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December 7 Is The Unofficial Pan-European Bank Mutiny Day

Tyler Durden's picture


After German blog "All is Smoke and Mirrors" floated an idea of an organized bank run (something attempted previously in the US without much success) in France in response to French austerity protests (which have resulted in no gains), the effort has since expanded to a pan-European organized bank run day on December 7, 2010, and has metastasized to Italy, Germany, the Netherlands, the UK and Greece. We are confident that very soon the rest of Europe, which is currently gripped in a climate of extremely unpopular austerity, will join in this symbolic protest against banking, which unlike the US, may just succeed, considering the European banking system is in total shambles, and in far worse shape than its American counterpart.

Since virtually all actions in 2010 by the global central banking cartel have been geared toward stabilizing the European banking system which continues to wobble on the edge of a complete systemic collapse, perhaps the marginal withdrawal of a few billion in deposits could be just the straw that forces a reset first in Europe, and shortly thereafter in the rest of the globalized developed (and then developing, proving what a joke the whole concept of decoupling is) world. As America has demonstrated so very well, 25 weeks of consistent withdrawals from domestic funds (sorry CNBC, there have not been inflows yet, confirming yet again that fact and propaganda don't mix yet) have resulted in a quarter in which bank earnings were simply said crushed. Had Americans followed through and withdrawn their deposits from banks it would have been the final straw. Luckily, the lack of organization among the US population gave the US banking system a reprieve. In Europe things are different: banks are not as reliant on trading, however, they are far more reliant on a stable deposit base to sustain the Ponzi. Therefore, even a partially successful withdrawal campaign could have far more dire consequences to the continent's banking system, and bring the financial system to its proverbial knees.

And before some accuse the blog's activism of some vile form of megalomaniacal quackery, we should highlight that the action has already been noted by such reputable newspapers as Suddeutsche Zeitung. Furthermore, in just 24 hours 1,500 readers have pledge their support to the action's various Facebook support sites, and another 48,000 are on the waitlist. We hope that more alternative media (the mainstream will unlikely support such a radical venture) catches on, and more Europeans realize they have all to gain and little to lose from forcing the balance of power to shift away from the banks, and into the hands of the people.

As for those who wonder why Europe's banking is much more fragile from a deposit base perspective, we present the graphic below comparing asset bases of American and various European banks: since both Europe and the US have roughly comparable GDPs, one would assume that the two regions' banking systes would have the same asset bases. That, however, is completely wrong. In fact Europe's asset base is roughly ten times, if not more, as great, even as it supports an economy the same size as that of the US. Which is also why it is far more unstable as the marginal utility of every deposit dollar goes that much further via the fractional reserve banking model, and supports that many more assets. In other words, every dollar withdrawn in Europe would have roughly the same impact as 10 in the US.

Which is why this action actually has a chance of success. And even more so that when it comes to political activism, Europeans tend to be far more ready to participate in joint causes, unlike their apathetic US brethren, who are perfectly content to watch the world series and collect their unemployment checks (soon expiring).

Perhaps in a jesture of poetic irony, some two hundred years after America showed the "Old World" what miracles an emancipated and ambitious population can do when it revolts, it will be the Old World's turn to return the favor, and rebel against that most destructive of concepts ultimately created by this splinter experiment from across the Atlantic: Central Banking and a fiat system in which money literally grows on trees.

For our European readers who wish to participate in this experiment, below are the various facebook support pages:

h/t Kyle


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Mon, 11/01/2010 - 22:16 | 692216 metastar
metastar's picture

And the criminal, corrupt, and illegitimate money systems of the world will simply change the rules and/or print more money to crush the masses.

Still, such a bold action by the people would result in an ultimately positive change.

Good People of Europe. The US Resistance to Banking Tyranny Supports You!

Mon, 11/01/2010 - 22:30 | 692245 Herd Redirectio...
Herd Redirection Committee's picture

That is not true.  If we withdraw our faith in their system, then the system fails.  Sure, they will be in position to replace the system,  but if we resist that, then a large victory will have been achieved.  Let us cross that bridge when we come to it! 

Check out PsychoNews, we have just started a series on 'Misconceptions: Hyperinflation & The Oligarchy", where we expose the myth of an all-powerful ruling elite, among other things.

Tue, 11/02/2010 - 00:24 | 692449 Herd Redirectio...
Herd Redirection Committee's picture

To clarify, there is definitely an elite, but they are not 'all-powerful'.  Didn't want it to sound like the elite themselves are a myth.

Tue, 11/02/2010 - 03:09 | 692569 Anton LaVey
Anton LaVey's picture

On the morning of December 7th, all the European banks will simply say: "You cannot withdraw more than one thousand (1,000) Euros per person and per account - and only if you have called at least 48 hours in advance".

End of story.

Please note that this is pretty much already in place - my [European] bank has a big sign up front telling you they require a 48 hour notice for withdrawal of more than 5,000 Euros in cash.

A much more interesting form of action would be to withdraw a large sum of cash every month to keep in your own pocket - which is what I have been doing for the past 6 months now.

Another would be to use that cash to buy Gold and Silver. Which is (surprise!) also what I have been doing.

Apart from that, yes, I'd love to see a lot of these corrupt bankers receive a well-placed kick in the pants.

Tue, 11/02/2010 - 04:19 | 692599 Al Gorerhythm
Al Gorerhythm's picture

Yup. Who's dumb enough to wait around for the long lines to appear. I'll be stuffed if I'm going to camp out on that day, waiting for the banks to open. I'll leave that to the Johnny(Bravo)-come-lately, true believers.

Tue, 11/02/2010 - 07:07 | 692670 Clark_Griswold ...
Clark_Griswold Hedge Mnger's picture

Well then people should start pulling out 1,000 or 2,000 euros on a day that week.

Get a nice steady stream of folks popping in for some play money to go.

Wouldn't it be nice if folks here in the US got themselves organized enough to do something like this.

And the icing on the cake would be if everyone ordered just 1 silver coin and ask for delivery.  That would make for some interesting headlines.

Tue, 11/02/2010 - 09:00 | 692811 Anton LaVey
Anton LaVey's picture

Make that 10 silver coins, and you have an even more ... ahem ... "interesting" situation.

I recommend the beautiful (and still cheap) 50 Francs "Hercules" coin:

I bought a large number of these beauties recently, and they do look very good.


Tue, 11/02/2010 - 11:35 | 693291 Clark_Griswold ...
Clark_Griswold Hedge Mnger's picture

I would agree,

I've pulled a decent amount of cash out recently, bought some nice shiney metals to add to the pile, expecting delivery any day now.


It would just be real interesting if you could get a high number of people to just all do it on the same day.  You know, if you take out 100-200 bucks for pocket money for the week, double it, then place a little order of PMs with a "Deliver it Bitch" for good measure.


You have China, pulling back rare earths; they are limiting silver exports and actively encouraging people there into metals...with a billion plus people there not all actively doing that, but you still have enough noise as it were to make it very interesting.

Tue, 11/02/2010 - 08:06 | 692706 jus_lite_reading
jus_lite_reading's picture

According to my source in Germany, many people who are joining this movement are planning on withdrawing well in advance of December 7th. I'm certain however, their gov't will intervene and perhaps start charging penalties or come up with some scheme which may curb a few weak hands. On the other hand, this movement is catching on quietly and many people are converting their Euros into gold coins.

I fully support their cause and hope the US joins them!

Mon, 11/01/2010 - 22:19 | 692223 DoChenRollingBearing
DoChenRollingBearing's picture

ZH-er Village Idiot and I tried cheerleading something like that earlier this year.  Big yawn, but I will be watching.  And I would most certainly be happy to see the idea get some traction here in the USA.

Mon, 11/01/2010 - 22:36 | 692249 Village Idiot
Village Idiot's picture

Thanks for the hat tip, DoChen.  Those were grand days.  I still have some matches, btw.

Mon, 11/01/2010 - 23:54 | 692412 Fish Gone Bad
Fish Gone Bad's picture

Perhaps DoChen was just a little before his time?  I am a big fan of keeping a whole pile of cash in a safe. 

Mon, 11/01/2010 - 22:38 | 692258 FoodTiger
FoodTiger's picture

I withdrew $20... oh well...

Mon, 11/01/2010 - 22:52 | 692280 flacon
flacon's picture

NO, you withdrew $200 + extra in derivatives. The beauty of Fractional Reserve Banking on steroids.

Tue, 11/02/2010 - 08:10 | 692713 jus_lite_reading
jus_lite_reading's picture

Actually, his $20 deposit is leverage out to an astounding $720 in derivatives. Now think of all the unwinding that will need to take place...



Tue, 11/02/2010 - 11:39 | 693305 Clark_Griswold ...
Clark_Griswold Hedge Mnger's picture

and while you think about how much to $ protest with on Dec 7th.

Take a look and google HR4646... for some pleasure reading.


This little nugget is waiting in committee for our fabulous soon to be retiring lame duck members to come back to and vote on.   Sort of a parting F@ck You to the folks back home who voted you out.

Mon, 11/01/2010 - 23:28 | 692372 RockyRacoon
RockyRacoon's picture

I participated and am much happier at my new local bank!  They call me by my first name when I come in and the branch manager comes out of her office to say hello.  All it takes is a little momentum and being sure they get the new checks right.  But, that would mean getting one's fat ass out of the computer chair and going outside (hopefully after showering).

Mon, 11/01/2010 - 23:43 | 692398 traderjoe
traderjoe's picture

I shave on Tuesdays and fridays. My mom does my laundry on Fridays and makes a nice lunch of chili mixed with fritoes, cheese, and onions. I find that is my favorite day to leave the basement for errands...

Mon, 11/01/2010 - 23:56 | 692415 Fish Gone Bad
Fish Gone Bad's picture

Chile + Fritos + Cheese + Sweet onions is definitely one of my comfort foods.

Tue, 11/02/2010 - 00:19 | 692442 RockyRacoon
RockyRacoon's picture

We call that a Frito chili pie.  When I was in grade school the local drive in (which I had to ride my bike to) would just open the Frito bag and dump the chili, cheese, and onions on top of the chips.  Stick a plastic spoon in it and there ya go!

Tue, 11/02/2010 - 01:27 | 692515 chopper read
chopper read's picture

that actually sounds pretty damned good around a campfire. 

Tue, 11/02/2010 - 07:55 | 692691 New_Meat
New_Meat's picture

"travelling tacos"

Wed, 11/03/2010 - 22:36 | 698184 chopper read
chopper read's picture


Tue, 11/02/2010 - 04:45 | 692608 Al Gorerhythm
Al Gorerhythm's picture

"I participated and am much happier at my new local bank!  They call me by my first name when I come in and the branch manager comes out of her office to say hello."

You surprise me RR. I would have thought you would be the first to deny the banks your savings, period. Unless of course you are just in the mood for change. Why would you (other than the obvious reasons of Electronic Transfer of Wages) enter the foyer of any of these fractional reserve destroyers of savings?  I hope not just because they call you by your first name.

I guess we are all in the situation where we have to suck on the teat of the private banks so as to get our wages. All credits have to be transfered through them (for a fee of course). 

However, I no longer see the relevance of banks. Just as the banks set up MERS so as to avoid the county fees, why can't our bosses establish a database where they can electronically transfer our wage credits (backed by profits}, to a central data base, no fees attached. Nearly every transaction is an electronically paid credit, so why not circumvent those turds, (sorry Ferguson) altogether? What is their use if they don't operate on a cash basis in these electronic ages?

Tue, 11/02/2010 - 21:03 | 694780 RockyRacoon
RockyRacoon's picture

Banking, as a general concept, is not evil.  Its original concept has been bastardized by greed and fraud.   I do NOT have "savings" in any bank -- period.  I have a checking account and that is all.  Merely for the convenience of writing checks.  I do NOT even have an ATM card.   I pay cash from the pocket for all in person transactions.  I use checks to pay utility bills, mortgage, and such.  I do NOT use on-line bill pay as I use the mails exclusively.   The bank manager knowing my by sight is just a cherry on top.  The bank is that small!  My credit card that I use for Internet purchases is thru this same small bank.  I can walk in and discuss any problem.  So, I hope I've not destroyed any image of me that you may have constructed.  Banks are a tool, and banking is the providing of a service, but that role has been reversed by the big banks.

Tue, 11/02/2010 - 21:27 | 694844 chopper read
chopper read's picture


Tue, 11/02/2010 - 01:39 | 692519 Bob
Bob's picture

It would certainly be a redeeming commemoration of Pearl Harbor Day.

Tue, 11/02/2010 - 01:50 | 692528 traderjoe
traderjoe's picture

An event which extensive documentation demostrates was at least allowed by the President, if not encouraged.

Count me in for 12/7.

Mon, 11/01/2010 - 22:20 | 692224 max2205
max2205's picture

Pinch me... I would do it if they do it. I love yuropeons

Mon, 11/01/2010 - 22:29 | 692243 chopper read
chopper read's picture

I love yuropeons


Mon, 11/01/2010 - 22:20 | 692225 Dr. Richard Head
Dr. Richard Head's picture


Bring out your debt!  Bring out your debt!

Mon, 11/01/2010 - 22:21 | 692226 AUD
AUD's picture

"Withdrawals from domestic funds", where does the 'money' go? Into a bank account?

A bank run, where does the 'money' go? Hoarded in notes, in other words, the credit of the government?

So what? It's still just rolling over the debt, central banks will make up any shortfall.

Until people understand that true money is what extinguishes debt, then debt will be passed off as money.

Mon, 11/01/2010 - 22:23 | 692231 Tyler Durden
Tyler Durden's picture

You have heard of physical commodities and/or precious metals? Also, what part of the $2.1 trillion decline in shadow banking liabilities (and thus money) that we have highlighted about 10 times in the past 3 months have you missed?

Mon, 11/01/2010 - 22:39 | 692260 AUD
AUD's picture

C'mon Durden, you can't seriously be saying that all the 'money' is moving into gold? Gold will be moving into backwardation by then, which it's not at present.

What about government bonds? That's where most of the 'money' is presently going. What are government bonds if not debt? What's the dollar? The debt of the Reserve Bank.

Holding the debt of the Reserve Bank is rolling over the government's debt. And don't give me the Fed is a private institution line. It's as private as our "wholly owned by the government" RBA here in Australia.

Mon, 11/01/2010 - 22:45 | 692268 AUD
AUD's picture

And I left out that government bonds are a promise to pay what? Dollars, that's what. In other words they are the same fucking thing.

I stand by my point.

Mon, 11/01/2010 - 22:50 | 692274 zaknick
zaknick's picture

People participating in a bank run are not your run of the mill bankster loving paper bugs. Isn't that obvious?

Mon, 11/01/2010 - 22:59 | 692298 AUD
AUD's picture

Aren't they? Then why are they hoarding dollars?

Mon, 11/01/2010 - 23:02 | 692303 zaknick
zaknick's picture

Who's hoarding dollars?? They're trying to bring down the banks not to "hoard" anything. This is an act of protest. Yoiu did read that this was a movement started at a German "conspiracy" website?


Dude, accepting a mistake doesn't make you less of a man!

Mon, 11/01/2010 - 23:21 | 692359 AUD
AUD's picture

So they 'run' on the bank, then what do they do with all their physical notes? Buy gold?

They could have done that already.

Mon, 11/01/2010 - 23:37 | 692374 chopper read
chopper read's picture

oi, you must know that banks have reserve requirements.  when reserves are depleted, loans must be called in to maintain reserves.  for example, with a 10% reserve requirement, a bank can originate 10 euros of loans for every 1 euro deposited.  if i withdraw my 1 euro, then a bank needs to borrow that euro from another bank, or recall 10 euros in loans.  if another bank cannot lend 1 euro because its patrons are withdrawing, too, then we could have potential bank failures.  All of this can happen simply by converting digital euros in a bank account to paper currency to be held in a safety deposit box, for example.  Most likely, reserve requirements would be dropped to 0% in response to this coordinated bank run. 

Mon, 11/01/2010 - 23:39 | 692391 AUD
AUD's picture

And as I've already said, central banks will make up the shortfall, just as they did in '08. In fact that's what central banks are for, to make up the shortfall with there government mandated ability to pass off bad debt on you, in the form of dollars.


Mon, 11/01/2010 - 23:50 | 692410 chopper read
chopper read's picture

"lender of last resort", i got it.  

however, depending on how large this run on the banks becomes, you are potentially looking at a crisis response in the form of a major expansion of the ECB balance sheet in order to maintain adequate depository funds for those corporate and government clients still engaged in daily transactions with each commercial bank. 

AUD, do you believe that a widespread and coordinated run on the banks could cause a problem, or do you believe that no amount of withdrawals would cripple the system?

Tue, 11/02/2010 - 00:01 | 692428 AUD
AUD's picture

A problem sure, but cripple the system? No.

Did the "widespread and coordinated run on the banks" in '08 cripple it? No

Why? Because the central banks made up the shortfall and despite the 'assets' of central banks, the Fed in particular, now being worth what?, zero if we're lucky, the 'system' still operates.

No, only when there is an understanding that money is what extinguishes debt & people demand payment will the system be permanently crippled.

Or as Antal Fekete likes to say "gold moves into backwardation".

Tue, 11/02/2010 - 01:24 | 692509 chopper read
chopper read's picture

i believe that we are all in agreement.  FRNs are ultra-short-term 'debt' that can be extinguished by converting into gold. 

No, only when there is an understanding that money is what extinguishes debt & people demand payment will the system be permanently crippled.

as government bonds are similarly converted to gold, the debt is extinguished and the system is 'permanently crippled'.  Since the FRBNY is currently buying Treasury Bonds, we are thus in these early stages of conversion with very few signs that we will emerge from this 'liquidity trap'.  the ensuing bond collapse is the endgame.  those who hold physical assets of barter, including gold, silver, tobacco leaves, goats, etc., will possess the entirety of wealth and 'money'.   

Tue, 11/02/2010 - 01:26 | 692514 tip e. canoe
tip e. canoe's picture

"FRNs are ultra-short-term 'debt' that can be extinguished by converting into gold. "

how so chopper?  when you exchange gold for FRN's, the FRNs are not being extinguished, merely transferred from one entity to another (like in a game of hot potato), yes?   remember there is no more gold convertibility thanks to tricky dick.

it seems the only way to extinguish the debt is to demand payment in "lawful money" aka coins.

Tue, 11/02/2010 - 14:06 | 693749 chopper read
chopper read's picture

i was speaking of it from a personal perspective, not as it relates to the overall system.  I understand that the gold dealer must then play hot potato with this paper money. 

Importantly, however, if all savers and investors persisted with conversion to gold, the remaining holders would all be unproductive borrowers and counterfeiters. 

I mean this: 

If you perform a productive service or provide a useful good and are paid in 1 fiat, for example, then you have 'created 1 unit of wealth'. 

If you take 1 unit of wealth to the bank, and this bank originates 10 units of loans, then the bank has counterfeited 9 units of money, and created no additional wealth. 

If you know that by depositing your 1 unit of wealth into a bank that this will devalue the very unit that you are depositing, then you may instead buy gold.

If the gold dealer knows that depositing this 1 unit of wealth into a bank will devalue it then he may buy more gold from the miner instead.

If the miner knows that depositing this 1 unit of wealth into a bank will devalue it then he may only except barter such as oil, for example. 

In other words, not everyone in the world has to accept paper currency.  When productive drillers, miners, loggers, and farmers stop accepting fiat money, then the impact will come full circle.

If enough productive people do this then the only folks left holding fiat currency are the counterfeiters themselves and unproductive borrowers.  

we win.  banks lose.

Mon, 12/06/2010 - 14:56 | 782831 Raymond K Hessel
Raymond K Hessel's picture

I think AUD has finally made his point here and I have to agree with him 100%.


While it'll be disruptive to individual banks, on the whole, the central banks will step in to lend to banks who've been forced to cover their capital requirements.


It is my hope that when people see how it failed to produce the desired result, they will realize that what they thought they were doing was exchanging fiat currency for money, hence, the next step will be to sell currency, buy gold/silver/money. 


That will be the pivot point....or else, nothing....nothing will happen and we all take a bullet in the back of the head behind some anonymous convenience store.


Seriously, I hate the fucking CAPTCHA thing. 

Mon, 11/01/2010 - 23:34 | 692378 RockyRacoon
RockyRacoon's picture

I can only speak for myself.  See my comment to DCRB above.

Banking per se is not the deal, it's banking to do the most "damage".

Going to a small, local bank was my answer.  Any funds that are not needed to pay bills and such is in PMs and cash.  Same theory in why I have 3 credit cards: 1 for Internet purchases only so I can keep close tabs on it.  1 for use at merchants, etc.  and 1 for the simple fact that they gave me a $25K line on it -- which I have never used.   The first 2 of these cards are the type that HAVE to be paid off in full every month.

Mon, 11/01/2010 - 23:43 | 692396 chopper read
chopper read's picture

"be your own central bank."   rates at 0%?  buy PMs with all non-working capital.  rates at 20%?  convert some PMs to fiat in order to lend at the attractive rate (if returns exceed increases in fiat living expenses - 'personal inflation').  

Tue, 11/02/2010 - 07:58 | 692696 New_Meat
New_Meat's picture


"Going to a small, local bank was my answer."

yep, we're clear of Bank of Amigos 'cept for a small amount.  Spread around a bit, none took TBTF money.

-  Ned

Mon, 11/01/2010 - 22:55 | 692291 flacon
Mon, 11/01/2010 - 22:46 | 692271 centerline
centerline's picture

AUD... not meaning to just jump in here.  Just happen to be sitting here in front of the computer on a Monday night in Florida.  Must be earlier there in Australia.  Would like to visit there someday.


Anyhow, my feeble take on the bond issue is simply that there is too much in way of desperate funds seeking yield at any cost in this environment.  Which of course is a bloodbath waiting to happen... hence, your reaction to the notion of money going there!

Mon, 11/01/2010 - 22:56 | 692294 AUD
AUD's picture

I agree with Doug Noland, the real bubble is in government debt.

Why? Falling yields are a 'capital' gain, Central Banks around the world are currently engaging in "open ended Treasury purchases", providing the backstop bid.

Why do people think that rolling over the governments debt is a 'capital gain'. I don't know, maybe they are stupid.

Mon, 11/01/2010 - 23:23 | 692302 centerline
centerline's picture

Edit:  ...must be "early" there...   "earlier" would fall into the "Captain Obvious" category.  Of course it is late here, which only makes my grammar and spelling get worse.


Mon, 11/01/2010 - 23:34 | 692383 AUD
AUD's picture

It's after lunch here, why aren't I at work? Work is for chumps, especially when you roll over the government's debt instead of demanding payment for your efforts.

Actually, I live & work on a farm so nothing has to be done yesterday.

I don't necessarily agree that funds are being pushed into 'high risk' in the sense of stocks etc. The stockmarket has gone nowhere for almost 12 months. I know because I bought a pile of gold miners at the height of the panic and except for a couple of standouts, most have not moved far at all.

The problem is as I originally stated, fuck all people seem to understand that money is what extinguishes debt. Therefore debt cannot be money, thus the dollar, being the debt of the Reserve Bank cannot be money.

Credit spreads over government bonds are still way above pre-crash levels, government debt & by corollary the dollar itself are huge bubbles, not the stockmarket (in dollar terms).

Tue, 11/02/2010 - 01:17 | 692505 tip e. canoe
tip e. canoe's picture

how's the locusts?

Tue, 11/02/2010 - 04:08 | 692595 sherryw
sherryw's picture

Ah, there's one sitting on the laundry door at my house on the Sunshine Coast. it looks fine to me.

Tue, 11/02/2010 - 02:59 | 692568 joe90
joe90's picture

December the 7th then.  Mark your debt to market.

Tue, 11/02/2010 - 09:50 | 692933 centerline
centerline's picture

Had to go get some sleep.  Stopping back for a moment.  Farm in Australia... pretty cool.


Anyhow, not stocks.  Credit markets - primarily on leverage.  Pension funds among others have been crippled by the last 10 years.  They absolutely must perform or will go belly-up.  

Mon, 11/01/2010 - 22:51 | 692278 Tyler Durden
Tyler Durden's picture

Not saying that at all. When it is, gold will be 5+ digits. And there is a reason why we believe bonds are in a bubble.

Mon, 11/01/2010 - 22:58 | 692296 UncleFester
UncleFester's picture

Anyone else notice that every physical paper dollar withdrawn from a bank or ATM is fresh, never used?  Or is it just me?

I Fester.

Mon, 11/01/2010 - 23:16 | 692346 CitizenPete
CitizenPete's picture

The FED replaces it by the billions.  They keep the U.S. Treasury Department of Engraving and Printing busy.


See this FED interview (links):

Tue, 11/02/2010 - 01:14 | 692501 DollarMenu
DollarMenu's picture

Not the case for me.

Most of the ATM bills I get are in good shape, but used.


Tue, 11/02/2010 - 08:03 | 692701 dpr10
dpr10's picture

how many billions or trillions can they keep printing..instead of making 0.5% in a banking account, keep it in a safe or buy gold & precious metals...

Mon, 11/01/2010 - 23:22 | 692364 CitizenPete
CitizenPete's picture

As you are well aware, when the Pension Fund managers (21 Trillion managed globally) up the holdings of gold then the price will go ballistic.



Mon, 11/01/2010 - 23:05 | 692323 Quinvarius
Quinvarius's picture

QE is the Fed buying treasuries.  That is where the bid is coming from.  Not the public.  The public and the bankers are only in there to the extent that the Fed is propping the price up.  If the Fed stops buying, the ten year yield will be over 5% and rising within a week.

Mon, 11/01/2010 - 22:46 | 692270 zaknick
zaknick's picture

In fine form tonight (as always), I see.

Mon, 11/01/2010 - 23:25 | 692368 been there done that
been there done that's picture

I was at Bank of America to get a new debit card when I had the idea tofile a complaint to the manager. They asked what the problem was and I told them it was banking in general. I actually had the lady type up a long list of stuff like "claiming profits due to lax accounting and then awarding bonuses"  "manipulating quarterly reports to show less leverage" etc.  I told: "Hey, you are a business, WHY should I keep my money here at YOUR bank???"  They really didn't have a good answer. I told them that the silver I bought in 2008 is up 300% and that I had emptied my account to load up on silver. I pointed out the whole FED primary dealer scams and said that thanks to bankers people are losing faith in fiat money. I don't think she knew what "fiat" even was!  I wanted it oficially forwarded up the chain as a complaint. Later a different branch manager responded by e-mail and we met. He agreed with me. Pretty funny. Anyway, I WILL GLADLY, GLADLY, remove more cash on Dec 7th.  I feel like Flounder in Animal House when the destroy the parade and he says "Boy is this Great!!!".  Dec 7th, a date that will live, in Infamy???

Mon, 11/01/2010 - 23:59 | 692420 chopper read
chopper read's picture

funny story.  thanks for sharing. 

Tue, 11/02/2010 - 00:00 | 692424 samsara
samsara's picture



  I feel like Flounder in Animal House when the destroy the parade and he says "Boy is this Great!!!". 

Unfortunately many many "Other" flounders are hearing

"Ya Shouldn't Have Trusted Us Flounder"  upon seeing the Lincoln(Economy) total demolished.




Tue, 11/02/2010 - 01:49 | 692525 Bob
Bob's picture

Dec 7th, a date that will live, in Infamy???

Perhaps the date when we strike back against a criminal cabal of bankers who have literally wrought more destruction upon this nation and its people than the Japanese did upon that date at Pearl Harbor.

Mon, 11/01/2010 - 22:33 | 692248 stewie
stewie's picture


Mon, 11/01/2010 - 22:39 | 692259 centerline
centerline's picture

If you feel really goofy, just pull the cash out and stick it in a safe place for a little while.  "Making up the shortfall" isn't as easy as it sounds if the overall numbers are impressive enough.

Tue, 11/02/2010 - 08:13 | 692715 jus_lite_reading
jus_lite_reading's picture

Read my post- My contact in Germany says they are converting Euros into gold. That is already occurring. I suspect if the gov't try to intervene, social unrest will break out into real chaos. Catch 22 for TPTB.

Mon, 11/01/2010 - 22:28 | 692242 buzzsaw99
buzzsaw99's picture

I wish this could work but it can't. The banks can borrow infinite reserves at less than zero interest. The BoJ is buying bonds, stocks, etf(s), reits, you name it. This is what the usa is &/or will be doing. They would prefer us to let them steal our clownbux willingly but when it comes right down to it nothing gets in their way.

Mon, 11/01/2010 - 23:02 | 692307 UncleFester
UncleFester's picture

Physical paper in a bank is similar to physical specie at the COMEX / just isn't "there".  If enough peeps transfer their 0 and 1's into "cash" the banks would be broke, 'tis the nature of Ponzi.

I Fester.


Mon, 11/01/2010 - 23:11 | 692337 ElCapitanNemo
ElCapitanNemo's picture

Bingo, you hit it on the head, great stuff:

"Physical paper in a bank is similar to physical specie at the COMEX / just isn't "there".  If enough peeps transfer their 0 and 1's into "cash" the banks would be broke, 'tis the nature of Ponzi."

Mon, 11/01/2010 - 23:43 | 692397 RockyRacoon
RockyRacoon's picture


Tue, 11/02/2010 - 01:32 | 692516 tip e. canoe
tip e. canoe's picture

then again, quite sure they still have those old Bob Rubin signature specials lying around in case of emergency.

still waitin for the tiny tim monopoly money to come out.   interesting that it hasn't been released...yet.

Mon, 11/01/2010 - 22:31 | 692247 Jake Lamotta
Jake Lamotta's picture

with your rubbish, you guys missed the biggest bull market ever.  i.e. LVS (Las Vegas Sands purchased in march 2010 at $18 3000 shares & presently trading $46 - $47 range.  Keep mocking the market......

Mon, 11/01/2010 - 22:35 | 692250 Tyler Durden
Tyler Durden's picture

Of course, that would be the same LVS that purchased in early 2008 at $80 traded at $1 a year later (both prices expressed in pre-Central Planning terms).

And because you asked nicely, here is a chart of LVS Free Cash Flow (EBITDA-CapEx) on an annual and cumulative basis. The company just may generate cash at some point in the next 3 years.


Mon, 11/01/2010 - 22:44 | 692265 prophet
prophet's picture

Ya, even if you doubled up at the bottom you finally broke even this week, but you gotta admit that a 40 bagger was one of the better "on sale - it might not make it" buys at the height of the crunch. 

Mon, 11/01/2010 - 22:55 | 692289 centerline
centerline's picture

LOL.  I rode the UAUA train last year myself.  But, I wouldn't consider it trading, let alone investment.  It was more like jumping out of an airplane (no pun intended) thinking that I am sure to find a parachute somewhere between the jump and the sudden stop.  Sector rotation bet among other variables.

Mon, 11/01/2010 - 22:36 | 692254 Dr. Richard Head
Dr. Richard Head's picture

I would assume your position on the Las Vegas residential real estate market would be to start flipping homes again too? 

Mon, 11/01/2010 - 23:08 | 692331 hack3434
hack3434's picture

Pffft...Ventana Corp, ATAC? 

Mon, 11/01/2010 - 23:15 | 692342 Village Idiot
Village Idiot's picture

"Keep mocking the market......"


You sound like a professional "money manager," Jake.  Some of the best managers out there had me in the market when it tanked.  I only lost about a mil., but whose counting - it was an invaluable lesson.  So when I read posts from people like you, I laugh.  I laugh because I can afford to.  I can sit by and watch the market go up and still feel good about myself. Think about that for a minute, Jake.  There are people who have chosen not to play because they don't give a shit.  Not to say I won't play.  As a matter of fact, I am positioned right now - to crush the "lie."  That's what gets me excited, Jake - hitting it out of the park on the backs of every person who has perpetuated this mirage we call a market.  The big picture bet, Jake.  Global.

You go nurse your little position there, buddy.  BTW, Jake Lamotta was a crook.


PS - It is my sincere wish that everyone on this site be made rich/whole in their endeavours.  Cheers.

Tue, 11/02/2010 - 00:03 | 692429 chopper read
chopper read's picture

great response, mate. 

Wed, 11/03/2010 - 08:04 | 695360 Jake Lamotta
Jake Lamotta's picture

No i'm no money manager. If i sell now how is that funny considering i made $90K?  Village idiot your comments are funny.  How can you "spit" on $90K.  I pay for my groceries but i guess you don't.

Sat, 11/06/2010 - 18:41 | 705680 Village Idiot
Village Idiot's picture

Nice shot, Jake.  Very weak.  I "laugh" at your attitude toward market participants.

Mon, 12/06/2010 - 15:01 | 782852 Raymond K Hessel
Raymond K Hessel's picture

Jake LaMotta = Cass Sunstein

Tue, 11/02/2010 - 00:01 | 692427 chopper read
chopper read's picture

all of your trades probably look that good, eh, Jake?

Mon, 11/01/2010 - 22:35 | 692252 prophet
prophet's picture

Narrow thinking.

Mon, 11/01/2010 - 22:42 | 692263 Crab Cake
Crab Cake's picture

Though I'm in Texas, I think I'll jump on board too.

Fuck the banks, take your money out. There is nothing more effective we can do than ceasing to participate, for it is from the collective citizenry that power emanates.

Mon, 11/01/2010 - 22:53 | 692282 ElCapitanNemo
ElCapitanNemo's picture

I'm in the rocky mountains, and like yourself I think I will be jumping on board as well. Well said "Ceasing to participate": mortgages, taxes, worthless paper money, and banks.

Tue, 11/02/2010 - 10:00 | 692959 WhiskeyTangoFoxtrot
WhiskeyTangoFoxtrot's picture

Exactly! Why just Europe? I may not have much in my TBTF, but it's still something.

Mon, 11/01/2010 - 22:44 | 692266 putbuyer
putbuyer's picture

Wow! this is a big deal. I already use my mattress so people need to get on board.

Mon, 11/01/2010 - 22:47 | 692272 Quinvarius
Quinvarius's picture

I guess we know when the world wide banking holiday will be.

Mon, 11/01/2010 - 22:55 | 692286 Croesus
Croesus's picture

To Europeans:

Stomp these greedy assholes into the ground !

To Americans:

Until you are willing to do something similar to what the European public is proposing, STOP thinking you are badasses, and STOP thinking you are tough - reality would dictate otherwise.

Mon, 11/01/2010 - 23:00 | 692300 flacon
flacon's picture

We won't act until the government stops paying us to sit at home and watch TV for a living - or how ever many years we get our unemployment checks. Hell, if you could sit at home, pick your nose, and buy the latest "3D HD TV" all for nothing, I'm sure you wouldn't give a rats ass about any "banking problem". /sarcasm 

Tue, 11/02/2010 - 10:01 | 692965 WhiskeyTangoFoxtrot
WhiskeyTangoFoxtrot's picture

+1. Not junk. A little less talk and a lot more action.

Mon, 11/01/2010 - 22:55 | 692288 CD
CD's picture

I like the bubble graph -- I wonder what portion of the 'assets' existing on the banks books is claimed by multiple (and how many) banks in the chart... The infinite corridor of two mirrors facing each other comes to mind.

Though only indirectly related, I really got a chuckle out of the compendium of career options facing many of us in the near future:


Mon, 11/01/2010 - 23:13 | 692295 CitizenPete
CitizenPete's picture

\nov. 22nd (a Monday this year) is the third annual END THE FED rally day.   If it was not for all the Ron Paul type supporters beating the drum for the last 4 years the HR 1207 (HR833) and S.604 would never have got as far as they did.  OK, so Sanders caved at the 11th hour and Dood and Franks pushed their watered down BS through.  The new libertarian minded people elected to the house and senate should help bring up another FED Audit Bill within a year. 


Running the banks assets is all the masses can do at this point -- and it is not a bad idea.  It's suppose to be the government and the peoples money.  Right?


Interesting note (not making this up):

A couple months ago I was in Downtown Cleveland Ohio and the Federal Reserve depository was getting a complete face lift.  Sand/water blasting the stone work,  removing the statues (with a crane) to replace the underlying rusty support structure, etc.   I walked by the project and chatted with the workers, who told me the night before 3 (three) 50mm machine guns were removed from under the statues and the steps as part of the renovation.  During the renovation it was clear that the space under the two statues was hollow and built out like two small rooms.  You could not see under the steps, as they were not R&R'd, just cleaned.   (see video from last years ETF rally below to see statues and steps). The question is...  

What were these machine guns replaced with?

This is a depository of the FED so there are some sort of defenses beside the private armed military guarding the place I am certain.  So what is under the statues and the steps now?    Here is my guess: ??? ???


Has anyone from any of the other 11 cities were the FED Banks are located noticed any "renovations" going on?

Mon, 11/01/2010 - 23:03 | 692297 beastie
beastie's picture

Well I wish my Euro brothers well in this fun. It will matter as banks really don't have that much money in their vaults. Christ, I could run my little bank out of cash tomorrow. Banks cannot conduct normal business without cash on hand. When Joe 6 Pints walks in to cash his cheque and is told there is no cash maybe he will think. 


It's proactive. It's dissent. If enough people do it matters. A message will be sent. 

I hope they all piig inhabitants trot down to their coin shops and buy everything in sight. 

Edit: Fuck it I'm in. I am closing my crappy little BOA account on the 7th in cash and moving to my local small bank with no online services to speak of.

Mon, 11/01/2010 - 23:06 | 692326 ElCapitanNemo
ElCapitanNemo's picture

Excellent: "It's proactive. It's dissent. If enough people do it matters. A message will be sent."

Then we should each buy one piece of gold or if that is to much for an avg Joe then a few pieces of silver or other REAL things.

Mon, 11/01/2010 - 23:00 | 692301 lsbumblebee
lsbumblebee's picture

Organization like this is impossible in America unless you can afford a one minute commercial spot during "Dancing with the Stars".

Naturally the commercial would also have to be funny, so as to distract attention from the People magazine. 

Mon, 11/01/2010 - 23:07 | 692328 beastie
beastie's picture

This is a flash mob, web 2.0, twitter the world type of thing. All you twenty somethings get busy texting, tweeting or whatever the latest fad is.

I'll phone some buddies on my rotary.

Mon, 11/01/2010 - 23:17 | 692349 ElCapitanNemo
ElCapitanNemo's picture

That's the spirit, Facebook, Youtube, Twitter, Blogs, Website Forums, etc. etc.  I just spoke with my wife (smile I know) and we are in.  She got so excited that she is calling her folks since her folks have been saying "what can we do to really make a difference" to many times.

Tue, 11/02/2010 - 08:14 | 692718 jus_lite_reading
jus_lite_reading's picture

Kudos to you! I pray this movement comes to the US! WE THE PEOPLE of the WORLD can make a difference!

Tue, 11/02/2010 - 12:00 | 693373 RichardP
RichardP's picture

All of the pulled cash will go right back in just before it is time to pay the bills.

Mon, 11/01/2010 - 23:23 | 692365 beastie
beastie's picture

Just a little anecdote. I was in college in England when the poll tax was in effect. I refused to pay that immoral tax ever. A lot of people like me refused to pay it. 

We won!

Tue, 11/02/2010 - 01:19 | 692506 Cathartes Aura
Cathartes Aura's picture

I was in Glasgow Scotland during the same time period. . . we had organised phone trees to call upon fellow resistors when the sheriffs were called in for a poinding (those who refused to pay the poll tax could have their belongings assessed for sale to cover the tax). . .

a minimum of 30 folk would gather and sit on the steps of the close (interior stone stairwells leading to each flat, usually about 3-4 people wide), blocking the sheriffs in a passive way. . . given that they were hired locals, similar to "repo men," it wasn't all that hard to convince them not to sell out their neighbours. . . we won too!

of course, Glasgow is quite notorious for its organised dissent - wouldn't happen in amrka, people are too comfortably insular.

Mon, 11/01/2010 - 23:29 | 692375 zaknick
zaknick's picture

Translation: QE2, which was recently defined as nothing more than a Ponzi Scheme by Bill Gross of Pacific Management Inc., is nothing more than a back door bail out of the criminal banking elite aka Goldman Sachs and U.S. Citibank.

QE2 actually involves the purchase of various mortgage-backed securities aka derivatives that are commonly known now as toxic assets.

This direct manipulation of gold and silver prices by the Federal Reserve and Goldman Sachs was designed to 'bail out' Citibank and the Saudi oil interests that currently hold billions of dollars of cross-collateralized EURO currency, gold and silver, gasoline, and crude oil derivatives tied to Citibank with Goldman Sachs being none other than the counter party to the derivatives.

Reference: 80% of Citibank stock is owned by none other than the Saudi Royal Family. Durden, this is what I'm talking about.
Tue, 11/02/2010 - 00:36 | 692461 bingocat
bingocat's picture

This direct manipulation of gold and silver prices by the Federal Reserve and Goldman Sachs was designed to 'bail out' Citibank and the Saudi oil interests that currently hold billions of dollars of cross-collateralized EURO currency, gold and silver, gasoline, and crude oil derivatives tied to Citibank with Goldman Sachs being none other than the counter party to the derivatives.

That's cute. I wonder where that info comes from. So if I read you right, Citi is long all those cross-collateralized whatchmacallits, and GS is the counterparty so they must be short, and therefore GS is buying up all these assets in blatant manipulation in order to make Citi's position (which is the opposite of GS' position) do well so they can be saved? And the Saudis hold long positions in these oil/gasoline interests?

Are you high? GS would not lose money to save Citi, and the Saudis are long the world's largest pile of proven oil reserves and short a future afterwards. They would not be adding to their long positions.


80% of Citibank stock is owned by none other than the Sauid Royal Family

That's cute too...


Is this the level of ZH poster analysis?


Mon, 11/01/2010 - 23:39 | 692388 onlooker
onlooker's picture

A peaceful push back is a grand idea.  

Mon, 11/01/2010 - 23:40 | 692393 gwar5
gwar5's picture

Uh... why wait until Dec 7th?  Start taking it out now and get some metal.  It'll drive 'em nuts.

Tue, 11/02/2010 - 01:50 | 692526 A_MacLaren
A_MacLaren's picture

+  That's the spirit +

Tue, 11/02/2010 - 08:22 | 692728 jus_lite_reading
jus_lite_reading's picture

That's the point. Some are ALREADY starting now and if this movement grows, I would highly suggest everyone in the US converts their dollars into gold now as well. A collapse there will lead to a collapse here- why do you think the US Fed is bailing out Spain?


Oh what a tangled web they weave, and yet they do not know how to get out!


I predict, at some point within the next few weeks, well before December 7th, those who are withdrawing money will soon be turned away because the BANK WILL NOT BE ABLE TO COME UP WITH THE MONEY- it's called funding allotments and these corrupt banks do not think it necessary to have a certain amount available! That is when the real fireworks begin.


I have already taken action and have withdrawn all monies (read my post last week). I have taken physical possession of gold bullion and silver, and besides a very small amount of "cash" (worthless paper) in a checking account for some bills to keep the electric on, I am all out of the system.



Mon, 11/01/2010 - 23:52 | 692399 CD
CD's picture








czech republic:





There is still a bit of time to go until December, this may well get interesting. These Facebook events need some time to germinate.

Average rates of (pledged) attendance:

France - 8% of invitees (8.5 K out of 121K)

UK - 9% (1.5K / 16K)

Greece - 10% (80 / 800)

Germany - 8% (800 / 9.5K)


The apologists on some of the pages are hilarious, though:


Tom Moon Seriously, IGNORE THIS CAMPAIGN - IT MAKES NO SENSE. I am definitely a supporter of ethical banking - but removing money from the banking system makes the issue worse. Instead of simply withdrawing your money, consider opening an account with a strongly ethically-motivated bank instead of the one you have at the moment. Then, after the new account is open, move the money by electronic transfer or by cheque.

You should remember that the money you have with your bank is relatively very, very little. A bank's richest customers are large business and corporations. If you want to make a difference, start encouraging these large organizations to bank ethically.


Sounds just like your average account-holding, concerned citizen, doesn't it?




Tue, 11/02/2010 - 00:47 | 692474 chopper read
chopper read's picture

ha, ha.  that is funny.  good eye!

Tue, 11/02/2010 - 06:18 | 692639 LMAO
LMAO's picture

These are excellent rates, it may very well translate to close to 100% of all bank accounts  getting liquidated  ;0)


Average rates of (pledged) attendance:

France - 8% of invitees (8.5 K out of 121K)

UK - 9% (1.5K / 16K)

Greece - 10% (80 / 800)

Germany - 8% (800 / 9.5K)


Considering that about 10% of the population is not heavily indebted and actually still has some money to withdraw.


Tue, 11/02/2010 - 08:27 | 692738 jus_lite_reading
jus_lite_reading's picture

Actually, this individual named "Tom Moon" doesn't understand banking whatsoever. The banks funding deposit allotments are a VERY small percentage. If just 15% of the population with their "very very little" accounts withdrew their money, the banks would be forced to unwind these positions. That in turn may be the spark needed.


Mon, 11/01/2010 - 23:46 | 692402 drswhaley
drswhaley's picture

Dec.7th also the day Ireland needs to have budget in place for 2011.  Good luck with that if there is a run on the banks.

Mon, 11/01/2010 - 23:47 | 692403 Lucius Corneliu...
Lucius Cornelius Sulla's picture

Any blogger who tries to get a bank run going in the USA will have Homeland Security knock in their door, tear their house apart, take their computers, brand them a domestic terrorist and the put in Gitmo.  Welcome to fascism baby!!!

Mon, 11/01/2010 - 23:49 | 692408 vainamoinen
vainamoinen's picture

already did my "bank run" months ago.


BTW - remember the wholesale credit union defaults of about 3 weeks ago? Blew throught the MSM in about 10 seconds - by I got a glimpse and recognised the name "Southwestern" and visited with the CEO of my small local credit union the following Monday. Asked some "dumb" questions and the CEO "spilled" unitl he realized he might be saying too much.


Anyway, no time for a full report, but there is a good chance that, due to a lack of lending demand from the local credit union members, that a significant chunk of this little credit unions capital was on loan to the bankrupt Southwest Federal Credit Union.


No worries tho' - its all insured by the (bankrupt) Federal Govt.


As I said above, I made my bank run months ago - and as the story has unfolded with regard to my little local credit union - I'm glad I did! 


As we all already know NO ONE is going to tell you what's really going on. it's up to you to cover your own ass as you see fit.


Still, my sentiments urge me to scream:



Mon, 11/01/2010 - 23:52 | 692411 RedPacket
RedPacket's picture

Perhaps it might be time to establish a 'clean', non-fractional entity to provide  the accounting function to credit that which is withdrawn ( i.e. offer 1:1000 (d-Euro: Euro -- on par with Au 1ozt : Euro) and clear the competitive community currencies established by open social networks established to spend it.  Time to start coding people:

You have a nice nose ... no need to cut it off.

The finesse is not collapsing the fiat system per se, that will happen anyway ... rather ensuring a peaceful and smooth transition to something smarter e.g. an internet-based, resilient-to-capture,  system that automatically tracks carbon usage and credits sustainability and saving (i.e.postponed consumption). 

Towards financial diversity... Twitter Token meet Facebuck!


Tue, 11/02/2010 - 05:00 | 692610 plongka10
plongka10's picture

"an internet-based....system that automatically tracks carbon usage...." I'm afraid you lost me there. Seeing as I am a carbon life form, how do you propose to "track my usage"???

Any form of taxation in morally wrong. Time to move beyond the old paradigms.


Mon, 11/01/2010 - 23:58 | 692417 RedPacket
RedPacket's picture

But there's one more thing ... ;)  

Governments may be democratic but their money is not! 

Time to establish a democratic dollar. Showtime = December 7th 2010.

Mon, 11/01/2010 - 23:59 | 692423 Xibalba
Xibalba's picture

Europe leads, America follows.  2012 will be a year to remember!

Tue, 11/02/2010 - 00:55 | 692485 bingocat
bingocat's picture

This sounds like a gang of high school kids getting together to think about how to blow up the school so there's no more school.

It's nice to get back at people. What do you think happens to you, your job, your mortgage, your everything, if heaven forbid people tried to bring down the system. The system was almost brought down in 2008 because people stopped money flow. People suddenly refused to lend to banks (effectively the same as withdrawing deposits) because they were scared of the idea that Americans would not pay their debts (remember, not a single CDO, mortgage, ABS, etc ever goes under if EVERYONE pays their debts in full and on time).

So bringing down the monetary/banking system accomplishes exactly what for who on what time frame? Everyone loses their job because all companies relying on short-term funding from banks don't get it. In order to "clear the system", the government nationalizes the housing stock which has mortgages against it at a fiat housing price level, giving out cash for net equity, forgiving everyone's debt, taxing the rich to pay for the negative net equity. All credit card functions cease immediately. All credit transactions cease immediately. Because not everyone pulled out cash, basically there is a shortage of cash. Those who pulled out on Dec7th or before become the new hoarders - the new bankers as it were - because they become the only ones who can lend money to others. Because of the dramatic parallel shift in societal risk, credit risk is ridiculously high so all those who withdrew money lend at usurious rates, assuming the government will print money and distribute it by the truckload. Which means that the only currency is goods and food. The US ceases production of almost everything, and people scavenge. The only ongoing enterprises are the much-scoffed at US multi-nationals who get their sales from outside the US. They become the most desirable employers because they can pay cash (they earn "hard money" from other fiat issuers abroad), and so there are ten-mile-long lines outside every facility waiting for a crumb of a job to drop. Because noone else can pay anything.

Why don't people vote? It is so much easier, and politicians will jump on anything they think has legs. If 80% of the masses want to implement confiscatory tax reform taxing all asset holdings above $1mm to zero, paying off the national debt, and distributing all left over monies by equal allocation, then vote in your write-in candidates to accomplish that.

Think about the possible outcomes of what you hope is successful. Think about every step along the way and the different possible endings. If in the vast majority of cases you think that that future will look upon you as a hero for having participated in bringing down a monetary system, by all means do it.

I personally haven't found an eventuality along those paths that I would be proud of having fomented.

Tue, 11/02/2010 - 01:58 | 692532 malusDiaz
malusDiaz's picture

You confuse Debt with Money.  And Savings with Debt.  Debt that cannot be repaid will be defaulted upon.


Loans? Fraction Reserve Money? Paper Wealth? Retirement? Health Care(aka immortality)? All these are mass delusions that will be shown for their true nature.


What do I get if the system comes crashing down? to spend my life surviving and fighting for life with my daughter and lover. 


I'd prefer that.  To know you live is something lost on you and me.  We have no trials of life, aka the test of manhood, survival, or anything of the like.  College, HA.


Just make that mortgage payment and keep going to work until you 80 and the 'system' will make sure you keep living another 20. 


I have no intention of tip toeing though life to arrive safely at death.

Tue, 11/02/2010 - 02:59 | 692552 bingocat
bingocat's picture

I don't confuse anything with anything, debt with money, savings with debt, or living life with destroying others.' Living life is not lost on me. I do not need to disembowel large carnivores with my swiss army knife, or to walk away from a mortgage, or not pay my credit cards, or simply decide I don't like the fact that I signed something which I didn't read carefully, in order to know that I am living life.

Money is just a way to count work and the accumulation thereof. It is a denomination. If you choose to use gold, so be it. It does not change anything. Take that representation away leaving hundreds of millions if not billions of people without a frame of reference to how to measure their work? That's obviously the way to prove you're a real man.

For those who have a 20-year stash of canned goods, a farm hours from the next person, and lots of guns, this might be fine. For those who don't, they will be led by someone who does, who decides what they do, and what they don't do. Eventually, it will just be a different 'might makes right' society. Lord of the Flies for manly men. For those seeking that for themselves, there are plenty of places to go. For those who complain about the fiat and abuse of power to let loose that future on others who don't is the height of irony.

If the masses break their promises of repaying what they owe, how does one ever expect credit to be sustainable, even in a post-apocalyptic world which is supposed to be more 'human'. Credit is trust. Trust is the ability to provide debt. If you want to exchange your fish for my vegetables, I would need your fish in my hand before I give you my vegetables. If you don't catch a fish today, you go hungry. Couldn't I give you something until tomorrow or the next day, when you will surely catch two? Why would I trust you to repay me? Because after bringing down the rest of humanity, you've turned into someone one can trust?

I have no mortgage. I worked hard and bought a farm with cash. I have taught my kids how to plant vegetables and take care of them. I have learned a great deal about picking wild vegetables. That said, I understand that as far away from humanity as my farm is, I would much prefer there be a hospital within driving distance, rather than not have that option.

How many Americans who advocate bringing down the banking system would also support simply turning off all communications with Afghanistan, leaving every American soldier stranded there for the rest of his life with nothing. Aren't soldiers simply the force behind the might-makes-right attitude of the corrupt US government? Aren't they like bankers working for banks - leaving waste, death, misery in their wake?

A little objectivity never hurt, folks. Look at the world through someone else's eyes every day and you might be surprised.

Tue, 11/02/2010 - 08:22 | 692727 goldsaver
goldsaver's picture

Yes, you are confused. Fiat is not money. Fiat is a promissory note designed to steal a portion of your value as a hidden tax paid to the bankers and the government. 

You advocate the continued support of the system because you fear the disruption it would cause the average J6P if the system collapses. Well, the same argument could be made for the system in North Korea or Cuba. The same argument was made prior to the civil war. "You cant end slavery, it would destroy the economy and leave a lot of negroes without a way to live". Should we reject the notion of freedom for some in order to maintain the stability of slavery? 

You say you bought a farm and are teaching your children to raise food. Good for you. The sweat of your brow is buying freedom for your family. You got yours so fuck everyone else?

What is so hard to understand? The fruits of your labor are yours and only yours. Your mind is your property that you freely exchange with worthy men. Why should you sell your property for devaluing linen and ink? What is the worth of such payment? A payment that is inherently worthless, but even worst, intended for theft? Are your efforts not valuable enough to demand payment in money? Is your life and that of your kids not worth more than bits of colored conffetti?

Other nations have gone thru resets before. The former Soviet Union is a recent example. Was it pleasant? No. Was it inevitable? Yes.

Wed, 11/03/2010 - 10:16 | 692912 bingocat
bingocat's picture


You missed the point of my farm example. You advocate that everyone work off the sweat of their brow and you accuse me of having done it and say "you got yours so fuck everyone else?" Isn't that kind of backwards?

If banks do not have the ability to lend, who does? Does all lending stop? My original question stands. Find me a prescriptive method for getting from HERE to THERE. If you need a reset, fine. Show me details. What happens to existing debt. Does everyone who took out debt have to give the money back? Show me ONE SINGLE TIME in history that "The People" have made out better on a relative basis on a reset and define how you analyse/measure that.

The Soviet example noted above was a method for the new political elite to become the banking elite. The "liberalization of ownership of state assets" was an opportunity for "the people" to be robbed blind. They exchanged those assets for paper rubles and the ruble subsequently lost huge against every other currency out there. It is still completely corrupt 20yrs on. If you are not friends with "I am not in power" Putin's friends, you lose everything. 

Zimbabwe's reset is an example of improved situations for its people? There is no elite determining what happens to the sweat of your brow? Sure the government managed to rest asset control away from some white farmers, but the people working those farms are now earning less than they did before, and the government is printing money left and right, diluting the fruits of everyone's labor. Zimbabwe used to be the breadbasket of Africa. Now 50% of the government's revenue comes from seigneurage.

Venezuela, another prime example of a reset. Savers' local currency assets are depreciated by fiat, and your ability to hold foreign currency is removed. If you hold significant hard assets, or acquire them through the sweat of the brow, you are most likely a capitalist running dog and those can be confiscated. The ones held outside the country are probably safe, but that's not the point of a reset is it...

Weimar Germany ended up with Hitler, another confiscatory regime, and another war. One which was basically won by the west because of the US government's ability to print money and expand money supply and give it away to people who weren't Americans.

Post-WWII Japan ended up with the longest-running 'I know what's good for you' government and corporate infrastructure in modern history of a developed industrialized society, where even 50-60yrs on, everything is cozy, and the corporate/media/government infrastructure is designed to keep you in your hutch on the treadmill.

It sounds like you are only worried about dilution of money. Don't worry, if it is taken away, it means dilution of hard assets. All ownership reverts to the rich guy because he is the one who has the highest ratio of assets to debt.

That's why resets occur, so they can take your money, and render your shares worthless, and then you get to work for the sweat of your brow. And some leader somewhere is going to determine how you and your fellow brow-sweaters will be able to allocate their sweat. That leader is going to be the one with the food, or whatever other promises you and all the other brow-sweaters out there find attractive if everything does not come up roses. 


Tue, 11/02/2010 - 04:18 | 692598 bingocat
bingocat's picture

4 "junks" (an hour later - I am sure it will rise :^) and just one response, from a guy who wants to play commando in the woods because he decides that health care is a mass delusion, and it would be good for humanity to go to survivalist training camp permanently?  Now I know why people think I am too patient.

Tue, 11/02/2010 - 06:02 | 692630 been there done that
been there done that's picture

Well, when you say if we:

"Take that representation away leaving hundreds of millions if not billions of people without a frame of reference to how to measure their work? That's obviously the way to prove you're a real man"   

THAT is what the FED is already doing to us!  You can sit there and watch them take money from people like my 80 year old mother living on a fixed income or you can do something about QE2 and maybe make them start over.

Tue, 11/02/2010 - 06:35 | 692649 Al Gorerhythm
Al Gorerhythm's picture

Great. Except for one little thing. While you are busy expanding your paper profits, my hard earned savings get fucked over. Whilst I have to work my common ass off to pay off my debts, the banks get to press a button to create money to pay off their debts thereby cheating me of my efforts. They get to POMO, I get to kiss their ass for being such fucking geniuses.

Meanwhile, shares that I buy get diluted, giving the owners another few years tenure in their plush McMansion. Everywhere you turn, some fucktard is fucking over the purchasing power of my savings through some TARP program, medicare program, dole offering, war games, through some pork-barreling vote buying fucktard, sonofabitch, high spending socialist mongrel bastard in Washington.

Fuck it, I just want a system whereby my lack of sophistication in avoiding any one of the above wealth transferring, carpet bagging, sons of bitches or my lack of insider knowledge when chasing a return, does not impose a penalty on me for being a saver. I want my money to carry my efforts through time, just by placing them in a sock if I chose to.

As long as you keep going into debt and expanding the money supply, by giving private banks the legal quarter to print their own credit money, they get the opportunity to destroy the purchasing power of my savings.

By letting them expand the money supply through off-balance sheet, derivative betting schemes and ledger book entry (so called) loans, they get the opportunity tu dilute the purchasing power of my locked up savings.

All of the above money expansion schemes, screws each and every cent I put in the bank. Fuck your apologist reasoning and support for debt based, irredeemable, depreciating credit note debt money. Fuck you and your excuse for debt expansion and savings dilution. Rabbit on about how sophisticated you are and how nobody loses, as long as you pay off your debt on time. No one gets hurt, my ass. Everyone gets hurt,,,,,, except the printers and their piss ant partners in this crime.

Fuck off.

Rant off

Tue, 11/02/2010 - 10:37 | 693027 bingocat
bingocat's picture

Love your moniker.

Your understanding about "expanding the money supply" through "off-balance sheet, derivative betting schemes and ledger book entry (so called) loans" is a key to understanding your point of view. 'derivative betting schemes'? Any two-way bet is just that. I know some people who bet on the Rangers. One bet a case of beer. They lost. That bet was off-balance sheet. It involved credit. Each person who did bet, personally, and without your approval, extended that credit, somehow causing a dilution in the financial worth of all of society and the value of their work. A billion people betting a six-pack on the Rangers vs a billion betting on the Giants creates off-balance sheet liabilities of a billion six-packs, causing (let's just say) $6 billion in debits from the balance sheets of those people. Some people did not bet. Those billion people who did bet expanded the total financial debt of America by $6bn, leveraging up their own financial situation by going into "debt" for $6bn and spending that money on 6 billion bottles of beer (the hard asset which does not depreciate). Who are they to worsen my plight and dilute the value of my labor?

Any time someone puts trust in you to pay back anything, he is offering you debt. If you ask some friends to help you move, and they do it, figuring you'll have their back when they need it, you have created debt. If you ask 10 guys, you owe that debt 10 times. You have expanded the supply of promised work out there, and therefore diluted the value of current work - both yours, and others'. If everyone does that, promising they'll pay you in the future because they'd rather have the short-term benefit of going into debt, then that's how we get to where we are now. And ANYONE who took out debt over the past several years helped contribute to the problem (housing loan, boat loan, car loan, credit card balance, no money down and no interest for a year on your sofa? It's all in there) as far as people who did not get into debt are concerned.


As I stated above, I have ZERO problem with going to a full reserve banking system if anyone can show me how those who currently complain about fractional reserve banking saying it is diluting them out of their wealth, as a whole, have their plight improved on a relative basis after the reset event vs. the bankers they despise. Do NOT accuse me of being an apologist. Propose away. I am COMPLETELY open to solutions. ANY solution. Show me how it works!


Wed, 11/03/2010 - 02:33 | 695204 Al Gorerhythm
Al Gorerhythm's picture

It's called capitalism.

Wed, 11/03/2010 - 12:31 | 696015 bingocat
bingocat's picture


You'll have to forgive my confusion. I did not see a prescription. There is nothing about all those things you rail against which is not capitalist. It all now sounds like a mishmash of Ayn Rand, Murray Rothbard, and right-leaning TeaParty Libertarianism. Mostly TeaParty Libertarianism. Which is fine... I have nothing against Libertarians. I know some very nice people who claim to be Libertarian. But there is a reason why all the famous Libertarians are politicians or right-wing media commentators. Hell, among really prominent economic figures the only Libertarians I know of are Alan Greenspan and Milton Friedman. And neither of them would seem to be your favorite people right now... Alan for blowing the bubble, and Milton for his prescription for how to deal with the bubble bursting.

Al Gorerhythm says:   Whilst I have to work my common ass off to pay off my debts... 

Definitely some Randian self-contradicton there. You are willing to take on debt when it suits you, but you don't want others to? Under what full-reserve banking system would you get to take on debt? Why are you allowed to take on debt and not others?

Al Gorerhythm says:  Meanwhile, shares that I buy get diluted, giving the owners another few years tenure in their plush McMansion. Everywhere you turn, some fucktard is fucking over the purchasing power of my savings through some TARP program, medicare program, dole offering, war games, through some pork-barreling vote buying fucktard, sonofabitch, high spending socialist mongrel bastard in Washington.

You don't like inflation when it means deflation of your dollar savings, but you want to be able to earn a fair return on holding shares (meaning shares increase in dollar value = inflation = your dollars depreciate vs goods). You can't have both lack of inflation with inflation unless something else gives. The thing that usually gives is people taking on debt, or people's labor losing value (i.e. what has been happening for the past 40 years).

Otherwise, nice rant.

Full reserve banking is a cute concept, other than being a total failure of an idea in any practical terms. It is riddled full of holes and self-contradictions, especially if espoused in combination with its most prominent proponents - the Austrian school economists. And even then, the Austrian school says despite the inherent rationality of individual actors and the fact that (most Austrian school economists believe) Natural Law is a societal factor unifying the interests of individual actors, the uncertainty of human behavior means that the actual legitimacy of their main economic system cannot be proven until it is proven to work. As I said, cute...


Full-reserve banking is a prescription for constant deflation, constant labor deflation, and negative real rates for any activity which goes through a bank (i.e. banks themselves are taxes). Many Austrian school economists actually refuted full-reserve banking to advocate "partial" full reserve banking (only requiring full reserves for demand deposits, which does not ban monetary 'creation' by banks), or free banking (where banks print money and people use many different monies at the same time). The only common thread in Austrian school economics is that it doesn't like government. Which is fine, but why not just admit it...


Tue, 11/02/2010 - 07:47 | 692684 Winisk
Winisk's picture

I think you are lacking imagination.  When you have lived with a tapeworm all your life you believe it's a necessary organ.  Dare to imagine the possibility that we will actually become stronger once the parasitic bankers are purged from our gut.  The resources will still be available.  The people actually doing something productive will still be there.  Communities generally still care about eachother and my hope is they will reorganize to keep life functioning.  No one here wants misery.  Personally I fear that is the endpoint of our current path.             

Tue, 11/02/2010 - 10:08 | 692987 bingocat
bingocat's picture

I have so much imagination it gets me in significant trouble. I have tried to work through every single solution I can find to get from Point A to Point B. There is no easy way to suddenly go from fractional reserve banking to full reserve banking. Money, as you understand it, ceases to exist. Your ownership of assets ceases to exist. If the entire debt is eliminated (paid off), it means that the people who OWNED the debt now own all the assets against that debt. You become a wage slave to live in your own house. Want to earn more? Show me how. Your labor is worth only what it is worth in money terms. If I can buy the product of your labor from you and sell it to someone else for profit, then I can eventually pay you more. Anything else is bartertown.

Your point about the tapeworm is apt. Let's say one removes it. You can't work for a while, and you require some ongoing medical support. Where do you get your food and medical support? It is either debt, or charity. And at that point, you are a parasite.  We will get stronger, but from a MUCH smaller base. That is an average much smaller base. Some at the top will have most of their wealth removed. Most people in the bottom 3/4 of society (as measured in net assets) have an asset (house) against a lot of debt. That will net out. They will not own their house, and they will have some net money, which they will be able to use to pay the rent on the house they once lived in.

The problem is that bankers are not the only parasites. Society which glorifies accumulation of wealth is at fault and all of us out there who contributed to it with needless consumption need to face the music. Pro sports players, and movie stars are ever richer. They get that money from you, who are obliged to pay more for your beer, buy a larger TV, etc, in the name of progress. What about land developers? What about companies which borrow money, dig a mine for gold, watch the gold price go up, and strike it incredibly rich. Is he a parasite because people are seeking to buy gold with their paper money? What about people who made mints by taking out margin loans and buying internet stocks in 1999 and getting out anywhere near the right time? Are they parasites?

What about the guy next door who bought his property in 2001 for $250,000, borrowed to buy it putting a measly $12,500 down, then refinanced it when he could at $400,000, taking out $150,000 in cash profit for himself, which he used to buy a couple of more places, which went up until 2006. He sold at just the right time - he was a regular joe and now he is worth millions, sitting on his patio drinking mint juleps and laughing at us whiners. Was he a parasite? 

Debt doesn't make itself. People take it out. Any deleveraging process is ugly. Any deleveraging process undertaken in a hurry involves monumental tragedy. Funny how Americans didn't seem to mind the leveraging process (taking out ever more loans against their house to buy a bigger pick-up, a new TV, a second car for the family). Credit card debt balances in 2007 were at an all-time high. I guess that was those nasty bankers allowing average joes to overspend?

There is one way to make bankers "lose." Tax them egregiously for being bankers. Want to make the people who made money off the leveraging-up process pay? Tax them egregiously. Want people to concentrate on the other values of being human? Tax any earnings you deem to be  'excessive' egregiously and tax accumulated financial assets egregiously. If they 'hide' their wealth in ownership of real estate? Antiques? Art? Sports cars? Tax it egregiously.  What will happen? People will go elsewhere and do other things. 

Tue, 11/02/2010 - 08:25 | 692732 BigJim
BigJim's picture

I think you'll find you'll be getting plenty of replies once America comes on line (I'm in the UK), but here's a few hurried observations:

The idea of withdrawing cash from the banks isn't to precipitate a 'Mad Max' scenario; it's to send a message that fractional reserve banking is wrong, and can only work with the complicity of deposit-holders. 

If a large enough number of people withdraw their cash, then there's a paper squeeze, and the banks will have to shut their doors to people wanting to withdraw cash money. The underlying banking system, however, will not fall over - there is still a central banking system sitting behind it all propping it up. There's absolutely no reason why electronic payments etc cannot continue to be made.

And the cash will be out in society at large, still being spent on groceries, gasoline, and everything else. 

Will there be some mayhem? Yes? Would it wake up the citizens to the reality of modern banking? Hopefully it would prompt them to do some research and wake up to their daily fiscal rape. At THAT point, we might get some voter interest in the subject, and some progress in dismantling the current corrupt banking system that is expressly designed to siphon wealth out of everyone's pocket, and into the financial 'service' industry elites'.

Tue, 11/02/2010 - 14:13 | 693857 chopper read
chopper read's picture

as i state above:

If you perform a productive service or provide a useful good and are paid in 1 fiat, for example, then you have 'created 1 unit of wealth'. 

If you take 1 unit of wealth to the bank, and this bank originates 10 units of loans, then the bank has counterfeited 9 units of money, and created no additional wealth. 

If you know that by depositing your 1 unit of wealth into a bank that this will devalue the very unit that you are depositing, then you may instead buy gold.

If the gold dealer knows that depositing this 1 unit of wealth into a bank will devalue it then he may buy more gold from the miner instead.

If the miner knows that depositing this 1 unit of wealth into a bank will devalue it then he may only except barter such as oil, for example. 

In other words, not everyone in the world has to accept paper currency.  When productive drillers, miners, loggers, and farmers stop accepting fiat money, then the impact will come full circle.

If enough productive people do this then the only folks left holding fiat currency are the counterfeiters themselves and unproductive borrowers.  

we win.  banks lose.

Tue, 11/02/2010 - 22:59 | 695012 bingocat
bingocat's picture

Your open-ness to discussion is shown by your use of loaded language. The bank has not counterfeited 9 units of money. If that is counterfeit money, running a balance on a credit card is participating in a felony. Writing a check because you don't have enough cash now but will when it clears is also "counterfeiting".

When you put money into a bank, you get interest. That interest pays for the dilution of money. Dilution of money has NOTHING to do with the absolute numbers of dollars extant (if the population doubles, you would expect number of dollars to double; if productivity increases, you would expect number of dollars extant to increase). It has to do with a dollar's ability to purchase goods of a somewhat constant nature (i.e. one ounce of gold (assuming zero speculation is involved), one man's suit, the makings of a meal, etc). If you believe in a constant fixed supply of dollars, you are effectively saying that every time you get a raise, someone else should get less money. Population should not increase (because then there will be fewer dollars to go around). The only way to increase one's standard of living vs the starting reference is to decrease the standard of living of someone else. Productivity does not pay for itself unless you assume continuous deflation with constant acceleration of the rate of deflation. A dollar is always worth a dollar, but if you and everyone else produces more per year, then the sum total supply of what dollars can buy is equal to an ever increasing amount of stuff.

YOU SAY:  In other words, not everyone in the world has to accept paper currency.  When productive drillers, miners, loggers, and farmers stop accepting fiat money, then the impact will come full circle.

What you have described is not a world without fiat. What you have described is a world where people pay each other in steadily diluting barter goods. The assumption is that a productive miner mining gold is adding to the amount of gold outstanding. The assumption is also that gold is worth something to someone. It is a shiny metal. It has assumed value because lots of people assume it has value. The same way a "fiat dollar" has assumed value. Right now, a fiat dollar has an assumed value of approximately 1/82 of a barrel of oil from the source, or 1/1350 of an ounce of gold. If 2500 tons of gold are mined each year and that is roughly 1.5% of total gold outstanding, then there is 1.5% dilution annually from holding gold.

What you are against is not fiat dollars per se - because you don't have to use them. You can live life without them. Any time you get paid them,  you can buy gold with them. They are simply a representation of value. You don't have to hold someone's promise. You can trade it in for something else.

If you are against DEBT on the other hand, you have to contend with the fact that promises to deliver something in the future are debt. It does not matter who offers that debt. If you run a business, and you buy a house for an employee, and say that if he wants to rent it, he can rent if for $X a month, or if he wants to rent to buy at $X+$Y a month, and you will take either one out of his paycheck, then if he chooses to rent, he is what respondents to this thread call a 'wage slave', if he chooses to rent-to-buy, in order to own a house based on the future sweat of his brow, then you have created debt, just as the bank did. If you as head of your company want to buy another man's business because he has employees and an ongoing business providing meaningful service and products to society, you can purchase it from him. If you enter into a contract with him to buy it, you need to pay him. You can borrow money from a bank based on the backing that a useful productive group of people can produce, or you can 'rent to buy' it from him. If you pay him out of your savings, and out of the proceeds of your business and his business through time, that's debt. If he has the right to get back his asset when you don't pay him, that's collateral. Just because a bank doesn't offer it doesn't mean that debt and credit and 'counterfeiting', as you put it, doesn't exist.

As I have said any number of times above, the problem with abolishing debt is that you have to abolish all the assets against it too. For the vast majority of Americans, that means everything they own. The result is that they become wage slaves. And because they have ultimate mobility (they have no house or assets, they work for their next paycheck, and presumably any new savings they generate purchases gold or equivalent), employers will pay only what they need to pay in order to keep them there. They don't need to pay more, because, there is no need for loyalty. If you work for yourself, you will generate revenue or income denominated in some medium of exchange (fiat dollars, gold, NewDols, whatever) and you will basically work from the sweat of your brow, because unless you are one of the privileged few to have significant net assets after the fall (i.e. one of the financial elite), you will not have money to invest to go into business.

This does not work cleanly unless you erase all asset holdings, and all financial holdings, and start with an assumption that everyone is created equally. Then you can wipe out debt, asset ownership, and money. And you can start with new money. Once everyone is 'naked', then you can dole out assets. The question then is "Who doles?" and are you happy with that? If you are, who isn't?

Wed, 11/03/2010 - 21:47 | 698041 BigJim
BigJim's picture

Quick reply:

I can't read Chopper's mind, but I would be willing to bet he'd be keen on 'free' money - ie, the market decides what is, or is not, money. Throughout history, in all societies that had access to them, precious/semi-precious metals arose as the money of choice. 

Yes, in a 'hard money' regime, where the quantity of money was not expanding at a rate greater than population x productivity, there would be mild deflation. So what? Once people realised the value of their money wasn't vanishing into the ether with every passing month (as it does now) they wouldn't be demanding raises. They might be getting nominally less every year, in fact, but as their money would be buying more than it used to it wouldn't be a problem. Think of computers.. cheaper, better, no problem with deflation there, right? Now imagine the entire economy that way.

I apologise if I'm mistaken, but reading your paragraph concerning debt and your dislike of Chopper's use of the word counterfeiting leads me to the conclusion you don't understand the nature of fractional reserve banking, and how it expands the money supply.

In a 10% reserve system, for every $1 deposited, it gets recycled via the banking system until it has created another $9 of spending power within the economy. This is inflationary, and, furthermore, is counterfeiting - just because the government has declared it's legal for the banking cartel to operate this way doesn't mean it's not having the same deleterious effect on the purchasing power of the money in everyone else's pockets.

This problem is not intrinsic to debt - in a 100% reserve system it would not occur.

Rothbard's The Mystery of Banking is a great place to start exploring this stuff:

Thu, 11/04/2010 - 02:01 | 698553 chopper read
chopper read's picture

Your open-ness to discussion is shown by your use of loaded language.

by 'loaded language', do you mean that which is similar to "Federal Reserve" which is neither 'federal' (it is private) nor possessing any 'reserve'.  I call them how I see them.  

What you are against is not fiat dollars per se - because you don't have to use them. You can live life without them. Any time you get paid them,  you can buy gold with them.

perhaps you are unaware that a gold-thieving thug named "FDR" took gold from my ancestors at gunpoint and made them take paper in return.  Shortly thereafter he devalued that paper by 70% overnight.  I call them how I see them.

In my mind, fiat paper currencies are simply a bi-product of the desire for control under a tax regime. the Welfare State, a byproduct of fiat money, is often used to justify the existence of fiat paper money. However, the major reason that fiat "legal tender" exists is because 'barter' cannot be collected as payment by our overlords. In other words, large governments, and privately owned central banks, need a standardized currency so that they may tax us into serfdom. This is the only reason that "money" exist. otherwise, folks would simply barter with anthing they wished, including gold and silver, as they have for thousands of years. 

further, if a finite amount of gold/silver are bartered only for productive efforts by clever or hard-working individuals, then unproductive individuals (dumb and lazy) will simply not gather any gold or silver for bartering elsewhere (for food and shelter). Of course, an inability to gain food or shelter (barring any philanthropic intervention) limits the ability of an individual to procreate. In other words, unproductive workers will not be able to feed their children; or, if they do have children, then their children will starve (barring any philanthropic intervention). 

This dynamic forces unproductive individuals to either change and become productive, or starve and become extinct; this basic system of barter discourages unproductive, anti-social behavior, and encourages peaceful, productive behavior. Productive individuals are paid in a finite amount of gold/silver, or with any other valuable asset (tobacco leaves?) or service (a returned favor), and move up the socioeconomic ladder.

Productive individuals will (in general) have many more children because they can feed them (for example). Upon their death, this accumulated savings of gold/silver will be divided among their children. If the individual children are not productive themselves, however, then eventually (perhaps over several generations) they will exhaust their inheritence of gold/silver and move down the socioeconomic ladder. 

After all, it cost gold/silver in barter to obtain food and shelter, so even a large amount of gold/silver will dwindle as it is peacefully traded to other productive individuals for their goods and services. Importantly, if they (the children of a productive benefactor) loan this inherited gold or silver to an unproductive enterprise then it is lost. However, if they finance aproductive operation then they are rewarded for their good decision with a return of more gold/silver. As the 'risk-taker' they win. The borrower wins from the capital backing of his/her idea. The customer wins by gaining a valuable good or service (that otherwise would not have existed) in return for peacefully trading their gold/silver. EVERYBODY WINS. 

Of course, this is very different than what we have now. Today, a wealthy child can be given shares in a bank, for example. This bank can "fractionally reserve counterfeit" 9 whole units of fiat paper money for every 1 unit of true 'wealth' that has been deposited. In essence, the individual who deposits 1 unit of wealth into a bank for safekeeping has earned this through peaceful, productive behaviour. However, the banker has not produced any good or service. No true wealth has been traded, only destroyed when the bank is allowed to lend 9 units of paper money to borrowers in return for interest that is paid in units of wealth (from productive behavior). 

It is important to note that a depositor actually finances the destruction of their own wealth by enabling the counterfeiting. Additionally, the banker can make at least 8 bad loans but, if the 9th loan returns both principal and interest, then the banker can still manage to return the original depositors unit of wealth and pocket the difference. Of course, this is very different than all other (non-banker) individuals who must chose borrowers with great care or risk losing each unit of wealth entirely. Finally, if a banker does get all 9 loans wrong and this 1 unit of wealth deposited is absolutely lost forever, then the banker can simply close as a business with no liability to themselves resulting in the taxpayer (other productive individuals) making the depositor whole again under the letter of 'the law'.

Only fiat currency can enable this type of counterfeiting at the expense of the poor, for example, and the most productive individuals who have no such privilege to 'legally' counterfeit, because only paper money can be multiplied out of thin air. Gold and silver cannot. In other words, fiat paper currencies favor the existing rich bankers and their children.

Without fiat paper money, the existing rich would need to teach their children truly productive behavior if their children were going to succeed like everyone else. When gold and silver are utilized as items for barter (rather than fiat paper money), an unproductive child of wealth will continue downward in their trajectory of dwindling resources until they demonstrate productive behavior, and only then will they reap the rewards in gold and silver in the same way as someone else (who may have come from lessor means than them, for example). Re-empowering gold and silver as both simple and natural items for barter ensures this fair process and prevents counterfeiting by the rich at the expense of the poor. 

Importantly, all productive individuals with gold/silver can make individual value judgements as they relate to helping their neighbors in need. Unlike the Welfare State, productive individuals can descriminate between the widow/orphan versus the drug addict.

Further, productive individuals who wish to pool their resources for mutually beneficial public works projects, for example, will do so at their own risk because the endeavor will only be possible with a surplus savings of gold/silver rather than the counterfeiting that takes place today. As we know, counterfeiting hurts the most those individuals who are born with the least fiat paper money by retroactively enslaving them through the debasement of their hard-earned wealth. 

The only two true and honest purposes of a bank are to (1) keep a productive individual's gold or silver safe from robbers for a fee, or (2) match an individual lender of gold or silver to and individual borrower of gold or silver for a fee. All other activities including centralized money planning, fractional reserve counterfeiting, and fiat paper money are designed by bankers to serve bankers (and their children) at the expense of those on the bottom. 

As far as "gold hoarding" is concerned, nobody can hoard physical gold AND assert their will on others because mercenaries cost gold, for example.  "Gold hoarding" only becomes an issue when an oppressive government mandates that taxes can only be paid in gold.  Otherwise, folks can barter silver, or anything else of their choosing. In other words, nobody can hold onto all the gold forever unless they are buried with it. 

On the topic of 'wealth concentration': as far as the acquisition of land is concerned, it is the owner that has the burden of protecting this land from attact, not the poor. Over time, in addition to upkeep, there are costs to defend acquired land.

Further, if i do not own land in England, then i will leave if i feel war is on the way, for example.  In fact, many Germans arrived in America before WWI for this very reason. in other words, 'labor' has the benefit of mobility, which cannot be understated, because they can go where they are paid the best. A landowner cannot do this, but rather must run a good business or run a risk that his property falls into derepair forcing him to sell some in order to stay alive.

Again, the important point is that paper money favors the existing rich and hurts the existing poor by creating headwinds to upward mobility. paper money can be "fractional reserve" lent by bankers, which is counterfeiting. of course, the poor go to jail for counterfeiting. further, the rich are always first in line to borrow the newly printed money, so they spend it at today's prices in competition with the earned savings of the poor. by the time the new money makes it into the hands of the poor, the prices of goods and services have been raised in response to the larger supply of money. again, the existing rich win and the existing poor lose. trading non-paper assets, whether they be 'coined' precious metals or otherwise, prevents these key assaults on liberty. right now, there is no wonder we continue to be enlsaved by an elite global banking cartel.

In general, a spirit of neighbors rewarding neighbors for productive behavior (that which perpetuates mankind) along with neighbors punishing neighbors for unproductive behavior (that which burdens our progress) is the closet we can come, in my mind, to perfecting the organic efficiency and stability of decentralized and peaceful free trade for the purpose of advancing civilization within the boundries of earth and perhaps beyond. 

Opening up our regional economies to competing currencies, including gold and silver, and eliminating the fraudulent practices aforementioned, will be the greatest step towards restoring liberty in America again where it once flourished without tyrannical central bankers and their fraudulent and wicked ways.

Thu, 11/04/2010 - 12:14 | 699828 bingocat
bingocat's picture

Thank you Chopper for a well-thought-out response.

I will stipulate most of the 'factual' aspects that you describe about how gold and silver accrue from productive work in a full reserve banking system with commodity currency. None of this is really in dispute. This is part of the nice picture of Rothbardian economics. I will address other points, including some of the "facts" and assumptions about fractional reserve banking, the nature of wealth and accumulation in a Rothbardian/ChopperHeadian system.

First, the concept of any commodity currency being "fixed" in quantity and thereby avoiding uncontrollable inflation or deflation does not work when other regions/countries do not use the same currency. Unless there is control above the individual level to restrict the flow of work and goods across borders, the flow of gold across borders is uncontrollable. If it is controlled against your will, your rights to be productive are being curtailed by an economic oppressor. The value of your wealth and productive capacity is being usurped. This should go against what you see as the root of full reserve banking.

Second, the assumption of a fixed amount of a commodity currency (and let us assume there is no industrial usage, and that the only useful function of the commodity is in coinage or jewelry (which under the assumption of permanent value, is just coinage worn as decoration - throughout history a method to show off wealth)) is false in any system where it is possible to dig up or discover more. If you can mine more gold, the wealth units are subject to inflation. Period. That inflation can be regular (whereby specie wealth owners see regular devaluation, and charge interest for the time value of their gold accordingly), or it can include sudden shocks (huge new discoveries, at which point, existing people's wealth is suddenly devalued). 

Third, the assumption that it's OK because one can use competing currencies in a free banking system is difficult to support because it assumes competing currencies are equally fixed and convertible/fungible without fear of restraint or interference. Without that assumption, there is no guarantee of a fixed quantity of gold/currency within your economic system. One explicitly cannot use a Rothbardian system of free banking because it allows fractional reserve lending as long as the public trusts it.

If we assume that the first two of these issues can be overcome (borders are closed, and we presume there is no more gold/silver/whatever to be dug out of the ground), we are left with a closed society with a fixed amount of total wealth as denominated in gold.  The presumption of fixed wealth, fixed population, and positive productivity (supported by almost all Austrian economists and your suggestion of banking being win/win for borrower/lender) means that goods deflation is constant, and unwavering. 

The presumption that gold hoarding AND assertion of will over others is impossible is simply false. It is utterly simplistic and ignores millennia of human behavior across all habited continents and all major societies. Humans have a history of threatening each other with future retribution without actually killing them. It is an easy way to achieve power without productive work. This ignores crime, which is ignored in everything you say except the function of a bank (which provides a service to wealth owners to allow them to hoard it more safely).

The presumption that gold hoarding is an issue only when an oppressive government mandates taxes can only be paid in gold is vexing. It is not clear whether from this sentence whether the "oppression" comes from the fact the government levies taxes, or that it only allows payment in gold. If because the government only accepts gold, and not silver or other barter goods like any reasonable government, so be it. There are plenty of human societies where taxes have been collected in kind. This almost always occurs because the non-wealthy ONLY have their production as wealth, and in order to tax them, you must take what they have. If you look at taxation as "oppression", that's fine too. You don't have to have government. We can assume lack of law, or if we assume law is required, we expect consequences for breaking it. One reason why governments are traditionally formed in small societies is to de-personalize the administration of unpleasant consequences. When sanction acquires a personal flavor, so does the vengeance. This has been borne out over millennia of human behavior.

You paint a nice picture under a full reserve commodity currency system of the very productive person becoming wealthy. The flip side you mention is the unproductive individuals will become less wealthy. This is right out of Rand. Obviously, the rich will have wealth they may seek to lend. They would only presumably do so because it would provide a return which is greater than the likelihood of failure. I will assume, as you do, that it is a win-win situation. In order for this to be win-win, the borrower has to be able to produce greater wealth as a result of his productive work+wealthnow (the loan) than he could out of just productive work. The lender has to earn a return which compensates him for the risk that the borrower will fail. In the case of success, it is win-win. In the case of failure, depending on the bankruptcy laws, it will either be "win" for the failed borrower and "lose" for the previous gold owner, or the failed borrower will owe the previous gold owner the work replied to pay back the loan. Either the wealth owner will have taken risk and failed, or the failed borrower will be a poor wage slave. Let us assume the two of them can figure it out at the start and take the risks accordingly. In any case, if he is successful, then the two of them (both the lender and the borrower) will have together removed wealth from another person(s) in the society. Eventually, as long as the lending/borrowing is a win-win situation, as you suggest it should be, the wealth will become concentrated in fewer hands than before.

The banker's job in all of this will be to 1) be productive and earn a profit, 2) just like any other worker, be seen as trustworthy so that more work will come your way. Presumably, because we will ignore crime, the fee for doing this job can be lowered as economies of scale are possible. If every rich man's wealth is spread out among an equal number of bankers, effectively, the banker becomes beholden to the wealth owner. If, on the other hand, many wealthy men place their wealth with one banker, and that banker places the money with many people, he will start also to gain some monopolistic/oligopolistic power based on the merits of scale. Of course, that banker would not abuse his position and power because we all know that bankers don't do that. Except in non-full-reserve banking and non-free-banking systems. 

The assumption that productive people will become richer and less productive people will lose out is fine. It happens in all capitalistic societies (and many non-capitalistic societies). If the poor people were more productive, they would have an equal opportunity to get rich. And if rich people, in order to further their richness, decide to hire the unproductive people for more than they currently earn, but less than they can produce under scale merit benefits, then someone else somewhere else will lose and the rich person will become richer, and the poor person thus hired will become richer at a lower scale (at someone else's expense) or will simply become poorer at a slower pace. That's fine. Everyone knows that becoming rich off producing something which is of value to someone else and doing so spectacularly successfully is good. It is the fulfillment of that man's self ownership. All very Randian/Rothbardian. Except for the people who are now working for the wealthy guy just to stay alive and disappearing at a slower pace than the other guy. His life sucks. He is not fulfilling his Rothbardian self-ownership. He is what Rand's John Galt would have called a person of "hopeless ineptitude, contributing nothing to those above". 

But that's OK. In the end, there is no problem at all. Those who have worked for their wealth based on producing what other people have determined is worthwhile are fine. They are wealthy. They have their money in banks. Those who cannot manage to accumulate wealth and instead accumulate work debt are hopelessly inept. Charity is possible for those people. People who resort to crime are always caught, and somehow, but not explicitly, dealt with.

Bankers, who are by definition fraudulent, wicked, counterfeiters in a system of fractional reserve banking, are suddenly controllers of the world's wealth (wealthy people want win-win situations more than hoarding with no return) and are good, non-fraudulent, and non-wicked bankers who maneuver all the wealth of the world to create win-win situations for wealthy people. Every rich person knows that one should not lend money to people who are poor and hopelessly inept because they are unlikely to be able to pay off the loan. And if there is no bankruptcy law protecting them from incurring negative wealth (i.e. work debt), you Mr. Wealthy just have a hopelessly inept person working for you and by definition, his labor is depreciating in value faster than the average, which is depreciating anyway, by definition, so he cannot possibly pay off the loan based on a fixed work unit unless you charge him work interest (he may owe you 100 units of work now, but he cannot pay you now so there is vig on his work units). So in reality, Mr Wealthy only lends to the rich in the land of full reserve banking and fixed commodity currencies.

And because in Rothbardian free reserve banking (cf Mystery of Banking), even though they have the ability to act completely freely, including in a fractional reserve manner, bankers would not do anything to disabuse people of the trust placed in them over years of steady performance. Bankers who maneuver the wealth around to create win-win situations for people with money to lend to other people with money are by definition trustworthy. Everyone knows that bankers in a free-banking system completely without rules, where they can print as much as they want as long as they have built up trust, are completely trustworthy and would not act in any fraudulent, wicked ways. But only as long as they lent counterfeit currency in a currency of their own invention (and public trust), rather than the currency denominated by a government. And heaven forbid they lend to a poor person - someone who has proven himself to be of hopeless ineptitude, then the banker is obviously not trustworthy as far as rich people are concerned. Therefore, there is a run on his bank. The curse of fractional reserve banking has hit our free banking system, but it's not a problem because he is abiding by the rules of free banking saying he will be shut down if there is a problem. And even if he lent out ten times his deposit and created an inflationary money base, and put out fraudulent currency, that was OK because he was not a fractional reserve banking counterfeiter, he was in a free banking system where his clients trusted him, and therefore he was just a banker doing his job who failed.

ChopperHead said...

...fractional reserve counterfeiting, and fiat paper money are designed by bankers to serve bankers (and their children) at the expense of those on the bottom.

It would seem that the reasonable course of action under a full reserve banking system, one where bankers are also self-interested and self-owned Randian/Rothbardian actors according to Natural Law, that bankers act in the interest of their customers - i.e. rich people. It is there interest to create as much profit amongst people who borrow and lend successfully and to avoid the risk of a non win-win situation. This sounds suspiciously like a system built for rich people and bankers at the expense of people on the bottom. And heaven forbid free-banking be instituted, this allows truly fraudulent counterfeiting behavior because one could say that while under an Austrian school free banking system, the trusted banker is allowed to create as much new counterfeit money as he wants, he has to avoid a bank run. i.e. if he does engage in surreptitious fractional reserve banking, as his Rothbardian right, he just has to avoid getting caught (i.e. he has to lie). But that's OK because as long as he doesn't get caught and everything works out OK, it didn't hurt anyone. Engaging in fraudulent counterfeiting banking activity under a free banking system with outright lies is fine as long as you don't get caught, but the same money creation in an explicit fractional reserve banking system is worse?

The one thing which comes out of everything that Rothbard wrote is that he is less capitalist than anarchist. He simply thought government should not exist. He was a brilliant theorist, and prolific thinker of great thoughts. He was a shining Naturalist and his reliance on Natural Rights and egoism, blinded him (and his followers) to the weaknesses which exist when mixes the foibles of human nature with his derivative theories. And this should not be a shock to anyone reading Austrian economics. The basis of Austrian economic theory remains that human nature is uncertain and unknowable, and therefore one cannot 'prove' that it will work until it actually does. The problem with that is that Austrian economic theory fully depends on Natural Law, Natural Rights, a society of rational egoists (as Rand would have used the word). Without all actors acting their part (even the losers have to appreciate that they are losers) according to a peaceful economic implementation of Natural Law, the societal basis behind Austrian 'economics' breaks down and almost all theories fail under the weight of human behavior, which is what Austrians half predict anyway when they say they cannot be sure of its outcome because human behavior is uncertain. Go figure.

And as to that gangster FDR robbing your ancestors at gunpoint, that is an anecdote. Some guy robbed my ancestor of his life when he was sent to fight a world war against Nazism. Obviously, the guy who sent him was a thug. Or the German who killed him was. The guy who stole my neighbor's money at knifepoint several years ago was a thug too. These are all anecdotes. There are lots of rich people and poor people who lied on their loan docs, are committed arson to get out from under a heavy loan, or fraud to keep it through a short sale. Those are anecdotes too. That FDR guy also spent a huge amount of rich people's money trying to create jobs when the rich people were hoarding their money and not efficiently lending out their money under a fractional reserve system. That's an anecdote. In any societal system over any span of history, even when full reserve banking was the monetary system, I can give you anecdotes of how that system failed. 

I assume that we will continue to disagree, so I think we can agree to disagree.

Thu, 11/04/2010 - 06:47 | 698888 bingocat
bingocat's picture

Thank you for an informed and dignified response.

Yes, in a 'hard money' regime, where the quantity of money was not expanding at a rate greater than population x productivity, there would be mild deflation. So what?

"So what?" is always a difficult thing. Some see it. Some don't. There are some who would not appreciate having this done to them because they do not want to have a falling salary 'in money terms' every day. You can explain to them that the prices of goods would fall as well but they still won't like it. You can suggest to them that if they work hard and well, and others do too, their labor will fall in value faster than before, and that prices of goods will fall faster as well. They may not like that or believe it. Forcing your will on others 'for their benefit' is not terribly different than what most people on this thread don't like about current (or permanent) government policy. You have to decide whether it is your right to force it. And if you are willing to, you have to be willing to accept that you may be on the losing side of a forced bet when push comes to shove, and that's going to have to be OK.

You make the wrong assumption about my dislike of the use 'counterfeiting.' I understand fractional reserve banking very clearly. It may have effects which theoretically look like they are structurally inflationary. The problem is the meaning of the word, which in its original meaning requires that the imitation be passed off with the intention to deceive. It is, as I said, a "loaded" word. We may not like the system, and the effects may be deleterious, but that does not mean we are ignorant of how the world functions.

In full reserve banking with fixed supply of money units, there are serious problems with debt, foreign trade, and competition. The accompanying assumption of lack of both seigneurage and tax that most people make creates other serious issues (read my response to Chopper below).

I have read Rothbard's works (as well as most other works in the Austrian school, those of Rothbard's once idol then object of contempt Ayn Rand, Friedman, and his once-idol then object of contempt Keynes), lots of Mises, Hayek, Machlup, and others). I get the feeling I should read MoB again but I had so many problems with the underlying assumptions required that I couldn't take it seriously. Specifically, his explanation in MoB of why Fre Banking works but why fractional reserve does not work is based on an assumption of human behavior which runs counter to that required for his economic system under full reserve banking to work. The same problem plagues lots of Austrian school theorists' work.

Tue, 11/02/2010 - 01:02 | 692494 Misean
Misean's picture

The British gov't's panic over bank runs not long ago is evidence that the impact could be more severe. The European system is much more patch work...I mean German Euros are more valuable than Greek Euros...

In the US the impact would be nil. Pull money from BofA and put it in Joe's neighborhood bank, and Joe increases his deposits at BofA.  Europe doesn't quite work that way.

Still, I will believe it when I see it.

Tue, 11/02/2010 - 04:25 | 692600 Anton LaVey
Anton LaVey's picture

I mean German Euros are more valuable than Greek Euros...

No, they are not.

The German government debt, however, may be much more valuable than the Greek government debt. But that's another story.

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