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The Last Resort Of A Dying Economic System: From "Beggar Thy Neighbor" To "Beggar Thyself"
The phrase of the week comes from The Privateer's Bill Buckler, who has coined the one term that best describes the lunacy that has gripped the world: "Beggar Thyself." Unlike the 1930s when the theme of the day was "beggar thy neighbor" and which culminated in World War 2, this time the emerging paradigm is one in which the first to defect wins... if only for a few seconds. Because when the "beggar thyself" process is complete, it will mark the end of not only the central banking regime, and the days of excess wealth accrual to the financiers of the world, but also the termination of the 140 year old Bismarckian "welfare state" which is the primary culprit for the creation of trillions of imaginary wealth out of thin paper. When the fiat system ends, so will end the hallucination that developed societies are capable of providing for their hundreds of millions of existing and future retirees. And with that will come the "social instability" that always marks the closure of a failed monetary regime and the admission of global bankruptcy.
From the October 17th edition of Bill Buckler's Privateer:
What Other Choice Is There??:
In the hundreds of articles appearing in the mainstream financial press all over the world and especially the English-speaking world, one headline stood out. It was this - “Currency wars are necessary if all else fails”. The headline appeared in the October 11 edition of the UK Telegraph.
The contents of the article are not germane. What is germane is the naked contention that the nation or nations which will emerge the “strongest” from the current financial malaise is the nation or nations which succeed in devaluing their currency faster than any other. Only in that way can the “currency wars” be won. If these “wars” develop further, they will become a race to see who can come up with a worthless currency faster than anybody else. The 1930s coined the phrase “beggar thy neighbour”. Today, the financial potentates have gone one better. They are working on a “beggar thyself” policy.
Co-operative debt-based stimulus didn’t “work” and neither have “austerity” programs, according to the IMF. Their “World Economic Outlook” comes to the conclusion that the world can neither “stimulate” its way out of the current GFC nor get there via “austerity” programs. And it isn’t too sanguine on the prospects of currency wars either. As the IMF report noted: “Not all countries can reduce the value of their currency and increase net exports at the same time”. After all, they tried that in the 1930s. The only thing that “saved the day” then was a REAL war, not one on the foreign exchanges.
But still, the global financial potentates keep thrashing around inside their own context looking frantically for a way to overcome their plight. As they want the citizens of the nations they “represent” to see it, they have no choice. If they for one second admitted that the entire system as it is presently constituted is deficient by its very nature, they would instantly have the “social instability” they are warning us against.
In other words, with each passing day the fraud that is the concept of Bismarckian social cohesion and stability, brought to you by a hundred years of central banker subjugation, like a putrid onion, loses layer after layer of its mask, until soon the entire world will see behind the lie. The resultant explosion in pent up decades of anger could easily make all prior conflicts seem tame in comparison. Hopefully it can be avoided. But for that to happen, the fate of the dollar as the reserve currency must and will end. Buckler again:
The “Game” Explained:
On October 12, the minutes of the FOMC’s most recent meeting (on September 21) were released for scrutiny. The gist of these “deliberations” are contained in one sentence - “Policy-makers had a sense that (more) accommodation may be appropriate before long.” This is the expectation on which the world has been basing its investment decisions ever since that September 21 meeting.
The reaction to the release of these minutes was by no means confined to the US. An excellent example of this is a quote from Brazilian Finance Minister Guido Mantega. For weeks, Mr Mantega has been maintaining (quite rightly) that the world is already in a currency war. This is what he had to say about the US central bank - “The Federal Reserve is promising quantitative easing, which is monetary policy’slast resort. I don’t think it will reactivate the economy, but it will weaken the Dollar.”
This is more than “monetary policy’s last resort”. It is Ben Bernanke’s “helicopter money” scenario writ large. The US central bank proposes to use the Federal Reserve notes it creates out of thin air to “buy” the debt of the US government which the Treasury creates out of thin air. This is the last gasp of a monetary “system” which is as far from sane and historically sound money as it is possible to get. Not only is it doomed to failure, it will doom the US Dollar if it is put into practice to any substantial extent.
Since the US Dollar remains the premier global reserve currency, that will leave the rest of the world with absolutely no choice but to institute radical changes to the money which underpins everything. In the modern sense of the term, there can be no markets without a viable money. The Fed is on a path which will remove the money. The markets can only then survive with a different, and better, underpinning.
What are the alternatives? These should seem obvious.
[The BRIC nations] rank first, second, fifth and ninth in terms of world population. Two of them, China and India, are the two most populous nations on earth with almost 37 percent of the global population between them. The BRIC nations are often singled out as the coming global economic powerhouse, the nations which are and will increasingly drive world economic “growth” in future. In recent surveys done in the US, they were seen as being a better investment bet than is the US itself.
The majority of the “ordinary” people in ALL these nations, but in India and China in particular, are still living in a coin economy. They still conduct their transactions the way the whole world did until the 1920s or 1930s and the way that all but the richest nations (the US and Canada in particular) did until the mid 1960s. Coined money is not a nuisance to these literally billions of people, it remains money itself.
The history of indirect exchange developed in two main stages. First came a steady narrowing down of the physical economic goods which were seen as having the utility to be a medium of exchange. That ended when Gold (and silver) were singled out. The next development was a tangible form that these two metals could take so as to be used as money. Gold and Silver coins emerged and lasted (in the case of silver coin) right up until the mid 1960s. As an illustration of the consequences of the banishment of precious metal coin money, consider this: The US stopped minting Silver dimes (10 cent pieces) in 1965. At current prices, the silver in one of these coins is now worth just under $US 1.70. A pre-1930s US Gold $US 20 Double Eagle coin is now worth about $US 1310 in Gold content. In the early 1930s, $US 20 was a month’s wages for many. At today’s minimum wage, $US 1310 is considerably more than a month’s wages. The difference is that the wages then were TANGIBLE. Today they are promissory.
In essence, that is what the history of the global fiat money era has been. The masters of the universe have taken a simple thing like precious metal coinage and turned it, in stages, into a galactic game of GIGO (Garbage In - Garbage Out). Computers, without which our modern monetary “system” would be impossible, will accept anything that is fed into them. So will a lot of people. But many will not.
The idea of Gold and Silver coin circulating as money may seem like something out of the distant past. But Gold coin DID circulate until about 65 years ago. And Silver coin was still circulating as money in the US when Kennedy was assassinated in late 1963. For half the world, coins still ARE money.
There is little, if anything, that can be added to this.
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"welfare state" which is the primary culprit for the creation of trillions of imaginary wealth out of thin paper.
So "entitlements" responsible for fiatsco? I don't think so. War funding is the primary reason.
I could post tons of evidence of this but too lazy. Expected better.
US Defense budget is 5% USA & only 2.5% average in Europe and they collapsed first.
SS, medicare, medicaid, and other social programs make up the largest percentages of our budget by far.
Sounds like your quite a way down the rabbit hole; you don't really take that defense budget seriously!! Milestones
Jim Rickards has a really interesting take on gold out. Sobering stuff, nothing tin hat about this. If Bernanke is inflating at just 4% a year, how many years till your dollar loses 50% of it's buying power? People will figure this out, the dollar will collapse. Worth the time.
http://kingworldnews.com/kingworldnews/Broadcast/Entries/2010/10/16_Jim_Rickards.html
Rickard's speculation on a new gold standard is doubtful.
Already tried it and the U.S. defaulted. There are still previous claims on U.S. gold outstanding.
Saying that we were on a gold standard is like saying we are a democracy, or that we have free markets.
I agree with Rickards take and it's not just him. Radical devaluation of the USD is a de facto sovereign default and at some point the US gold reserves are relevant again.
We have the largest reserves of gold, if they're there. Killing the dollar resurrects gold. Rickards even suggests holding our physical gold over any counterparties for soveriegn security, and giving them the paper. Bold.
Malaysia is going gold standard already and is stamping coinage again. Sharia compliant banking is also coming into vogue and they don't believe in usury.
Alternatively scenario to gold standard by another analyst -- Japan may be forced to buy gold which would be a huge deal. They are looking at potentially $10 Trillion (in USD) to invest somewhere to provide their aging domestic poplution the pensions that are due. Their people are no longer buying their own bonds, they're withdrawing now as they retire. Japan may be forced to buy gold to diversify, even a small amount would be huge on the markets and could drive the world to gold.
I don't see any other way out than a gold standard. Another global fiat would be very hard to get the other half of the world to accept after the games being played with the current ones.
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The solution does truly ask us to beggar ourselves if the answer is to inflate our currency. This is robbery. This is a plan to make you whole by diluting and cheapening those dollars in your pocket. Or, it's like putting the leech on the sick patient. Maybe that will make him whole. Either way people aren't going to like it. It's a toss of the dice to see if they'll take it. Who'd toss dice like that with others' necks on the line? You? Me? That kind of arrogance and blindness can only be found among tyrants, bureaucrats, and central bankers.
DAMN.
Kicks myself for not adding a nice drawer FULL of 1964 rolls of dimes when I had the chance.
[W]hen the "beggar thyself" process is complete, it will mark the end of not only the central banking regime, and the days of excess wealth accrual to the financiers of the world, but also the termination of the 140 year old Bismarckian "welfare state" which is the primary culprit for the creation of trillions of imaginary wealth out of thin paper.
God. Fucking. Speed.
Fire in the hole!!!
Get out!!!
You're right, looks like rain.
Some hot shots were predicting a rise in the USD for several weeks, after the big QE II talk, but before it kicked in --- "Buying opportunity for commodities, PMs".
I Don't Like Mondays - Boomtown Rats
My mother always told me social security would not be there for me when I get old. The whole world is going to beggar themselves and hit the reset button on a few things:
Karl Marx is still wrong and Adam Smith is right.
Keynes was wrong and Von Mises was right.
Fiat currency is bad and a gold standard is good.
Private Central banks are bad and a country coining it's own money is good.
You're no fun! There's nothing to argue about...
Two recent important trial balloons:
#1: Paul Krugman says "QE2 should be $8~10T, not $1T".
#2: Edwin Truman says "the US government should sell all its gold".
What are the agendas and purposes of these claims?
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#1: Translation: Paul Krugman wants to replace Bernanke as next chairman of the federal reserve. Krugman correctly identifies that Bernanke was purposely chosen to be chairman for his promise to "drop money from helicopters", which is clear fed-speak for "hand trillions of dollars to the international ganster banksters so they can leverage and speculate at zero cost, and rape everyone else by getting the money first before prices are inflated by the policy".
Krugman knows the collapse of fiat currency is coming, and that cries for the end of the fiat currency, the federal reserve, and fraction reserve atrocities will become loud, even when held down by their co-conspirator, the mainstream media. The predators-that-be will never willingly give up their system of full spectrum dominance, financial terrorism and financial slavery, but they'll be happy to throw Bernanke off the boat as a fake peace gesture... knowing what they have in the wings is even more insane and virulent.
Paul Krugman announces QE2 should be $10 trillion to position himself to replace Bernanke when that happens. Krugman knows the predators-that-be will not reverse course, but want pedal-to-the-metal policy, which simply means egregiously more obscene levels of free money to the predators-that-be at the expense of everyone else.
Makes perfect sense when you understand the motivations of the predators-that-be, no?
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#2 The Edwin Truman proposal that the government of the USSA should sell all its gold is part of the plans described in #1 above. The predators-that-be know perfectly well that their fiat currency scam is collapsing, but have no intention of being shoved to the side and replaced by a "gold standard" or any other "hard money standard" that would leave them less capable of continuous financial and existential terrorism. So they ask themselves, "how can be massively reduce if not eliminate the chances of return to a gold or hard money system?". One certain way would be... if the US held no gold instead of being the largest holder of gold as it [supposedly] is today. Who in their right mind would want to start a new system in the worst possible relative position? Nobody! Many gold standard advocates would probably jump ship before they'd advocate putting the USSA into such a "worst possible position".
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I think #1 is spot on. I suspect #2 is a shot across the bow... a self-fulfilling prophesy by poison pill. The mere threat of selling all gold may be enough to shut the traps of fence-dwellers. The predators-that-be see this proposal as a threat to show they would be willing to absolutely, positively destroy the economy of the USSA --- if anyone was to seriously threaten any weakening of the stranglehold they now enjoy. I think they're saying, "if you even begin to think seriously about returning to a gold standard, we'll exchange all the gold for worthless fiat toilet paper, and overnight you'll become the poorest nation on earth.".
Under scrutiny, Truman's rhetoric about dumping the gold has been seen as purposeful misinformation to head fake the price of gold lower and to undue the recent Greenspan comment.
Greenspan's recent comment to the CFR, "There is no place for fiat to go but gold" was very revealing and wasn't intended for mass consumption. They all know.
All the banksters want fiat, a new single global fiat, but the East -- they no like. It's a global war over a gold backed vs fiat currency.
If you're not holding gold when the music stops, you'll get screwed in the exchange.
#2 is a ludicrous pile of misinformation, as there is no U.S. gold left to sell. The last two years have shown that bankers lie about everything. Why would they be telling the truth about the only real money in the world? Answer: they wouldn't, and they aren't. #2 is just another absurd fiction designed to separate fools from their money. Problem is, the Fed has run out of fools. Gold knows this.
I suspect you are correct. However, none of us are absolutely certain, and most fools on earth assume the USSA still has 8000 tons of gold hidden away. So these predators still get the benefit of having the gold, even though they don't. Plus they have the benefit of having stolen the supposed backing of the reserve currency (asset of all americans).
We certainly do need a physical audit of every ounce of gold held by the federal reserve and government of the USSA. Of course, the result might set off the mass lynchings we so despartely need.
China has a few USD it would like to swap for all the US gold.
Don't think the US would like that. It won't sell it gold as it strengthens the hands of others.
Money lenders have lived off the backs of people for long enough. We owe so much of our future productive capacity that they can't milk anymore income from us anymore. We're at a crossroad now where the very foundation of a credit based society is threatening to crumble. That foundation is the assumption that debtors need to honor their debts. People moving back into a home where they have failed to meet their debt obligation is a scary start. The money lenders have two choices:
a) they can force more credit on people that, because of the inability of repay, will default.
b) accept their losses on their loans and after a period of deleveraging, start again.
Option a) will mean the end of the fiat currency system, as at some point people will say fu$K you, I'm not paying you back. We are closer to this point than the Fed realizes.
Option b) will allow the money lenders to continue on with their system, abeit after some severe losses. ie the Great Depression
The Fed is pursuing option a) with determination. The bright side is that it will mean the end of the Fed.
I propose a better model - Beggar Thy Banker. Pretty soon it will be overtaken by a newer model - Shakedown Thy Banker. After that - Where the fuck are all the bankers?
Interesting read. Just two additions perhaps the article could have touched on.
1. The other way money has been created out of thin air (Fractional lending), which we're probably all too familiar with already.
2. The hundreds of millions of people in the 3rd and developing world who have hoarded the USD as helicopter money. The Indian and Chinese govts may be encouraging their populace to hoard gold instead, but it's been the habit of a generation of people in these and other countries to keep wads of dollars for emergencies. We're talking about the poorest of the poor here, and when/if the USD paper becomes useless, I worry deeply about what will happen to them.
Horatio Beanblower - good luck with your business - try this article to open up some eyes:
http://www.webofdebt.com/articles/dollar-deception.php
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