I couldn’t say I fell off the chair because I was lying down on the floor where I sleep next to Leah, but the effect was the same.

So, I fell off my chair early this morning when I picked-up my i-Pad and read Ambrose Evans-Pritchard’s piece on an ostensible IMF plan to… wait for it… alter the monetary system.

Do you guys realize how big of a deal this is!!!! Ambrose Evans-Pritchard gives space to a plan that involves altering if not abandoning this monetary system??? Coming from one of the quintessential establishment figures, that is HUGE.

Admittedly though, AEP does concede that, and I quote: “Personally, I am a long way from reaching an conclusion in this extraordinary debate. Let it run, and let us all fight until we flush out the arguments.”  Still, for AEP to even contemplate that there may be something to altering the monetary system is nothing short of an intellectual quantum leap.

Once again, to borrow from a famous phrase: It is the monetary system stooopid!

But other than AEP allowing for the possibility that the monetary system may have something to do with the current situation, the even bigger news is that the IMF should allow such a study to emerge at all. We will see where we go with this.


Tags: , , , ,


  1. Jim Says:

    Evans-Pritchard doesn’t have it quite right; you can’t allow a government or any one institution to control the money supply, given government attraction to debt.

    By now it is government debt that is wagging the banks, not the other way around.

    Two scenarios cause immediate depression; big banks go bankrupt, OR, we abandon fiat money. The reason is simple. Governments could no longer sell their debt into infinity. In the first example, interest rates would immediately rise to catastrophic levels. In the second, governments would almost immediately default because they cannot control spending without a deflating currency.

    This was the original reason for the formation of central reserves in the first place; first as a Treasurer for the king, and then as a safeguard for the government and big banks. That the public believes the Fed is on their side is perhaps the biggest political hoodwink of all time. it is saving its own (government and large banks) at citizen expense.

    Think of it. The whole system would never have gotten out of control if there was no federal reserve to control the money or the interest rates. After all, it must do both in order to allow governments to spend way beyond their means, and allow the gargantuan levels of bank gearing that we see today.

    In a free banking economy (where all banks would issue their own currency that did not lose its value) interest rates on government bonds would have shuttered government spending decades ago. And banks would never have gotten to 3 times the size of most countries. It would be impossible.

    • guidoamm Says:

      Yes to everything with the minor observation that governments “control” nothing and that personally, I do not believe the debt is wagging the banks.

      For as long as our politicians allow the banks the privilege to impose this monetary system, more debt is a bonanza for the banks. The banks are just selling the rope and the politicians are tying it around the neck of individuals.

      • Jim Says:

        Sure, banks have had it great for decades; self-serving regulation (think Basil) which allows more leverage, acts as barrier to entry, and generally socializes losses.

        But Guido, the reason that government debt is wagging the bank tail is that it is by now gargantuan. Who will buy it at current interest rates, but for the big banks? But at higher interest rates all of Europe and USA will collapse.

        And debt is getting larger as the Baby boomers retire. Even inflation will not fix the debt glacier that is coming, but for now, governments are protecting banks to print money. Central banks are buying 70%+ of all government issued debt.

        The whole thing is a mutual perpetual motion machine. And macroeconomics is being unclothed for the crap that it always was. Keynes, like Marx and Freud, have stymied our cultures now for generations. Their ideas are pervasive but totally wrong. It may be impossible to recover without collapse.

        • Patrick Donnelly Says:

          Collapse of the financial system, yes. But all the assets, the tangible ones are still here? It is a question of making them work to produce enough food. You see, we actually have all we need! The whole point of the Ponzi scheme was to get the slaves to work harder. MOTIVATION!
          The economics of a kleptocracy have existed for some time and have produced many scholars who only know those conditions.

          We have all we need, except honesty and transparency! We all can have adequate employment and pay pensions etc. Just not the HOLLYWOOD version, based on bullshit?

    • Patrick Donnelly Says:

      Quite right, Jim!

      But what is Gubmint? TPTB is truer as a description, as it may include different folk or institutions as the context changes. The taxpayer is getting to pay off the debt while private profits are still being made, so Political power is uppermost. They tend to be short term people and the revolving door syndrome involves others, currently making profits, on and off the books?

      This is a depression! DEPRESSION! Faulty accounting and massive government panic has masked some of the eventually realizable losses, but in a few short months … ?????

      Kleptocracy arises in like manner to all the other mal-investment. We cannot afford these products of drunken credit booms. Now we are making it global!

      • guidoamm Says:

        Indeed, it is different folk and institutions that make up TPTB.
        When taken to extremes, DBFM can only result in government becoming the largest actor in the economy and individuals becoming dependent on government. It is this dependency that forces most individuals to either not understand or, worse, disregard moral hazard and corruption. It is dependency that will ensure the total destitution of society and the next world war… and when I say next I mean in the next three years.

        And, yes, this is a depression. During a depression, people become rather accepting of extreme actions particularly if these actions are perpetrated towards people other then ourselves.

  2. Patrick Donnelly Says:

    I have long suspected that one powerful faction, call them Fabians, want to destroy the interest system, based upon fractional reserves at any rate. The case against this is that people still have not learned their lesson and that coming into 1999, no-one set up the play across the MSM, something I believe will signal the end of the Ponzi/Banking weapon. Till then …. ?

    Another faction, call them Bushies, will set up the system again, since people have yet to learn. Pretending that the mob do not drive this weapon is pointless. They make deposits and take loans to enable others to do so, knowing that housing/ tulip bulbs are always going up in value!

    The system will always work when greed can be stimulated either by making something illegal such as drugs, prostitution/gambling /alcohol. Thus savings alone will not be enough, but clearly, housing and pensions are the most likely to be affected. Insurance companies are also involved. Mutual assurance is required. Spousal murder for example, is driven by being able to insure spouse/self leaving money to family. Like the lottery, the weapon is a threat only to the ignorant and they insist on living without learning?

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: