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What The Financial System Will Look Like In The Future
Submitted by Simon Black via Sovereign Man blog,
Thousands of years ago whenever the Pharaohs of Ancient Egypt passed away, they were buried with all of their gold in a specially constructed tomb.
The idea was to ward off thieves with booby traps and other perils so that these perceived demigods could enjoy their riches for eternity.
It worked. In the case of Tutankhamen, his gold was untouched by both thieves and desperate government tax collectors for thousands of years.
In the Pharaohs’ day, gold was money. Today, it might be even more important than ever.
As advanced as our modern civilization may be, we’ve been playing with fire for more than a century. Every single experiment with unbacked paper money throughout history failed.
And though today’s economists like to think that ‘this time is different,’ our own experiment with paper money will share the same fate.
It’s already moving in that direction. The bubble in fiat currency is now so large that it has simultaneously created all-time highs in nearly every major financial asset class, particularly stocks and bonds.
Bear in mind that these are not tangible assets, but rather ‘paper assets’—nothing more than claims on promises made by others (stockbrokerages, politicians, etc.)
So in other words, the explosion in the supply of paper money has created dangerous bubbles in paper assets. Funny how that works.
And at this point there are no good options remaining to gracefully end the experiment.
Any direction that central bankers go risks inflation, deflation, hyperinflation, or the collapse of financial markets.
If they print, they create inflation. If they don’t print they get deflation.
If they print too much they get hyperinflation. And if they so much as utter the wrong word then financial markets go into a panic.
The situation has become so bizarre that we’re now seeing negative interest rates across Europe.
Central bankers are conspicuously trying to whip up confidence in their poorly capitalized banking systems.
And wealthy emerging markets are moving to build their own financial infrastructure that no longer depends on the West.
This is clearly a system on the slide. And it’s not the first time this has happened.
Throughout history there have always been major shifts in the global financial system.
Reserve currencies change. The way people engage in commerce changes. The rules of the game change.
This time is no different. And we’re currently experiencing the early stages of yet another historic shift.
No one can say for certain what the next iteration of the financial system will look like. But there are a few things we can say for sure-
Today, the US dollar, US government, and US central bank form the cornerstones of the global financial system.
But that game is quickly drawing to a close.
The rest of the world is sick and tired of the US arrogantly dictating rules for everyone else to follow.
They’re sick and tired of the US going deeply into debt and pawning its bonds off to everyone else as ‘risk free’.
So it’s a safe bet that in the future, US paper money and debt is not going to be anywhere near as important as they are today.
We’ll also likely see a new system where banks are far less relevant.
All the technology and all of the resources already exist today to effectively eliminate the need for banks.
Decentralized crypto-currencies and transaction platforms already exist. You no longer need to hold your cash at a bank when you can simply store it in the blockchain.
(This may sound esoteric, but consider that most currency is already stored in digital form. Your bank balance doesn’t really exist except in the digital world.)
You no longer need to apply for a home mortgage or bank loan when entire networks of peer-to-peer lending platforms exist.
For every function that a bank serves, there is technology today that does it better, faster, and cheaper.
It’s time for these financial dinosaurs to hit the historical dustbin.
Again, this is a normal trend of history. The horse and buggy went away a long time ago due to changes in technology. So will fiat currency and conventional banking.
Nothing is going to change immediately. But as Hemingway said, this trend will unfold gradually, then suddenly.
So it does make sense for now to consider your options now, particularly real assets like productive land, operating businesses, and yes, gold.
* * *
* Hey, Simon, isn’t gold a bad investment right now? Read more about that here. As well as three offshore facilities I recommend storing gold in.
P.S. Also check out how much Mozart and Beethoven were making more than 200 years ago—translated into today’s dollars.
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How about we don't have financial systems?
The pieces are being put into place to roll out the Multilateral Financial System and SDR bonds.
http://philosophyofmetrics.com/
Interesting to think they ENCOURAGED a period of deflation after the death of a ruler...
Basically taking out one of the biggest 'piles' of wealth in the nation, making everyone else wealthier in A FAIR way, as opposed to all the politics of splitting up the pharaoh's treasure...
The financial system of the future will look just like the financial system of the past
Like 5000 years ago !!!
Whatever happened to Simon's property in Chile? I heard it's an exclusive club now for Rickards, Rodgers, et al....?
"Thousands of years ago whenever the Pharaohs of Ancient Egypt passed away, they were buried with all of their gold in a specially constructed tomb."
Jesus Tapdancing Christ...
TOMBS [for fuck's sake]?... Is that what the pyramids were for Simon?...
Before anyone junks me ~ I would like them to publish... HERE... A full accounting of, say, 20 Pharaohs, which detail BOTH the finding of a mummy & a huge stash of gold...
The future is made up of the same things as today.
Platinum and Bitcoin as diversification are OK too.
goo.gl/GRGii3
Blah, blah, blah...we are in the end game....blah blah blah....I've been hearing this so long that I'm getting close to my end game
Patience Mr. Pink, we are all weary but the inevitable will come...it is inevitable...
http://youtu.be/RPBX47zSktc?t=1m7s
Then stop reading factual articles at Zero Hedge and park your ass over at MSNBC. You'll get all kinds of pie in the sky nonsense over there...
Don't tell me what to do
you tell em Mr pink ...
he's runnoft now
We’ve been in the end game for over 100 years.
The U.S. has been at war in the Middle East my entire life and I was born before 1991.
You've been smoking too much pot – it has only been about three weeks now.
Maybe just bold it all next time.
he could at least have bolded The Pharaohs of Ancient Egypt
What the fuck is with Shitcoin? A year ago every 10 th ZH post & comment was on the subject but now? What's the latest intelligence? Investors got creamed? What % of transactions is it used for? Do you still get conned at the exchanges?
Send Simon Black $49 and he'll send you an exclusive report.
i'm still suffering from every 5th post being ebola withdrawl ... thankfully, Eugenia there to comfort me ...
I think there's likely millions of people already infected in the US, but they've been moved to detention facilities in the Utah desert.
You'll only hear that on Zero Hedge.
They are being warehoused at Yucca Mountain......
I saw Kim Kardashian's titties today
My condolences.......
I've got a link for some 'eye-bleach', now let me find it...
Nah, kids gots to learn their lessons.
My guess is everyone finally realized that Bitcoin is an NSA scam and now it's going the way of the Dodo. Another bankster distraction bites the dust...
Crypto Fiat
lol
TRANSACTIONS using Bitcoin are totally secure, and fee-less. Do not use it as a medium to store your wealth. 2 distinctly separate ideas.
Although a non-dilutable currency should not decline in value, as you say.
"...whenever the Pharaohs of Ancient Egypt passed away, they were buried with all of their gold..."
They weren't burried with all their gold.
And gold was not used for money in Pharonic Egypt.
http://www.touregypt.net/featurestories/prices.htm
http://www.aldokkan.com/art/gold.htm
"The idea was to ward off thieves with booby traps and other perils so that these perceived demigods could enjoy their riches for eternity.
It worked."
No, it did not. Only for Tutankhmun did the tomb remain untouched. All the other pharaohs (that we know of) had their tombs looted. And I'm not aware of any booby traps, that is a Hollywood invention. Curses, yes, if you believe in that sort of thing.
There are gold coins all the way back to 300 BC that we know were minted in Egypt.
332 BC - Alexander the Great conquered the Achaemenid satrapy of Egypt.
So from the 1st (~3100 BC) through the 31st dynasty (332 BC), with the 31st really the end of the pharaonic period that Simon is talking about. After that came the Ptolmaic dynasty and then the Romans (but I shouldn't have to tell you about the Romans).
See what happened numerous times before .
https://www.academia.edu/9289413/Relative_advantage_leads_to_war_
http://andreswhy.blogspot.com/2014/11/laundry-economics.html
The idea that 'reserve curriencies change' is false. There has only been one fiat reserve currency, the dollar post 1971. Before that it was always gold or letters of trust that allowed trade. Back when the pound was the 'reserve' the pound was gold. Gold itself would have worked but any other currency that would assuredly be exchanged for gold (or other wealth assets) would have worked as well.
What is ending here is not the dollars as the reserve currency but the use of any currency as a central bank reserve.
The world is over allowing one country the 'exorbitant privilege'. It is likely gold will find a role as the future reserve and fiat currencies will be forced to behave or suffer higher gold prices.
The Euro and ECB are already structured to allow this to happen.
The dispute between the Currency and Banking schools? The three suspensions of the Bank Charter Act? 1971 was supposed to be temporary too... I guess that's where the exorbitant part of the fiat reserve privilege comes in (40 years later).
Fiat currency and conventional banking may indeed go by the wayside, but they will be replaced with a closed system completely controlled by the elite. You don't work for the State, you don't eat. It will be that simple.....
get off the grid. black markets will arise.
The banks and banksters are dinosaurs, they just don't see the giant meteorite coming their way.
Well, they saw it coming in 1933!
They wrote a derivative to cover the event
dup
The front page graphic for this article is bull!
I lit my $100 bill on fire, and there was no golden train steaming out.
Maybe I just need to try it on these other ones, too, like finding the Willie Wonka Golden Ticket.
i dont think i ever played a full game of Monopoly to the end game
You mean without cheating.
Actually these don't make much sense in the event that things go too far south. If the shtf then almost no sense
productive land - can easily be stolen through things like eminent domain or taxes
operating businesses - not unless it is utilizing a practically applicable skill that you've mastered
gold - good unless banned or confiscated so keep some pvc & a shovel handy
stolen productive land soon becomes unproductive--operating business will work (excluding middle man ventures) -golds best use is to buy an assasin or buy freedom--
Simon, conventional banking has already gone the way of the horse and buggy. That type of banking used to be a place where people stored things of value, such as gold. What we have now is a system of fraud. Why do you suggest that people store their gold offshore in a quasi bank and then suggest that banking is dead. If my gold is not where I can get to it quickly then it is no longer mine, and would not be useful. A boating accident is a better way of storing gold than what you suggest.
Contagion lurks as a problem because we are all interconnected for better or worse. Some people have been calling for a "world currency" for years. the saying "one should never let a good crisis go to waste" means a meltdown with high levels of fear would present a perfect opportunity and catalyst to advance this agenda down the field.
Remember many people with agendas have a lot to gain when a major shift in the currency markets takes place. Even with some countries not participating in such a currency dislodging the American dollar as the world reserve currency represents such a shift. Calls for a new world currency may grow over the coming years, if the world stumbles into an economic hell the noise could become deafening because people and their leaders tend to look for easy answers. More about how chaos in the currencies might bring about a new world wide currency in the article below.
http://brucewilds.blogspot.com/2014/02/contagion-may-lead-to-new-world-currency.html
Did Bruce forget to mention that his girlfriend's cousin's old crone of a grandmother got laid off from her job as a welder at the submarine yard last month but now makes precisely $8741.04 a week writing blog posts for him in her spare time?
LOL if this is just the 'start' of problems???
What the financial system will look like in the future...
Hi, we're from the government and we're here to help you. First off, we need to help you count your cattle and measure your acreage under cultivation.
A crypto-currency backed by gold and we're set. There has to be something backing the currency. Otherwise it's print/generate away...
Virtual fiat backed by an armada of aircraft carriers controlled by a government running an annual deficit over $1tr has been pretty successful for them.
Can't argue with that.
Yeah, so far, so good. Electronic monkey money backed by apes with atomic bombs ... an experiment happening within the lifetime of one generation, while there was nothing whatsoever in known human history to compare it to!
Hey here is a simple idea... why not just a fuckin GOLD/SILVER PHYSICAL coin... .. leave the crypto fiat for artsy starbucks slurping morons
And it doesn't even have to be backed 100% by gold.
Physical possessions and cryptography don't mix easily. If you have gold backing proper, you have a counterparty that holds the gold and there are many things that can and will go wrong. However, how about this idea:
There is a concept with cryptocurrencies called "proof of burn" - it is to destroy some amount of a cryptocurrency in a way that can be seen by everyone and acknowledged for some purpose. It has been used in some cryptocurrency projects as the way to acquire the units of the new currency. You send bitcoins a certain way, they can no longer be spent in the bitcoin network (they are "burnt"), and you get a corresponding amount of the new currency in the new network. It is a good way to ensure that there is something of market value "behind", or represented by each unit of the new currency.
So why not do the same thing with precious metals? Would you value a currency that represents gold that existed in the past but was destroyed and cannot be (easily) recovered? I think it is far-fetched, but might just work one day. It has the obvious serious drawback that you can't recover the commodity, which has value for industrial purposes, however, most gold is used for monetary purposes anyway, so there might be a place for such a scheme. It has some nice advantages.
It would eliminate the need to put trust in a counterparty continuously while holding the currency, but it would still require some trust, although a much lesser kind of trust. You would need to see a proof or attestation by someone that the gold really existed and that it was destroyed. Perhaps as a destruction mechanism one could produce a gold solution or colloid and then dump it into the world oceans (talk about boating accidents) or transmute it by bombarding it with neutrons.
What do you think?
In the real world, money was always measurement backed by murder. Cryptocurrencies are merely parasites added on top of parasites inside of that situation. Backing up money with any possible commodity merely changes the basic ways that money is measurement backed by murder to become the measurement of that commodity backed by murder.
For the past 100 years plus we've had a theft delivery system.
Herr Oberst, and their mandate is "In Perpetuity" unless changed by Congress. Their greed makes them always hang around later than they should.
Like nothing any of us dreamed of .
See
http://andreswhy.blogspot.com/2008/10/money.html
Seriously, what part of Bitcoin are you guys missing????
The part that works when there's no electricity.
So you have missed the point. Bitcoin is a DIGITAL system - for when the Internet is working - at other times you rely on the traditional analog approach - GOLD.
Two different systems for different environments, but solving a common problem - removing counter party risk.
Both Gold (physical) and Bitcoin have no counterparty risk. They both have systemic risk..
Where they differ, is in matters of transport and security costs, level of systemic risk, and scale of network effect.
When you compare the two:
Gold has lower systemic risk and larger network effect due to it's 5000 year history, but has more difficulty security and more expensive transport costs.
Bitcoin has brilliant inexpensive globe spanning 'transport', and many good (inexpensive) security options, but only a tiny user base (small network effect), and only a very short history.
So I contend you did 'miss' something. FYI: Gold does not 'work' when there is no universe... just as valid a criticism as your comment about electricity and Bitcoin (and equally irrelevant for me to say)
The part when the grid goes down.
ALT CNTR DEL.....and .......it's....gone
Hoag Futures , anyone ?
There's a derivitive for everything .
Hoag Futures are the ultimate .
Does no one care what God thinks of these shenanigans ?
See
https://www.academia.edu/9290655/Hows_God_doing_
Fatal falacy of this article and the zillions of others like it is that hyperinfation will be an inevitable outcome of continued central bank debt monetization - this has not been happening and will not happen as long as the created money remains locked up in bank reserves instead of circulating in the economy.
Ironically, the central bank policy of ZIRP is a major contributor to keeping the created money locked up because the net interest margins are so low that banks have an incentive to NOT make long-term loans - HA !
Socialism, with all due respect, I differ in my opinion. The banks, and even the Fed itrself, put their free money in the market. They will arrange to withdraw from the market before anyone else does. Think about it, there are many ways thay can get theirs out before you can. The tribe is not stupid when it comes to money, they always have a plan that gives them an advantage.
Then where is the hyperinfaltion from all the TRILLIONS that have been computer generated ?????????????????
Great. That's all we need: a gradual take down of the price of gold to $32 an ounce--and fixed. You gotta fix it.
At $32/oz I would literally be backing up my truck. Of course at $32 there will have been no physical for a long time.
.gov wants electronic money bad. everyone in the irs knows this.
you can't melt electronic money down like gold.
complete control
welcome to the borg
For those who like to indulge in irrational hopes:
http://www.youtube.com/watch?&v=6_ZGloqmJIc
Foster Gamble: Is the Value of your Money About to Change
That raises some nice to day dream about political miracles ... However, I doubt that enough people understand enough to be able to avoid the BIGGER problems getting way worse, faster. As far as I can tell, banksters will go for broke, and start more wars, and democidal martial law, rather than allow other outcomes to ever happen. The video above is somewhat similar to the optimism which was stated by guys like Ben Fulford, and David Wilcocks, HOWEVER, my opinion continues to be they are pleasantly delusional.
My opinions regarding "What The Financial System Will Look Like In The Future" continue to be that runaway debt slavery generating numbers which become debt insanities are going to provoke death insanities, that wipe out the current context inside which we are pretending to be able to develop better "solutions."