It’s not currently in China’s interest to destroy the dollar (US authorities are doing a fine job of that on their own) but when the final destruction occurs, a Chinese gold-backed yuan could supplant the dollar as the world’s reserve currency. From Alasdair Macleod at goldmoney.com:
This article describes how China can escape the fate of a dollar collapse by tying the yuan to gold. There is little doubt she has access to sufficient gold. Currently, her interest is to preserve the dollar, not destroy it, because it is the principal means of Chinese foreign interests being secured .
Furthermore, a return to sound money requires China to reverse its interventionism under Xi, returning to Deng Xiaoping’s original vision. Sound money can only last if the relationship between the state and the wider economy is properly addressed.
Of all the major economies, China’s is best placed to implement a sound money solution. At the moment it seems unlikely the necessary reforms will be forthcoming; but a general collapse of the global fiat currency regime presents the opportunity for reassessment and change.
In last week’s Insight I examined the position of the US dollar, given the Fed’s current monetary policies, and concluded that the Fed’s dollar is likely to become valueless by the end of this year. The consequences for other major currencies — the euro, yen and pound — are that they are likely to fall with the dollar. This is because they adopt the same monetary policies, the same macroeconomic fallacies, and through the Bank for International Settlements, G7 and G20 meetings agree to continue to be bound by common policies. While the intention is for all to survive by working together, instead it ensures that they all sink together.
The string of absurdities that is Black Lives Matter’s political philosophy reaches its apogee with the group’s embrace of Marxism. From Mark Glennon at wirepoints.org:
“You can’t make an omelet without breaking eggs.” In George Orwell’s day — the 1930s — that’s what supporters of violent, Marxist revolution often said in justification.
Orwell, the stunningly prescient author of Nineteen Eighty-Four, had a simple response: “Where’s the omelet?”
An honest look at the omelet offered by Black Lives Matter is long overdue, particularly for BLM Chicago. What do they want? Do its supporters and apologists know?
Where’s their omelet?
In an interview about Black Lives Matter, its national co-founder Patrisse Cullors said, “We actually do have an ideological frame. “Myself and Alicia [Alicia Garza, another co-founder] in particular are trained organizers. We are trained Marxists.”
Chicago BLMers are likewise trained.
Watch the video meeting they hosted last week titled, “Black Abolitionist Huddle: On How We Win Police Abolition.” You will see that many of them are very fluent with Marxist rhetoric, particularly the modern version focused on toppling “late stage capitalism.”
This article was written in 1992 and the tone is probably more hopeful than if it were written now. From Ralph Raico at lewrockwell.com:
[This article appeared in the Future of Freedom Foundation’s Freedom Daily, August 1992]
Classical liberalism—or simply liberalism, as it was called until around the turn of the century—is the signature political philosophy of Western civilization. Hints and suggestions of the liberal idea can be found in other great cultures. But it was the distinctive society produced in Europe—and in the outposts of Europe, and above all America—that served as the seedbed of liberalism. In turn, that society was decisively shaped by the liberal movement.
Decentralization and the division of power have been the hallmarks of the history of Europe. After the fall of Rome, no empire was ever able to dominate the continent. Instead, Europe became a complex mosaic of competing nations, principalities, and city-states. The various rulers found themselves in competition with each other. If one of them indulged in predatory taxation or arbitrary confiscations of property, he might well lose his most productive citizens, who could “exit,” together with their capital. The kings also found powerful rivals in ambitious barons and in religious authorities that were backed by an international Church. Parliaments emerged that limited the taxing power of kings, and free cities arose with special charters that put the merchant elite in charge.
The objective of the coronavirus response and the riots.
During the coronavirus hoax and the George Floyd riots, most people kept their comments and criticisms to private conversations and internet postings. They didn’t respond to forced lockdowns or violence in the streets with violence of their own, although many of them have the ability and capacity to do so. Their restraint has been the primary force keeping whatever remains of the peace in this country.
The restraint stems from respect for that peace, their stake in maintaining it, and a fading hope that things will eventually get back to normal. People who run businesses, have jobs, own property, and are engaged in honest production have a vested interest in civil order. Only reluctantly will they overtly oppose unjust and idiotic government measures or rampaging rioters. Keeping their cold rage on ice, the vast majority will be moved to action only when they feel they have no other choice.
That day is coming. Consider the philosophical obscenity of governments renouncing their only justified reasons for existence—protecting individual rights, particularly the foundational rights of security for people and property. The Minneapolis city council voted to disband its police force and other jurisdictions are considering defunding theirs. Minneapolis and Seattle abandoned police stations to mobs. No word yet if criminals are going to swear off crime and embark on productive pursuits, or where they’ll find such pursuits with 30 plus million unemployed. The only certainly is that official appeasement will elicit nothing but what appeasement always elicits—contempt.
A lot of Americans, particularly the Baby Boomers, have trouble recognizing the limits imposed by reality. From Jeff Thomas at internationalman.com:
The baby-boomer generation were perhaps the most privileged generation that the US has ever spawned.
Their fathers returned from World War II, eager to get married, buy a house and start a family. The economy was booming, as, during the early years of the war, the US wisely stayed out, but provided tanks, helmets and even toothbrushes to those who were directly involved in the fray.
What’s more, they didn’t accept pound notes or francs; they accepted only gold. So, at the end of the war, when the manufacturing cities of Europe had been destroyed by bombs, the male populations decimated and the governments broke, the US was on a roll. They had most of the world’s gold and had first-rate manufacturing facilities that only had to switch from making jeeps and rifles to making cars and televisions.
That wave of wealth allowed the young married couples to spoil their children with whatever they wanted.
The boomer generation reached their teens in the 1960s, and having grown accustomed to receiving whatever they wanted in life, they were young adults and wanted to party. The phrase, “sex, drugs and rock ‘n’ roll” was coined and it was an apt one. Young Americans opted for plenty of all three.
Massive fiat debt creation is not going to save the day for global economies; the Greater Depression has arrived. All sorts of revolutionary activity and insurrection will follow. From Thorstein Polleit at mises.org:
The world seems to be on fire. A couple of months ago, the economic upswing was still firmly established, production expanded, and unemployment was declining. It all changed with the advent of the coronavirus or, to be precise: things turned really sour with the politically dictated lockdowns. As a reaction to the spread of the virus, governments in many countries ordered shops and firms to shut down and people to stay home. The inevitable result was a close to complete breakdown of the economic system. Hundreds of millions of people were thrown into outright despair; in India alone 120 million workers lost their jobs in April 2020.
The economic collapse sent the unbacked paper money system into a tailspin. Borrowers were unable to service their debt, and banks unwilling to roll over maturing loans, let alone extend new funds to struggling debtors. The entire credit pyramid was about to come crashing down. To prevent this from happening, governments and their central banks went “all in,” providing huge amounts of money to pay for people’s lost incomes and firms’ evaporating profits. Of course, governments do not have the money that they have promised to spend.
Central banks have started running the electronic printing presses, issuing great amounts of newly created money into the banking and financial sector and also injecting new balances into people’s accounts held with banks. In other words: as production contracts heavily, the quantity of money is rising strongly. This is, no doubt, an inflationary policy, for, if anything, inflation must be understood as an increase in the quantity of money. One possible outcome of a policy of increasing the quantity of money is price inflation: the increase in the money prices of goods and services.
The global central bank and government fiat debt expansion free should spell the end of such fiat debt. From Alasdair Macleod at goldmoney.com:
“In short, the Fed is committed to rescue businesses from the greatest economic catastrophe since the great depression and probably even greater than that, to fund the US Government’s rocketing budget deficits, fund the maintenance of domestic consumption directly or indirectly through the US Treasury, while pumping up financial markets to achieve these objectives and preserve the illusion of national wealth.
“Clearly, we stand on the threshold of an unprecedented monetary expansion.”
President Reagan memorably said that the nine words you don’t want to hear are “I’m from the government and I’m here to help.” Governments in all the major jurisdictions are now making good on that unwanted promise and are taking responsibility for everything from our shoulders.
Those receiving subsidies and loan guarantees are no doubt grateful, though they probably see it as the government’s duty and their right. But someone has to pay for it. In the past, by the redistribution of wealth through taxes it meant that the haves were taxed to give financial support to the have-nots, at least that was the story. Today, through monetary debasement nearly everyone benefits from monetary redistribution.
This is not a costless exercise. Governments are no longer robbing Peter to pay Paul, they are robbing Peter to pay Peter as well. You would think this is widely understood, but the Peters are so distracted by the apparent benefits they might or might not get that they don’t see the cost. They fail to appreciate that printing money is not just the marginal source of finance for excess government spending, but it has now become mainstream.
Sometimes it’s enlightening to hear what foreigners have to say about your country. From Xiaoran Tong at antiwar.com:
I recently came across a Facebook comment from a Hongkonger, arguing that the Chinese Communist Party (CCP) is nothing communist given China’s prosperous private sector after 1979’s reform. He then linked a video to mock the western electoral democracy that put Trump and Hitler into the office, leading to the conclusion that the West has no credential to criticize the one-party system of China for the lack of democracy. His comment represents the contemporary Chinese sentiment and is quite understandable given the ongoing color revolution in Hong Kong 2019, which is still lukewarm to this day, and the unrelenting blame of COVID19 on China. Although the hybrid war waged on China is unjust, the current Chinese mindset does not help to diffuse but only fuels the conflict even further.
The Facebook comment was right about CPP not being Communist that seeks total control of the economy by the state. Yet, China is state capitalism, an oligarchy, or crony capitalism. China is a plutocracy by the marriage between the party leadership (the state), and the monopolizing mega-corporations (the money) like Huawei, Ali, the four state-owned commercial banks, and Sinopec Group. It is far from a free-market where the only way to win a competition is to provide excellent products, where the state has no role in deciding the winner and no ability to finance itself by forcing the circulation of central-banknotes. China does have a private sector – the semi-free-market, the good part of our bad plutocracy. Still, even that part is weatheringafter supreme leader Xi took power, and most Chinese do no realize that we are marching back into a more planned, more communism, more Mao Zedong like system, slowly but surely. In China, life is artificially expensive under the tightening state control that imposes layers upon layers of covert taxation, to the point of causing hesitation to have more children.
The economic consequences of lockdown lunacy are going to be far more severe than most people reckon. From David Stockman at internationalman.com:
International Man: Decades of money printing have created enormous distortions in the market. It seems that the coronavirus popped the Everything Bubble. Where do you see the stock market going?
David Stockman: I’d say it’s going in a new direction, and it’s not up year after year, month after month, day after day.
It’s not going to be a world where buying the dip is a no-brainer thing to do.
I think the stock market was insanely valued when the S&P 500 peaked at 3,380 on February 19th.
It has got a long way yet to correct.
Who knows what earnings are going to be?
No one knows how long these lockdowns will last.
You look at the news flow every day, and it’s like a massive political arm-wrestling match between the White House and the Democratic governors and mayors.
I’m sure in their minds, these local and state politicians, think they’re serving the public good and protecting the safety and lives of their citizens. But, the fact is, back in the unstated regions of their brains, they’re focused on taking down the US economy, which was Trump’s only claim to reelection.
After the coronavirus outbreaks fades, people will be conditioned to being treated as cattle. From Eric Peters at ericpetersautos.com:
Will you Moooo like a good Corona Cow when the ranchers who are “the government” decree that businesses may reopen provided the workers – and customers – mask up?
The ranchers have already decreed masks mandatory in several states and – weirdly – more people seem to be wearing masks even though not yet mandated in other areas. Which is weird given that by now it is obvious – or ought to be – that WuFlu is a much greater threat to our liberty than our health.
Except for a few concentrated areas of population – and stupidity – such as New York, where Rancher Cuomo ordered oldsters with WuFlu to be housed with other oldsters (already weak) in nursing homes, assuring lots of oldsters would die from WuFlu – the number of people who’ve died from WuFlu is so low it would have gone unnoticed in normal times.
In Virginia, for instance, fewer than 500 over the past four months. This in a state with a population of nearly nine million people. The hospitals in Virginia and many other states are dying . . . for customers. They are going broke from lack of patients – and billing. See, for example, this plea to Rancher Coonman from the Virginia Hospital and Health Care Association, which speaks for 125,000 people employed by Virginia hospitals. They beg the Coonman to allow – such servile, despicable verbiage – hospitals to resume treating other than the Corona’d, of which there are far too few.
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