But, but, but… it is a barbarous relic that has no intrinsic value…

http://www.bloomberg.com/news/2012-01-22/european-union-likely-to-agree-on-iranian-oil-ban.html

Excerpt emphasis added:

“The EU will freeze assets of the Iranian central bank in Europe as well as of eight other entities and ban the trade in gold, precious metals, diamonds and petrochemical products from Iran, the EU said. “

And since we are at it, it gives me the opportunity to bring something up that I chose not to comment on a few months ago. But since when does a rag tag rebel army ever think of setting up a central bank in the midst of their attempt to overthrow a sitting government (Libya)?…

We are in the final stretch folks. We’re talking months here…

 

Fine wine, caviar, lobster, butlers, chauffeurs and limos… but not a mention of the monetary system…

It’s that time of year again. No, not the Chinese New Year. It is the time of that ultimate plutocratic shindig self styled as the World Economic Forum.

http://www.breitbart.com/article.php?id=CNG.be33fda73987ff722e71ca3a18f1bfaf.351&show_article=1

Excerpts:

“Economic and political elites meeting this week at the Swiss resort of Davos will be asked to urgently find ways to reform a capitalist system that has been described as “outdated and crumbling.” [...] “Solving problems in the context of outdated and crumbling models will only dig us deeper into the hole. “We are in an era of profound change that urgently requires new ways of thinking instead of more business-as-usual,” the 73-year-old said, adding that “capitalism in its current form, has no place in the world around us said Klaus Schwab, host and founder of the annual World Economic Forum.”

End excerpts.

First off, Mr. Schwab must look up the definition of Capitalism again because we sure as heck haven’t had any semblance of anything remotely approximating capitalism in the West for decades. But other than that, in talking about morality and such, these clowns would do well to cut back on the foie gras and the caviar before they blurt out their idiotic platitudes.

At any rate! Once again, nobody anywhere mentions the monetary system. Our Debt Based Monetary System based on Floating Exchange Rates and boosted by Fractional Reserve Banking is the one and only thing that is afflicting us today. Our monetary system is designed to bleed wealth from the many so as to concentrate it in the hands of the few leaving in its wake only un-payable debt thus enslavement to the finance industry. And even assuming someone were smart enough not to get embroiled in this scam, reckless deficit spending carried out by the state ensures that whether you like it or not, you will be indentured to the financial industry at some point. This is not opinion. This is arithmetical truth. An arithmetical truth that is necessarily brought about by the diminishing marginal efficiency of debt. That same diminishing marginal efficiency that drove debt to increase orders of magnitude faster than GDP over the past thirty years; that same diminishing marginal efficiency that while driving debt higher at a faster clip than intrinsic wealth necessarily drove interest rates at their historic low; that same diminishing marginal efficiency that drove economic entities to gradually pledge all productive assets to the financial industry in return for unpayable debt.

The only variable is time but the conclusion is an arithmetical certainty.

And so the world turns.

David Rhodes and Daniel Stelter via John Mauldin

John Mauldin today shares a private letter from the Boston Consulting Group with his readers.

David Rhodes and Daniel Stelter analyze the current financial/economic situation and the solutions being devised by Western governments and go on to tut-tut what is being done, proposed and implemented.

http://www.johnmauldin.com/frontlinethoughts/collateral-damage

Let me just jump straight to the conclusion where we have this pearl:

“The euro zone needs a comprehensive plan to deliver a combination of higher inflation (to reduce real debt and address diverging unit-labor costs), deleveraging in the periphery, and higher consumption in the northern countries. “

And there you have it. Do more of the same and ensure that those that are not yet mired in stifling debt do get into it so that in time we should all be equally in the shit pool.

Throughout the entire analysis, not a mention of the monetary system. Not one. Not even by implication. But what Messers Rhodes and Stelter do say should be done is…. wait for it… deliver more inflation.

You can read the letter if you wish. You may have to subscribe to Mauldin’s letter which is free and, anyway, often contains interesting information and data. But the long and the short of this “analysis” is that governments should simply do more of what has already been done till now. The only difference is that now they should do it in spades… you know… go nuclear.

There are two ambiguous paragraphs in this letter. The first one states that: “Take, for example, the history of hyperinflation in Germany in the early 1920s. The German Reichsbank funded the government with newly printed money for several years without causing inflation. But once the public lost trust in money, people started to spend it fast. This led to higher demand and an inflationary spiral.Today the velocity of money in the U.S. is at an all-time low of 5.7. If the number of times a dollar circulates per year to make purchases returned to the long-term average of 17.7, price levels in the U.S. would rise by 294 percent over that periodóunless the Federal Reserve simultaneously reduced its balance sheet by $1.8 trillion. Some inflation is probably attractive to those seeking to reduce debt levels.“

The second paragraph states that: “A recent article in The Economist compared the implied adjustments for the periphery of Europe with developments during the 1930s leading to the Great Depression. Back then, adherence to the constraints of the gold standard prevented an adjustment, and Germany had to achieve an internal devaluation to regain competitiveness. Although very few expect a repetition of the tragedy of the 1930s, it is obvious that a strategy of saving our way out of the crisis will not only fail but will run the risk of triggering significant tensions in Europe.“

I am unclear as to whether Rhodes and Stelter are suggesting that German interwar inflation was a clever strategy that yielded positive results. It certainly reads that way to this reader. If indeed this should be the case, Rhodes and Stelter are way off the mark… in my humble opinion… the opinion of an uninitiated geezer typing away at an $800 computer in some obscure corner of the world.

I am no Boston Consulting Group contributor but I have two things to mention at this point. First, German productivity in the interwar period did not pick up till Hitler and his central banker Hijalmar Schacht devised a system that is in all respects similar to a Debt Free Fiat Monetary system. Essentially, they cut the central bank out of the monetary deal and created a currency (MEFOs) that was issued directly by the state. Essentially, Hitler made use of Fiat Money but the crucial difference was that the productivity and profit generated by this new money were no longer leaked out of society to third party banks banks. Rather, productivity and interest were recycled within German society thereby increasing wages, savings, disposable income and investment. This strategy in turn allowed Germany to rearm despite the embargoes that had been imposed by the sponsors of the Treaty of Versailles. This is not a judgment of what was done with those profits. It is simply a statement of fact. Which, by the way,  in turn may also explain Germany’s current reluctance to allow the ECB to create debt based inflation to monetize the sovereign debt of individual EU member states.

The second thing is this:

-

Once again, I am no contributor to the Boston Consulting Group. But I look at this graph and then I look at the situation we are in and I have to wonder how more of the same is going to help us come out of this shit hole?

-

Now! Where did I put that application to become a financial consultant? Maybe I should just skip that and apply directly for a Nobel Prize.

When government becomes the largest actor in the economy

That is “when” not “if”.

Some thoughtful soul put online a diagram to illustrate the interconnectedness of government and big business.

http://www.techdirt.com/articles/20111221/17561617164/mapping-out-revolving-door-between-govt-big-business-venn-diagrams.shtml

If this diagram shocks you, you have not been paying attention.

By and large, people are happy to present a cynical stance vis-a-vis government. In truth, few can identify the processes by which government can become a threat to the economic health of individuals or to their personal freedoms. Generally speaking, government is perceived as an entity that owes us something because it is a well worn common place to hold that government over taxes us. Furthermore, there is a fundamental misunderstanding (is it deliberate?) as to what government money is, to the extent that individuals consecrate considerable time and effort to extracting as much financial support from government as possible.

Although I don’t know how accurate the information portrayed in the diagram may be and although I am not going to check, in a context of Debt Based Fiat Money and electoral politics the symbiotic relationship of government and big business is a mathematical certainty. It cannot be otherwise.

DBFM is predicated on inflation brought about by the constant expansion of credit markets. Inflation conforms to the law of diminishing marginal efficiency. All this means is that DBFM is inherently limited mathematically. If DBFM were allowed to follow its natural life cycle, the economy would undergo regular resets during which the sponsors of the system would naturally succumb to bankruptcy. And it is this particular feature of DBFM that is most dear to its sponsors because as DBFM guarantees recurring devastating crisis, the sponsors of the system are guaranteed several opportunities to trample due process in the name of fighting an ostensible emergency that risks fire and brimstone upon society.

But the diminishing marginal efficiency of inflation also guarantees that each recurring crisis is orders of magnitude larger than the previous one. Thus, as the sponsors of the system progressively inject greater degrees of debt into same, in order to avoid saturation and catastrophic failure not only does government have to curry favor with industry and business but the monetary system must perforce assimilate other currencies and other markets too. Naturally this is a self reinforcing dynamic.

Eventually, as you do that over decades, government must perforce become the largest and most influential actor in the economy not only at home but in other countries too.

Which brings us to the moral dilemma this situation represents.

*

 

And now for a bit of a tangential diversion… (The EU behemoth)

My wife and I had not traveled together in quite a long time. What with the wedding and the birth of our daughter, we just did not have the time or the possibility to travel together. But now that we are both well adjusted to our new routine, a friend invited us to spend a few days in his apartment in Cyprus.

I am an Italian citizen, but since we’ve only been married less than two years, Rula (my wife) does not yet have an EU passport. In preparing for our trip last September, Rula had to apply for  a visa from the local Cypriot consulate. Just for context, Rula has traveled extensively to Europe and the USA prior to our marriage.

Rula’s request for a visa resulted in a request on the part of the Cypriot Consulate for either of two things: a hotel reservation or an invitation from the Mukhtar of Limassol. Despite informing them that we would be staying with a friend and could produce an invitation letter from him if they liked, the Cypriot Consulate insisted we required either a hotel reservation or an invitation from the Mukhtar.

Since we were not about to request nor, if we did, were we going to get an invitation from the Mukhtar in due time, we reluctantly opted to make a spurious online reservation at a hotel.  Sure enough, cancelling said reservation created some complications necessitating amongst other things a call to an Expedia call center somewhere in South East Asia. But I digress.

Imagine my surprise when after complying with what can only be described as inane regulation Rula obtained a visa for… 8 days… one week…. A one week visa for the wife of an EU citizen to travel to a presumed EU member country.

So I thought I’d lodge a formal complaint with the local EU ambassador with the expectation that nothing would be done. But at least, I would make my feelings known officially.

Sure enough, my first email to ambassador Wronecka resulted in absolutely nothing.

I followed up the first email with a second email that was designed to convey mild irritation at being ignored by a civil servant and an institution that is supposed to look after our well being which, of course, should encompass passing judgment on just similar, albeit, silly situations.

Second email; no response.

I am not in the best of moods these days and if you read this blog you will know our respective governments in the West have become rather fascist in nature and it is beyond a reasonable doubt that the citizens of Europe and the USA are being robbed blind.  So, I decided to write a third email to my EU ambassador.

Now, keep in mind that I was not at all sure the email address I was using to contact the EU embassy was valid. It is a generic email that I thought was valid because I received it from a reliable source but, since my missives had not been acknowledged, maybe, just maybe, the email was not valid…

So this was my third email:

Dear Ms. Wronecka,

Further to my two previous emails over the past two months that have yet to be acknowledged, you will be glad to hear I have come to terms with both the prejudicial treatment the Cypriot consulate reserved for my wife and your condescending attitude towards my complaint of same.

I imagine that high officials in the neo EU Politburo such as yourself cannot entertain even the mere thought of having to deal with a citizen complaint. After all, in the new EU post Lisbon Treaty, citizens are but chattel meant to keep your masters in Bruxelles and you in the style of life you feel entitled to.

It is nonetheless difficult for me to fathom why you should so obstinately refuse to even acknowledge my inquiry. Even assuming you felt my complaint was groundless, standard procedure dictates that you should reply with any of the three form letters you have ready  for just such pesky citizens; if for no other reason than to appease the plebs so they should not notice how the EU Politiburo is hell bent on plundering them.

But sarcasm aside, I am genuinely interested in understanding what happened. Why not even bother with one of the standard replies full of pablum that administrations like yours are so well known for or, at the very least, just a stern “your complaint is groundless because that’s how we do business”? Has your contempt for the common citizen reached such a level that you cannot even bother to delegate this simple, albeit annoying, task to anyone in your bloated overpaid staff to carry out? Do you really feel so far superior to the mundane circumstances of the people that pay your salary that you feel no compunction to arrogate the privilege to dismiss us as inconvenient interruptions to your primary task of pleasing your masters in Bruxelles?

Let me assure you the sarcasm in my words is intentional. Allow me to illustrate what grieves me so that you could either pursue your professional prerogative and seek to rectify your supercilious stance or, as I suspect is more likely, so that you may have some entertaining reading material with which to endear yourself to your masters whom whilst sipping coffee at the office will undoubtedly delight at your condescending detachment from the every day reality of the citizenry. I will reduce my argument to the most basic terms so as not to confuse you with the details.

I have a grievance. I turn to you for judgment as you are my representative to other members of the EU. You may not feel my grievance has any grounds for being but even so, simple decency not to mention basic diplomatic practice is to acknowledge my grievance and either follow up or dismiss it.

You failed on all counts. In fact, in doing so, you prove that despite the EU’s self proclaimed status as holders of the moral high ground you are nothing but a kleptocracy.

Depending on how well you grasp the English language you may surmise I am not a happy camper.

Since I am at it, allow me to also get something else off my chest. I did not vote for a united Europe as it has been proposed. I certainly did not agree to the Lisbon treaty. As far as I am concerned, the entire EU idea as it has been conceived is nothing but a construct with blatant fascist tendencies. And you, my dearest Ms. Wronecka, are glaring confirmation of my fears.

Although my original email to you complaining about what I consider discriminatory behavior bordering on harassment on the part of the administration of a presumed EU member state may be considered an unfounded nuisance, the least one should expect is the standard answer replete with platitudes that the EU administration is so adept at dishing out. But the fact that you should not even have bothered to delegate the task of sending a trite reply to one of the minions in your ridiculously overstaffed administration indicates the degree of your contempt for citizens.

Fortunately, not all is lost for the common citizen. As I sit back to contemplate the all too predictable train wreck that is the EU (I run a blog on such matters too should you be interested), I rejoice in the knowledge that a large number of redundant civil servants such as yourself, whom have lost any sense of what their function should embody, will soon be forced off the gravy-train that is the EU. The reason you are about to be pushed off the gravy train is simple. That is, although the organization and power structure of the EU have borrowed liberally from the strategies of previous totalitarian governments such as the Reich and Nomenklatura,  because you have been more greedy, more arrogant and, let’s face it, more ignorant and short sighted, all you have been able to create is an organization that after only ten years is the laughing stock of the world. And now that the easy money has run out, you and your masters find yourselves at the mercy of Germany and the USA’s Fed. My how the self proclaimed great have fallen!

So enjoy your last few months in office at the EU and start working towards preserving some type of official position in your country of origin. Because from where I am standing, you can only keep plundering the EU for a very short period of time after which you shall either be out on your ass or you will have to beg the politicians of your country to find you another office from which you can keep suckling at the public teat.

You will not be missed Ms. Wronecka. As the German television video below shows, the people are on to you and your acolytes.

http://www.youtube.com/watch?v=xnMtc_QJ4-E

The above email duly sent, nothing happened. That is, nothing happened for about one week.

Suddenly, a few days ago, “Caterina” a very pleasant lady with a mild Spanish accent called and identified herself as the EU Ambassador’s secretary. Caterina apologized profusely for what happened and went on to take the blame for the mishap saying she has just taken over the position and my emails “slipped through the cracks”.

Hmmm!… Considering there was one month between emails, I find that hard to believe but… anything is possible I suppose. Stranger things have happened. Nonetheless, for a secretary at that level to let things of this nature “slip” through the cracks twice is unlikely. Would you not say?

Better still. As I am typing this blog post today, I received another telephone call. This time it was Dana from the Cypriot consulate. Once again, Dana apologized profusely for what happened and even though she stated that they abided to current legislation, she was nonetheless sorry for the inconvenience this may have caused us. Dana also offered that I could visit the consulate and meet with the ambassador. However, Dana did not say what meeting the ambassador would achieve. I mean, since my complaint is groundless because this is current legislation, then what good would meeting the ambassador do? Maybe they think that I would be placated if I felt awed and rewarded to be in the presence of a high official? I guess we’ll never know.

The moral of the story

The moral of the story is this. I am a nobody. Legislation is legislation and at a personal level, there is very little I can do to influence it.

Very likely and as is standard procedure in Europe and particularly southern European countries, I suspect the ambassador planned to ignore my inquiry expecting I would go away. Southern Europeans are particularly inured to faceless unaccountable administrations.

If indeed that was her strategy, having ignored my first email, the ambassador should also have let slide the third one and nobody would have been any the wiser.

But true to the psychological profile of self absorbed public officials the ambassador could not let the third email slide because my tirade likely hit a raw nerve. The same nerve that animates public officials to believe they are essential, indispensible cogs of an administration rather than servants for the advancement of society.

And that is exactly the problem. High officials in the West today no longer seek office with the aim to serve the collective good. Rather, the aim of politicians and civil servants is to make a career that inherently means their primary directive is to advance the cause of the administration they serve. The Byzantine structure of the EU, the undemocratic system of appointments, the pettiness and the arrogance of its officials is glaring proof of the inanity, the wastefulness, the arrogance (for the second time) and, yes, the aberrant nature of this behemoth that today is overtly trampling on all those democratic principles it demands other countries (usually developing countries) to uphold. How can we justify a European president and concomitant body of apparatchiks that despite having executive power have not been elected by the people? How can we justify parachuting Prime Ministers into position without due process? How can the suppression of a popular referendum be justified? How can comments by EU officials like the one reported in the Telegraph article of February 2011 be justified when it states: “As Irish voters headed for the polling booths on Friday, the European Commission bluntly declared that the terms of the EU-IMF bailout “must be applied” whatever the will of Ireland’s people or regardless of any change of government.

The list goes on and on spanning the past decade and the aberration is gradually worsening.

Does it sound like I have a beef?

————————————————————————————-

Some hours after I wrote the above, I have received an email purportedly from Madame the Ambassador herself. Obviously, this should have been the response to my very first email. It is indeed a letter full of platitudes stating that that’s the way business is done and I have no grounds for my complaint. Had this letter been sent to me two months ago, I would have taken my lumps and faded into the night… Except that it wasn’t, so I got ticked off, and I didn’t…

Dear Mr Romero,

 I would like to thank you for your email and all details concerning visa application of your wife. I have immediately send your letter to the Ambassador of the Republic of Cyprus in Amman.

As you know Cyprus is not yet in the Schengen area, although many EU regulations apply to this country.

 Applications shall be examined and decided on by Consuls who are directly involved in visa process and each of them is obliged to take into consideration all information and documents provided by the applicant. During the examination process of an application additional documents and information might be requested. It is crucial in order to give the most adequate decision.

Multiple entry visa (Schengen or national, like in this case) should be issued to facilitate travel for frequent or regular travellers. The period of validity of a visa and the length of the authorised stay is always based on the examination conducted by competent authorities (Consuls).

 Decision that was taken by the Cypriot Consul does not contradict with the right of free movement enjoyed by third-country nationals who are family members of UE citizens. I understand that you and your wife are disappointed about the outcome of the case, therefore I expect that you will receive a separate respond from the Embassy of the Republic of Cyprus in Amman clarifying your concern.

 Sincerely Yours,

 Joanna Wronecka

Ambassador / Head of Delegation

Delegation of the European Union

So, it appears that the Consul has ultimate say in how many days a visa should grant to a “third country” national.  Thus, although the decision taken in the instance of my wife’s application does not contradict her right of free movement, granting 8 days was clearly a daft decision in light of Rula’s travel profile prior to our marriage and the fact that she is now married to an EU citizen.

The inevitability of the diminishing marginal utility of debt… part II

The social promises that activists, unions and individuals thought had been won over the past 40 years are being blown out of the water for the expedient political stratagems they were.

http://www.telegraph.co.uk/finance/financialcrisis/8932687/Portugal-raids-pension-funds-to-meet-deficit-targets.html

A debt based fiat monetary system (DBFM) can only work provided credit markets can be expanded. There can only be three conditions for the expansion of credit:

a) GDP must expand at a greater degree than credit

b) Interest rates must progressively be lowered

c) A combination of the above two conditions

Clearly as already pointed out here, condition ‘a’ has not been met since 1980. However, this  can be obviated by assimilating other markets and currencies in your monetary system. Hence the abrogation of Bretton Woods and the institution of the Floating Exchange Rate mechanism which led to the Euro and globalization. So regardless of how you achieve condition ‘a’, this is a strategy that is limited mathematically.

Condition ‘b’ is obviously limited mathematically too. The alternative of course would be to allow some inane program as was proposed last year to put a ‘use by’ date on money or charge savers.

When credit expansion has outpaced GDP expansion by orders of magnitude for four decades and when interest rates are knocking on the 0 limit, there is an absolute point at which it is mathematically impossible to expand credit. Greece is there now.

Simply put, our current monetary system is a pyramid scheme. This means that all our economic constructs are predicated on a constantly growing number of contributors to the system. For as long as more input outpaces more output, the system can be expanded and looks solvent. When more is taken out than what is put in, the system detonates.

Social security is a noble idea. Social security as it has been devised, implemented and managed is a pyramid scheme. Social security is a preordained consequence of DBFM. Social security as it has been implemented is predicated on the perpetual expansion of credit markets. If for whatever reason credit markets can no longer be expanded or, Ye Gods!, should contract, social security cannot be maintained… and will be reneged upon…

This message is important. It is particularly important that this message be understood by those entities that are used by government to enforce government policy. For example. It is very important for the police in the USA and for the new international Gendarmerie that has recently been set up in Europe to understand that they are in the same boat as everyone else.

Our current monetary system has a well defined mathematical limit. When this limit is approached, all social promises and public expenditure will gradually be rolled back. Historically speaking the way out of this mathematical dead lock is a war.

How the war starts and where it starts matter not in the least. Historically speaking, the insolvency of prominent sovereigns has always resulted in war. The EU and its individual members are insolvent. China is insolvent. The USofA is insolvent.

The inevitability of the diminishing marginal utility of debt

… and the reason we are hurtling towards a conflagration of global proportions.

I am a nobody and I can be dismissed as misinformed and sensationalist. So, I’ll let Kyle Bass do the talking.

Via Zero Hedge:

http://www.zerohedge.com/news/kyle-bass-explains-new-world-order

“Reiterating how critical the psychology of today’s situation, Bass goes on to debunk the optimism of globalization (at least for the Western world), destroy the myth of a 50% greek writedown solution, Japanese xenophobia and savings losses, structural versus cyclical implications for US equity deterioration, US deficits and housing‘s bottom, global debt saturation and how this tearing at the social fabric of the world will lead to – war.“

You can watch the video of the interview on ZH at the link above.

Tic-toc… tic-toc… to global war

I have been trying to find an analogy that would adequately illustrate what it feels like to watch the development of an event all the while being helpless to do anything about it.

Try as I may, the only image that comes to mind is that of the 1937 newscaster that witnessed the destruction of the Hindenburg. The only difference being that I could see this happening before hand.

Today, via Zerohedge, we have bonafide, third party, main stream confirmation of what was already clear was happening a decade ago:

“Multi Trillion Bank Bailout Leads To Multi Billion Bank Profits Bloomberg Finds

What remains to be seen is whether this “finding” by a serous main stream publication can open the eyes of the general public.

In the meantime, the UK Foreign Office is warning of the imminent break down of social order in Europe. Read the article. There is rare use of conditionals in any of the phrases. The Foreign Office is warning that there will be strife. Admittedly, the FO only warns of strife in Europe. But the reality on the ground says that the USA will not be immune either.

http://www.telegraph.co.uk/news/politics/8917077/Prepare-for-riots-in-euro-collapse-Foreign-Office-warns.html

This is, by the way, the reason behind the gradual militarization of formerly civic institutions such as the police. Any of you remember the repatriation of a combat brigade from the Iraq war theater for deployment at home in the USA… in urban settings… in civilian urban settings? If not, do a search on the internet or on this blog.

As the arithmetic underpinning out monetary system assures us, unless our current monetary system can assimilate a new currency and a new market of import, then this is it. The debt load now weighing on the global monetary system is such that no degree of productivity that may be found henceforth can service the debt.

http://www.zerohedge.com/news/707568901000000-how-and-why-banks-increased-total-outstanding-derivatives-record-107-trillion-6

“[...] the Bank of International Settlements reported a number that quietly slipped through the cracks of the broader media. Which is paradoxical because it is the biggest ever reported in the financial world: the number in question is $707,568,901,000,000 and represents the latest total amount of all notional Over The Counter (read unregulated) outstanding derivatives reported by the world’s financial institutions to the BIS for its semi-annual OTC derivatives report titled “OTC derivatives market activity in the first half of 2011.”“

And here is the problem.

When the benefits of open society are gradually and glaringly eroded; when civil liberties are progressively withdrawn; when social promises are rolled back; when public infrastructure and services can no longer be maintained;  when the time between what a politician promises in order to be elected and when they renege on their promises is counted in weeks; … and when a restricted gang of politicians and bankers are caught defrauding the public and making away with Billions over and over again throughout Western countries….

… why would anyone think that revolution would be unthinkable?

But today, no Western politician can in good conscience do what needs to be done. Not if doing what needs to be done means recognizing that despite our self proclaimed standing on the moral high ground, they (our politicians) are no better than your garden variety Mugabe.

So, when you are financially and socially cornered and you are not willing to admit that you have fucked up, what do you do?

Traditionally, you precipitate a war.

2013/2015 and we’ll have us our global war. Stand by for the next foreign evil to be foisted upon the unemployed, homless, hungry masses.

 

 

 

 

 

Sound money by Bill Frezza (Forbes op-ed)

In the recent past, Forbes has surprisingly and boldly gone where few, if any, main stream publications have gone or will go.

Granted, it is only an op-ed as, in the recent past, it was always third party contributions making similar points rather than Forbes actually picking up standing behind the ideas and arguments being expounded. But it is a start nonetheless.

http://www.forbes.com/sites/billfrezza/2011/11/09/will-western-civilization-rediscover-the-moral-foundations-of-sound-money/

Here are some excerpts that define the entirety of what money is and how it should do what it is supposed to do. Nonetheless, the entire article is truly worth a good read.

“[...] Frédéric Bastiat [...] stat[ed]ing that money was a promise to “Pay the bearer a service equivalent to what he has rendered to society.” Note the past tense — a product or service must be rendered before money can properly come into existence.“

“Money’s unredeemed promise might be tokenized by a paper note, a gold coin, or a few bits in a computer database. ” [...] The moral claim real money places on society on behalf of its bearer comes not from the intrinsic value of the token but from the fact that the bearer had previously produced some good or service deemed valuable by others. This is what gives money its moral legitimacy.“

Note in the above excerpts that money might be tokenized. It might be, because it does not have to be. Money is only a vehicle that facilitates exchange. Money is not intrinsically valuable. It matters not what is used as “money”. In prison, cigarettes can be money. On Yap island, stones was money. On some Pacific islands, shells was money.

“Money” only facilitates the exchange of one’s skills and ideas in order to obviate the problem known as “coincidence of wants”. That is, in a barter society if you are a shoe maker and need bread, you must find a baker that might want shoes before you can get your bread. Money allows you to sell your shoes to absolutely anyone that might want shoes an then you can use that money to buy your bread or anything else you might need. The “wealth” in this example is represented by the bread and the shoes. It is the product of human ingenuity and skills that is intrinsically valuable. Not the vehicle that allows the exchange of same.

In the article, Mr. Frezza also remarks on what effectively is happening on the ground in Greece where barter networks have sprung up in order to obviate to the loss of revenue of individuals and their lack of savings. The necessity of returning to barter also suddenly enlightens individuals to what money is or at least, what it should be.

Money cannot exist prior to anything having been produced.

And this is the great con that a restricted elite of bankers with the assistance of politicians has successfully pulled over society in the past century. It began in the USA on 23rd December 1913 and was subsequently pulled in Europe in 1971 and then, through globalization, gradually on all countries that became members of the “Floating Exchange Rate” mechanism i.e. all currencies that accepted the US$ as reserve currency.

Today, the nature of money has been subverted to the point where even most finance professionals staunchly believe that Debt Based Fiat Money is capital.

It is not. And the reason should by now be clear as to why.

But why is it important for us to understand the nature of money? All of the above may seem like an interesting intellectual exercise. But are there any real life implications in pushing for one type of money or the other?

Those individuals that are now having to resort to barter not by choice but by necessity, have understood the real life implications of DBFM:

““The most exciting thing you feel when you start [bartering] is this sense of contribution,” a participant reports in a recent news story. “You have much more than your bank account says. You have your mind and your hands.”“

- Permit me to issue and control the money of a nation, and I care not who makes its laws. (Mayer Amschel Rothschild)

As an illustration of the nature and consequences of DBFM imagine the following. You are playing Monopoly with your friends and you are the bank. Imagine too that you just happen to be the owner of the factory that produces the Monopoly game boxes. In this construct, your source of Monopoly money is inexhaustible. Thus, in this construct too, you cannot lose. No matter how inept you may be, eventually you’ll buy everyone and everything out.

And that is the reality of DBFM. The monetary authority and the entities that gravitate around it, simply by dint of having access to the newly created currency and credit first, enjoy a disproportional purchasing power advantage over anyone that comes later in the chain of users of the currency. And as far as the consumer is concerned, well, by the time the new money reaches his/her pocket, it is at the lowest purchasing power. So that, in due course, the monetary authority and its acolytes will end up owning everything … and everyone…

This is the importance of understanding what money is and how it works.  And although this dynamic has been evolving over the past century it is only today that most people are beginning to feel the real life squeeze the monetary authority has over people. This is not a metaphor. This is a real, honest to God, no holds barred coup by a restricted elite over the rest of society. This is the reason why, financial institutions are at the top of the ownership tree of most productive assets in the West and why today all our leaders are capable of doing is shoveling money hand over fist towards the banks.

Other than open and violent rebellion, is there anything that we can do to reverse our descent towards physical and material enslavement?

So far, I have been advocating collapsing the velocity of the currency so as to impact the capital ratios of the major banks by closing lines of credit, moving savings to smaller local banks or co-ops, increasing savings, accumulating gold bullion and, eventually, just plain leave your country so as to starve the beast of your fiscal contribution.

But after reading Mr. Frezza’s Op-ed, I am reminded that barter too is a very effective way to collapse the velocity of the currency. So, yeah, barter… barter anything and everything… barter away all you are allowed to… because, for example, in countries like Italy, there are restrictions as to what assets can change ownership without making use of money. I found this out twenty years ago when I wanted to gift my vehicle to my sister.

There is more to money than just the bits of paper in your pocket. Money and the monetary system are upstream of all and any human dynamics bar none. The choice of monetary system is a choice between liberty and enslavement and indoctrination.

A bon entendeur, salut!

- If the American people (or any other people) ever allow the banks to control the issuance of their currency, first by inflation, and then by deflation, the banks and corporations that will grow up around them will deprive the people of all property, until their children wake up homeless on the continent their fathers conquered. The issuing power of money should be taken from banks and restored to Congress and the people to whom it belongs. I sincerely believe that the banking institutions having the issuing power of money are more dangerous to liberty than standing armies.
(Thomas Jefferson)

A bit of this and a bit of that but it all ties in…

Everything in this post has already been dealt with in these pages in the past, but a BBC article this week once again drove home the absurdity of our economic and political systems and the hypocrisy and expediency permeating the establishment from politicians to scientists and experts.

Then, a string of other press articles and blog posts seemed to all coalesce to corroborate my feelings.

First the BBC article:

http://www.bbc.co.uk/news/science-environment-15593602

“Scientists are set to begin a six-week mission to explore the Indian Ocean’s underwater mountains. Aboard the UK research vessel the RRS James Cook, the team will study animals thousands of metres below the surface. This year a report in the journal Marine Policy found that deep sea trawling is one of the most damaging forms of fishing. The expedition will help scientists to better understand the threats to this environment.“

As I already mentioned some time ago, the fact that trawling is the most damaging form of fishing is not new. As a child growing up in a fishermen village outside of Rome in the mid 70s, it was already clear then that trawling was devastating to fish stocks. Already then the size of the catch and the quality of specimen being caught were dwindling rapidly so that deep sea trawlers were coming closer to shore in order to catch  a similar quantity of fish albeit of younger specimens. However, in trawling so close to shore that we cold swim out to them, not only did trawlers damage the nets of small land based fishermen but they also devastated the spawning grounds of fish. I know this because already then my father was implicated in spearheading a fight against the trawlers. A fight that was as much legal with the help of the WWF as it was physical. I remember the times my father had to drive to town during the wee hours of the morning in order to pick up the local Carabinieri to take them physically out to the trawler on our speed boat so they could witness the law being broken first hand. Despite carrying a law “enforcement” officer on board, being shot at was not unusual. Of course Italy being what it is, already then this was essentially a political fight as trawlers by and large belonged to politicians. It was already clear back then that this would be a lost cause. But the fight went on nonetheless. Initially with the assistance of the WWF we were able to get permission to create artificial underwater barriers in order to hinder the progress of trawlers plying their trade under the consented distance from shore. This was actually a rather successful campaign because by sinking scrapped vehicles in an haphazard manner, trawlers never knew where they would lose their nets next. But then the state intervened and judged it opportune to forbid the wild cat sinking of wrecks by consenting to the creation of concrete underwater pyramids in pre established areas. At that point, the fight was lost because now trawlers knew exactly where the obstacles were and could bypass them. This was an intentional ploy on the part of political interests that own the trawlers and it worked. Eventually of the few remaining land based fishermen, one joined the ranks of commercial fishing whislte the rest just gave up their trade. By 1985 the whole thing was well over.

So, that a BBC “science” reporter should now highlight that scientists have just realized that trawling is damaging is ridiculous to say the least.

In fact, our territorial seas and oceans today are so devastated that European trawlers venture well south along the coasts of Africa to pillage and ransack whatever fish stocks may be left there. The advantage of trawling in Africa of course is that to the exception of South Africa and Morocco, no other country has any legislation in place capable of preventing us from ransacking and pillaging their food source.

The devastation of the environment and the waste and subsequent depletion of food sources is of course a direct function of inflation. Although I’ve already ranted on this point a number of times in the past, here is a blog post from one of my favorite posters Karl Denninger with a different perspective on the same dynamic.

http://market-ticker.org/akcs-www?post=197356

Excerpt emphasis added:

“Notice anything?  The so-called “acceleration” in that labor participation rate was driven by…… debt being accumulated in excess of growth in GDP.

Or, to put it more simply, by fake demand.

Demand that didn’t really exist. Pressure on the production of goods and services and their prices that would not have existed were they to have been purchased with economic surplus.  That pressure grew more and more strident in the form of more and more debt per unit of GDP added, and after the 2000 recession we did on steroids, reaching an insane level of about $6 of new debt in the economy for every dollar of GDP increase in 2007 – right before it all went to hell.

That’s where your “asset and price inflation” came from too.“

Go have a read at the entire article because it does put a number of things in perspective with regards to sustainability and our monetary policy.

And where are we today? We are at a point where politicians and the experts that have their ear want even more debt piled high on top of previous debt because apparently insolvency can be cured by taking out more loans and food staples can be replenished by instigating even more waste and fish stocks can be regenerated by stoking even more frivolous demand.

Such is the prevalent logic permeating the establishment.