Left: Tom Woods complaining about lack of MSM airtime
Recently the Austrians have been aiming some firepower at the ‘Greenbackers’ again. As we have documented extensively, Austrianism was developed mainly to organize the opposition against the current monetary order and to mind control it into cheerleading the reinstatement of the Gold Standard, which the Money Power has been planning for decades now. Not much new under the sun, but since they insist, let’s have some more fun with their silly antics.
Tom Woods has 34k likes on Facebook, is asked by friends to run for the Senate, is clearly groomed to play a major role in Libertarianism in the future and looks like the Heir Apparent to Lew Rockwell’s ‘Catholic arm of Libertarianism‘. Certainly an influential fellow and he recently opened up a page on his site called ‘Why the Greenbackers are wrong‘.
As we know, the Greenbackers are the sworn enemies of the Austrians. They don’t like to talk too much about them, lest they would get unwarranted attention, and they usually reserve their gall for the Keynesians. But in fact, the Greenbackers are their ‘raison d’être’, to usurp the real opposition against the Money Power’s control of the money supply. So it’s probably necessary, even if a tad boring, to rebut this 5100 word screed.
Let’s keep in mind what is at stake
We could print enough debt free paper money to pay off the National Debt. This Debt is entirely credit based, for every debt free dollar we print, a credit based dollar would go out of circulation. Meaning: no inflation. After the operation we would have no national debt and the Fed Govt would be spared $450 billion per year in interest payments. This is the Greenback and this is not something the Money Power is going to allow and stopping this is what Austrianism is all about.
This would end the Fed, at least as we know it, and it would nationalize money. This, according to Tom Woods, would mean more socialism. You see, it is clearly better when a private banking cartel prints money, slaps interest on it and a few Trillionaires rake in this $450 billion per year. That is, after all, the ‘free market’, a great example of ‘human action’ by the Rothschilds, certainly not to be interfered with.
As we have analyzed in ‘Libertarianism’s main fault: Blaming the State while ignoring the Money Power‘, the Money Power, which sits at the top of the international power hierarchy, owns all the money supplies in the world, including that of the US. It uses it to enslave us with interest and the boom-bust cycle.
It can do this, because it forced sovereigns in the past to create de facto currency monopolies through legal tender laws and then hand these to the Money Power.
So reclaiming this currency monopoly actually devolves power from the summit (the Money Power) to one level lower, the Government. In short: less socialism than we have now, not more.
And the Greenback is not even the ideal solution. With the current level of Interest-Free Economics it’s probably the least of the acceptable solutions. But the Greenback would be a major step forward and undoubtedly set back the Money Power agenda for decades. It would end the depression and halve the deficit over night. It would bust Wall Street profits, which is a great relief for Main Street paying for these profits through income tax.
Violent Statist Fiat Currency
This is an issue that never ceases to amaze me, when dealing with the Austrians: they’re completely clueless about the different proposals around. They all lump it together in the ‘Greenbacker’ label, that they try to make into something derogatory. That’s why I put together ‘A Primer for Recovering Austrians: the many systems behind ‘violent statist fiat’ currencies!‘, it concisely explores the main propositions at this point.
Of course, we must not forget that it is in the Austrian interest to keep it all neat and simple, so they can keep hammering away at the ‘statist fiat’ nonsense. How annoying, then, that interest-free, free-market units have been turning over untold billions per year for decades.That there are highly developed proposals out there even more powerful than the Greenback, devolving money power even further to the commonwealth and individuals.
The ‘Paper vs. Gold’ meme now sweeping the Alternative Media is just another pleasant Keynesianism vs. Austrianism dialectic, both ignoring the paper based interest-free alternatives like the Greenback, Social Credit and Mutual Credit.
End the Fed
Woods opens up his hitpiece with the now almost universal Libertarian rechristening of the Truth Movement, that erupted after the 9/11 attacks, to the ‘End the Fed’ movement.
Of course, most Libertarian leaders, in unisono with their dialectical brethren of the left like Noam Chomsky, say Arabs attacked New York.
The Austrians like to slap down ‘conspiracy theories’, just like the MSM do. The only conspiracy they see is the State, but of course ‘free market’ players are just wonderful people in it for ‘enlightened altruism’ Ayn Rand style, aka wholesale profiteering and rent seeking, all ultimately for the greater good.
Murray Rothbard made a few highly amusing cases in the typically deductionist Austrian way, meaning utterly disconnected from practical observation, ‘proving’ cartels in the market are impossible without the Government. Really funny stuff, highly recommended for comic relief.
Of course, as we know, the Bush administration was up to its eyeballs in this Mossad attack. So it’s actually a little weird the Austrians have so much difficulty coping with this rather blatant Government conspiracy.
Woods says the ‘End the Fed’ movement sees some people who don’t understand, because they are Greenbackers.
But it is clear that in the Truth Movement we have some Austrians who don’t understand because they are Money Power goldites.
There is no ‘End the Fed movement’ other than a wholly bogus controlled opposition effort, enabled by Alex Jones who certainly should know better, and some other stooges, disabling the patriots out there.
The Money Power is ready to dump the Fed and Austrianism is here to make sure they both get that and their coveted Gold based new currency order. It’s certainly not for nothing that Alan Greenspan is probably the most famous Austrian out there.
Tom Woods explodes the myth of elite financing of Libertarianism
He doesn’t really want to go into it, because it is such nonsense, but he did ask Mises biographer Guido Hülsmann to comment. Who then goes on to confirm the Rockefeller Institute sponsored Mises. How could he not?
Of course, he completely ignores the Volker Fund, Jesuit involvement in Libertarianism, Ayn Rand doing a Rothschild when she was writing Atlas Shrugged, the billions the Koch brothers poured into Libertarianism, after their father co-founded the Birch society (another bunch of good friends of Tom Woods, by the way) and Atlas Foundation strongman John Blundell explaining how they were ‘littering the world with ‘free market’ think tanks’.
He also tries to dispel this notion with the idea that Austrianism is fringe and thus financing failed. No students hear about Austrianism in college, he says.
Well, compared to the Mainstream, Austrianism is certainly small, although growing very rapidly. Ron Paul educated the masses on the wonders of Gold and deflation and many of them are all for it now. Ed Griffin on Fox, Napolitano all over the media, Peter Schiff and all the others. Compare that to what Populism and Interest-Free Economics receive in airtime.
Let’s also not forget that the Mont Pelerin guys (who are behind the Austrian theories) got eight economic ‘Noble prizes’ (no such thing actually exists, of course) during the last few decades. Not bad for a suppressed opposing system the elite so profoundly fear.
Obviously, as controlled opposition against the Main Stream Austrianism’s time had not yet come. It is only now that the Money Power is ready to kill the dollar and move on to a new currency order that Austrianism has become important.
But we don’t want to tease Tom too much: all these bribes are certainly a bit tasteless a conversation in polite society. Too conspiratorial, I’d say.
Most of the article is just one massive diatribe explaining where money comes from and how paper money must always be forced upon the public by the State, for it could not exist otherwise and Gold is the only money that will ever emerge from the free market. They always do this. You will not believe how many Austrians have been explaining ‘that first we bartered, but that was cumbersome and we needed money’.
The whole thing is dazzling, I’m still not sure what he’s actually saying, but it sure does not suggest great clarity of thought. Perhaps he was just scaring people away, I don’t know.
In the first place he attacks the notion that Interest plus Debt cannot be repaid. I’m not going into his reasoning, simply because he makes the case in the worst of ways: others have done so much better. There is some merit to it. But not much. Recently I penned a slightly revised appreciation of the situation and I’d be most interested to hear if any questions remain in this regard.
The debt can never be repaid, period.
Eternal growth of money is guaranteed with paper, eternal deflation guaranteed with Gold because of this issue.
Much worse: Usury costs the poorest 80% of the globe’s populace 5 to 10 trillion per year. I’d certainly be interested in Tom’s comment on this situation. Or any Austrian’s comment, I might add. Never heard anything about it from their side.
As said, Woods also claims Gold has historically been the only money coming out of the free market. Complete crap. The first Gold coins were minted by sovereigns, not by the market. Furthermore, ancient money was actually credit based: receipts for supplies stored in centrally controlled warehouses. This goes back all the way to Hammurabi.
Austrians, as does Woods, have a very fuzzy understanding of what money is. They will often say it’s ‘the most marketable commodity’. Or they’ll cite ‘marginal utility’. Maybe. But what is more marketable than promissory notes? What could have more marginal utility? Perhaps that’s why there are so many interest-free paper based free-market units out there, could be.
But let’s just stick to a simple definition: money is whatever we agree upon as a means of exchange. Even our friends at the Daily Bell have seen the light there.
Woods really takes fuzziness to the downright insane in this video. In it he says that if Greenbackers like debt-free money so much, why don’t they like Gold? Because, Woods explains, Gold is mined, coined and then spent into circulation. So Gold is debt-free!
Excuse me? Does he actually believe this, or is this just propaganda for more feeble minded consumption?
Gold mining adds maybe 1% to known reserves yearly. The rest is safe in Central Bank vaults. Does Tom really believe they will spend these reserves into circulation? Or will it be LENT into circulation, at interest?
As a final note, when dealing with a self-declared Catholic making a career of whitewashing Usury, it’s obligatory to mention that Anton Lavey is on record stating his satanist ‘religion’ is just ‘Ayn Rand’s philosophy with ritual and magic added’.
The level of thinking that these people promote is actually quite insulting to the public. Who, in turn, show how desensitized to outlandish nonsense they really have become, considering the sweeping ascent of Austrianism in the last five years or so.
However, considering the careful long term Money Power strategizing behind it all, we must not bear too harshly on the public and personally I’m very grateful for the ongoing opportunities Austrianism offers for pleasantries as the above.
Answering Tom Woods
Debunking Tom Woods’ ‘Catholic’ Austrian Economics (Memehunter)
How the Money Power spawns Libertarians
Greenbackers vs. Goldbugs, by Eric Blair (Activist Post)
Addendum: Meanwhile, the Daily Bell cannot let go either. The last few months they have taken the ‘Public Banking and the Greenback are fascist’ line. Because Hitler took money power away from the City and printed his own, everybody doing the same is now a Nazi. Rather predictable, in fact, we did predict this would happen. It’s called ‘Guilt by Association’ and is just one more of the logical fallacies Austrianism is famous for.
Just a few days ago they sighed with relief that “the apparent creation of bought-and-paid-for websites has diminished along with the eruption of fury against those who have the presumption to discuss freedom.”
They are so happy they declared victory by naming the article ‘Mises has won’. Apparently they miss our regular outings dealing with their monetary quackery. My good friend and close ally Memehunter tired a little bit of nurturing the smoldering ruins of Daily Bell credibility at the Daily Knell, focusing on more pressing priorities.
But don’t push your luck guys, he came out of retirement once, he’ll do it again should you get on his nerves with all too blatant manipulations of the debate…..
For years now, the collapse of the dollar has been in the cards. Recent developments show mounting pressure on the dollar’s reserve currency status. With a major international deflation going on, the threat of inflation through money printing is unreal. However, should the dollar’s reserve currency status end, the repatriation of trillions of petro- and eurodollars could lead to a strongly inflationary scenario.
The roles of a reserve currency are to finance international trade and to function as a store of value for Governments. Until the second world war it used to be the British pound, but with the demise of the British Empire, the pound lost its international relevance and was overtaken by the dollar. This was formalized in the 1944 Bretton Woods system. All other currencies were fiat currencies, but pegged to the dollar, which in turn was pegged to Gold at 40 dollars an ounce and redeemable for international trading partners.
With the dollar as the reserve currency, the US had to export dollars. In the early years after the war especially for Europe, the famous Eurodollars. This sounds great: print money and buy whatever you like. But with the Gold window it was also risky: overprinting could mean excess dollars would be exchanged back to Gold, depleting US Gold reserves.
This was also a weakness that those annoyed with American Hegemony could exploit. In 1967 the leftist press mogul Jean-Jacques Servan-Schreiber penned a famous screed called ‘le défi Américain’ (the American challenge’), arguing Europe was being colonized economically by superior American competition.
France, at the time, was run by de Gaulle, who never was impressed with Anglo-American supremacy. He made a point of exchanging every dollar he could lay his hands on as a means to undermine it.
In the late sixties the situation got badly out of hand because of the Great Society and the Vietnam war, very costly projects that were deficit financed, leading to serious inflationary pressures. Inflation that the US tried to export, leading to an excess of dollars abroad. Especially the resurging Deutschmark’s appreciation became untenable. The Europeans started pressuring the US to fix its deficits, provoking the US Treasury Secretary John Connally famous cry ‘the dollar is our currency and your problem’.
But the situation had become unsustainable and Nixon was forced to close the Gold window to stop the depletion of US gold. This was the end of the Bretton Woods system and from then on the major currencies were floated freely in the international currency markets.
But it did not end the dollar reserve currency status, as the Empire had been found another basis for it: they reached an agreement with the House of Saud, to accept only dollars for its oil. The Sauds agreed to invest their dollar wealth on Wall Street, making the deal even more powerful for the Empire. Saudi Arabia controlled OPEC and the dollar was saved: international oil trading is financed with dollar only. Since then we have been on an informal Black Gold standard, known as the petrodollar.
This situation was better than before, because overprinting of the dollar for international trade or to finance all sorts Empire projects could no longer be punished by depleting Gold reserves and would result only in rising prices.
In the last decade the problem of over printing was solved by artificially raising oil prices through the Peak Oil hoax, and ending Iraqi oil production. It must be understood that the Empire is not looking for more oil production. There is so much oil in the world that should it be drilled for freely, it would end the Money Power’s energy monopoly. The Iraq invasion and the quest for control of the Middle-East is to keep a lid on oil production. Saddam’s suicidal decision to accept euro for his oil only hastened his demise.
Even today Iraqi oil production is not even half of what it was before 1991. With the Western Oil companies now in charge, it will most likely never fully recover.
By raising the price for oil, the oil market has mopped up excess dollar supplies, which are now needed for the oil trade. As a result, the dollar has remained relatively stable in its value. Of course, it fits well with the agenda of decapitating the middle classes and under this agreement higher oil prices also means ever more oil profits invested in Wall Street.
Of course, the great boon of this for the Empire is that it can pay with worthless paper for real goods. It can eternally finance a major trade deficit.
Trade deficits are incorrectly understood as problematic.
From a nation’s point of view, the goal of trade is not to export, but to import. We export to give back for what we need from others. If you run the reserve currency, you don’t need to export as much as you import, because you can partially finance your imports with money printing. For all other nations this is impossible and trade deficits are lethal in the long run, as it leads to net capital outflow.
But the US Empire is in trouble. Its infrastructure is crumbling, its manufacturing base gone, it’s badly over extended. It needs ever more virulent threats to coerce the nations into dollar submission and just like Connally failed in 1971, the US is failing today. The Money Power is done with the Empire and the dollar and it is moving to the next phase. The dollar will have to step back and we are seeing a realignment.
The new currency order
China is moving towards a Gold backed yuan that will be very powerful in the international arena. Recently Australia, which is already completely dependent on China, with 30% of its exports going there, is preparing direct convertibility between the yuan and the Australian dollar, meaning they will no longer use US dollar to finance bilateral trade. This means less US dollars are needed in its reserve currency role.
In 2001 Goldman Sachs executive Jim O’Neill invented the BRIC’s. South Africa was later added, representing Africa and emphasizing its globalist agenda. Russia and China, as two powerful neighbors, obviously have long standing and important bilateral relations. But equally obviously, have little in common with Brazil, India and South Africa. India and China are actually sworn enemies. However, in 2009 they organized a first summit. Just a week ago we all of the sudden hear the BRICS are planning to open up a competitor to the IMF. They’re still working out the details and it’s not a done deal yet, but the move looks very serious.
And there is of course the euro, which, make no mistake, is in great shape. True, Eurocrat legitimacy is suffering because of the euro crisis, even in Germany the currency is losing support. But the euro crisis is purely for internal consumption, to sucker the nations into surrendering budget responsibility to Brussels. This is the final frontier for a full blown EU federalist Super State. While the euro is deeply hated, this is not really a problem for the Money Power: it isn’t in this business to make friends and it does not mind a big fight. It only fears real alternatives and these are nowhere to be seen. There is nobody proposing anything real, people are just letting off steam. Once they get their fiscal union, the crisis will quickly end. People have a short memory.
The euro was designed to be eventually backed by Gold and the ECB has enough of the stuff to be ready for the coming transition.
We are seeing the advent of the new currency order. There will be a number of more or less equal blocks: a dollar zone, a Yuan/BRICS zone and the euro, with the Yen and the Pound as lesser entities. These will later be able to converge to even more ‘cooperation’, in the Money Power’s relentless march towards World Currency.
These units will be at least partially Gold backed, implying long term deflationary pressures. Central Banks are buying Gold in major quantities, creating the interesting question why Gold prices have not risen in the last 18 months.
The problem for the United States will be to manage the transition. Trillions of dollars that will no longer be needed will have to be repatriated and this will lead to very strong inflationary pressures at home. It is unclear how the Fed is going to deal with that. It probably can’t. Furthermore, the US is probably in the worst of positions to deal with a new Gold standard. They claim to have 8,000 tonnes of Gold in Fort Knox, but nobody really believes that.
The hyperinflation scare that the Austrians have been promoting because of ‘money printing’ is ridiculous: we are in a stagflationary depression and prices are rising because of speculation, not because of excess money. But when the dollar loses its current status, long term price rises will become the norm.
The Greatest Depression has only just started.
Here’s a highly recommended post by Roberts, the Assault on Gold. It makes a plausible case for massive Fed bullion busting. As discussed in ‘why is Gold not Rising?‘, the ascent of Gold was a carefully orchestrated operation, but it probably got out of hand in 2011. Since then the Fed has been very active on COMEX again. With CB’s and market players buying massive amounts, it’s the only logical explanation for stalling bullion. The fall of COMEX and the fall of the Dollar are basically an evil twin, they will happen simultaneously and because of each other.
Why are we hearing of the ‘Triffin Dilemma’ all of the sudden?
Why is Gold not rising?
Is China part of the New World Order?
The US Empire is Not the Money Power!
The Euro Crisis
Phoenix Rising, the Return of the Gold Standard
This week three banks, ING, Rabo and SNS, simultaneously suffered major computer malfunctions, leading to a temporary closure of their on-line facilities. Their problems were ‘unrelated’. It is completely unprecedented. The chances of a coincidence are close to zero. For years some in the blogosphere have speculated that ‘computer problems’ might be a good excuse for the Money Power to call a bank holiday and ‘reorganize’ their system. This looks like a drill.
ING’s problems were the worst, it’s off-line again today. ING is one of the biggest banks in Europe with a trillion plus balance and one of the living dead. It’s a zombie bank, propped up with massive credit lines from the ECB and handouts and guarantees from the Dutch taxpayer. It has 40 billion of Spanish debt on its books and it needs to write off untold billions, maybe as much as hundreds of billions, from its commercial real estate portfolio. Obviously this would vaporize the Dutch economy over night, should it have to bail out ING.
The Dutch economy is one of the worst in the world in terms of debt. All the nonsense about ‘lazy Greeks’ and ‘thrifty and frugal Dutch’ is just that: complete baloney. We have a usurious debt based monetary system. However hard one works, eternally growing debt and interest charges are inevitable, it has nothing to do with character.
Meanwhile, the economy is being destroyed with ridiculous austerity, 45 billion was taken out of the budget over the last two years. The Government loses 80 cents in income due to falling aggregate demand in the economy for every euro it takes out of the economy through taxation or austerity. Same thing that destroyed Southern Europe. It’s incredible that this kind of insanity can happen in the modern age.
Considering the situation in Cyprus and depositors now knowing they are fair game, it seems clear that the Money Power is organizing a bank run to further the depression it wants so badly.
However unpleasant it is to be on the same side as these vultures in this case, the advice remains the same: get your money out of the bank now. The advice is now not just correct because of moral imperative, it is becoming a matter of personal financial survival. True, it is becoming harder and harder to find safe havens, but the bank is absolutely not one of those, that’s for sure.
Why is the Money Power busting its own banks? They don’t really care: all the major banks own each other. 100% market share remains guaranteed, even if some of them drop. Also, the smaller banks go first and they are gobbled up by the big boys, often with ECB/Fed/taxpayer financial support. So this crunch is also a major consolidation effort by the Money Power. Busting the banks is a good way to plausibly sell the many that the good days are over.
So what does this computer malfunction mean? It’s an exercise. And probably not for Holland itself. The Dutch economy is midsized and a good place for a drill for something bigger. Like the US, which is the real target here. Two weeks ago, Chase Manhattan had some problems too: accounts were suddenly drained and set to zero. Interestingly, this was also going on with ING.
The US has been coasting relatively unscathed through the crunch up to now. Because the Fed printed like crazy, all in all some 16 trillion were lent out to its buddy insider banks worldwide to prop up their balances. This money never enters the real economy, because it used as capital to replace losses to the Mortgage Backed Securities scam that popped in 2008. Hence no inflation.
But this is coming to an end and in the next round of the crunch something major is going to go down.
We have the funniest stockmarket boom ever, bankers resigning all over the place, Cyprus, and now this.
Something’s on. And it’s big.
Addendum: I forgot (but Henry didn’t) to mention ABN-AMRO, another one of the Dutch Big Five, who two weeks ago let their customers know they would stop physical delivery of Gold and that all those with a Gold account would be paid in Euro if they liquidate their account. I’m sure most readers connected this dot, though. This certainly adds to the notion that there is some kind of trial run going on in the Netherlands.
The elegant P<P+I equation points in the right direction but it is incomplete and needs further analysis. Not only does it ignore the velocity of circulation, but also the question whether the interest is spent back into circulation. The issue is important, both in terms of truth-seeking and Austrians and the Mainstream subverting the argument.
Can all debt be repaid in a usurious credit system? The P<P+I (P=Principal, I=Interest) equation suggests it cannot. For the longest time we have been maintaining that the principal is created, but not the interest and thus eternal indebtedness is part of the system. A closer look shows the problem is more complicated and the original proposition not per se correct.
Interest-Free Economics has always assumed that P=Money Supply (MS) if the money supply is debt-based. This ignores the crucial factor of velocity, the number of times the money supply changes hands in a given time span. The effective money supply (r(eal)MS) is Principal x Velocity: rMS = P x V.
Another vital issue is the question whether the interest is spent back into circulation. If it is not, it is bound to cause problems.
Here’s an analysis of the implications of these two overlooked factors:
A: slow circulation.
Let’s say P=100 and I=10 and velocity is 1. We are in an economy of two players. Let’s say the loan is for a year and that it has to be repaid at the end of the year. My partner gives me the loan so we don’t need a third party.
We pay the other participant 100 at the beginning of the year. Velocity is 1 and P=MS, so he’ll buy something worth 100 from us at the end of it. It’s easy to see that at the end of the year we will have 100 income to pay off the principal, but we will have to borrow an extra 10 to pay off P + I.
So in this example the original proposition is correct.
B: Good circulation, interest not spent into circulation.
Now let’s see what happens if velocity is 20. I go into debt, pay my supplier and he busy with me. I save 1 because I know I need to pay interest at the end of the year, so I by 99 worth with him. He buys 99 with me and I save another 1 for the interest payment. In the final transaction, I have saved 9, my partner buys 91 with me and I collect the remaining 1 for the interest payment. I have the interest, but only 90 for the principal.
It matters not, whether I save to settle the interest payment at the end of the year, or whether I pay the interest immediately, while the lender does not spend it. If the interest is not immediately circulated, no matter the speed of circulation of the remaining money supply, there will be a shortage of money. I will not have enough to pay off P + I.
Again: P < P + I still stands.
C: Good circulation, interest spent into circulation.
Now let’s say I pay the interest immediately and my partner spends the received interest back into circulation. Velocity is again 20.
So I buy 99 worth + I pay 1 interest. He buys back 100 worth of goods. I again buy 99 worth + 1 interest. Etc.
In this example, after 20 (10 buys and sells each) transactions, I will have paid off the interest during the year and at the end of the period, I will have 100 to pay off the principal.
The conclusion is, that if velocity is high enough and the interest is immediately spent into circulation, the P + I > P equation does not mean that debt plus interest cannot be settled with only P as the money supply.
However, these are two big ifs. In fact: they both don’t fly.
Getting to the bottom of the issue
In the first place, velocity. As it happens, Usury is a key factor in destroying velocity of money. It greatly encourages hoarding, especially in the current banking system. Postponing paying your bills nets you income through interest. So Here’s a graph, courtesy of wiki, the green line shows velocity, the left axis shows the relevant scale:
As we can see, velocity is very low in the economy, money changes hands a little more than once every two years. It went down even further during the last few years, because of the depression. Considering the the example above, it is clear that velocity is far from sufficient to allow interest payments on the money supply, meaning we have serious deflationary pressures because of interest payments.
Then the other issue: is the interest spent back into circulation? The answer is: far from all the interest payments are spent back into circulation. Sure, the banks pay their people massively bloated bribes (‘bonuses’) for their handiwork and to control their conscience, and they build major citadels (‘office buildings) everywhere, but banking is an incredibly profitable business and this profit is not spent back into circulation.
In the first place, banks use profit as capital reserve requirements for more lending. Basically this means the money is lent back into circulation, not spent. Because it is lent back into circulation, even more money is needed for interest payments, aggravating an already grim situation.
Secondly, there is the two loop economy. I discussed it in an article on stagflation. There are two economies. The real one, where we operate, actually producing all sorts of stuff. Then there is the financial economy. A large part of it is accessible only to insiders and the financial industry. Normal people can access it only via the Stock Exchange, where their assets are disowned through insider trading. Turnover in the financial economy dwarfs that of the real one. Most of the money out there is in the financial economy. This, I venture to suggest, is another reason why velocity is so slow: in the real economy money circulates much quicker, but most money is in the financial economy which is not counted in the GDP figures. Meaning only a small percentage of our money supply is used to finance the real economy. Here’s a graph of the financial economy:
Make no mistake: the two loop economy is real. Recently insider Mark Faber actually mentioned it, it’s the first time I ever saw it mentioned in the media.
The financial economy is where the big bucks are being made by the vampire class. Their derivatives, forex, insider trading. It’s where all their gains from the stock market and other fleecing of the non-sophisticated investors is going. Unfortunately for them they cannot really use this money in the real economy, because it would cause an immediate hyperinflation, but it does give them full control over the real economy and it is an important part of their domination. It also explains why QE1, 2, 3, x have not led to rising prices: There was a massive deflation in the financial economy as a result of the busted Mortgage Backed Securities hoax and Bernanke slyly fixed only that, while not adding any money to the real economy, which needs to be strangled with austerity, sequestration, the fiscal cliff and whatever tool they have to aggravate the depression.
The point is: much of the interest is siphoned off to the financial economy. Meaning it is not circulated back into the real one. Meaning usury does deflate the money supply and interest + debt can never be settled.
It’s an important issue. The Mainstream and the Austrians have been getting to terms with the original P + I > P equation. The argument in its original form is no longer operable. More importantly: we owe it to ourselves and the people we talk with to get to the heart of the matter and take both truth and their arguments seriously, if they have merit.
In an ideal scenario, when velocity is sufficient and the interest is spent back into circulation, principal plus interest can be repaid.
But for other reasons, the basic problem still is the same: velocity is very low in practice, making it impossible to pay for both and the leaking of money to the financial economy, the ‘upper loop’ is probably even worse.
I hope this article can lead to further discussion, perhaps the experts can shoot a hole in it, making it irrelevant or better. I’m not a mathematician, and I’m pretty sure people like Gauvin, Turmel or Montagne would put it more elegantly, but I hope to have made the point clear.
Please comment if you have anything to add and share this article with those you know are into this line of thinking.
Dick Eastman is the main thinker on the two loop economy, a phrase he coined. Unfortunately he does not operate a website, so he cannot be found on the web and there are no archives of his previous work to be searched. But Dick is one of the most outstanding economists out there, and he sends out emails on a daily basis, you can contact him at oldickeastman(at)q.com if you want to get to know his work.
The struggle against the Money Power and its Usury is only the physical arm of the real spiritual battle: the war against self. It is a way of showing that we are in this world, but not of it.
Usury and Deflation, which is not a lesser scourge, are two of the key ways for Satan to weaponize the love of money, which is the root of all evil.
Not only do they redistribute wealth to the rich, they create artificial scarcity of money.
Scarcity of money is yet another paradoxical monetary issue. Even today, while the world seems awash in cash, money is scarce in terms of Interest-Free Economics, because there is not enough money in circulation to provide for a fully operational economy. Scarcity of money hinders the match between supply and demand.
Money is scarce when there is all the capital we need and all the labor we need, while not all the work is getting done. That’s the situation today, like it has been for a very long time now.
Usury creates scarcity of money, because it systematically redistributes to the rich who recirculate only that part of their wealth they need for conspicuous consumption and ‘investments’ that will only further increase their wealth. Deflation is taking money out of circulation, so its relation to the theme is self-explanatory.
The love of money is the love of self
Because money is scarce, there is always unemployment. Because there is always unemployment, there is always an existential angst. Because there is this fundamental fear, people focus on survival, even at the cost of their brethren. Because they focus on survival instead of doing His will and relying on His abundant Providence, self grows. Because self grows, Christ dwindles.
Jesus taught we need take up our cross to follow Him. And for what is the cross? To crucify self on, of course. That is our main task, every day of our lives. Few hear of this in churches, because the many prefer the easy grace: proclaiming Jesus is Lord and singing nice songs in church on Sunday. To them Christianity is more a social occasion, a pleasant illusion to cover up their fear, shame and guilt. They are not saved, alas. They are the goats, sent to the left.
Killing self never was a popular option. Most people continue to cling to the five aggregates (awareness, mind, heart, senses and body), as the Buddha put it, because they really believe they are self and are not desperate enough to look hard enough for a way out.
Sometimes I am, but self is an incredibly addictive object. Every time my focus on Christ ends my misery, I immediately disconnect from Him for more self-inflicted pain. It is indeed true that it is not darkness we fear, but the Light.
Self crucifixion certainly sounds painful, but that is the voice of self and as always it is wrong. It is self that is the cause of all pain. Jesus did not leave us with painful messages. Truth only hurts in the beginning, when we are still enthralled with the lie. He left us with the key to liberation and He sure walked His talk.
It took me a decade to understand what self or ego actually is. Once you see it, it’s simple enough though: self is everything that preoccupies awareness. Awareness itself is the most sticky bit of self.
“He must increase, but I must decrease.” (John 3:30) is how John the Baptist put it. The endgame of human development is permanent, complete focus on Christ. Through Him we will know our Father too.
Getting our priorities straight
By combating Usury and Deflation we hope to alleviate the pressures of artificial scarcity and to provide people with a more relaxed lifestyle. The idea is that if we take away fear for survival, people will be less absorbed by material issues. Less prone to the love of money.
In all fairness: it’s an uphill struggle. The premise is incorrect. Because it is love of self that allows the system, not the other way around. It is because people love self, that they look up to others with a bigger self. People have no compassion for the ultra wealthy, for their enslavement to matter. They see them as an example. They want to be one of them, instead of seeing these people have a problem and are an even bigger one.
Why fix the system if it is not broken? This is the question that most people don’t even care to ask, because to them the answer seems so self-evident.
True reform, true economic liberation can only come from ending our preoccupation with self. Recently a friend of mine told me Rudolf Steiner taught that society can only function well if people are willing to give, not-for-profit, the added value of their work to the community.
He was right.
It’s a mistake to say: but this can only work when everybody does it. It starts to work when the first one does it. In fact, it were the people who did this throughout the ages that kept humanity going, notwithstanding the horrible odds.
The Greatest Victory
And he departed from our sight that we might return to our heart, and there find Him. For He departed, and behold, He is here. ~St Augustine
Thank you Jesus, for showing us the way. Thank you Christ for being in all our hearts always. For responding every time we disconnect from self. For the ever growing bliss with every step we take in your direction. For your providence, your forgiveness, for your willingness to rule our hearts and destinies if we let you.
May our faith, our hope and above all, our charity grow every day.
Thank you Father, for the Christ.
“After silence, that which comes nearest to expressing the inexpressible is music.”
Bitcoin now stands at $89. It’s the most ridiculous bubble in ages and its bust will be legendary.
Not an extensive analysis this time, just calling the now obvious: Bitcoin is trouble.
Bitcoin was at a mere $6 only 15 months ago and traded at $30 last month. Combined value of outstanding Bitcoins is now almost $1 billion.
As we have analyzed Bitcoin was designed to be deflationary. As a result it suffers from a rising exchange rate, making people hoard it instead of using it for what money was designed to do: exchange goods and services. As it stands now, Bitcoin is just another completely bogus speculative item.
The whole thing is ridiculous, of course: people are paying $89 for just bits and bytes and it is basically no different than speculating with cyberland and ‘avatars’ in on-line computer games. Hardly any serious goods or services can be bought with Bitcoin.
Once reality sinks in, people are going to suffer, not only because of their losses but also because of the dream. And there is a far greater issue here: Bitcoin’s failure will provide regulators with the ideal excuse to clamp down on free market units. The whole thing is starting to look so blatant, it’s probably not unfair to suggest this is just another problem-reaction-solution operation. Considering its shady designer, CIA involvement, recent news that the Government is already looking to get it under control and what is at stake, Bitcoin has become a major liability to free market monetary reform.
Hugo Chávez was loved by many, both in Venezuela and abroad. His fierce resistance of US Imperialism was welcome and much appreciated world-wide. But his domestic policies were openly Marxist and his most notable legacy is the Bolivarian Alliance for the America’s, aiming at social, economic and political integration of Latin American Nations. In short: he was a globalist.
Hugo Chávez is no longer with us. We’ll miss the old rascal: it’s always pleasant to hear people denounce the US Empire. He also did much to alleviate at least the worst of the poverty suffered by millions in Venezuela. These people were tyrannically oppressed by the Empire’s rule over Latin America, especially through its corporations. Millions will never forget him for it.
Resisting the Empire and helping so many out of the gutter in the process are surely noteworthy accomplishments. But we have been blinded so often by the old adage that ‘the enemy of my enemy is my friend’. And this is the case with Hugo Chávez too.
Was Chávez a mason? I guess he was. There is this masonic handshake with Obama. There are other signs. But I have not seen conclusive proof and it’s not like he was flashing their signs all over the place, so let’s reserve judgement until proof is delivered.
His great example, Simon Bolivar, definitely was. Bolivar led the rise against Spanish rule in northern Latin America in the early 1800′s. His masonic watchword was ‘liberty’, fitting well with that masonic construct known as the United States, which only a few decades earlier gained ‘independence’ from the City.
He became the president of a major country, named Gran Colombia, which existed between 1819 and 1830. After gaining independence from Spain, the country succumbed to a power struggle between those wanting a strong centralized state and those looking for regional autonomy in a federation. Bolivar led the quest for centralization of power, an eternal tell tale of the real enemy. In 1830 Gran Colombia ceased to exist: the conflict ended when it fell apart in a number of smaller entities, Venezuela, Colombia and Ecuador. Later Panama seceded from Colombia.
One of the Banker’s more memorable, yet unknown defeats. It certainly didn’t damage the reputation of their man Bolivar and that is probably not a coincidence. Money Power defeats are not part of the history they write, lest they might inspire others.
Chávez made the reliving of the Bolivarian dream a key part of his agenda. Venezuela is a fairly rich country because of its oil and Chávez invested billions upon billions in his project, called the Bolivarian Alliance for the America’s. It was Chávez’ answer to the failed US driven ‘Free Trade Area of the Americas’.
He financed FARC, a ridiculous outfit run by coke-dealers parading as Marxist champions of the people. True, they’re probably not worse than the Empire run Government in Bogota. But it’s always the same: the conflict itself is the goal and both protagonists either are directly run from the City, or are their most welcome stooges without realizing it.
The Marxist: did he really help the poor?
Chávez openly called for a ‘socialism of the 21st century’. He denounced the Soviet Union as State Capitalism, which is a very apt description. But his own politics were similar in many respects. He created thousands of ‘communal councils’ throughout the country. In Russian that’s ‘soviets’. They are touted as wonderful examples of ‘participatory democracy’, but outfits like these are actually comfortably run from the top down with tools like the ‘delphi method‘.
He started tens of thousands of state-owned cooperatives, financed with government credit.
As a result, the private sector tanked: during his reign the number of private sector jobs declined with an astonishing 30%. Half of Venezuelans depend on the informal economy to survive. Public payrolls have ballooned.
Venezuela enjoyed an unprecedented oil-boom under Chávez and he used some of this money to build Social Services, alleviating the plight of the poor. Housing was a top priority for him and public spending on health also rose significantly, from 1.6% of GDP in 2000 to 7.7% in 2006. These are basically his main achievements. But an oil-boom will end and it remains to be seen whether the welfare state is sustainable with such a severely mauled private sector.
Chávez did absolutely nothing about the real issue: banking, debt and usury. The Venezuelan Central bank is State owned, like in most nations, except the US. But State owned means: providing State sanction to private banks to loot economy with their usury.
Its banks are private, many are run by his pals. There was a crisis in Venezuelan banking a few years ago, leading to nationalization of some of them. Meaning the Venezuelans were on the hook for their ‘balances’, better called black holes. He actually arrested a handful of bankers. But most were left to continue their plunder unscathed.
While he wisely paid off all debt to the IMF and the World Bank in 2008, Public Debt itself rose from $1400 per capita in 2002 to $3400 in 2010. During this time there was a major inflation, the Bolívar lost 90% of its value. Meanwhile, he fixed the Bolívar-Dollar exchange rate at only one third of the Dollar’s real value, an incredible subsidy for Transnationals repatriating their profits and the wealthy importing luxury goods. The poor paid for this subsidy and it cost them untold billions.
In short: while redistributing wealth from the middle classes to the poor through taxation, monetary slavery, our real predicament, ruled supreme during his reign.
Chávez was a self-styled ‘socialist-feminist’, attacking paternal rights and the family.
“in 2008, during an event to commemorate the 9th anniversary of the National Institute of Women (which is now a government ministry) Chávez criticized machismo and declared himself a “convinced socialist-feminist”.
“Socialists must be feminists or they won’t be complete human beings. With the support of our women we must strengthen unity in Venezuela… We have to take firm steps towards…the total emancipation of gender and be more just with our women,” he said.
He added that women were condemned by history, but the “Bolivarian administration developed community plans against family violence and in favor of single mothers, which has meant huge positive advances”.” (Source)
The results have been predictable: sexual degeneracy, single mums and escalating teen pregnancy.
Also not helping the poor is the fact that Venezuela succumbed to an incredible rise in crime under his watch. Hard to believe, but these days one is more likely to be murdered Caracas than in Kabul or Baghdad.
As usual with commie strongmen ‘helping the poor’, Hugo took good care of himself: he seems to have owned between one and two billion dollars at the time of his death. Not bad for a kid from the gutter.
Many people will never forget Hugo Chávez. He helped emancipate the poorest. He scolded the Empire.
But his legacy is built on quicksand and in the typically Marxist way he did nothing to stop the root cause of poverty. All he did was destroy the private sector and the middle classes to give to the poor and to centralize power in Caracas by switching from a private economy to a State run one. The wealthy had nothing to fear and much to gain under his rule. He became very wealthy himself. Meanwhile he furthered the Internationalist agenda by laying the foundation for Latin American ‘cooperation’.
It remains difficult to see for many that the evil US Empire is ‘opposed’ by no less evil forces. Be it the Russian, Chinese or whatever leadership.
Hugo Chávez was one of them.
A few months ago Robert Stark interviewed me again. The result was recently posted at Counter Currents.
You can listen to the interview here.
Some points we discussed:
- The essence of capitalism
- Satanism as Ayn Rand’s Objectivism plus rituals
- How the wealth of monopolies is based on a lie
- The Catholic arm of usury and libertarianism
- The intellectual framework of the great hoax known as libertarianism
- The basic ideas of Keynesian economics
- The “End the Fed” movement as false front
- Public Banking as not interest free
- The Jak Bank of Sweden; its four principles
- Usury as prohibitive of long term investment
- The affiliation of anti-usury movements with anti-Semitism
(left: one of those Cypriots holding the bag)
In a stunning, but inevitable development, savers are getting a haircut in Cyprus. Raping depositors, however necessary if they insist on keeping the banks open, will only further erode confidence in the system. Did the Money Power miscalculate? Are they upping the ante in preparation for their endgame? Or was their hand forced by mounting German opposition?
‘The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks.’
The euro may not fail, because if it does, they will never be able to sell World Currency. If they can’t even make it work in Europe, how is it going to work on a global scale? That’s the reason why all member states are kept on board at whatever cost, either to Brussels, Frankfurt, the national economies or even, it seems, the banking system itself.
It’s not unfair
The story of today is about those poor savers that did absolutely nothing wrong, are indeed the backbone of the economy, and are now being mauled so badly. But this celebration of victimhood is not to the point. What is really absurd, is forcing the taxpayer to guarantee the holdings of savers. Meaning the poor guarantee those that actually do have money. The taxpayer guarantees of deposits always were a clear sign of banking supremacy. Banks have been going bust routinely for centuries and nobody would have kept a dime with them, without the depositor guarantees. It’s just another example of how they privatize profit and socialize loss.
The truth is that the banking system could not exist without savers and the banking system is the scourge of the world. So savers are not only insanely irresponsible with their own money, they’re backstabbing all the rest of us too with keeping their money in banks. True, very few will agree with this line, but it seems the inescapable conclusion of a clear cut analysis of our long term predicament as interest-slaves.
So what’s the story?
What are the forces driving this seemingly suicidal step?
During the negotiations about the ‘rescue’, the issue of the Bond holders was of prime importance. Prime Minister Juncker of the small Bankster nation of Luxemburg warned against a Bond holder haircut and indeed they seem to have been spared. Although viper bank Barclays warned that even touching deposits was a clear threat to Bond holder confidence. The Bond market is everything in finance and we’ll know the end is there if they quit the market. They paid in Greece, but it seems they managed to scare the Germans and the IMF away from their assets this time.
This is in fact a crucial trade off: lest we forget, the Bond holders are mainly the international banking cartel itself. So either it pays for the debt crisis they created themselves with direct haircuts, or by raping the depositors, whose confidence they need in the long run. And of course: making the banks pay just creates a new round of busts for the ‘too big to fails’, ‘forcing’ the taxpayer into a new round of bailouts.
The key driver behind the Euro crisis is the Money Power agenda of consolidating power in Brussels. The issue is fiscal union. Over the last few decades a lot of political power has been centralized in Brussels. About half of European legislation is already from there, instead of national capitals. But real political power is with those running the budget and that’s what Brussels is after here. The Euro crisis’ main goal, from the Money Power’s point of view, is to sucker people into handing over the power over their budgets to Brussels. How this is achieved is of lesser import, there are several ways.
One of them is the infamous European Stability Mechanism (ESM), an utterly tyrannical outfit, financed by the Nations and run, without any democratic oversight, by a commission of finance ministers. The ESM’s goal is to bail out any bank even before it becomes a problem. The ESM is backed by a law forcing the nations to cough up any sum the ESM demands within seven days.
The other is ECB money printing. The big difference between the Fed and the ECB is, that the Fed is backed by only one Government and the interests of the Fed and Washington are highly aligned. The Fed will always provide Washington with whatever liquidity needs. The US cannot go bust, because the Fed will always print whatever is needed. Nowadays, with nobody buying US Treasuries, the Fed simply provides the Government with all the money it needs at close to 0%. This is not possible in Europe, because if the Spanish need money, all other Governments, most notably the Germans, are on the hook for it.
This is the reason why the US has not found itself in the kind of debt trap that destroyed Spain, Italy, Greece, Portugal and Ireland. Had these nations still been able to print their own money, they would not have had these problems either.
Structural ECB money printing would make a mockery of ‘fiscal independence’ and would create an almost unstoppable driver for further fiscal integration, as all the nations would in effect be guaranteeing each other and the weaker nations would have to comply with the stronger nations’ demands.
This was the real ‘break through’ behind ECB boss Draghi’s ‘we’ll do whatever it takes’ back in July 2012: what he was really saying was that the ECB, for the first time, would interfere in the sovereign debt market in a major way: printing to keep borrowing costs down for the PIIGS nations. However, although the Germans backed this statement, gnashing teeth and all, they are far from willing to go all the way. They are not going to allow a real debasement of the euro. Most certainly not if they are on the hook for it.
German support for the euro is still fairly strong. The country has benefited immensely from the crisis. Structural imbalances have provided Germany with great exporting opportunities throughout the zone. The nation has seen a massive capital influx from money leaving the South due to lack of confidence. This capital has generated a bit of a boom while the rest of the world burns. But while Germans love the upside of European Colonization through the euro, they hate the downside: backing Southern debt. Merkel is dealing with plummeting confidence and recently an anti Euro party was launched.
People like Merkel and Schauble (the German finance minister who also coordinated the Cyprus deal) are total NWO insiders, but most lower politicians are kept in check with ‘political correctness’ and with the mounting pressures of the crunch, this shallow veneer is becoming ever more fragile. Nationalism, a lethal enemy to Globalism, is rearing its almost forgotten head and the utter disgust with the bankers and local elites are becoming hard to avoid.
So we see two basic conflicts: one being the hard choice for the bankers of either being shorn themselves or to rape the depositors they need in the long run and on the other hand the German refusal to pay the price for the great benefits the euro has brought them.
Of course, the tensions in Europe’s South continue to escalate also. Only a few days ago the Spanish police took to the streets to apologize to the people that they were fighting them, instead of arresting the Bankers. In the Netherlands, another key member, people are refusing austerity to destroy their economy like it did in the PIIGS nations.
The euro may not fail. If it does, it would be a devastating blow to the agenda of World Currency. Rest assured that the Cypriots were threatened with sulfur and brimstone.
The original German demand seems to have been taking 40% of deposits, to avoid further (German) tax payer or ECB involvement. Obviously this is not sustainable: just this Cyprus thing is going to have major consequences. Already we hear of taking 15% of Italian savings but this is not doable. It would mean war. The Italians just did away with Goldman Sachs alumni, Trilateralist and German backed strong man ‘Super’ Mario Monti . They went for Beppe Grillo and it’s not hard to imagine what he would make of such a move. We would see quick new elections in Italy and the end of the current order.
Throughout the South local elites face extinction. In the US it is clear the Government is preparing for civil war, depleting national ammunition production, buying thousands of tanks for the DHS and the recent confirmation of manned and ready internment camps throughout the United States.
Of course, many rational real solutions are available to the credit crisis. But all of these imply the end of banker hegemony and that is, after all, what it is all about.
It remains impossible to fathom it all in real time. Their smoke and mirrors will always fool us and only with hindsight can it all be really understood. But the question of today is: is the Money Power still in control and preparing for a final showdown, or is all this a sign of weakness? It seems fair to say we will know the answer to this question perhaps sooner than most might have imagined.
The latest news (3/19/13 7:11 pm GMT) is that parliament in Nicosia has declined to go along. The whole thing is in disarray and nobody knows what’s next.
Take your Money out of the Bank NOW! (includes video)
Financial Warfare 2012: Boycott All Banks
Germany, the Money Power’s Golem in Europe
The Battle for Europe: will the people or the Euro survive?
High Treason: The European Stability Mechanism
The Wolfson Prize, I win!
Debt Repudiation or an Interest Strike?
Mutual Credit, the Astonishingly Simple Truth about Money Creation
The Swiss WIR, or: How to Defeat the Money Power
It was bound to happen and it’s a miracle it didn’t happen before. But in the next round of the crunch, savers will pay for their trust in banks. Cyprus is the first to do the right thing. Savers will be levied to keep the banks going: 10% on their holdings over 100k euro.
Obviously, it’s a disgrace that those without savings are paying to make whole those hoarding cash at banks when these banks do what they do all the time: go bust. That’s, after all, the implication of Government guarantees of these savings.
Cypriots will pay a 10% ‘levy’ of savings over 100,000 euros and almost 7% over savings below that.
Now that the taxpayer is broke (and upset), the inevitable is happening. It will only get worse. Governments are as broke as the banks and can no longer keep up guarantees of savings. And of course, why would they? Why do the poor have to guarantee the holdings of the middle class and the wealthy?
People keeping their money at the bank are not only supporting their own slavery, they are risking losing everything.
Here’s the Guardian reporting. Angry Cypriots are trying to get their money from the banks, but they closed down. So let this be a final stern warning, not from me, but from the real world: if you’re one of the happy few still holding money, get it out of the bank now.