Guest Post: The Dark Age Of Money

Tyler Durden's picture

Authored by James C. Kennedy, originally posted at CounterPunch,

[It's Thursday; The World Series is on - so is Football; Grab a drink, we know it's long - and read this - at least skim the bolded segments and the last section - will open your mind a little]

If you often wonder why ‘free market capitalism’ feels like it is failing despite universal assurances from economists and political pundits that it is working as intended, your intuition is correct.  Free market capitalism has become a thing of the past.  In truth free market capitalism has been replaced by something that is truly anti-free market and anti-capitalistic.  The diversion operates in plain sight.

Beginning sometime around 1970 the U.S. and most of the ‘free world’ have diverged from traditional “free market capitalism” to something different.  Today the U.S. and much of the world’s economies are operating under what I call Monetary Fascism: a system where financial interests control the State for the advancement of the financial class.  This is markedly different from traditional Fascism: a system where State and industry work together for the advancement of the State.

Monetary Fascism was created and propagated through the Chicago School of Economics.  Milton Friedman’s collective works constitute the foundation of Monetary Fascism.  Knowing that the term ’Fascism’ was universally unpopular; Friedman and the Chicago School of Economics masquerade these works as ‘Capitalism’ and ’Free Market’ economics.

The foundation of Friedman’s corrupting principle is that the investor (money to be more precise) has no duty, obligation or covenant to anyone or anything.  Friedman’s ‘Market’ is not subject to ‘any’ human standard of morality, political limitations or national interests.  Money is free to act without bounds or conventions.  Nothing is prohibited as long as the market can provide a “clearing price”.

The fundamental difference between Adam Smith’s free market capitalism and Friedman’s ‘free market capitalism’ is that Friedman’s is a hyper extractive model, the kind that creates and maintains Third-World-Countries and Banana-Republics, without geo-political borders.

If you say that this is nothing new, you miss the point.  Friedman does not differentiate between some third world country and his own.  The ultimate difference is that Friedman has created a model that sanctions and promotes the exploitation of his own country, in fact every country, for the benefit of the investor, money the uber-wealthy.  He dressed up this noxious ideology as ‘free market capitalism’ and then convinced most of the world to embrace it as their economic salvation.

As improbable as it sounds, this ideology has the near-universal support of most economists, the media, universities, the Federal Reserve, the U.S. Treasury, nearly every member of The U.S. Congress and most everyone you know.  Today Friedman’s ideology is accepted, to some degree, by nearly every country in the world.  But ultimately this exploitive model is not sustainable at any level, or for anyone or any nation.

The ultimate difference between Friedman’s ideology and Smith is simply this: Smith was in fact a Mercantilist.  True, he opposed the custom of hording gold and other Mercantilist practices, but ultimately he was a Mercantilist. Smith promoted “free trade” with the goal of improving the English merchant’s advantage, and thus the State’s.  Nothing expresses this more clearly that the title of his book An Inquiry into the Nature and Causes of the Wealth of Nations.  Mercantilism is based on the relative wealth of one Nation State over the other, not the plunder of the State and it’s peoples for the benefit of the individual.

Smith believed in the power of the State and recognized that it was only by the power of the State that free enterprise could succeed and thrive. In a world without the State, he sided with Lock, “life was brutish and short”.  Consequently one had obligations to the State and the people who make up the state: the working man.

According to Smith every butcher, baker, craftsman and merchant would seek out his own self-interest and that economic advantage would ultimately benefit his fellow Englishman and the Crown.  Smith’s arguments against some precepts of Mercantilism were intended to give the English tradesman a greater advantage, nothing more.  The intended effect was to enrich one’s State above all others as an alternative to the primitive act of war, the traditional means to National enrichment.  Smith viewed things as a zero sum game.  And as England was the undisputed master of global exploitation at this time, exploitation of other Nations was fair game.

However, according to Economist David Ricardo trade between nations of relative economic parity result in what he termed “Comparative Advantage”.  Comparative Advantage is based on specialization: Germany builds machine equipment, Italy does leather goods, France produces cheese, wine and literature.  When these nations trade with each other all parties enjoyed a net gain as a result of specialization and non-duplication of resources.

Of course this does not work when first world nations off-shore factories and jobs into subsistence-based economies (the term “comparative” is no longer germane).  Off-shoring into non-comparative economies is purely extractive because all of the gains are ‘privatized and are no longer correlated to national interests.  Non-Comparative off-shoring undermines both the host and source/flagship nation.

The financial entity is able to extract environmental, capital, tax and infrastructure concessions from the host nation.  If the host nation ever seeks to renegotiate its position with the financial entity the entity can enlist the powers of its flagship nation (i.e. State Department).  This type of intervention can be very costly to the flagship nation and end very tragically for the host nation.  Under Monetary Fascism the financial entity maintains out-sized rents from the host nation by utilizing the state as its enforcement agent, while maximizing tax avoidance via off-shore corporations (and other gimmicks).

Free market capitalism, as conceived by Smith, was Nationalistic in nature and as the Nation State became wealthier, so did its people and industry.  This relationship required shared obligations and shared rewards between the State and its people.

Traditional Fascism, as conceived by Mussolini or Hitler, had an aggressive Nationalistic disposition where the State promoted Industry above all others in order to strengthen the State relative to its perceived rivals.  Hitler and Mussolini believed that as the State lifted industry, industry lifted the people – dignity and pride in one’s nation were foundational principles.

Monetary Fascism, as conceived by Friedman, uses the powers of the state to put the interest of money and the financial class above and beyond all other forms of industry (and other stake holders) and the state itself.

In democracies and first world nations this is achieved through lobbying, campaign donations, financial incentives, revolving door regulators and through other means.  As such, the state is coopted into altering regulations / legislation, diverting investigations / prosecutions or creating tax loopholes for the benefit of the financial class/ industry.  Ultimately these actions undermine states sovereignty.

For the rest of the world state interests and sovereignty are undermined through the IMF, The World Bank and other global monetary agencies.

Monetary Fascism has a strong preference for political rather than capital investments.  These  investments are designed to sustain and support the preferences and activities of the financial class as it manipulates and create ever larger out-sized rent opportunities or constructs risk-diverting transactions that aggregate a ‘risk-arbitrage premium’ to one side of a transaction and transfers all future losses to the other.

On a global basis Friedman’s ideas heavily influence international treaties on taxation and capital flows with the single minded goal of freeing capital from any obligation to the host or origin country.  These agreements have essentially created a virtual nation, or non-nation, of money that is ultimately beyond the reach of the conventional Nation State.  Friedman’s ‘invisible hand’ is free to extract the wealth of any corporation or Nation without any reciprocal obligations.

The Serene Insurrection of Money

All economic theories are devised to fill a need; to justify public and / or private actions. With the rapidly growing profits to the financial class during the divestment era, beginning in the early 1970s and continuing today, they needed some ideological justification for what they were doing (selling out America’s future and destroying corporations and jobs for quick profits) so they found and embraced Monetary Fascism. In fact, they found each other: Friedman was just ‘fulfilling a need in the market place’. Friedman simply created a new ideology that justified what the financial class was doing.

Rationalizing the divestment of an entire economy is morally deplorable, but it also offered “out-sized” profit opportunities on a massive scale.  Seeking relevance in this sweeping tide of economic-cannibalism other academics rushed into the water.  None bothered to consider the long term consequences that would result from the wholesale dismemberment of our industrial economy.  Instead academics suddenly ‘discovered’ an implausible utopian future that would be sustained by the creative powers of finance and trading our industrial heritage for a service economy.

Shocking? – no, the academic promotion of concepts, theories, historical narratives and the state of ‘fact’ and ‘science’ are increasingly available to the highest bidder.  Custom realities are also made-to-order ad nausea from within our Nation’s many tax exempt ‘think tanks’ that attempt to define public debate and guide public policy for the benefit of their patrons.

Milton Friedman and the Chicago School of economics claimed to have refined and developed modern,  scientific tools of ‘free market capitalism’, capable of unlocking ever greater rewards from Adam Smith’s simple, primitive concept of free markets.  Monetary Fascism was rapidly adopted because western culture recognizes the tremendous historical contributions of traditional free market capitalism and wanted to participate in the promise of these enhanced rewards.

In truth, it was nothing more than a cloak of deception – providing cover for the unscrupulous behavior of investment bankers, corporate raiders, speculators, off-shore corporation, debt mongers and bubble pushers (typically one and the same).  The enhanced rewards came from the pilfering of capital investments and technology from generations past, the liquidation of employees and off-shoring of production, the pilfering of pension accounts and the termination or spin-out of R&D departments and option packages to executives and directors that focused on short term stock price targets.

Bell Labs, once part of AT&T, laid the foundation for all modern telecommunication and electronics technology today was morphed into Lucent Technology.  Lucent quickly looted the legacy portfolio of Bell Laboratories to enrich themselves and shareholders, leaving a worthless shell that was eventually merged with Alcatel.

Wall Street Investment Bankers, leveraged buyout firms and hedge funds became the Paladin Knights of the ’free market’ whose allegiance was to the ‘noble shareholder’, markets and liquidity.  In truth the shareholder was/is nothing more than a nameless, faceless transient in an endless pursuit of ever larger ‘outsized returns’.  Traditional capital formation was replaced with financial schemes designed to acquire existing asset for liquidation, management and directors traded long term management discipline for short term performance and accounting gimmicks tied to stock and option pricing.  With most of the IPO capital used to pay for the exit of early investors, the stock market has become nothing more than a series of game theory type exit strategies.   The equity markets are a failed forum for the creation of productive or capital intensive projects.

However, the larger system failure at the nation and global level stems from the perversion of the public and private debt market.  This was made possible through massive decade’s long deregulation and the post 2008 financial crisis.

The entire 2008 financial crisis lies at the feet of The U.S. Congress.  When The U.S. Congress repealed the Glass Steagall Act, passed in response to the Great Depression, they eliminated any meaningful financial oversight within the Banking and Investment Banking industry.

Why did the U.S. Congress change the law that protects our economy from a second 1930s type depression?  Simple, it was campaign contributions (shit-loads of cash, considered bribes or worse in the private sector), filling the top post in the Fed, Treasury and the Administration with top level executives from Goldman and the like and the prospects of private sector jobs in the financial industry for pliable regulators, retired Members of The U.S. Congress and former Presidents.

It was from the decades-long cash infused orgy of conflicted interest that Congress finally entrusted the financial industry with “self-regulation.” If you believe the rhetorical record, deregulation was intended to unleash the ‘wealth creating powers’ of these new financial instruments created through the pure genius of the investment bankers.

Alan Greenspan and others saw no limits to the potential economic contributions of the financial markets – if they could only be freed of unnecessary and burdensome regulations.

This wanton deregulation allowed the financial industry to create trillions of dollars in unregulated CMOs and CDSs (CMO: Collateralized Mortgage Obligations – packages of high risk mortgages that were rated AAA & CDS: Credit Default Swaps – bogus insurance on junk paper like CMOs) and other complex derivatives, hypothecated derivatives, synthetic derivatives, even hypothecated synthetic derivatives and the ‘black pools’ of unregulated capital that created and priced these complex financial instruments.

This resulted in the unprecedented and unsustainable accumulation of debt and related derivative instruments, literally in the hundreds of trillions of dollars, dwarfing global GDP by a number of factors, controlled by unregulated and uninhibited bankers.  Ultimately it has cost most nations their sovereignty.

Monetary Sovereignty and the Death of Nations

Friedman’s model of wealth extraction has been in conflict with the traditional Nation State and the concept of State sovereignty from inception.

Great, you say!  The state is evil and must be replaced with something new.  Beware of this thinking.  The evils of the state are nothing when compared to the money-counter.  The State must answer to the public, or at least the mob.  The money-counter only answers to his insatiable desire for more and more money.

Friedman’s ideology undermines State sovereignty by initially delinking the aggregation of wealth from the interest of the state.  As wealth accumulates it is then used to alter political outcomes, tax avoidance and financial regulations for the benefit of the wealthy.  Throughout history the State has always jealously protected its sovereignty.  So how did this ideology survive and eventually overtake the State.

Easy, they co-opt everyone.  First the academics and think tanks then one political party after the other.  The media was consumed and consolidated by large corporate conglomerates who quickly enforced their own interest’s at the editor and programmer’s desk. Then they locked in the entire public through 401(k)s and savings plans.  Even the unemployed and the unemployable qualified for credit cards, new cars and even homes. At the national and global level they expanded public and private debt everywhere.  They made everyone feel richer for a short time.  At the same time the financial industry off-shored, liquidated, crowded out and displaced the traditional industry of our economy.

With the introduction of Monetary Fascism financial activities as a percentage of GDP grew from less than 5% in 1969 to more than 22% of GDP by 2008.  Over the same period U.S. manufacturing as a percentage of GDP declined from more than  26% to just 12%. Using historical measures 2008 GDP for the manufacturing sector would be considerably less than 10%. Only the federal government was consuming a larger portion of GDP at 35%.

Taking the number one spot in the U.S. economy, the finance industry has become the most influential player in government.  But the real power behind the finance industry is much deeper than just the political access that campaign donations buy, the financial industry has wide and deep influence throughout government policy via the Federal Reserve, Treasury, Fannie May, Freddie Mac, the FDIC, key advisory rolls in the Administration, Members of Congress, political appointments within the SEC, CFTC, and membership on The Council on Foreign Relations and participation in global organizations like the G8, G20, Basil Accords, IMF and World Bank.

Through their unparalleled influence over the Administration, Congressional Finance Committees and the Federal Reserve they gained full control over the regulators.  In fact, it was the Allen Greenspan, Tim Geithner (Federal Reserve) Robert Rubin, and Larry Summers (the Administration) and others who silence ‘Rouge Regulators’ who attempted to alert The U.S. Congress to the potential risks of deregulation, dark pools and derivatives.  Greenspan, Summers, Rubin and others essentially staged a soviet era show trial against Brooksley Born and others, designed to send the message to any would-be-regulators that the rules no longer apply to the financial class.   It worked.

Once they controlled the regulators and the key members of the Congressional Finance Committee they were free to alter accounting standards, create complex financial vehicles, and leverage risk in derivatives while real losses accumulated to staggering and globally disruptive levels. They hypothecated CMOs and even synthetic CMOs to unsupportable levels, papering over any potentially observable warning signs with zero-collateral CDSs.

The real risks to global finance were hidden in the derivative instruments related to the massive debt portfolios controlled by the “Too Big To Fail” banks with unprecedented political power.  These banks were not subject to any measurable regulatory restriction.  Point of fact, Goldman Sachs and others were able to morph into traditional Prime-Banks overnight, with the blessing of their regulators, instantaneously gaining unlimited access to the Discount Window.  The act is so egregious that the public is incapable of cognition, while the media, academics and think tanks collectively remain silent.

Unlimited access to the Discount Window was not enough.  Investment Banks and the overall financial industry enjoy unlimited government largess in the form of Quantitative Easing, immunity from prosecution, as it relates to fraudulent financial instruments such as CMOs, CDSs & assorted derivatives, front running client accounts, pilfering of client accounts, wholesale asset sweeps from failed banks to failing banks and even the wholesale world-wide manipulation of LIBOR.

The final act of treachery was delivered by the U.S. Supreme Court who imbued ‘money’ with a voice and electoral powers.  This decision treated each and every single dollar in circulation as a prospective voter.  In the hands of an ordinary citizen the dollar’s ultimate voice is limited to $2,500 per person per candidate.  But in the hands of a corporate controlled Super-PAC the dollar’s voice is virtually unlimited.

The Financial Sector invested more than $5 billion in campaign contributions and lobbyists from 1998 to 2008.  As if $5 billion was not sufficient, the new Supreme Court Ruling and the creation of Super PACs will create a financial Tsunami Effect on politics.

Super PACs may raise and spend unlimited sums of money from individuals, corporations, associations, and other interest groups to “overtly” advocate for political candidates.  A recent example of how disruptive this is demonstrated by Sheldon Adelson and his wife’s $10 million contribution to Newt Gingrich.  The Aelson’s ‘legal’ Super PAC contributions were able to keep ‘their candidate’ in the Republican Primary single handedly.  Gingrich had no meaningful support beyond this single patron.  Democracy?  Representative government?

This decision effectively abolished our representative form of government.  Again, this act of treachery did not spark any meaningful discussions from academics, constitutional scholars, think tanks, civil rights groups or the media. Why?  They have all been co-opted.

Today the power of the State blindly serves the interest of these banks at the expense of all others.  I am not claiming that this needs to be a preconceived conspiracy. To the contrary, the outcome was inevitable.  Without any restraints most growth oriented systems, such as a virus, tend towards uninhibited growth.  With no means of restraint, equilibrium becomes impossible.  The single-minded focus on the growth of money compromises all other systems in the economy.

Any U.S. political leader who puts forward a Nationalist agenda is pillared as an opponent of ‘free trade’ and a danger to ‘free markets’.  A perfect example is the U.S. Congressional and Administrative reaction to traditional Industrial Policy initiatives.  The universal reaction is to characterize any U.S. Industrial Policy initiatives as “anti-free trade” and un-American.  This is wrong on both counts: Adam Smith’s entire argument about free trade was intended to enhance England’s Industrial Policy.  It is also a fact that the U.S.’s industrial greatness was rooted in 200 years of government directed, supported or sponsored Industrial Policy.

The press and pundits also contribute to this reversal of reality when they recently questioned Obama’s commitment to capitalism and free trade because he criticized Mitt Romney’s “Off-Shoring” of U.S. jobs as the head of Bain Capital.  According to the press and pundits off-shoring is a foundational principle of ‘free markets’, but off-shoring has no basis whatsoever in Smith’s free markets.  Off-shoring as we now employ it technically does not fit with Riccardo either, as Riccardo’s arguments of Comparative Advantage pre-suppose reciprocation of trade between relatively equal partners.

Historically governments would use tariffs or other measures to balance out large deviations between un-equal or undesirable trading partners.  Today corporations and the financial industry pocket these out-sized ‘comparative disparities’.  Eventually this results in wide spread unemployment and dislocation inside the flagship/host-country and all of these accumulated costs simply become a burden of the state.

This is nothing more than arbitraging disparity and transferring the resulting collateral costs to the state.  As the unemployment and dislocation costs to the state threaten the asymmetric relationship between the state and the financial class, the financial class promotes austerity through its various think tanks, financially sponsored academics and loyalist inside Congress and the Administration.

Outside the U.S. it is the IMF, the World Bank and various international trade and financial trade and monetary agencies including the EU that promote austerity.

Today the financial and banking class enforces this ideology through the media and government with the same ruthlessness of the Church during the Dark Ages: to question is to be a heretic.  It is a much more sinister form of excommunication for any public figure who does not accept or property articulate his allegiance to Friedman’s poisoned ideology.

Consequently, it is a sad fact that both Democrats and Republican Members of Congress wear Monetary Fascism on their sleeves – out of conviction or fear.   Both parties have become slaves to this deadly ideology.

Global Contagion

Challenging Monetary Fascism is much more dangerous for political leaders representing countries outside the G-20.  Populist leaders who put forward Nationalist policies are automatically in violation of one or more international ‘free trade’ agreements.  Non-conformity with these agreements ultimately results in trade sanctions, IMF or World Bank imposed austerity, or worse…

Friedman’s ideology is global and his rules of ‘free trade’ are deeply integrated into the laws of international trade.  All of our Nation’s international treaties on trade and banking are a series of interlocking agreements that force all nations to subvert their sovereignty and conform to Monetary Fascism.  It is a global pandemic built on a world-wide transmission system with universal powers of enforcement.  Sovereign Nations comply or they lose their credit rating.  Considering the world wide mass escalation of debt to GDP for most western nations, a small increase in the cost of borrowing would easily result in default and bankruptcy.

Today, Nation States face nothing less than financial Armageddon – the Sampson Option, if they do not comply with the demands of the global banking industry.  And it is with this weapon that the Financial Class has come to dominate the State.

Forget Al Qaeda, the only legitimate threat to U.S. and international security is the financial class.  They have created Weapons of Mass Financial Destruction (Financial WMDs) and they stand ready to take down the world economy.  They are more dangerous than any ‘terrorist group’, or even all of the ‘terrorist groups combined.

Exaggeration – consider what Friedman’s ‘free market’ banking system has done to Iceland, Ireland, Spain, Greece, Estonia, etc.  How many western nations has Islam overthrown?  Not one, and by comparison that should scare you.

Money has become the state and the traditional state is forced to serve money’s interests.  Everywhere the Financial Class is openly lording over sovereign nations.  Ireland, Greece and Spain are subject to ultimatums and remember Hank Paulson’s $700 billion extortion from the U.S. Congress.  The $700 billion was just the wedge.  Thanks to unlimited access to the Discount Window, Quantitative Easing and other taxpayer funded debt-swap bailouts the total transfers to the financial industry exceeded $16 trillion as of July 2010 according to a Federal Reserve Audit.  All of this was dumped on the taxpayer and it is still growing.

Why must the people of Ireland or Iceland accept the losses of the private banking sector as a public obligation?  Why must Greece accept austerity because its politician’s entered into a series of deals structured by Goldman Sachs specifically designed to deceive its EU partners?  If Goldman Sachs authored documents with the intent of fraud then Goldman Sachs is required to bear the losses and prosecution.  The taxpayer had no hand in this.

It is breathtaking.  Within the last 40 years ‘money’ has gained total control of each and every one of us.  Generations to come will enter this world burdened with the debts of their fathers.  It is inescapable and ubiquitous.  More than just a spider’s web, or a money-sucking vampire squid, it is a global pandemic that infects our very DNA.  It is the Original Sin of money – subject to compound interest, converted into a derivative, hypothecated and rolled into a CMO and then leveraged through CDSs.

The uber-wealthy will continue to aggregate wealth.  The banking system will continue to make ‘risk free bets,’ booking gains and shifting the losses to the public.  As these losses accumulate on the public balance sheet the state will be forced to seek austerity measures from the public. As austerity and debt levels increase the global economy will continue ‘circling of the bowl’ with increasing speed until we suddenly plunge into the vortex.

All Bow to the Welfare Queen

Total governmental transfers and assumed liabilities related to U.S. financial institutions since 2008 exceed the entire history of all social welfare programs for all free world economies collectively since Bismarck (do the numbers, its true).

So, how is it that history’s biggest welfare queen can demand that the rest of human society be forced to take responsibility for its prolific reproduction of trillions of dollars in derivatives and other financial abominations in the name of ‘free markets’?  Easy, your government has surrendered its National Sovereignty.  Representative government has ended. The public’s misconception and blind acceptance of Friedman’s ideology as a legitimate form of capitalism is precisely what makes Monetary Fascism immune from any true political recourse.

It is the classic case of failing to properly identify the true nature and source of a contagious epidemic.  This is the hidden strength of Monetary Fascism.  Failure to identify the source of the disease or its mode of transmission assures continued contagion, misdiagnosis and mistreatment.

The public’s support for Friedman’s poisoned system is based on the past success of true capitalism and free markets as surmised by Smith.  Most U.S. Citizens desperately want to regain our Nation’s former prestige.  Because they cannot differentiate Smith’s system from Friedman’s they see government restrictions on business, taxes and capital flows as the obstacle to achieving our previous economic greatness.  The public can be counted on to demand even greater deregulation, undermining their relevance in the system and our Nation’s economy and sovereignty.

Whole industries have long ago disappeared.  Friedman’s Monetary Fascism has burnt through most of what remains of the middle class.  Seeking fuel, the fire has spread to the upper middle class and the lower middle class. Small businesses and Unions are consumed in the flame.  Even the ranks of the finance industry were offered up to the god of money.  Tens of thousands of recently dispossessed upper middle class and the lower ranks of the wealthy find themselves without meaningful work and dark prospects.   All of these people have passed through the bowels of Monetary Fascism, yet they stand up and defend ‘free markets’ so that they can be consumed once again as this raging fire seeks new fuel.

The only rational defense is for people everywhere to denounce Friedman’s ideology in all public policy debates and academia, and to articulate the true principles of Adam Smith.

Ending the tyranny of Monetary Fascism begins with the wide spread recognition that it is the anti-theses of capitalism, free markets, individual self-determination and national sovereignty.  However, it is truly unstoppable as long as the world continues to view it as the embodiment of Adam Smith’s “free market capitalism”.

Until then, the plunder will continue, lives will be discarded the angry mob will continues to grow.  As we approach critical mass the fear is setting in.  The remaining upper middle class and middle class fear losing what they have, while the recently disenfranchised desperately cling to their faith in Friedman’s ‘free markets’ in the hopes of redemption.  The faithful double down on their own demise, while the ranks of the dispossessed swell.  Every one of us has become a bit player in our own tragedy.

We are at the end of human evolution, we have become chattel.  We are conditioned to the service of those with money, who only seek to enlarge their store of money, to beget money, for money’s sake and nothing more.  The future is grim.

The predictable long term outcome is a steep decline into a very dark Monetary Feudalism.

When asked in an interview what humanities’ future looked like, Eric Blair, better known as George Orwell, said “Imagine a boot smashing a human face forever.”

Welcome to the Dark Age of Money.

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vinayjha's picture

US debt is now 16.205 trillion and limit is 16.395 trillion. Thanks to Obama and Fed. Everything you need to know for Oct 26th trading.


Silver Bug's picture

The only true real money are gold and silver. Like countless times in history we will be back on that system before long.

Bindar Dundat's picture

OK count me officially scared.  Maybe this gold and guns thing has some merit!

Colonial Intent's picture

The skills to use gold and guns correctly should also be developed.

Freegolder's picture

Uh oh.

How many central banks are holding/buying silver?

You need to read this first, then google 'costata's silver forum'.

Have an open mind. I used to think gold was in a bubble, now I see what is coming.

Hate to see guys like you, having seen the light, just take the wrong route (i.e. silver).


Good luck.



exi1ed0ne's picture

While it is important to always look to the other side of your thesis, there are quite a bit details missing from the linked article.  Silver is mostly a byproduct of mining other metals.  As demand for those metals fall, fresh silver supply falls also.  However the biggest tell for me as an investor is correlation.  How are the other panic goods (beans, bullets, food oils) doing?  What is happening in relatively inelastic (ex oil - too many games there!) goods?  How about the super elastic goods(Prosumer goods, not luxury).  Bottom line they are all going more up than down, and even hockey stick in some cases, because absent all the other factors fiat currency of all stripes is sinking.  Correlation does not always mean causation, but sometimes a cat is a cat.  Couple that with political instability the world over, poor weather, developed nations in deep debt, and general cluelessness of the public about precious metals, and you have to work harder than an ex-investment demand vs. supply chart for the core of your thesis.


Colonial Intent's picture

Or you could just hedge your gold with silver:)

mayhem_korner's picture



"Limit"...?  You don't really believe that, do you?

Never One Roach's picture

"There is a feeling today among too many Americans that we might not make it," Lawrence Lessig writes in the introduction to his new book Republic, Lost. "Not that the end is near or that doom is around the corner, but that a distinctly American feeling of inevitability, of greatness – culturally, economically, politically -- is gone." He goes on to note that Americans' trust in government is at an all-time low, related to the (largely accurate) belief that moneyed special interests wield outsize influence over our political system. In his book, Lessig, a Harvard Law School professor and big noise in the field of law and technology, details how money came to corrupt our government, how our broken system hurts both the Left and the Right, and what it will take to return American democracy to its rightful owners – the people.



Read more:

Colonial Intent's picture

And iraq and afghanistan were just an off books expenses claim right?


poink's picture

In a world without the State, he sided with Lock, “life was brutish and short”

That was Hobbes, not Locke. Maybe my overpriced university actually did teach me something.

BigJim's picture


Nice catch. Of course, that's not the only thing the author got wrong. No mention of the Fed (or even central banking generally) or Triffin's dilemma; no, it's all Friedman's fault for advocating free trade. And the usual holding up of 'Adam Smith' as some kind of high priest of free market thinking, which shows the usual ignorance of the history of economic thought.

Of course... Friedman's support for centralised monetary control was not exactly pro- 'free market'.

The deleterious affect of minimum wage laws and endless regulation, and actual monetary fascism (the State arrogating to itself the right to control the money supply) get no mention, which is hardly surprising from the avowedly Statist author.

So, Mr. Kennedy, +1 one for seeing the disease, -1 for allowing your Statist brainwashing to blind you to its aetiologies. 

caconhma's picture

"You have to choose [as a voter] between trusting to the natural stability of gold and the natural stability of the honesty and intelligence of the members of the Government. And, with due respect for these gentlemen, I advise you, as long as the Capitalist system lasts, to vote for gold."

– George Bernard Shaw
hapless's picture

You kids do realize that Shaw was an anti-capitlaist who believed that capitalism tainted Government, which could only be rescued by Socialism; ergo the Wikiquote directly above the one cited by caconhma:

"Capitalism has destroyed our belief in any effective power but that of self interest backed by force. But even Capitalist cynicism will admit that however unconscionable we may be when our own interests are affected, we can be most indignantly virtuous at the expense of others."

- George Bernard Shaw in The Intelligent Woman's Guide to Socialism and Capitalism (1928), p. 214.


Colonial Intent's picture

Thats because G B Shaw equated capitalism with corruption and naively thought socialism had less corruption.

A view shared by many at the time.

It dont but why spoil the dream by letting facts and history get in the way of wishful thinking.

America has a capitalist society in the same way that USSR had a communist one, In name only.

In reality its the same old story of corruption and cronyism in both systems that ultimately provides the seeds of its own destruction, if I was a free market capitalist i'd be pretty pissed at the current 'capitalist' system too and it has poisoned people against any real free market capitalism for generations in the same way that western communists lost their faith when the reality of communism was shown to them.

BigJim's picture

Capitalism... or, to be more precise, free market capitalism, can exist without  tyranny; communism, by its very nature, cannot.

This business that we only got to see a 'perverted' communism is quite wrong; communism (and even socialism) are by their very nature perverting. 

I suggest you read Mises' seminal work on the impossibility of rational economic calculation in an economy that has no price discovery:

I just wish whoever translated it into English had done so a little more idiomatically.

DoChenRollingBearing's picture

Here's a handy little guide (below) to what my family and I are doing re financial fascism.  The original author does not offer up much, except LOTS of words, so here is what we have done:

1) Bought gold.

2) Peru does not produce rolling bearings, so we get them from Korea!

3) Have a healthy dose of salt from stuff from CounterPunch...

4) Get diversified, now!  Stay out of debt, he should have mentioned that.

MachoMan's picture

It depends.  People close to the retirement hump are squirrels trying to store nuts for the winter (they still have hope that there will be some semblance of what they envisioned).  People not close to retirement have no such fantasies and are busy simply trying to tread water and stay afloat.

There is a two part process for this: (1) deleverage; and (2) purchase inflationary hedges.  They might be able to be done contemporaneously.  Pay down all debts that benefit you from paying them early: student loan, credit card, etc.  (each payment you make, you will actually be charged less interest the next payment you make; compare and contrast this with a mortgage).  For those debts that you know will take you decades to pay (forever), then get them fixed and as long of a duration as possible (reduce monthly payments as much as possible to weather the storm and/or create surpluses to purchase inflationary hedges).  With the additional money, begin being more self sufficient, e.g. growing part of your food needs, learning to maintain your automobile, fixing your computer, maintaining/repairing your house, etc. 

Contemporaneously, purchase meats and other items in bulk and store for longer term (freezer, etc.) to help mitigate the effects of inflation.  Do the same with virtually anything you'll NEED. 

At some point, you'll end up with surplus income...  and that's when you actually get a smell of freedom...  albeit with a bit of the fart smell of paper.

Gestwa's picture

Revolution Bitchez! I'm guessing I'm the only Marxist on the site so let me spell it out for you. The expansion of Capitalism has been dependent on being able to make a profit off the work of those doing the physical work and having a rich enough consumer population to sell those products to. This could continue as long as Capitalism could expand, find new cheap labor forces and subsidize the Consumer Class (created by Keynesianism). Face it, Globalization is over, energy will only get more expensive, and the Fascist elite will plunder all that is left from the remains of the middle class. Its endgame friends, resist or die.'s picture


The expansion of Capitalism has been dependent on being able to make a profit off the work of those doing the physical work and having a rich enough consumer population to sell those products to.


Nothing wrong with that. Folks like to make a profit and folks also like to be able to afford quality goods and services. Don't forget that those who do the physical labor profit from having access to the capital organized by management and would have far less earning potential if left to their own devices. Nothing wrong with that at all.

Nothing To See Here's picture

The guest author might as well be a marxist too :

"Today the U.S. and much of the world’s economies are operating under what I call Monetary Fascism: a system where financial interests control the State for the advancement of the financial class."

He's got it all wrong. You have to be either totally naive or totally socialist to believe that the State can be made a slave to any interest whatsoever. The Leviathan State always controls. Those "financial interests" are what they are because the State wants them like that for its own purposes.

taeonu's picture

Maybe you haven't noticed but the state and the financial interests are the same group of people.

Joe A's picture

"access to the capital organized by management" = debt, lots of it.

Harbanger's picture

You're not a Marxist, you think like Obama.

Colonial Intent's picture

But i was told obama was a marxist, all the commenters say he is, and they must be right/Sarc

Dr. Engali's picture

Get your head the fuck out of the matrix. You are a slave , the sooner you realize that the sooner you can free yourself. I don't care what kind of ism you worship, it will never ever .... evar... come to fruition due to the corruption of men. So wake the fuck up to reality and understand that there will never be justice until all corrupt men and women are held accountable regardless of who they are.

NidStyles's picture

More like you are just another chump that has never actually read the material you are claiming to adhere to.

Gestwa's picture

Really? Look up Marx's theory of overproduction in the Grundrisse. Keyensianism, Decoupeling from physical assets, Financilization and Friedmanite Fascism have been the steps the Government and Capital been forced to accept to stave off the inevitable collapse of Capitalism. Infinite growth is impossible on a planet with finite resources.



Hobbleknee's picture

Capitalism does not exist.

falak pema's picture

nor do infinite resources and infinite growth of toe nails.

mayhem_korner's picture



Currency is intended as a medium of exchange; a proxy for barter to make commerce more efficient.  A fundamental problem arises when scarcity is imputed on the currency via an interest rate...AND that interest rate is subject to establishment other than by market forces.  Social agendas force the interest rate to be artificially lowered, while at the same time artificially empowering those who wield the lever (i.e., CBankers).

The predictable end-result is increasingly upon the world.  Insufficient scarcity of currency leads to unrepayable debts. 

The CBs are not printing currency, they are printing debt.

Smith and Locke understood that "free" and "market" are inseparable concepts; neither exists at this point.

My rant is done.

Harbanger's picture

Not all countries have the same levels of national Debt.  Some are doing much better than others.  So isn't it really your particular Govt., printing money to pay for years of borrowed money. 

FrankDrakman's picture

Currency is intended as a medium of exchange

Far too limiting. As the old saw goes, "Money has these functions four: a measure, a means, a standard, a store"

A 'measure' - money allows us to equate e.g. hours of labour with pounds of flour.

A 'means' - Money allows you to obtain other goods and services that you can actually consume more efficiently than barter (your point)

A 'standard' - i.e. legal tender - All debts can be settled by money (the lender can't demand your car or your house to satisfy a debt if you have money)

A 'store' - A store of value. Sadly, the Fed and central banks everywhere have virtually wiped out this function.

Orly's picture

"Ending the tyranny of Monetary Fascism begins with the wide spread recognition that it is the anti-theses of capitalism, free markets, individual self-determination and national sovereignty."

We are beginnig to see this, collectively, as people of the globe.  What was once able to be hidden with esoterics and complicated instruments is now finding its way into the open dialogue.

These ideas, however, were around long before Friedman and were known even in the day of Thomas Jefferson, who warned quite clearly about the advent of the money-men, of which Alexander Hamilton was one.  Perhaps Friedman quantified it, put the formulae down on paper, but the idea has always been one and the same: to strap the people with interminable debt such that they were to be "chattel," as you say, for the rest of their lives.

The only difference between then and now was the availablity of cheap transportation and other luxuries of technology.  It was inconceivable to Jefferson to move himself from what would be Washington, D.C. to Sydney, Australia in a matter of a single day.  Technology, then, was the root of global expansion of the money-changers, the central bankers and the usurists, not some guy named Milton.

Monetary fascism has been around for a long, long time and is not limited to its time in the latter part of the 20th century until today.  While I grant that such a thing exists and that we, as a global people have allowed it to go on for the benefit of a few rather than for the benefit of all for far too long, the advent of such thinking was borne not of modern technology and global reach but from the bane of humanity from the get-go; namely greed and jealousy.  Extrapolation of that main thesis will take us back to the Book of Genesis when it was noted that, "I am not my brother's keeper."


mayhem_korner's picture



Interesting non sequitur to Scripture.  BTW, the Bible police would point out that it does not say in any translation of Genesis the statement, "I am not my brother's keeper."

Orly's picture

Perhaps so but I am not a Hebrew scholar by any means.  My intent was to demonstrate that the idea of taking advantage of and even murdering someone, say for better land or, in short, more riches, was not invented by a mousy academic from Chicago.


socalbeach's picture

fyi the "brother's keeper" line comes from the following, after Cain murdered his brother Abel:

Genesis 4:9
New International Version (NIV)

Then the Lord said to Cain, “Where is your brother Abel?”
“I don’t know,” he replied. “Am I my brother’s keeper?”

Orly's picture

Thanks for that.  :D

So we have a young man who murdered his brother for what would be assumed to be monetary reasons and he callously shrugs it off because it was done for his own benefit and he has little guilt about it.  He got his, so what does he care?

It seems fitting to what the author is trying to say about the callousness of the bankster class but is as ancient as the day is long.

socalbeach's picture

I thought Kennedy's essay above was excellent, but one thing I wasn't sure of was the role Friedman played in all of it.  Your comments about Jefferson and Hamilton were good, and there's a good chance Kennedy overstated his role.

(Back to the biblical quote, my interpretation is that Cain killed Abel over jealously, and he wasn't shrugging off the murder, he just didn't realize he was caught: )

Orly's picture

Well, let's just hijack the thread, shall we?  :P

I have heard the interpretations, or rather the insinuations that it was over jealousy but as far as I know, the main point of fact is never explicitly stated in the Bible.  Let's suppose that he was indeed jealous of his brother. Jealous over what?

One was a shepherd, the other a farmer.  Both need arable land to perform their tasks in life.  It could be assumed, therefore, that Cain was jealous over Abel's lot and murdered him for that.

Your idea that he didn't know he was caught seems a bit of a stretch to me.  I mean, how would you not know you were busted when God Himself says, "Yo, where's yer bro?"  Cain would have had to know of God's omnipotence and would therefore have been trying to lie.  If he were trying to lie, then why didn't he just say, "Oh, he must be over in the pasture."  Instead, he basically said, "What are you asking me for?  Do I look like I care?"

Of course, he would have said that knowing full well that God already knew the answer to the question but was insolent in his response, which would lead me to believe that there was a jealous motive in his mind about his brother's lot and could justify the murder to himself secondary to his anger over the situation.

Harbanger's picture

Cain was the 1st born from Adam and Eve, then they had Abel, who was murdered by his brother.  Some say that he was the child of satan, from when he met Eve in the Garden.

falak pema's picture

Without a sexy twist what is a good murder mystery worth? 

Now we are getting somewhere; if you threw in some inferences to incest and one son being preferred by mother than other, we would be home and dry! 

Voilà Hercule! 

Orly's picture

I love the little Belgian!  My favourite character of all time.

FrankDrakman's picture

Cain and Abel are a myth, and all myths are compressed wisdom. The point of the fable is if you murder someone, you will be cast out of society - east of Eden, into the desert, by God in the Bible, and by your fellow man, into prison, in real life. Why you killed him doesn't matter, so long as it wasn't self defense.

mayhem_korner's picture



Cain killed Abel over jealousy, correct.  He was jealous that Abel's offering was found more favorable to God than his own.  But there are two other elements to the story.  First is the notion that God would even need to ask Cain where Abel was (He knew).  So it is about rejecting accountability to God.  The second point is that Cain and Abel were Adam and Eve's first post-fall offspring.  So the sinful nature was passed down from Adam & Eve to their first offspring and, by extension, to all men.  That is why only Adam is considered "made in God's likeness" and the rest of us are "made in Adam's likeness".  We have the physical form God intended, but not the spiritual purity.

mayhem_korner's picture

Thanks for that.  :D


He just confirmed that what you wrote is NOT correct.  You wrote "I am not my brother's keeper."  It does not say says "Am I my brother's keeper?"  You may say subtle difference, but the context is important as to why it was a question and not a statement.  Just like the Bible does NOT say that Adam and Eve ate an apple, does NOT say there were three wise men, does NOT say Jonah was swallowed by a whale, does NOT say we are made in God's image, etc. etc. etc.

Kitler's picture

Epic post. We are incredibly fucked.

kito's picture

oh please, stop fretting,...... pinochet, er, romney will save us......drones, dissident camps and free market capitalism!!!!.....