Fascism by any other name… war is abrewing…

References to a new World Currency are cropping up everywhere and, like references to a NWO, are becoming insistent. A world currency implicitly means a world government. But like the Euro, it is easier to introduce a new currency than to harmonize the laws that regulated it – not only things like fiscality, interest rates or money supply but also things that have an indirect effect on the currency of a country such as commercial and/or criminal law. So, like the Euro, introducing a world currency will certainly create a degree of inflation which is the desired outcome; at least temporarily. But then we’d have to deal with the stability and the viability of the currency not to mention, as shown by Iceland and as we’re about to witness in Eastern and mainland Europe, entire countries.

So, as a short term solution to the deflationary recession and as shown by the introduction of the Euro, a world currency might achieve the desired effect of creating inflation via the devaluation of the currencies that join the union.

The question, in my opinion, is whether now that we are on the other side of peak credit devaluing the currency will in fact help governments decrease their debt load. As I outlined in Thoughts on Stiglitz, Western governments are like the proverbial dog chasing its tail. Politicians and governments use deficit spending to achieve their goals – deficit spending is made possible by goosing inflation through the expansion of credit and money supply – inflation erodes the value of the currency thus eroding the nominal value of the national debt. Rinse, repeat. That’s fine for as long as you are in an inflationary cycle as we’ve had for the past 100 years. However, inflation has a mathematical limit. This limit is not psychological or intangible; it is mathematical. The limit to inflation is reached when corporations and individuals spend more on debt service than they earn through their operations. At that point, debt can no longer be expanded and assets must be sold in order to service and/or extinguish current debts. The point at which the sale volume of assets is sufficient to lower the aggregate value of similar assets, you enter into deflation. This condition will persist till enough debt has been expunged from the balance sheet of commercial or individual entities so that the credit cycle can start again.

The trouble is of course, that once you’re on the other side of peak credit, the inevitable and necessary bout of deflation may be rather long… as in a decade long… or more…

So, if this world currency thing has to be done, it has to be brought about fairly quickly… we’re talking months here… and, of course, anything on that scale that is going to be cobbled together that quickly is bound to be ugly… ugly for the Joe6packs and Jane10nails of the world… if enough governments decide this is the thing to do, they will ride roughshod over their respective populations bypassing all regular channels and procedures in the name of  “urgency in order to avert a world wide catastrophe”.

Of course what they don’t tell you is that the world-wide catastrophe they are trying to avert might actually be good for you. Deflation is not an undesirable state of affairs. The degree of undesirability of deflation is directly proportional to the level of debt you are carrying. Western governments and a large number of Western individuals and corporate entities are saddled by crushing debt. For these entities, the advent of deflation is the equivalent of the Grim Reaper paying a visit. But for everyone else, deflation makes for quite a nice life style thank you very much.

Be that as it may! A world currency implies a world government. Call it what you will and New World Order is as good a name as any but getting from where we are today to a world currency in the time frame required to contrast deflation inevitably means a degree of fascism or totalitarianism or dictatorship at international level. This process, forced through as it has to be, might well bring about a conflict of international proportions. On the other hand, deflation too will bring about a conflict of international proportions as Western governments are unable to make good on their financial obligations to their people (social security, health, education, transport) and to creditor countries.

Either way. Unless some bright young bulb, somewhere on planet earth, comes up with a brilliant idea to restart inflation, in some asset, somewhere, without reconfiguring the global political architecture, a pretty big war is abrweing at some point, somewhere…. Timeline? …. I’d say by 2015 latest…

[To give you an idea of the scale involved in this boondoggle consider that the Bank of International Settlements estimates current global financial obligations at US$500Trillions… some estimates go as far as US$1400Trillions (1.4Quadrillions)… to sustain that pile of obligations, we have world GDP of around US$40Trillions and it is dropping fast… As you can see, global revenue streams are less than 10% of global obligations and declining fast… to put it in perspective, this is the equivalent of you having a salary of $100K per year and debts of $1M. When your salary decreases, you still have to pay the interest on the Million in debt so your only choice is to sell assets. But as your assets decline in value, you’ll have to sell more assets faster till you’ve reached a debt level that is manageable in light of your new circumstances. If the majority of your assets where bought with no money down i.e. if you have little equity in your assets, just a slight decline in asset values will put you underwater instantly. Once under water in a deflationary environment, you’re on the hook to the lender for a long time. When a large number of entities are underwater, deflation will persist on a generational basis.

Once the limit of inflation is reached, deflation is unavoidable for the simple reason that debts are always paid. Debts are paid either by the borrower who sells assets to meet his obligations or by the lender who writes off assets. Either way, debts are always paid and when on the other side of peak credit, deflation settles in for a good while.]


This next article is not a direct reference to a world currency but it is still about the search for “global solutions” aka NWO




And this is deflation at work



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2 Responses to “Fascism by any other name… war is abrewing…”

  1. G-8 leaders to receive books on Canova, gold coins « Guido’s temple of the absurd Says:

    […] I point out here and in other essays, introducing a new currency is one of the preferred methods of devaluation. It […]

  2. ECB attacks G20 plan to boost IMF drawing rights to pump cash into global economy « Guido’s temple of the absurd Says:

    […] outlined in previous comments like this one for example, a world currency is a dangerous thing. It is dangerous to individual liberty it is […]

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