Category Archives: Currencies

The new deal is a bad old deal, by Alasdair Macleod

The Internet’s best economist explains why the New Deal was a huge mistake, and why we’re about to repeat it, except this time only huger. From Alasdair Macleod at goldmoney.com:

So far, the current economic situation, together with the response by major governments, compares with the run-in to the depression of the 1930s. Yet to come in the repetitious credit cycle is the collapse in financial asset values and a banking crisis.

When the scale of the banking crisis is known the scale of monetary inflation involved will become more obvious. But in the politics of it, Trump is being set up as the equivalent of Herbert Hoover, and presumably Joe Biden, if he is well advised, will soon campaign as a latter-day Roosevelt. In Britain, Boris Johnson has already called for a modern “new deal”, and in his “Hundred Days” his Chancellor is delivering it.

In the thirties, prices fell, only offset by the dollar’s devaluation in January 1934. This time, monetary inflation knows no limit. The wealth destruction through monetary inflation will be an added burden to contend with compared with the situation ninety years ago.

Introduction

Boris Johnson recently compared his reconstruction plan with Franklin D Roosevelt’s New Deal. Such is the myth of FDR and his new deal that even libertarian Boris now invokes them. Unless he is just being political, he shows he knows little about the economic situation that led to the depression.

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How the U.S. Government Debased My Coin Collection, by James Bovard

Governments, being corrupt institutions, corrupt their money. From James Bovard at libertarianinstitute.org:

Nnc Us 1907 G$20 Saint Gaudens (arabic)

Old coins vaccinated me against trusting politicians long before I grew my first scruffy beard. I began collecting coins when I was eight years old in 1965, the year President Lyndon Johnson began eliminating all the silver in new dimes, quarters, and half dollars. LBJ swore that there would be no profit in “hoarding” earlier coins “for the value of their silver content.” Wrong, dude: silver coins are now worth roughly fifteen times their face value.

History had always enthralled me, and handling old coins was like shaking hands with the pioneers who built this country. I wondered if the double dented 1853 quarter I bought at a coin show was ever involved in Huckleberry Finn–type adventures when “two bits” could buy a zesty time. I had a battered copper two-cent piece from 1864, the same year that Union general Phil Sheridan burned down the Shenandoah Valley where I was raised. Some of the coins I collected might now be banned as hate symbols, such as Indian Head pennies and Buffalo nickels (with an Indian portrait engraved on the front).

In the era of this nation’s birth, currency was often recognized as a character issue—specifically, the contemptible character of politicians. Shortly before the 1787 Constitutional Convention, George Washington warned that unsecured paper money would “ruin commerce, oppress the honest, and open the door to every species of fraud and injustice.”

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Great news from the most prosperous nation on earth, by Simon Black

You can inflate your way to prosperity, just look at Zimbabwe. From Simon Black at sovereignman.com:

By the mid-1990s, the economy of Zimbabwe was in serious trouble.

The national government under its dictator Robert Mugabe had spent years confiscating private property– real estate, businesses, factories, bank deposits, etc.

And unsurprisingly, this had a disastrous effect on the economy.

Productive citizens and talented entrepreneurs left Zimbabwe in droves– after all, who would want to keep operating under such awful conditions?

So within a few years, everything from food production to mining output to manufacturing had plummeted.

The banking sector collapsed. Unemployment soared. Tax revenue dried up.

So Mugabe did what most politicians would do in that position: he started printing money.

This is an old trick that governments have relied on for thousands of years.

The ‘denarius’ coin of ancient Rome, for example, contained 93.5% silver in the early 100s AD under Emperor Trajan. By the time Aurelian became emperor the following century, the coin contained only 5% silver.

And as the denarius became less and less valuable, prices across the empire soared. Merchants had to keep increasing their prices in order to receive the same amount of silver that they used to… so inflation was rampant.

This is precisely what happened in Zimbabwe.

The government conjured absurd quantities of money out of thin air in order to make ends meet… but the new money had no value.

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Under this new law, cryptocurrency could become illegal, by Simon Black

The US government has long sought back doors into encrypted systems and Congress is at it again. From Simon Black at sovereignman.com:

In early 1775, Benjamin Franklin and his European colleague, Charles Dumas, developed a secret method of communicating with each other.

Dumas had spent years gathering intelligence in Europe to assist the Americans in their revolt against Britain. But the two needed a secure way to pass information across the Atlantic.

So they developed a special cipher– a crude form of encryption where letters and words were substituted for numerals.

The decryption key changed with every letter; so, for example, in a letter from Franklin dated March 2, 1781, the word “MERCHANT” was written as “23. 3. 4. 13. 6. 14. 24. 18.”

At the same time, the physician James Jay (brother to the first Chief Justice of the Supreme Court, John Jay) developed an invisible ink so that revolutionary leaders could communicate in secret.

These encrypted communications became critical to the Revolution. And it’s safe to say there would probably not be a United States if they hadn’t developed a secure way to send information.

Ironically, politicians are trying to destroy modern methods of encryption.

Over the past few months while everyone has been in mandatory isolation, cowering in fear in their homes… and over the past few weeks while the Land of the Free has been consumed with rage. . .

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Let’s Talk Privilege…. by Mark E. Jeftovic

The title may make it look like this is an article about race, but it’s not. From Mark E. Jeftovic at outofthecave.io:

After the 9/11 terror attacks, when our privacies were permanently revoked, and we entered into “a war which would never end in our lifetimes”, Bush II proclaimed “They hate us because of our freedoms”.

Some critics thought that was an almost nonsensical statement to make, while the credulous took it at face value. It framed whoever perpetrated the attacks as some inhuman “other” that despised happiness itself. It was unthinkable anybody could have an actual foreign-policy derived reason for doing it, and anybody who suggested as much was usually hounded out of the public eye.

However I always thought that utterance did have a kernel of truth to it. If you looked at the United States as a global empire, and that the freedoms “they” hated were not actually the ones to assemble, or worship or to vote, as Bush intimated, but rather the ones where America acted unilaterally in its own interest observing American Exceptionalism as a type of infallible axiom, then Bush would have been closer to the substance of the matter.

Here was world hegemon who claimed the freedom to overthrow governments, the freedom to bomb or invade any country it pleased, the freedom to support brutal dictators, assassinate enemies, interfere in elections and basically do whatever it wanted. Seen in that light, then yes, the 9/11 attackers did hate our “freedoms”.

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A collapsing dollar and China’s monetary strategy, by Alasdair Macleod

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.

Introduction

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.

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MMT: Not Modern, Not Monetary, Not a Theory, by Jeff Deist

Jeff Deist spares SLL the trouble of debunking the Modern Monetary Theory fantasy. From Deist at mises.org:

Modern monetary theory (MMT) has a new champion, and a new bible. Stephanie Kelton, economics professor at SUNY Stony Brook, is the author of The Deficit Myth: Modern Monetary Theory and the Birth of the People’s Economy. Professor Kelton was an advisor to the Bernie Sanders presidential campaigns, and her ideas increasingly find purchase with left progressives. It is certainly possible that she has a future either in a Biden administration or even on the Federal Reserve Board, which is a testament to how quickly our political and cultural landscape has shifted toward left progressivism. And left progressivism requires a “New Economics” to provide intellectual cover for what is essentially a political argument for painless free stuff from government.

Kelton’s essential argument, first advanced by MMT guru Warren Mosler in the 1990s, is quite simple: federal spending is unconstrained by revenue. Taxes function only to regulate demand and hence inflation; federal borrowing functions only to regulate interest rates. Sovereign government treasuries can create and spend as much money as they like to stimulate growth, especially when the economy is underperforming. If inflation spikes, taxes can be imposed to take money out of the economy.

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Doug Casey: The Deep State Is Responsible for All Economic Turmoil

Who is in the Deep State and what do they do? From Doug Casey at caseyresearch.com:

I’d like to address some aspects of the Greater Depression in this essay.

I’m here to tell you that the inevitable became reality in 2008. We’ve had an interlude over the last few years financed by trillions of new currency units.

However, the economic clock on the wall is reading the same time as it was in 2007, and the Black Horsemen of your worst financial nightmares are about to again crash through the doors and end the party. And this time, they won’t be riding children’s ponies, but armored Percherons.

To refresh your memory, let me recount what a depression is.

The best general definition is: A period of time when most people’s standard of living drops significantly. By that definition, the Greater Depression started in 2008, although historians may someday say it began in 1971, when real wages started falling.

It’s also a period of time when distortions and misallocations of capital are liquidated, and when the business cycle, which is caused exclusively by currency debasement (also known as inflation), climaxes. That results in high unemployment, business failures, uncompleted construction, bond defaults, stock market crashes, and the like.

Fortunately, for those who benefit from the status quo, and members of something called the Deep State, the trillions of new currency units delayed the liquidation. But they also ensured it will now happen on a much grander scale.

The Deep State is an extremely powerful network that controls nearly everything around you. You won’t read about it in the news because it controls the news. Politicians won’t talk about it publicly. That would be like a mobster discussing murder and robbery on the six o’clock news. You could say the Deep State is hidden, but it’s only hidden in plain sight.

The Deep State is the source of every negative thing that’s happening right now. To survive the coming rough times, it’s essential for you to know what it’s all about.

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The Global Reset – Unplugged. “The Deep State”, by Peter Koenig

The globalists have some really swell ideas on how the world’s economy should be run. From Peter Koenig at lewrockwell.com:

Imagine, you are living in a world that you are told is a democracy – and you may even believe it – but in fact your life and fate is in the hands of a few ultra-rich, ultra-powerful and ultra-inhuman oligarchs. They may be called Deep State, or simply the Beast, or anything else obscure or untraceable – it doesn’t matter. They are less than the 0.0001%.

For lack of a better expression, let’s call them for now “obscure individuals”. 

These obscure individuals who pretend running our world have never been elected. We don’t need to name them. You will figure out who they are, and why they are famous, and some of them totally invisible. They have created structures, or organisms without any legal format. They are fully out of international legality. They are a forefront for the Beast. Maybe there are several competing Beasts. But they have the same objective: A New or One World Order (NWO, or OWO).

These obscure individuals are running, for example, The World Economic Forum (WEF – representing Big Industry, Big Finance and Big Fame), the Group of 7 – G7, the Group of 20 – G20 (the leaders of the economically” strongest” nations). There are also some lesser entities, called the Bilderberg Society, the Council on Foreign Relations (CFR), Chatham House and more.

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David Stockman on Fiscal Disaster, Social Unrest, and the Presidential Election

The fiat debt the Federal Reserve has created has to go somewhere, and it’s going into stocks. From David Stockman at internationalman.com:

Fiscal Disaster
International Man: Recently, massive riots have broken out in many cities across the US.

Despite the unrest—and the economic damage from the shutdowns—the stock market continues to rally.

It seems that markets don’t reflect earnings, economic prosperity, or growth. What is going on here?

David Stockman: It’s quite simple. The Fed has unleashed the greatest torrent of liquidity ever, and it’s finding its way into a relentless, massive bid for risk assets.

Since the eve of the Lockdown Nation disaster on March 11, the Fed’s balance sheet has erupted from $4.3 trillion to nearly $7.2 trillion. That’s $32 billion per day—including weekends, Easter, and nationwide riot days.

Worse still, at their June meeting, the mad money printers domiciled in the Eccles Building promised to keep printing $120 billion per month to buy US Treasuries and other assets for an indefinite period. That should get us to a $10 trillion balance in less than two years’ time.

What this means, of course, is that honest price discovery in the canyons of Wall Street is deader than a doornail. We now have a putative capitalist economy in which the most important prices in all of capitalism—the prices of financial assets—are pegged, rigged, and manipulated by the central banking agents of the state.

The result, of course, is speculation and malinvestment on a biblical scale.

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