Archive for the ‘Current events: economics & politics’ Category

And for the WTF file of today… I give you…

April 29, 2013

And for the WTF file of today… I give you…

I have no inspiration to write much any more. Everything that needs to be said has been said. 

I grant you that going over some of the posts of the past five years highlights the need to write clarification and, in many cases, amendment or errata notes on many of my posts. My knowledge has evolved considerably since 2005. Other than that however, there is not much more I can write about.

At this stage, I suppose my time is best spent pointing out factual, if anecdotal, evidence of what is being foisted upon the public in the West – and this article should be as clear as any writing on any wall writ large.

Western governments have now adopted a blatant policy of intimidation and terror in order to make the masses pliable. This warning to Philadelphia residents has all the hallmarks of fascist totalitarian propaganda aimed at fostering insecurity and fear in a bid to ensure that when the government says “jump”, the public will ask “how high?” rather than asking “Why”.

A conflict of global proportions is around the corner and, in short order, Western citizens will be sent to a front somewhere.



They Are Coming For You

March 20, 2013

The debacle in Cyprus seems to have awaken some to the reality of the concentration of power in the hands of the European Union’s appartchiks.

What is still missing in the outpouring of outrage at popular level and, more disconcertingly, in the main stream press is the fact that the suspension of laws protecting private property has a precedent; a very recent and stunningly blatant precedent.

In 2011 MFGlobal filed for bankruptcy after $1.3Billion (with a B) in deposited funds had been pilfered from private accounts. In normal times this would have been an open-and-shut case as the regulators and sundry insurance bodies along with the department of justice would have stepped in to reimburse the losses and prosecute the company’s management. What actually happened is that the regulators as well as the DOJ did not uphold the law opting instead to hang the rightful owners of the funds out to dry; and mind you we are talking here of some large investors with a certain degree of clout (but obviously not enough of it to be able to recover their funds).

The supine passivity of the regulators was then confirmed  when Peregrine filed for bankruptcy too.

In hindsight, we can see that these two instances were merely trial balloons paving the way for a strategy to be rolled out at national level.

Today it is Cyprus’ turn. Tomorrow it will be anyone from France to Portugal via Spain and Ireland.

Never forget that evil triumphs when good people remain silent.

First they came for the communists,
and I didn’t speak out because I wasn’t a communist.

Then they came for the socialists,
and I didn’t speak out because I wasn’t a socialist.

Then they came for the trade unionists,
and I didn’t speak out because I wasn’t a trade unionist.

Then they came for me,
and there was no one left to speak for me.


A conflict of global proportions is around the corner and hapless Westerners will be packed off to the front as cannon fodder to ostensibly protect our way of life… such as it is…

Nothing new to readers of these pages:

The Berlin Wall

February 10, 2013

I went to a fun quiz night last Friday and one of the questions asked was: “When did the Berlin wall come down?”

As is well documented, the Berlin wall came down on the 9th of November 1989. What is less documented is that it only came down to move West

“A European Union report has urged tight press regulation and demanded that Brussels officials are given control of national media supervisors with new powers to enforce fines or the sacking of journalists.”


Capitalism? Free Markets? Freedom To Trade?

January 29, 2013

Via Zerohedge.

Just the latest example of the absurdity brought about by this monetary system that cannot contemplate a diminishing cost of living.

Fractional Reserve Banking only allows expanding credit markets. As credit expansion slows or, Ye Gods!, stalls, government must necessarily and inevitably intervene. Government intervenes with subsidies, with protection of industries, with the granting of social benefits (student loans are a prime example) and with the imposition of taxes. Whatever form it takes, government intervention is aimed at increasing costs thus increasing the cost of living. Initially, intervention is cloaked in things like social justice and security for the less fortunate. But as the expansion of credit markets no longer brings about the nominal increase in asset values as it used to, government must necessarily intervene at the micro level at increasing degrees.

Till one day, the state intervenes to…


The Icelandic Solution

January 27, 2013

President Olafur Ragnar Grimsson tells the simple truth on how to get out of this jam…

Since we are at it, one of the things I suggest we should also have the courage to take a look at is how a country that was on its knees militarily, industrially, economically and agriculturally was able, in six years, to not only rebuild, re-industrialize and rearm, but jump at the leading edge of technological innovation. We should have the courage to take a dispassionate look at how Hitler was able to do what he did in six years. Where did the money come from at a time when Germany was under embargo and was forbidden to trade liberally with partners?

My view is that Iceland and Lithuania today like Germany before them, successfully broke out of the central bank imposed debt cycle thereby boosting real internal growth by reinvesting profit within their economy rather than leaking it in the form of interest to a third party.


The Trillion Dollar Coin

January 19, 2013

The proposal has been killed as it should have been.

Is this proof that our politicians are sensible?

Not at all of course. What happened here is merely a calculation aimed at self preservation. Someone realized that in going through with the plan, society would begin to question the role of the central bank; as they indeed should.

If Treasury is legally entitled to repay the entirety of the debt generated by a Debt Based Fiat Monetary system (DBFM), then why don’t we just do it? Similarly, if Treasury is legally able to create the currency, why exactly do we need a central bank? More importantly, why should government borrow money from a third party and pay interest when government can create its own money?

These are questions that central banks do not want asked.

Please note. I am not advocating that Treasury should take over monetary policy perpetuating DBFM. Monetary policy should be in the hands of the public and politicians should not have free rein in managing the monetary system just as unaccountable and unelected central bankers should not either. In this respect a value based monetary system or a fixed amount of fiat money would be desirable and would serve to, at once, eliminate the central bank and restrict government excesses.

The Trillion Dollar Coin Delusion

January 12, 2013

When some of the most prominent pundits, economists and financiers, if not the intelligent ones, can opine positively on this idea, then I too feel entitled to offer my thougths.

The idea is, to be polite, at best asinine. No suspense in what my position is as you can see.

Here is the quick and dirty.

If treasury can mint a 1oz coin of platinum and declare it to be worth $1 Trillion Dollars, where do we stop?

The question is rhetorical of course because in the new normal governments are attempting just that. When Fractional Reserve Banking and Floating Exchange Rates no longer provide the lift to asset prices as they used to, then the monetary authority must intervene directly to buy assets itself which, of course, runs counter to the dynamic they are trying to save.

Moreover, anyone who still believes the West enjoys free markets and a capitalist economy should finally have the cob webs removed from their eye lids. Insidiously if deliberately we are reaching the logical end of what this monetary system has wrought and the statist slant of the electoral political process is finally revealed for the authoritarian centrally planned utopia most politicians worth their salt dream about.

A $1 Trillion Dollar coin? If that works, then similarly why not declare by fiat the value of real estate, the value of wages, or what the rate of unemployment is…. oh! Wait!

The Monetary Straightjacket II

January 3, 2013

Pluralistic open societies like to boast the democratic principles and ideals under which they presumably endeavor. Few proponents of open societies however understand the utility or the desirability to allow individuals to choose what type of money they want to utilize in daily life. Western citizens are free to choose where to live, what car to buy, whom to marry and, to a certain extent, where to work but they cannot choose the money they wish to make use of.

There is of course a very good reason why money is imposed by government and the privilege to manage it is bestowed upon an unelected third party.

By forcing individuals to make use of a specific variety of money that is under the control of a privileged party, the monetary authority can gradually divest society of its financial and professional independence thus making the individual dependent on government. This is a generational strategy of course but it is arithmetically guaranteed to work. We have already gone through the arithmetic of how this works. What we have not yet explored however, is how this same dynamic eventually results in an homogenization of policy resulting in traditional political ideologies becoming indistinguishable in their policy implementation. But this dynamic should be clear.

In a Fractionally Reserved monetary system, money is gradually debased. This is a self evident truth. This is achieved by aggressive monetary inflation which in turn is justified by the political and social process which inevitably results in an expansion of government. As money is debased, government expands and the financial independence of the individual is ineluctably compromised. The eventual but direct result is that government not only becomes the largest employer but it also becomes the entity that is considered the only and primary “investor” in the economy.

Although the contradiction in terms should by then be glaringly evident to even casual observers, at that point the continued expansion of government is deemed vital to the welfare of society.

This is too the point at which government is deemed to be the only viable solution to the crisis; a crisis that has been precipitated by the constant debasement of money, the excessive expansion of credit markets (think mortgages or student loans) and the concomitant expansion of government and para governmental agencies.

It is at this point that, regardless of the rhetoric, whoever may be elected into office is presented with a set of monetary realities that foster a set of political conditions that cannot be reversed easily or quickly. This is the point at which the choice is to either do what is arithmetically sensible by reducing the deficits and the debt and go down with the political ship on a wave of social upheaval as the incumbent will be perceived and portrayed as the destroyer of wealth, or just go along for the ride thus allowing the political dynamic to continue as it has and try to keep credit markets expanding and postpone the political upheaval as far off into the future as possible. Just to be clear however, either option results in the same outcome. There are however two important differences in that the latter option buys time at the cost of creating a more dramatic outcome and, certainly,  a more costly one both in financial as well as human terms.

As we have already pointed out several times in these pages, credit markets cannot be expanded forever. The point at which each new Dollar of debt generates less than $1 of GDP this strategy is pretty much dead in the water and the piper is knocking at the door.

FRED Graph

When the piper is knocking at the door, trying to do more of what you have done till the present moment only serves to dig a deeper hole for society.

This is where we are today in the West. Obama, Draghi, the new head of the Bank Of England and now Japan’s Abe have all embarked on the same strategy of perpetuation of the status quo only in spades. But the arithmetical reality is what it is so that the final denouement is going to be that much more severe with, this time, bloodshed in the cards for all; and I mean all including Western citizens.



Facebook Censors Prominent Political Critics

December 28, 2012

Via Zerohedge

Par for the course in a debt based fiat monetary system. Nothing new to readers of this blog. It had already happened to me circa 2005 when my Facebook account was suspended for over a month.

On The Desirability Of Debt Based Fiat Money (DBFM)

December 27, 2012

The debate is still going on and it is in fact not getting any easier to explain effectively why DBFM should or should not be desirable.

My last attempt here gave rise to all the usual questions followed by all the usual unsatisfactory answers.

Once again however, I’ve come across a nugget of truth that fits neatly in the completion of the final puzzle that should, if not totally debunk, at least help shed light as to why money should be a monopoly of state and if it is, what the arithmetical consequences may be.

In the West we are proud of our democracy because we feel it engenders open societies, open economies thus personal freedom.

But our open, literate and ostensibly civilized societies have allowed government the monopoly of money. To be exact, government has unilaterally and arbitrarily arrogated itself the monopoly over money thereby simply skirting the democratic process and our societies have thought nothing of it; because we are free you see. We can travel; we can pick where to work (to a certain degree, I am Italian so ask me); we can buy property and we generally can enjoy all the trappings of an ostensibly free society.

But if we are open and free societies endeavoring under free markets, then why is there the need for a monetary authority to have the monopoly over money?

As free citizens, why do we not have the right to choose what to exchange our labor for? Our labor is our effort; it is what we deploy in order to improve our lives and expand the wider economy.

Why then should a presumed democratic government want the exclusive privilege to dictate what money is?

In a true “democratic” society, each individual would have the right to choose what they wish to exchange their effort for. Provided it is allowed to compete with any other type of money individuals can choose from, there is nothing wrong with state sponsored money per se. Quite the contrary. In ideal circumstances, state sponsored money should be a steadfast store of value thus of purchasing power, thus enticing everyone and their cousin to make use of state money.

But that is clearly not the case because we have an arbitrary and unilateral monopoly here.

Why then, is money so important that the state has deemed it necessary to impose this particular variety upon society to the exclusion of any other under penalty of violence?

The truth is not entirely intuitive but it becomes gradually more evident as the arithmetical limits of an artificial monetary system are reached.

By imposing DBFM, government sells individuals to the monetary authority. The word is “sells” – individuals are sold into slavery. It is a forward sale to be sure but a sale undisputedly it is. And a mighty future revenue stream it is too.

In return, the monetary authority grants the political establishment the funds necessary for the electoral dog and pony show and funds and encourages the establishment of different political forces and parties including the establishment of those presumed bastions of the rights of the common folk that are the unions. Unions are nothing but the addition of more layers of corrupt and privileged individuals over already bloated and corrupt layers of government – corruption that is an inherent and mathematical ramification of an artificial monetary system.

Money is a natural extension of who we are. Money is a natural right. Money is intrinsically and nominally expensive to produce because our physical and intellectual efforts represent who we are. What is the price of a human life?

By imposing artificial money upon society, government takes control of your effort. By instituting a monetary authority and bestowing upon it the privilege to create the money that society will have to make use of, government has sold your effort to the monetary authority.

Artificial money has no intrinsic value. The liberal creation of fiat money allows the monetary authority to gradually but arithmetically appropriate the wealth of society.

What I am outlining here is not an event of course. This is a dynamic that takes place over generations but the outcome is guaranteed. At the outset, the trap may not be evident. As the system expands, dissent is silenced or brought on side by applying a mix of coercion or flattery or by invoking personal interest. The easiest way to do that of course is to gradually expand government and para governmental institutions. The recent and current crop of politicians have invented nothing that the Romans, the Ottomans, the French or the British before them had not already devised in order to subjugate conquered societies.

Government expansion is usually justified by a mix of vague concepts that relate to justice, peace and safety; safety of the individual as well as safety of professional classes or industries or minorities and justice and peace for the citizens of sundry countries. Naturally however, what remains unseen is that the expansion of government is the primary cause of the lack of safety, justice and peace.

The need to expand government carries the perverted but inherent need to create a pretext. It begins by offering the masses unrealistic promises of health and financial security. It is boosted by building a powerful and sprawling armament sector and army (which combined employ significant chunks of the population) and it is cemented by the creation of entities that travel the globe offering developing countries advise and counsel on the benefits of borrowing artificial money and joining the Western sponsored monetary system.

Taken together over decades, over a century in fact, this dynamic fosters a number of socio/economic characteristics that are all evident today but that most people cannot relate to the original cause.

In over five thousand years of recorded history, there has not been one instance of an artificial monetary system that has lasted as long as our has or that has ended happily.

Money cannot be and must not be cheap. If society surrenders the right to choose what it deems worthy to accept as money, the usurper of that right will always and everywhere end up owning you.

If you think I am talking shite than answer me this.

How many of you reading this post feel comfortable quitting your job safe in the knowledge you will find alternative occupation that will allow you to live comfortably?

Better still. How many of you reading this post feel unhappy in your present employ and feel comfortable that you can quit and find alternative suitable employment?

How many of you work for government, a major bank or a para governmental organization such as the UN or the IMF or USAID?

But more importantly. How many of you feel you can now quit your job and live a less stressful though more frugal life doing the things you’ve always wanted to do but never had the time to?

This is the end of an era and like previous ends to similar monetary fantasies, it will be painful and bloody… and I am not talking twenty years from now.