WHAT YOU CAN DO (updated)

You can actually do something and it won’t cost you any more than US$50. If you follow this blog you know I contend the monetary system is upstream of all human dynamics. Thus our entire socio/economic construct inscribes itself within our monetary system. Similarly, you will also know that the choice and management of the monetary system falls outside of the democratic process. Ergo, not only do politicians impose the system upon society but they also retain the right to manage it by decree. So much for capitalism or, indeed, for our “open” societies based on democratic principles. Western politicians have imposed a debt based fiat monetary system upon our societies. In the USA it started in 1913 and then from 1971 it gradually spread to all other countries. The problem is that debt based fiat money is predicated on inflation. But inflation is a dynamic that conforms to the law of diminishing marginal utility so that greater degrees of inflation are progressively required in order to obtain the same result.   In this case the “result” we seek is GDP expansion. So that in  order to keep GDP on a positive trajectory in a debt based fiat monetary system, government must necessarily induce progressively greater degrees of inflation in the economy. Inducing ever greater degrees of inflation artificially, pervasively and aggressively over decades requires the ever increasing use of financial leverage. But since inflation conforms to the law of diminishing marginal utility, it follows that the effect of inflation on GDP expansion must inherently be limited mathematically.

https://guidoromero.wordpress.com/2009/11/07/the-utility-of-a-fiat-monetary-system/

and this

https://guidoromero.wordpress.com/2011/12/04/the-inevitability-of-diminishing-marginal-utility-of-debt-part-ii/

As the effect of inflation gradually wanes as it is mathematically true it will, government must necessarily intervene in the economy directly and at progressively greater and deeper degrees till government becomes the largest actor in the economy. This dynamic is accompanied by increasingly more severe and pervasive political crisis that is necessarily always accompanied by expedient politics, aberrant economic regulation and increasing degrees of corruption. As this dynamic evolves, social unrest becomes more pervasive and increasingly violent until it morphs into organized social unrest i.e. revolution. History is replete with examples of what happens when a sovereign currency is debased. The clearest indication that our current monetary system is pushing the mathematical limits is the endemic and pervasive corruption that permeates Western governments and institutions. It is clear today that the civic and political mechanisms that have made the West the envy of developing societies around the world have lost their intended function. Western governing elites no longer represent the aspirations and the hopes of their people and are instead beholden to select banks, corporations and unions in an attempt at maintaining the spending power of their office and that of their cronies in an attempt at perpetuating their own personal self interest. I suppose that one of the clearest and most glaring examples of the incestuous and self serving nature of Western governments is given to us by none other than current US President Barak Hussein Obama whom, despite his pledge of change that carried him to the White House, just nominated another bank executive to the position of White House Staff thus not only reinforcing but also confirming and shouting it out loud from the roof tops that it is the banks that today pull the strings of puppet politicians. But enough ranting. Democratic politics is no longer a viable option for the common people. So, other than a violent uprising a la Tunisia, what can everyday folks do? The easiest, most effective and devastating way to affect the political dynamic today LEGALLY is to exploit the weakness of the monetary system. I say “legal” because it is still legal to suggest what I am about to suggest. However, beware! In Holland for example, a law is being debated that would criminalize the mere act of suggesting something similar to what I am about to suggest. WHAT YOU CAN DO Debt based fiat money is predicated on the constant expansion of inflation. Inflation can only be expanded if the credit markets can be expanded. Expanding credit markets aggressively and relentlessly over decades requires increasing degrees of financial leverage. You want to bring down currently sitting politicians and institutions? Then you can prevent the expansion of the credit markets. The easiest way to do that is to start accumulating gold and silver ingots and/or coins. We are not talking large sums here. If every person on earth acquired one silver ingot/coin and one gold ingot/coin, that would suffice to bring the whole house of cards down. We are talking of an investment of US$50 per person at the most. Fifty Dollars!!! The reason that is so is because Debt Based Fiat Money is predicated on inflation. But inflation is a dynamic that conforms to the law of diminishing marginal utility. Thus greater degrees of inflation are needed to obtain the same result. Thus DBFM requires ever greater degrees of leverage; in other words, DBFM requires that money circulates. Thus DBFM cannot contemplate saving and buying gold and silver is equivalent to savings; in other words, buying gold and silver lowers the velocity of circulation of the currency thus chipping away at the logic of DBFM. If every single citizen in the West were to purchase one ingot or coin in silver and/or gold, that would deal a very serious blow to the major global banks. Essentially what happens is that now that the global banks are so highly leveraged (Lehman was leveraged 70 to 1 when it failed) even a modest reduction of less than 10% in their capital base will bring about their failure. Take down the banks and you’ve paralyzed the political process. If you really wanted to push the boat out, there are other things you could do. Once again. These are so far all absolutely legal ways to put a very quick stop to the entire farce that is our political process. Withdraw all your savings from the major global banks. Open accounts in smaller banks or cooperatives or just hold on to the cash. By withdrawing your savings you use the power of the financial leverage against the banks and you force their demise! If you have no savings to withdraw, you may have credit lines and/or a mortgage. Closing all credit lines and mortgages is exceptionally effective too… though I realize some of you may find it impossible to “live” without making use of credit. To that, I can only say that nobody ever said that doing something right would be painless. WARNING!!! These are very simple but lethally effective ways to put a stop to our governments and their shenanigans. But like everything in life, each action has an equal reaction. Taking down the banks and paralyzing the political process is easy. In fact it is so easy most people cannot believe it is possible. But it is. The downside of taking down the banks is that we’ll create dislocations in a myriad sectors of the economy and life in general. Things like public transport or trash collection might be terminated for example. Fuel deliveries might be disrupted. Road and bridge maintenance could be adversely affected. Pension funds might blow up. Any of the above is possible and more. However, there is a rationale for taking bitter medicine now rather than letting things plod along as they are. By letting things plod along, there is a more than reasonable certainty that our “leaders” are going to plunge us into a world war. Essentially, as the monetary system is hitting the buffers and politics have become incestuous and corrupt, social expenditure must be curtailed. Curtailing social expenditure at the same time that the governing elite is caught neck deep in corruption will lead to social unrest and eventually to revolution. But I guarantee that our “leaders” will not let revolution happen in the “developed civilized” West. Before social unrest morphs into revolution, our leaders will have packaged a nice war somewhere to fight an evil empire that ostensibly threatens our way of life. The choice today is: bring down the political system legally and lets take the consequences of the subsequent dislocation that is sure to follow … or … plod along as we are doing today and let our “leaders” send our children to the slaughter along with countless and nameless children of parents in faraway lands. A bon entendeur…

6 Responses to “WHAT YOU CAN DO (updated)”

  1. Khaled R. Says:

    Brilliant idea. Count me in. It’s long been my policy to have zero debt. So refreshing to read such a comprehensive analysis. Should I keep my savings in the bank (what currency), or do you have a better idea?

    • guidoamm Says:

      Hi Khaled,

      This post needs updating by now. $50 dollars will no longer do it.

      At any rate.

      Premising that I am not a registered financial advisor and that you should take what I say with the appropriate caution, here are my two cents.

      All banks are at risk today as, indeed, are all major currencies. If you are in the fortunate position to have savings and unencumbered assets, you must at the very least protect these with an investment in gold bullion or coins equivalent to 10% of your net worth. This is the very least you should do immediately. Bullion and coins should be kept where you can have access to them easily; i.e. not a bank.

      Going forward, in light of the most recent announcements by the ECB last week and the Fed yesterday, prepare for further significant currency debasement – i.e. prepare for an increase in the cost of living.

      If you really must have currency, the choice is slim and unpleasant. For the immediate future (up to 18 months) the US Dollar and the Swiss Franc might turn out to be the best of the worst of the whole bunch. Icelandic Kroners might be useful too. Don’t know enough about the Rouble and the Singapore Dollar but I should think they might be worth investigating simply by dint of recent monetary developments in both countries.

      For the rest, try to secure a revenue stream and/or a food source.

      A global monetary crisis is nigh and there are going to be severe repercussions including a war that will have a direct and significant impact even on Western society.

  2. rebecca Says:

    Hi Guido,

    I didn’t know you had a blog! I wish I could do more on this but I do not have anything that you could call savings. However $50 is not beyond me so I will do my little tiny bit.
    My one (small) loan is due to expire this month and I won’t be taking a new one but like they’d give it to me anyway – that’s something I don’t understand – if leverage is needed to keep the whole shebang going how come they’ve stopped lending – or are they relying on government leverage now? Guess so.

    Rebecca

    • guidoamm Says:

      By “they” I presume you mean the banks.

      It is deceptively simple. On one hand, banks have been given public funds either directly (TARP) or indirectly (bailing out AIG for example). On the other hand, banks enjoy special accounting and legal treatment. This means, for example, that they can disregard a whole swathe of accounting rules which make them appear solvent. As solvent entities banks can keep their investment rating. As investment grade entities in an ocean of otherwise struggling corporations, banks now attract significant chunks of institutional funds (insurance and pension funds… your insurance and pension funds that is). Ever noticed that the most recent bonuses paid by banks are the highest ever? That’s because bonuses are paid out of total turnover rather than profits. Cute eh?

      Another nifty trick that allows banks to earn a pretty penny is the following. Banks have halted loaning money to you and me but, get this, they have been able to get rid of significant chunks of bad paper (debt) offloading it unto the Fed. In turn, the Fed gives them clean cash as if Treasury had requested new amounts of money to be created. And now for the doozie. The banks take this fresh cash and… wait for it… deposit it with the Fed … at interest.

      Et voila’! No risk. Pure profit.

  3. guidoamm Says:

    Thank you for taking the time to read mohenko.

  4. mohenko Says:

    Ahoy Mr Guido!
    Practical, brilliant and achievable strategy open to most! Exactly what I’ve been looking for. Thanks to you (and Golem & Hawkeye) for voicing sanity amidst the lies & delusions spread by our ‘rulers’.

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