded through government transfer payments. Rather, it is funded via the printing press.

Emerson, no doubt, was lacking in the unique perspective we are presently granted. He did not have the special opportunity to watch his government destroy the economy in short order. Perhaps if he had, he would have penned a neat axiom to distill the essence of what happened.

The world today looks nothing like Emerson’s day. The 19^th century was an age of honest money. Central bankers did not roam the land.

Printing money to buy bonds and stocks, and to sprinkle on people, would have been quickly dismissed. The experience of the Continental Congress during the American Revolution, and their over-issuance of paper “continentals”, had shown that resorting to the printing press was an act of suicide.

Promises, promises… “not worth a continental” became a saying after this early experience with paper money. [PT]

Currently, printing press money is considered enlightened central banking policy. Inflation targets, zero interest rate policy (ZIRP), direct bond purchases, twisting the yield curve, unlimited credit. This is merely a partial list of the trouble central bankers are up to.

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On Inflation (& How It’s Not What Happens Next)

August 23, 2020

On Inflation (& How It’s Not What Happens Next)

Everyone is convinced the dollar is going to inflate because more dollars are entering the system.

But are they really?

That is the question that sparked a succinct Twitter thread by Travis K (@ColoradoTravis) explaining why inflation is not what happens next (emphasis ours):

Let’s take a look at how dollars are born and how they die.

A dollar is ‘born’ when a loan is made against collateral on a bank’s balance sheet. Banks can issue multiples of dollars for every dollar of collateral they have.

It’s this multiplication effect that expands the amount of total dollars.

Generally, banks are limited in how much they can lend – let’s say it’s 10x their collateral. So for every dollar of collateral they have, they can lend 10 dollars.

By so lending, they ‘birth’ new dollars into the system.

As banks lend more, more dollars are created and the money supply increases. This multiplicative lending is the chief driver of total dollars in the system.

Banks lending a lot → more total dollars and inflation.

When do dollars die?

Dollars ‘die’ when debts are paid back. This reverses the multiplication effect of lending, leading to less total dollars in the system and a contraction of total dollars in circulation.

So what is the Fed ‘printer’ doing – creating dollars, right? Actually no, not really.

The printer only increases the collateral banks have to lend against. It does not directly ‘birth’ dollars, only *potential* dollars.

Banks are still the midwives, and the only ones who birth dollars into the system by lending.

The Fed can increase collateral by 1000x but unless the banks lend against that collateral, dollars will not enter circulation for you and I to interact with.

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

Why Martians Are Wrong About Gold

August 22, 2020

Why Martians Are Wrong About Gold

A martian — Warren Buffett once razzed — would marvel that earthlings dig gold from the ground… only to rebury it in vaults.

That is, the business is idiotic… pointless… and wasteful.

At first blush, our space man is justly puzzled. Why would humans shovel up hunks of metal — only to lock them away, idle?

Yet the martian — and the Nebraskan — jump past a fundamental truth of human nature.

As one insightful fellow (whose identity we cannot recall) has noted…

Men act with purpose. They do not squander their time or resources on pointless, juiceless pursuits.

Why would they expend vast resources to haul up gold… and risk their lives deep in dangerous mines to grab it… if they lacked compelling reasons?

We note that Mr. Buffett has recently purchased 21 million shares of Barrick Gold. Has this man forgotten his martian?

And so we arrive at this question: Why do men still toil extravagantly to wrest gold metal from stingy earth?

The Gold Standard of Money

Perhaps men continue digging up gold because thousands of years of history demonstrate that gold is worth digging up.

Gold is perhaps the ideal money, money par excellence — if you will forgive the expression, the gold standard of money.

Money must be rare. Rocks cannot be money — for example. Nor can dirt.

Yet there must be enough money to “go around.”

Gold is rare. But there is enough to go around. Hence it meets money’s strict conditions.

Gold is also durable. Gold mined thousands of years ago lives yet, fresh as a sprig, no wrinkles, no sags.

And unlike gems or diamonds, gold is divisible. It can be fashioned into bars or coins as needed.

Meantime, money must be a store of value. And gold maintains its value across centuries, across millenia.

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

Gaia, the Return of the Earth Goddess

August 20, 2020

Gaia, the Return of the Earth Goddess

Temple worship in Ur, from Sumerian times. Note in the lower panel people are bringing all sort of goods to the temple represented as the abstract structure on the right.

House founded by An, praised by Enlil, given an oracle by mother Nintud! A house, at its upper end a mountain, at its lower end a spring! A house, at its upper end threefold indeed. Whose well-founded storehouse is established as a household, whose terrace is supported by lahama deities; whose princely great wall, the shrine of Urim! (the Kesh temple hymn, ca. 2600 BCE)

Not long ago, I found myself involved in a debate on Gaian religion convened by Erik Assadourian. For me, it was a little strange. For the people of my generation, religion is supposed to be a relic of the past, opium of the people, a mishmash of superstitions, something for old women mumbling ejaculatory prayers, things like that. But, here, a group of people who weren’t religious in the traditional sense of the word, and who included at least two professional researchers in physics, were seriously discussing about how to best worship the Goddess of Earth, the mighty, the powerful, the divine, the (sometimes) benevolent Gaia, She who keeps the Earth alive.

It was not just unsettling, it was a deep rethinking of many things I had been thinking. I had been building models of how Gaia could function in terms of the physics and the biology we know. But here, no, it was not Gaia the holobiont, not Gaia the superorganism, not Gaia the homeostatic system. It was Gaia the Goddess.

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

What You Will Find When You Follow the Money

August 14, 2020

What You Will Find When You Follow the Money

It has been a rough go for California Governor Gavin Newsom. Late last week it was revealed that the state Department of Public Health had tickled the poodle on its COVID-19 record keeping. Somehow the bureaucrats in Sacramento undercounted new coronavirus cases by as many as 300,000.

Perhaps this oversight prompted Newsom to imbibe in a little meditation and reflection. At his Wednesday coronavirus news conference, shortly after quoting Voltaire, Newsom offered the following epiphany:

“Businesses can’t thrive in a world that’s failing.”

Often the simplest insights into reality are the most essential. We’ll give Newsom that. Yet, this is hardly an insight. Rather, it’s readily obvious…even to a numskull.

The world that’s failing, where businesses can’t thrive, is a direct consequence of government lockdown orders. And Newsom, more than any other public official, has his fingerprints all over the offense. If you recall, California, under Newsom’s command, was the first state to order lockdowns. It’s a shame he didn’t pause for meditation before committing the state to ruin.

The dynamics of what would follow Newsom’s lockdown orders were predictable. When government decrees froze the economy, bills were still due. Yet many people’s incomes, in the form of paychecks, disappeared.

For businesses, outstanding accounts payable were still due. Though accounts receivable quickly became overdue. In short, the flow of cash, as delivered by an open economy of give and take, broke down.

Certainly, Newsom thought he was doing the right thing. He had to keep everyone in the Golden State safe by locking them down. Many governors followed Newsom’s lead, having the same disastrous results.

But that was just the beginning. Soon the uplifters in Washington swung into action…

Printing Press Money

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ECB v Fed

June 27, 2020

ECB v Fed

QUESTION: Martin,

You mentioned in a recent blog post that the ECB, unlike the FED, can go bankrupt.

Can you explain further?

Not sure where you get the time, energy and resources to research and write all that you do buy it is truly amazing.

Regards,

ANSWER: The Federal Reserve does not need permission to create elastic money. It has the authority to expand or contract its balance sheet. However, it cannot simply print money out of thin air. The ECB is the only institution that can authorize the printing of euro banknotes. The Federal Reserve must back the banknotes by purchasing US government bonds. The Fed buys and sells US government bonds to influence the money supply whereas the ECB influences the supply of euros in the market by directly controlling the number of euros available to eligible member banks. This structure was created because of Germany’s obsession with its own hyperinflation of the 1920s.

Each member state retained its central bank and those central banks issue the banknotes — not the ECB. Therefore, the ECB works with the central banks in each EU state to formulate monetary policy to help maintain stable prices and strengthen the euro. The ECB was created by the national central banks of the EU member states transferring their monetary policy function to the ECB, which in effect operates on a supervisory role.

There are four decision-making bodies of the ECB that are mandated to undertake the objectives of the institution. These bodies include the Governing Council, Executive Board, the General Council, and the Supervisory Board.

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

The path to monetary collapse

May 23, 2020

The path to monetary collapse

Few mainstream commentators understand the seriousness of the economic and monetary situation. from a V-shaped rapid return to normality towards a more prolonged recovery phase.

The fact that a liquidity crisis developed in US money markets five months before the virus hit America has been forgotten. Only a rising gold price stands testament to a deeper crisis, comprised of contracting bank credit while central banks are trying to rescue the economy, fund government deficits and keep the market bubble inflated.

The next problem is a crisis in the banks, wholly unexpected by investors and depositors. At a time when lending risk is soaring off the charts, their financial condition is more fragile than before the Lehman crisis. Failures in European G-SIBs in the next month or two are almost impossible to avoid, leading to a full-blown monetary and credit crisis which promises to undermine asset values, government financing and fiat currencies themselves.

We can now discern the path leading to the destruction of fiat currencies and take reasonably guesses as to timing.

How central banks view the current situation.

The financial world is bemused: what is it to make of the economic effects of the coronavirus? The official answer, it seems, is on the lines of don’t panic. The earliest fears of millions of deaths have subsided and in the light of experience, a more rational approach of easing lockdown rules is now being implemented in a number of badly hit jurisdictions. Whether this evolving policy is right will be proved in due course. But the motivation is moving from saving lives to restricting the economic damage.

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

“Revolutions And Wars”: What According To Ray Dalio Comes After “Printing Money”

May 21, 2020

“Revolutions And Wars”: What According To Ray Dalio Comes After “Printing Money”

Having seemingly conquered the world of finance, Ray Dalio and Howard Marks have been competing who can be a more productive writer in recent weeks, and just two weeks after writing a lengthy thesis on the rise and fall of fiat currencies (which had no less than 43 mentions of gold for obvious reasons), Dalio is back to discussing one of his favorite topics, namely the rise and fall of empires, among which the US and China, over the last 500 years.

The third chapter of his “Changing World Order” series (preceded by Chapter 1 “The Big Picture in a Tiny Nutshell”, and Chapter 2, “The Big Cycle of Money, Credit, Debt, and Economic Activity” and its appendix “The Changing Value of Money“), takes a closer look at the rise and fall of the Dutch, British, and American empires and their reserve currencies and, in what will spark howls of outrage from both sides of the discussion, touches on the rise of the Chinese empire, which Dalio views as the next ascendent superpower “to bring us up to the present.”Ray Dalio✔@RayDalio

In this latest release of my series The Changing World Order, I will review the rises and declines of the Dutch, British, and American empires and their reserve currencies and will touch on the rise of the Chinese empire to bring us up to the present…

https://bit.ly/TCWOch3 The Big Cycles Over The Last 500 YearsNote: To make this an easier and shorter article to read, I tried to convey the most important points in simple language and bolded them, so you can get the gist of the whole thing in just a few…linkedin.com

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Permaculture and Money – Part 3

May 10, 2020

Permaculture and Money – Part 3

The Practice of Being Open

In part 1⁽¹⁾ of this series, we explored the relationship between money, psychology and violence, while in part 2⁽²⁾ we looked at some ways in which the stories we tell as a culture to do with money could be seen as encouraging destructive patterns of behaviour. Looby Macnamara would describe such destructive patterns as “spirals of erosion”⁽³⁾ and this part will explore in more detail some practical ideas for how we can transcend such erosive behaviours and create “spirals of abundance”⁽³⁾ instead.

Alternative Economic Theories

In parts 1⁽¹⁾ and 2 ⁽²⁾, I mentioned theories about the possibility of a moneyless society, or a society where money takes a different role, such as Sacred Economics⁽⁴⁾ author Charles Eisenstein and Satish Kumar, who among other roles was a practicing Jain monk as a child⁽⁵⁾. Both of these writers can be said to be influenced by EF Schumacher, whose book Small is Beautiful ⁽⁶⁾, published in 1973, critiqued the unsustainable model of resource and profit-driven industrialised capitalism, and recommends instead a philosophy of “enoughness” and appropriate use of technology⁽⁶⁾. Schumacher was himself influenced by Oriental thinking and in particular Buddhist ideas of moderation (see for example ref 7). In modern society, we can see an example of “enoughness” in practice in the Thai concept of “sufficiency economy” ⁽⁸⁾.

Peace Pilgrimage

The above examples show some ways in which alternative economic ideas have been influencing the world, and are somewhat encouraged in some mainstream societies. Yet if money is the very problem, it seems we need to explore more radical alternatives.

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

Time to learn about money

May 9, 2020

Time to learn about money

An unexpected destruction of fiat currency has been advanced by the monetary and fiscal response to the coronavirus. Financial markets have yet to discount the possibility of such an outcome, but in the coming months they are likely to awaken to this danger.

The question arises as to what will replace fiat currencies. In the past the answer has always been gold but today there are cryptocurrencies as well, whose enthusiasts are more aware than most of fiat money’s failings.

This article describes the basics about money, what it is and the role it plays in order to understand what will be required by the eventual replacement for fiat. It concludes that gold will return as the world’s medium of exchange, and secure cryptocurrencies, unable to provide the scalability and stability of value required of a medium of exchange will be priced in gold after the demise of fiat. But then the rationale for them will be gone, and with it their function as a store of value.

The destruction of fiat money

These are strange times. Circumstances are forcing governments to destroy their money by debasing it to pay for their obligations, real and imagined. If central bankers had a grasp of what money really is, they wouldn’t have got into a position where they are forced to use their seigniorage to destroy it. They are so ignorant about catallactics, the fundamentals behind economics, that they cannot see they are destroying the means of exchange they have imposed upon their citizens with far worse consequences than the abandonment of the evils they are trying to defray.[i]

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

Permaculture and Money – Part 2

May 1, 2020

Permaculture and Money – Part 2

Living and Giving Abundance

In part 1 of this article series we looked at the curious concept of money and how it can be seen to be contributing to the institutional violence of much of modern society. This part will look at some alternative ways of viewing and interacting with money, while the next part will begin to explore some practical ways in which we can all begin living more abundantly.

Stories For A New World

In part 1 we explored the idea of transcending current modes of thinking or behaving, in order to engage in new ones. As John Paul Lederach points out, if we really want to find new ways of living then we cannot simply create a vision of a different place – we also need to be aware of where we are right now ⁽¹⁾.

As Charles Eisenstein, author of Sacred Economics, put it,

“It is not merely our attitudes about money that must change…rather, we will create new kinds of money that
embody and reinforce changed attitudes” ⁽²⁾

A Change In The System…

Some alternative economic theories include ideas such as the creation of local currencies like the Bristol Pound ⁽³⁾, non-centralised currencies such as Bitcoin⁽⁴⁾ or bartering or exchange systems such as those put into practice using Local Exchange Trading Systems (LETS), for example in Australia with the Australian Community Exchange System ⁽⁵⁾. All of these can be seen to represent important options for those looking to put permaculture into practice by moving away from the monoculture of solely using money.

Or Of The System?

However, such alternatives can be seen to still be based on the premise of exchanging for a fixed rate which is decided abstractly and therefore they still hold within them the inherent disconnection from nature and subsequent destructive tendencies which using money carries with it ^{(2, 6)}.

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

The Recent History of GDP Growth, CO2 Emissions, and Climate Policy Paralysis, All in One Table-Runner

April 30, 2020

The Recent History of GDP Growth, CO2 Emissions, and Climate Policy Paralysis, All in One Table-Runner

Note: I began designing this table-runner just before the COVID-19 pandemic blew up in the United States. In the time I have been embroidering it, rates of death and misery have soared while wealth generation and carbon emissions (the two subjects of this work) have ended their decades-long rise and have plummeted. A deadly virus is a terrible means of slowing greenhouse warming. Whenever we come out the other side of the pandemic, we must pursue a rapid, humane, ecologically sound, and guaranteed-effective course of action to drive greenhouse emissions down to zero. Here’s how. — P.G.C.

The color of money is the color of calamity

This table-runner illustrates, from left to right, the increase in atmospheric carbon dioxide concentration from 1946 to the present. Each year is represented by two adjacent stripes: one in gradually deepening shades of green representing that year’s U.S. gross domestic product (adjusted for inflation) and one in increasingly intense shades of yellow-orange-red, representing CO₂ concentration.

There are nine shades for GDP and eleven for CO₂, with shades indicating roughly equal intervals of increase in each. The shades of both types of stripes darken as the years go by, in accordance with the increases that occurred in both GDP and CO₂. (For hi-res, zoomed-in images of the table-runner, see here.)

The shades of yellow-orange-red in the table-runner darken more and more rapidly as the years pass, illustrating how emissions of CO₂ accelerated as industrial output and fossil-fuel use rose more rapidly throughout the world. The concentration of CO₂rose at an annual rate of about 0.8 ppm from 1945 to 1980; 1.5 ppm from 1980 to 1995; and 2.1 ppm from 1995 to 2019. (The United States accounted for almost 20 percent of the rise in atmospheric CO₂ during those years.)

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

Fed’s Quantitative Easing Strategy Holds Long-Term Benefits for Crypto

April 2, 2020

Fed’s Quantitative Easing Strategy Holds Long-Term Benefits for Crypto

These are perilous times, and it hasn’t escaped anyone’s notice that the United States Federal Reserve is doing its part to alleviate the suffering — which began with the coronavirus pandemic and has spread to the global economy. It’s printing more money.

“There is an infinite amount of cash at the Federal Reserve,” Neel Kashkari, the president of the Federal Reserve Bank of Minneapolis, told Scott Pelley of CBS on March 22, adding: “We will do whatever we need to do to make sure there is enough cash in the financial system.”

The U.S. Federal Reserve itself reinforced that message on March 23, announcing that it would “continue to purchase Treasury securities and agency mortgage-backed securities in the amounts needed to support smooth market functioning.”

The death of capitalism?

Reactions to these affirmations of quantitative easing, or QE, have been swift from sectors of the crypto community: “With these words, the last vestige of #capitalism died in the US,” wrote Caitlin Long, who established the first crypto-native bank in the United States. “[The] Fed’s monetization U.S. debt is now unlimited.”

Mati Greenspan, the CEO and co-founder of Quantum Economics told Cointelegraph: “The Fed said it is willing to buy the entire market” if necessary to stabilize markets. Meanwhile, on the fiscal side, Congress’s $2 trillion stimulus package includes handouts like “helicopter money” — i.e., a $1,200 payment to every tax-paying adult who has an annual income below $75,000. “Inflation is pretty much a foregone conclusion at this point,” he stated elsewhere.

Garrick Hileman, head of research at Blockchain.com, told Cointelegraph: “The response by central banks to COVID-19 is truly unprecedented, with Fed and Bank of England officials using terms like ‘infinite,’ ‘unlimited’ and ‘radical.’” They’ve been using such extraordinary language in the hope they’ll prevent equity and credit markets from seizing up. “Only time will tell if they have gone too far.”

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

Spirits in the Material World

February 27, 2020

SPIRITS IN THE MATERIAL WORLD

There is no political solution
To our troubled evolution
Have no faith in constitution
There is no bloody revolution

The Police – Spirits in the Material World

As I was driving home from work last week, an almost forty-year-old song began emanating from my radio. I’ve always appreciated the music of The Police, but was never a huge fan. Spirits in the Material World was a relatively minor hit from their 1981 Ghost in the Machine multi-platinum album. I’ve probably heard it hundreds of times over the last four decades, but the lyrics struck me as particularly apropos at the end of a week where lunatic left-wing politicians staged a battle royale of ineptitude, invective, and idiotic solutions, in front of a perplexed public in a Vegas casino. Sting wrote the lyrics to this song in 1981 at the outset of the Reagan presidency. It is less than 3 minutes in length, but says much about humanity and the world we inhabit.

The interpretation of Sting’s (Gordon Sumner) lyrics depends upon your position in the generational kaleidoscope of history. As a boomer, Sting came of age during the 1960s and 70s. He was thirty years old in 1981 as the Second Turning (Awakening) was winding down and Reagan’s Morning in America was about to launch the Third Turning (Unraveling) in 1984.

His passionate idealism and search for spiritual solutions to the problems of the day had not been extinguished. The raging inflation of the 1970s had led to the worst recession since the Great Depression. The Cold War was at its coldest. Politicians had been discredited as criminal (Nixon) or incompetent (Carter). Sting and many others of his generation had lost faith in the political system. His viewpoint fit perfectly into the Strauss and Howe assessment of our last Awakening period (1964 – 1984).

Image result for awakening strauss and howe

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

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