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Old January 14th, 2012 #21
Alex Linder
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“Money is not an invention of the state. It is not the product of a legislative act. The sanction of political authority is not necessary for its existence.” --Carl Menger

That's a good quote. It puts you in the right frame of mind. Menger was not a jew, and it is false to dismiss the Austrian school as a jewish school.
 
Old January 14th, 2012 #22
Mike Parker
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Quote:
Originally Posted by Alex Linder View Post
I guess you could say that altho our money has long been decoupled from gold, and is backed by the full faith and credit of the (bankrupt) US, which is basically nothing, it still retains residual credibility and utility with everyday people.
Is there a quantitative test for government solvency under open economy conditions? Like you, I’m very interested in the information content of market prices. Does the Treasury market consider USG bankrupt?
 
Old January 14th, 2012 #23
Alex Linder
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Quote:
Originally Posted by Mike Parker View Post
Is there a quantitative test for government solvency under open economy conditions? Like you, I’m very interested in the information content of market prices. Does the Treasury market consider USG bankrupt?
We have an open economy? What do you mean by that term? I don't know the technical meaning of bankrupt, if there is a special definition for government bodies, I'm using it in the everyday sense. Of course the government in a sense can't truly go bankrupt when it can simply print notes to pay off its debts. But it amounts to the same thing.
 
Old January 14th, 2012 #24
Rick Ronsavelle
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1) Why can't silver be money too?

Fine, gold was an example. Whatever the buyer and seller want to use as money. The ratio of gold to silver must not be fixed- gold can be priced in terms of silver, or vice-versa, by the market.

2) I understand the receipts aren't literally money, but if they're routinely exchanged and the gold is seldom seen, won't they become de facto money in the eyes of users, after a time?

We must state our objective- a pure, honest money system, with zero fakery or fraud. When I said the paper receipt is not to be considered as the money, I meant formally and legally. Taking a look at a warehouse receipt here:



Compare to this later "gold certificate":



Paying attention to the details (fine print)- "payable to the bearer on demand AS AUTHORIZED BY LAW"- significantly different than the first one. And "This Certificate is Legal Tender" implying that the certificate alone may be a value apart from gold That is IMPLYING THAT THE CERTIFICATE QUA CERTIFICATE IS THE MONEY!

The subtle shift from a pure metal standard to a fake metal standard:

A pure metal standard emphasizes the ACTUAL WEIGHT OF THE METAL. It should be on the coin- yet seldom is. The $20 double eagle has .9675 troy ounces of gold- this is not shown on the coin. Why didn't they pick a round number like one ounce? The mexican 50 peso gold coin has 1.2057 ounces- why not 1.200 ounces? The Swiss 20 franc gold coin has .1867 ounces- why not .2000 or .2500 (1/4) ounce? Because they don't want you thinking about the metal content. The coin is "fifty pesos", "twenty dollars", or "twenty francs". Why? Because there were fake loans and fake deposit (warehouse) receipts circulating with the gold coins. These constituted the "money supply" during the fake gold standard of the 19th century.

We want to remove the fake stuff. Now, calling a REAL warehouse receipt "money" will happen. It would have no ill effects if SAID RECEIPTS COULD NOT BE COUNTERFEITED. In non-government schools, the children would be told "this coin is the real money and can't be printed. This paper receipt can be printed. Beware!"

How is that going to be avoided practically? Is there enough gold to circulate to make transactions simple and easy as using paper and electronics?

There is always enough gold. If less, each ounce would be worth more. Paper and electronics are fine EXCEPT for the fakery problem. Each warehouse receipt has to have the actual coin on deposit, as stated.

When one moves away from having the actual PM in one's hands the problem of fake loans/fake warehouse receipts arises. (See Celente and others about the recent commodity fiasco)

btw Notice that the first gold certificate doesn't mention how many ounces of gold are involved. Try to find out the definition of a "dollar" over the years!

But what incentive would the bank have to exist in the first place? Sounds like about the same as a self-storage unit business?

Eggs-ackly kee-rect. Banking, without loans made from nothing, would be very low profit, like a supermarket (1-2 % on sales) or a coin dealer.

If a bank could loan only time (savings) deposits (not demand deposits/checking) up to what it has, they would get interest charged (maybe 6%, less interest paid (maybe 3%) less operating expenses. Profit would be near zero, believe it or not. Bankers would go literally and figuratively ape-shit.

The other bank- that didn't loan- could only charge a fee for services. This would be safest as it would block fractional.

Remember private folks can loan. Let's get away from idea the only banks can loan. Private folks too can earn interest!

Last edited by Rick Ronsavelle; January 14th, 2012 at 03:39 PM.
 
Old January 14th, 2012 #25
Alex Linder
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Good stuff, Rick. Thanks for the free education. I particularly like that point about the coiners hiding the actual metal content.
 
Old January 15th, 2012 #26
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Quote:
Originally Posted by Alex Linder View Post
We have an open economy? What do you mean by that term?
Open_economy Open_economy

Quote:
I don't know the technical meaning of bankrupt, if there is a special definition for government bodies, I'm using it in the everyday sense. Of course the government in a sense can't truly go bankrupt when it can simply print notes to pay off its debts. But it amounts to the same thing.
Quote:
Although the terms bankrupt and insolvent are often used in reference to governments or government obligations, a government cannot be insolvent in the normal sense of the word. Generally, a government's debt is not secured by the assets of the government, but by its ability to levy taxes. By the standard definition, all governments would be in a state of insolvency unless they had assets equal to the debt they owed. If, for any reason, a government cannot meet its interest obligation, it is technically not insolvent but is "in default". As governments are sovereign entities, persons who hold debt of the government cannot seize the assets of the government to re-pay the debt. However, in most cases, debt in default is refinanced by further borrowing or monetized by issuing more currency (which typically results in inflation and may result in hyperinflation).
Insolvency Insolvency


Now back to the data. What do average TIPS yields of <0.50% tell us about the market estimate of the probability of default?
 
Old January 15th, 2012 #27
Alex Linder
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Now back to the data. What do average TIPS yields of <0.50% tell us about the market estimate of the probability of default?
It doesn't tell me anything because I don't know what TIPS is.

I know you have point(s); this might be a time it's better to make them directly, if you want to debate.

I don't know if there is technical meaning to bankrupt as applied to a country, rather than individual or corporation. In one sense, as long as a country can print money, or use its citizens as slave labor, it can't be bankrupt, I guess you could say. In the ordinary sense, if a business or person has debts well beyond what he could ever pay then it or he is called bankrupt. Considering the 'unfunded liabilities' the US has, I think it's fair to say it is bankrupt. It has no solution but stealing the purchasing power of the middle class, its wealth, to keep paying off the parasites.
 
Old January 15th, 2012 #28
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Question: What Are Treasury Inflation Protected Securities?

Answer: One way to protect your portfolio from inflation is with TIPS - Treasury Inflated Protected Securities. The bad news is, TIPS only pay you a fixed rate of interest. The good news is that, twice a year, the Treasury Department raises or lowers the principal in response to inflation or deflation. These price changes are measured by the Consumer Price Index (CPI), as published monthly by the Bureau of Labor Statistics.


This means that, as inflation increases, the value of TIPS bonds increase even though the interest rate doesn't. Why? TIPS holders get a larger cash payment because the fixed interest rate is applied to a larger principal.

The opposite is true in times of deflation. If prices go down overall, as measured by the CPI, the value of TIPS will also decline because now the fixed interest rate is being applied to a lower principal.

The fixed interest rate is determined by the initial TIPS auction. TIPS are issued in terms of 5, 10, and 30 years. You can hold TIPS until they mature, or auction them off yourself on the secondary market.

Here's a nice benefit of TIPS. When they mature, you receive either the adjusted principal, or the original principal, whichever is higher. This provision protects you against deflation.

As you would expect, TIPS do well during inflation, or even if inflation is expected. People will pay a lot more for the safety of TIPS if they are afraid of inflation. For this reason, TIPS also do well when the value of the dollar is declining. That's because a declining dollar usually leads to inflation, at least for imported goods.

TIPS do worse during times of deflation. They aren't really a great investment during a stable economy. That's because,over the long haul, they do not return as much as a well-diversified portfolio that includes stocks. Of course, they are guaranteed by the government, so you do get less risk - but you also get a lower return.

Inflation adjusted by the CPI (CONsumer Price Index)? Is UNCLE SHAM telling the truth about this?

Inflation Actually Near 10% Using Older Measure


(Government says 3.4%, understating price rises by a mere 6.2%)

Published: Tuesday, 12 Apr 2011 | 5:18 PM ET
Text Size
By: John Melloy
Executive Producer, Fast Money & Strategy Session

After former Federal Reserve Chairman Paul Volcker was appointed in 1979, the consumer price index surged into the double digits, causing the now revered Fed Chief to double the benchmark interest rate in order to break the back of inflation. Using the methodology in place at that time puts the CPI back near those levels.


Inflation, using the reporting methodologies in place before 1980, hit an annual rate of 9.6 percent in February, according to the Shadow Government Statistics newsletter.

Since 1980, the Bureau of Labor Statistics has changed the way it calculates the CPI in order to account for the substitution of products, improvements in quality (i.e. iPad 2 costing the same as original iPad) and other things. Backing out more methods implemented in 1990 by the BLS still puts inflation at a 5.5 percent rate and getting worse, according to the calculations by the newsletter’s web site, Shadowstats.com.

“Near-term circumstances generally have continued to deteriorate,” said John Williams, creator of the site, in a new note out Tuesday. “Though not yet commonly recognized, there is both an intensifying double-dip recession and a rapidly escalating inflation problem. Until such time as financial-market expectations catch up with underlying reality, reporting generally will continue to show higher-than-expected inflation and weaker-than-expected economic results in the month and months ahead.”

The pay-site and newsletter by Williams, an economic consultant for the last 30 years to companies, has gained a cult following among bloggers hungry to criticize Bernanke these days. The mission statement of the newsletter, according to the site, is to expose and analyze “flaws in current U.S. government economic data and reporting…net of financial-market and political hype.”

Investors are anxiously awaiting the release of March’s CPI reading on Friday. The consensus estimate from economists is for an annual inflation rate of 2.6 percent.

“Given ongoing inflation problems with food and the spreading impact of higher oil-related costs in the broad economy, reporting risk is to the upside of consensus expectation,” said Williams, citing a 10 percent jump in gasoline prices in March, in the note.

“While the federal government would have us believe the numbers are rather tame, our own personal gauge leads us to believe inflation is running between 5 percent to 6 percent annually,” wrote Alan Newman in his latest Crosscurrents newsletter that refers to Williams’ statistics.

Newman uses recent comments from Walmart CEO Bill Simon that inflation is going to be “serious” to back up the much higher

CPI figures from him and Williams.


“Given Walmart’s [WMT 59.54 0.04 (+0.07%) ] sales of $422 billion, we think Mr. Simon has a good idea of what’s in the pipeline,” said Newman.

To be sure, the BLS argues that the changes it has made over the last three decades more accurately reflect a true change in the cost of living. For example, in response to its hedonic adjustments, the BLS web site states, “to measure price change accurately, the CPI must be able to distinguish the portion of price change due to this quality change.

Still, going by recent strong comments from Federal Reserve officials, even members of the central bank must believe inflation is being underreported. Dallas Federal Reserve President Richard Fisher said in a speech last week that the central bank was reaching a “tipping point” as far as changing its policy so it can react to inflation. Maybe Fisher stumbled across Shadowstats.com. The voting member did, after all, mention Volcker in the same speech.

“The need to break the back of that (budgetary debt) spiral is as dire now as was the need for Paul Volcker to break the back of inflation in the 1980s,” said Fisher on April 8th. “As a result of his steadfast determination to press on with exorcising inflation, Mr. Volcker is today among the most respected living Americans and widely considered an exemplar for public servants worldwide.”

http://www.cnbc.com/id/42551209

Last edited by Rick Ronsavelle; January 15th, 2012 at 12:15 PM.
 
Old January 16th, 2012 #29
Mike Parker
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Quote:
Originally Posted by Alex Linder View Post
It doesn't tell me anything because I don't know what TIPS is.
http://www.treasurydirect.gov/indiv/...ips_glance.htm

I look at TIPS because the inflation premium is removed, leaving time value of money and default risk. As you can see, that risk is perceived as low to nonexistent. That was all.
 
Old January 16th, 2012 #30
Alex Linder
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Quote:
Originally Posted by Mike Parker View Post
http://www.treasurydirect.gov/indiv/...ips_glance.htm

I look at TIPS because the inflation premium is removed, leaving time value of money and default risk. As you can see, that risk is perceived as low to nonexistent. That was all.
The US still has a lot of power to threaten and steal, and tens of millions of workers to mulct from. I guess that amounts to security, from some investors' POV.
 
Old January 17th, 2012 #31
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Here is a snippet from a Wikipedia article about the Bureau of Engraving and Printing regarding currency production. the last sentence sums up why there is a debt... money can work if there is a sane and logic goal that determines it's course. the beauty of it is that one can save and silver and gold are just a few examples of a governments holdings there are a lot of valuable medals like palladium which Is a chemical element with the chemical symbol Pd and an atomic number of 46. MORE INFO>>>>>> {{{It is a rare and lustrous silvery-white metal discovered in 1803 by William Hyde Wollaston. He named it after the asteroid Pallas, which was itself named after the epithet of the Greek goddess Athena, acquired by her when she slew Pallas. Palladium, platinum, rhodium, ruthenium, iridium and osmium form a group of elements referred to as the platinum group metals (PGMs). These have similar chemical properties, but palladium has the lowest melting point and is the least dense of them.}}}

WHEN IT COMES TO THE MOST VALUABLE RESOURCE IT TRULY IS PEOPLE BECAUSE THE HUMAN BODY IS THE MOST ECONOMICAL AND PRODUCTIVE MACHINE IN THE WORLD


WIKIPEDIA ENTRY:

Plate capacity on power presses increased from four to eight notes per sheet in 1918 in order to meet greatly expanded production requirements related to World War I.

With the dramatic redesign of currency in 1929 – the first major change since paper currency was first issued in 1861 – note design was not only standardized but note size was also significantly reduced. Due to this reduction in size, the Bureau was able to convert from eight-note printing plates to twelve-note plates. The redesign effort came about for several reasons, chief among them a reduction in paper costs and improved counterfeit deterrence through better public recognition of currency features.

A further increase in the number of notes per sheet was realized in 1952 after breakthrough developments in the production of non-offset inks. Beginning in 1943, the B.E.P. experimented with new inks that dried faster, therefore obviating the need to place tissues between sheets to prevent ink from offsetting to other sheets. The faster drying ink also enabled printed sheets of backs to be kept damp until the faces were printed, thereby reducing distortion caused by wetting, drying, and re-wetting of the paper (sheets needed to be dampened before each printing).

By reducing the distortion that increases proportionally with the size of the sheet of paper, the Bureau was able to convert from 12-note printing plates to plates capable of printing 18 notes in 1952. Five years later in 1957, the Bureau began printing currency via the dry intaglio method that utilizes special paper and non-offset inks, enabling a further increase from 18 to 32 notes per sheet. Since 1968, all currency has been printed by means of the dry intaglio process, whereby wetting of the paper prior to printing is unnecessary.

Currency has since been printed primarily by the intaglio method, whereby fine-line engravings are transferred to steel plates from which an impression is made on sheets of distinctive paper. Ink is applied to the plates – each plate containing 32 note impressions – and then wiped clean, leaving ink in the engraved lines. The plate is pressed against the sheet of paper with such pressure as to actually press the paper into the lines of the plate to pick up the ink. Both faces and backs are printed in this manner, the backs being produced first. After the faces are printed, the sheets are then typographically overprinted with Treasury Seals and serial numbers.

During the Fiscal Year 2008, the Bureau delivered 7.7 billion notes at an average cost of 6.4 cents per note.[2]

SO LET ME GET THIS STRAIGHT 7.7 BILLION DOLLARS OR "NOTES" = ONLY 46.2 MILLION DOLLARS??? NOT SURE IF I DID THE MATH RIGHT... 7.7 BILLION (*).064= .462 MOVE THE DECIMAL OVER TWO PLACES.... ECT. ECT.>>
 
Old January 17th, 2012 #32
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Quote:
Originally Posted by Rick Ronsavelle View Post
We must state our objective- a pure, honest money system, with zero fakery or fraud. When I said the paper receipt is not to be considered as the money, I meant formally and legally. Taking a look at a warehouse receipt here:
Money is still an abstraction of something whether of gold or paper or oil. It's how the priests of banking manage these abstractions against the least sophisticated among us - that has me far more concerned. The question I have is how changing what money is based on will necessarily eliminate bad practices, lending abuses, CDS, Bernie Madoff type "pyramids-schemes," or how monetary values can be manipulated by Wallstreet, media or government (ie not by straight market conditions or consumers).

I can see the argument that money backed by certain metals leads one to think that nations and bankers can't print, borrow or spend out of thin air what they do not have in gold bars sitting in some vault - and can't print off funny money on whim. I can ALSO see waves of angry old Kwan men, fist slamming the table in agreement, along with "get back to what's writtn the Bible, Con-stuh-too-sun." It seems like a starter fix.
 
Old January 17th, 2012 #33
Walter E. Kurtz
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Quote:
Originally Posted by Rick Ronsavelle View Post

Remember private folks can loan. Let's get away from idea the only banks can loan. Private folks too can earn interest!
"Private folks too can earn interest!" - This is essentially what your "deposits" at a bank are. "Deposit" is a misnomer. When you "deposit" money at a bank, you are essentially loaning your money to the bank, for which you receive interest. And, just as a bank loan is "callable" at any time the bank wishes, so is your loan ("deposit") to the bank callable by you ("withdrawable") at any time you wish. Bank "deposits" should more accurately be called customer loans to the banks. Banks are just loan brokers. They buy money at a certain cost (interest) from "depositors" like you and loan that money out to whoever is willing to pay more for it. Instead of "depositing" your money at a bank, you are free to loan it out to whomever will pay more for it. It's just that the banks have more information with regard to who may be willing to pay more for it than you do.

At current "savings" interest rates of around .30%, are you satisfied in loaning your money ("depositing") to a bank? The choice is yours. Banks don't particularly need to borrow money from you ("savings" accounts) at .30% because they can borrow money more cheaply from the Federal Reserve. In fact, in this period of ZIRP, I believe Fed Reserve banks can borrow at .25%, which thereby means that banks are actually losing money by offering .30% to "savers". So, one shouldn't be surprised at all the new and higher bank fees associated with other kinds of bank accounts, like checking. Banks need to somehow cover their losses on "savings" accounts.
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Last edited by Walter E. Kurtz; January 17th, 2012 at 11:00 AM.
 
Old January 17th, 2012 #34
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(I ran across this and will put it here whilst I contemplate the other questions)

Gold and Silver Confiscation
11/08/2010
By Alan Leishman11/08/2010
e


F.D. Roosevelt’s, President of the USA, confiscation of gold and silver in the USA in 1933 is a relatively well known historical event.

Partially banished from the history books, however, but well known to many Gold Bugs, through articles on the internet and historical texts, is the story of gold and silver confiscation in France in 1720 by the legendary John Law. (baptised 21 April 1671 – died 21 March 1729)

There are several reference works on John Law, of which one of the older and best known ones is « Extraordinary Popular Delusions and the Madness of Crowds » by Charles Mackay first published in 1841. However some extremely interesting details on the gold and silver aspects are available in a more recent well researched book; « Millionaire » by Janet Gleeson published in 1999.

John Law’s brilliant mathematical mind enabled him to be a successful gambler in his early days by calculating the odds, and often taking the « bank » in various forms of card games and dice.

He was also way ahead of his European contemporaries in developing new theories on banking, involving the issue of paper money alongside the gold and silver coins which were the monetary systems of his epoch.
[FAKE gold standard. Beware. rr]

Law, a Scot, eventually rose to become the Minister of Finance in France, appointed by the Regent Duc d’ Orléans, governing on behalf of the dauphin, later Louis XV, who inherited the throne as a young child.



Law was also Founder and President of the Royal Bank and the Mississippi Company.

The Bank issued paper money which was in competition with gold and silver coin…………and therein lies the tale.

This short essay has no intention of repeating the whole history of Law’s rise and fall from monetary stardom, which can be pursued in the above quoted works and elsewhere.

The author’s aim here is to concentrate solely on the legal and other measures that Law took as Finance Minister of France around 1720 in order to try and save his monetary paper empire versus gold and silver.

Law was very well aware that a loss of confidence in paper, (bank notes and shares in the Mississippi Company) would result in a flight to safety into gold and silver. The following sequence of events in 1719/20 is sourced from Janet Gleeson’s book, «Millionaire» referenced above.

In Dec. 1719 the share price of the Mississippi Company, which had risen in a bubble from 150 to 10,000 Livres descended to 7,500. Law declared a dividend for shareholders of Livres 200 per share and the price recovered to 9,000.
Future markets developed at 15,000 Livres, but Law refused credit to finance futures, whereupon the price fell. He then revoked his credit ban and the price recovered. Company sales offices were opened in Paris to try and curb “unregulated” sales and control the market.

”Primes”, equivalent to today’s options, were launched with leverage of 10 to 1.
Investors sold shares in order to buy Primes, crashing the share price from 10,000 to 7,000 Livres. Physical silver and gold were draining from the bank’s coffers as investors, anticipating an end to the bubble, sold shares and cashed out into physical.

By the end of 1720, some 500 million Livres in silver and gold had been taken out of the country to London and elsewhere. Inflation in France escalated and the price of land rose 400% in some areas. The price of staples rose with bread up 500% from 1 to 5 sous within a year. Law, although a free marketeer by philosophy, decided the time had come for swift and devastating intervention.
[Which means he wasn't a free marketeer]

Law passed an edict banning the export of silver and gold coins and bullion.
The public turned to buying diamonds, gems and jewels, in order to escape paper (Livres and shares). The purchase and wearing of diamonds, pearls, and other jewels was then prohibited. The investors turned to buying silver and gold dishes, plates, and other similar objects. A ban was imposed on the production and sale of all silver and gold items except religious ones. The prices of crosses and chalices soared, until their use was also banned.

Law announced the Royal Bank was being taken over by the Mississippi Company at 9,000 Livres per share and closed down the company sales offices.
The share price collapsed from 9,500 to 7,800 Livres.

On Feb 27th measures for «hoarders». Informers were rewarded for any hoarding information, which included the right for the government’s agents to search any private property for silver and gold.

Some 2 weeks later Law reversed his decision, re-opened the company sales offices and supported the sales price at 9,000 Livres. There was a rush to sell shares for paper Livres. Law decided to fade out silver and gold coin by reducing their value to zero over several months - turning to a total paper monetary system.

Law had gone one step too far and his political support started to collapse.
A huge crime wave developed simultaneously as losses led to penury, hardship and hunger.

By May 1720 some 2.6 billion Livres banknotes had been printed.
Law decided to reduce the price of the shares from 9,000 to 5,000 Livres.
The value of Livre banknotes would also be reduced by 50%.
After 3 days of riots, Law resigned, and Orleans restored the value of the shares and banknotes to their previous levels.

A few days later the limits of owning gold and silver were lifted, but nobody had any left.

Only 2% of the money still circulating was in silver and gold. Coins were rationed and vast public bonfires of paper shares and Livres bank notes were organized by the government to try and restore faith in paper, by demonstrating to the public that they were reducing the quantity in circulation, which needless to say did not work.

On the foreign exchange market a pound sterling rose from 39 Livres to 92 Livres in 6 months.

Finally vast quantities of copper coins were minted to replace the lack of coins in circulation.

Banks however opened only sporadically and to huge queues of people trying to exchange paper for gold and silver.

Law went into exile and his fortunes ebbed and flowed for the rest of his life.

The parallels with today’s global fiat monetary system, now arguably close to the verge of collapse in October 2010, are so amazing as to warrant this short essay as a heads-up, and to provide a template as to how events might play out in the next couple of years.

The intention is to allow the reader to draw his own conclusions as to how he (or she) might or might not save themselves from a similar potential collapse in fiat paper monetary system.One can, of course, imagine that many of Law’s measures would not be acceptable in the 21 st century, but a global monetary system collapse may well lead to surprises?

History seldom repeats, but it often rhymes, to paraphrase the famous bonmot of Mark Twain.

http://www.financialsense.com/node/2974
 
Old April 7th, 2012 #35
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I think the banking system is simply the 1/10th of the iceberg, sticking up that you can actually see. the other 9/10ths of the mechanisms of Jew power are less easy to notice or understand.

Freemasons police the police. They are the inspector general of the police force, they listen in on the cops, keep them in line, sick them on political foes of the Jews, and that is how they get away with owning our money system. This is sort of a case of which came first, the chicken or the egg. Did the jews get control of the police force, after gaining control of the fiat money supply? Or did they get control of the money supply, by a coup de tat of the police forces?

It all grew out of their natural instinct for economic race warfare. Never buying things from goyim, never giving them their gold, hoarding the gold, til they owned it all, and the Gentile nations not having any other currency to use, becoming enslaved by a lack of foresight.
 
Old May 16th, 2012 #36
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All This Fuss About a Fiat Dollar

by Jeff Thomas
International Man

Throughout the First World, and, particularly in the US, there is an increasing consciousness that fiat currency, far from being the solution to economic problems, is, in fact, a cause of them.

There are even those who, over the years, have predicted that the continued massive creation of fiat dollars may well lead to price controls, destruction of savings, looting, riots and, possibly, even revolution. A decade ago, such predictions were regarded by most as nonsense. Today, all of these eventualities seem more likely, although there still remains a strong contingent (possibly even a majority) who believe that, "It can't happen here."

A Brief History of Colonial US Fiat Currency

At this juncture, with regard to the US, it may be helpful to mention that not only can it happen here... it in fact, already has – back when the US was first created.

Much has been said about the American founding fathers having been "visionaries," and this is most certainly true. But how was it that so many people in pivotal positions in late 18th-century America possessed such insight, such inspiration in terms of designing a country whose Constitution was based upon free-market values, and avoided, as much as possible, a central government that had its fingers in the economic pie?

The answer lies in the simple fact that they had not only experienced the outcome of the use of a fiat currency, but had done so in recent memory.

In the 1750s, the use of fiat currency by the colonies (particularly in the financing of military endeavours against the French in Quebec) caused massive inflation. The situation became so dire that Mother England stepped in and called an end to the creation of debt-related promissory notes. There was an immediate return to using coinage.

The result was prosperity. Although the colonies did not yet possess their own coinage, they used gold and silver coins from England, France, Holland and Spain as unofficial currencies. (Note: The word "unofficial" is key here as a free market prevailed and was able to adjust itself, as necessary, with regard to the purchasing value of each form of coinage.)

But this was not to last. When the American Revolution broke out in 1775, the Continental Congress saw fit to "solve" the cash-flow problem by starting up the printing presses. (Once again, war created the incentive to print paper currency.) At that time, the colonial money supply had been some $12 million. Within five years, over an additional $600 million had been created. Whilst this monetary creation initially served as a boost to the economy, the predictable end result was that massive inflation returned, laying waste to the economy.

Then, as now, many people could not understand why the Continental Congress did not simply keep printing until the problem went away.

By the time the war had ended, the newly-formed United States was deeply mired in economic troubles. Although there were those who called for an end to the rolling of the presses, the government did what governments typically do: exert a greater level of force to get the people to use the debased currency. Wage and price controls were created, in addition to stiff penalties for anyone who refused to use the Continental Dollar. Congress declared that, any person shall hereafter be so lost to all virtue and regard for his country as to refuse to accept its notes, such person shall be deemed an enemy of his country.

It may be beneficial to read this simple statement a second time, whilst considering just how timeless and universal it is. It is the position governments typically take whenever they have created a problem that the public have ultimately paid the price for. When the public ultimately realise that they have been victimised, and back off from the government "solution," they (the public) are described by the government as being "unpatriotic." In this case, Congress went so far as to describe the public as "enemies."

This time around (in 2012), Americans have not yet reached this point; however, it should not be surprising if, as the US dollar declines more severely, they are once again described as enemies of the state, should they move away from using the dying dollar in favour of a more stable form of wealth, such as precious metals.

Money in the US Constitution

It was in the immediate aftermath of the 1787 monetary debacle that the Constitutional Committee met to create the Constitution. Having read the foregoing, it should not be surprising to the reader that a primary concern of the American founding fathers was that, in future, neither the state nor the federal governments should have the ability to create fiat currency, period.

Oliver Ellsworth, a Connecticut attorney, stated at the time,

"This is a favourable moment to shut and bar the door against paper money. The mischief of the various experiments which have been made are now fresh in the public mind and have excited the disgust of all the respectable parts of America."

It was under this sentiment that the Committee consciously rejected a recommendation for the federal government to "emit bills of credit." And, instead, allowed the federal government only to "... coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures."

Central Bank Tug-of-War

It is clear that, in 1787, there existed a true "vision" as to a government's rightful role in the economy. However, it should be stated that, as early as three years later, in 1790, a move was afoot to create a central bank, modeled after the Bank of England, and that that bank, in addition to having the power to borrow for national interests, would have the exclusive right to issue bank notes.

For another century, a tug of war existed over both the wisdom and the Constitutional legality of a central bank that could issue fiat currency, and this struggle waxed and waned throughout the 19th century. In 1913, a cabal of bankers succeeded in creating the Federal Reserve, and, for the last hundred years, the US economy has been subject to its manipulation.Currency is one manipulation, but the Fed's manipulation extends beyond currency manipulation.

Back in the late 18th century, the former colonists found themselves in a disastrous economic situation which was a direct result of debt and fiat currency. In 1787, businesses were bankrupted, looting became commonplace, and there was mob violence in the streets. However, the situation was saved by a small group of people who had been given the responsibility to craft the American Constitution. In my belief, the greatness that the US experienced was due, in no small part, to the rejection of fiat currency and a focus on free-market values.

However, by 2012, the American Constitution has largely been abandoned, and the economic debacle of the late 18th century is being repeated. It is conceivable that the present situation is so dire that the US will again see the currency controls and riots that occurred in 1787.

It is left to the reader to consider whether the present situation will generate a movement to re-establish both the word and spirit of that exceptional document – the American Constitution – or whether the powers that be will dig in their heels in favour of their own ability to control both the population and the economy. The answer could well determine whether the US can rise again as a great nation, or whether it will fall to the wayside.

If you enjoyed this article, you might like our complimentary report, The Best of Jeff Thomas. Pulling no punches, Jeff shares his thoughts on the greatest threat to gold ownership, finding a bolthole on a budget, as well as the coming hyperinflation. You may download this free report immediately in our member's area. Or, if you are not a member, register for free here.

Reprinted from International Man with permission.

May 16, 2012

Jeff Thomas is British and resides in the Caribbean. The son of an economist and historian, he learned early to be distrustful of governments as a general principle. He began his study of economics around 1990, learning initially from Sir John Templeton, then Harry Schulz and Doug Casey and later others of an Austrian persuasion.


http://lewrockwell.com/orig12/thomas-jeff5.1.1.html
 
Old May 16th, 2012 #37
Alexander M.
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Default 12 yr old explains how banks commit fraud

Quote:
She got the problem statement correct and at a high-level she got the solution generally correct. Most importantly if a 12yr old gets it- why the hell doesn't the rest of the world get it?
http://www.youtube.com/watch?feature...v=_ae7h8FioX0#!
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Old May 16th, 2012 #38
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So money presently reproduces itself independently of human intervention

Money wasn't a commodity, but a measure of other commodities to Aristotle's way of thinking, no use value only an exchange value; just a utility of other things & presently it is a medium of exchange transformed into an object of exchange, if I understand it correctly.

Last edited by littlefieldjohn; May 16th, 2012 at 07:03 PM.
 
Old May 16th, 2012 #39
Rick Ronsavelle
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(re: #37)

The head of the "Public Banking Institute" is lawyer (not economist) Ellen Brown.

Late in 2010 she threw her full support in favor Of BS (Ben Shalom) Bernanke.
Two Keynesians in love with the printing press.


Ellen Brown: Bernanke's Cheerleader

by Gary North



Ellen Brown is a lawyer. Lawyers are trained to settle a case when they are losing. Brown just settled with me.

She has just switched sides. Instead of becoming an Austrian School critic of the Federal Reserve, she has become its cheerleader.

This is Bernanke's loss and the Tea Party's gain.

In my criticism, I kept saying that she is a leftist. She wants a welfare State funded by zero-interest loans from the government. She wants a big Federal government. She does not care how we get it. Now that the FED will inflate enough to pay for it, she has switched sides. Her primary commitment was always to the welfare State, not the battle against the FED.

In my detailed critique of her economics, I made it clear that she was never a conservative. Now she proves it. She praises Bernanke and the FED. She says that QE2 is not fiat helicopter money, and that Bernanke is not "Helicopter Ben," which he obviously is.

Hard to believe? Let me quote her.

A Bold Precedent

QE2 is not a "helicopter drop" of money on the banks or on Main Street. It is the Fed funding the government virtually interest-free, allowing the government to do what it needs to do without driving up the interest bill on the federal debt — an interest bill that need not have existed in the first place. As Thomas Edison said, "If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good, makes the bill good, also."


The Fed failed to revive the economy with QE1, but it could redeem itself with QE2, a bold precedent that might inspire other countries to break the chains of debt peonage in the same way. QE2 is the functional equivalent of what many countries did very successfully before the 1970s, when they funded their governments with interest-free loans from their own central banks.

Countries everywhere are now suffering from debt deflation. They could all use a good dose of their own interest-free national credit, beginning with Ireland and Greece.

As the kid said to Shoeless Joe Jackson after he threw the World Series, "Say it ain't so, Joe." (In the interest of historical accuracy, this quotation cannot be verified, but a non-exchange between a silent Joe and a group of boys did take place, and the words of one of them were close.)

Ellen Brown initially stood with the Greenbackers in their call to end the Federal Reserve. She parroted the Greenback Party line. She said that the FED is private, which is not really true. The Board of Governors is a government agency, as its website address reveals. It ends in .gov. She said that the government — Congress — should print money without interest rates.

Now that Treasury bond rates are low — but not at zero percent, contrary to what she implies — she has scrapped it all in full public view. She now says that the FED is on the government's side. "It is the Fed funding the government virtually interest-free, allowing the government to do what it needs to do without driving up the interest bill on the federal debt — an interest bill that need not have existed in the first place." She wants the present enormous Federal government to continue doing "what it needs to do." She is a welfare State leftist, which I kept saying in my criticisms of her economics.

She praises QE2. She calls it "a bold move." She writes: "The Fed failed to revive the economy with QE1, but it could redeem itself with QE2, a bold precedent that might inspire other countries to break the chains of debt peonage in the same way." Got that? QE 2 is self-redemption.

If she tries to defend herself by saying, "This is consistent with what I have always said," then she is dumber than dirt, or else she thinks her followers are dumber than dirt. If she says, "Yes, I switched. So what?" then she is just another lawyer.

In The Web of Debt, she repeatedly quotes Greenbacker Stephen Zarlenga as the world's expert in money. As I pointed out, Zarlenga posted a critical review of Brown, saying that she was a compromiser. He did not write it, but he posted it. I called attention to this review here.

Here is what the reviewer said.

Brown is clearly saying here it is banks lending "the use of something the lenders never had to lend" which "is a fraud" because people are made to think they're borrowing money that's there to be lent. Surprisingly then, Brown ends up wanting to enshrine this "fraud" by inserting it into the U.S. Constitution. Furthermore, Brown would enthrone the biggest Wall Street banks inside the U.S. Government to continue perpetrating it on the people. . . .


In summary, the book is very disappointing (from a monetary reform perspective) because Brown's conclusion proposes a non-solution: to keep the unsupportable debt-based system in place and consolidate it by embedding the fraudulent 'debt-money' accounting mechanism within the apparatus of government.

That's not effective reform and certainly not a "paradigm shift". Instead, Brown proposes to entrench the very same system she's been "shocking" us with. This is not "how we can break free" — it's the same trap.


Now she has proven his case. She never had a clue about economic theory or monetary theory. She has therefore switched sides with ease — we might call this intellectual quantitative easing.

Her only hope now is to insist that she never meant anything like this. "No, no, no, I meant something completely different. It's all a big misunderstanding." A lawyer who can't make herself clear needs to find another career — maybe as an economic guru.

I have received many emails from Tea Party people telling me I am an economically ignorant fool for having criticized Brown publicly. These poor souls were her targets from day one, as I said repeatedly in my series. I called them victims. I said over and over, she was putting the shuck on the rubes. But they had committed to her emotionally. They refused to listen to my warnings.

This is what happens in every movement. Followers become committed emotionally to some guru, and will not listen to anyone who criticizes the guru. This is always a mistake. They risk winding up like Max Keiser.

The Tea Party movement claims to be a free enterprise movement, but its members have so little economic knowledge that they are vulnerable to loose canons like Ellen Brown. These naive people are sitting ducks.

Ellen Brown has now publicly set sail on board the cruise ship QE2 just as Captain Bernanke takes it out of port. She will be lost at sea.

She has always been intellectually lost at sea. This latest switch is part of her original lack of understanding. I offered 52 pieces of original evidence and 30 responses to prove it.

Can you hear me now?

November 23, 2010

>>>Cannon, Gary- Cannon.

Last edited by Rick Ronsavelle; May 16th, 2012 at 07:18 PM.
 
Old May 18th, 2012 #40
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Originally Posted by Alexander M. View Post
Ridiculous propaganda...

Read that banner behind the girl: "Public Banking Institute" - whose mission is:

"PBI’s vision is to establish a distributed network of state and local publicly-owned banks that create affordable credit, while providing a sustainable alternative to the current high-risk centralized private banking system. This network will act in the public interest..."

Greenbackers. Socialist ones.
 
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