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"Literally, Your ATM Won’t Work…"

Tyler Durden's picture




 

By Bill Bonner Of Bonner And Partners

Literally, Your ATM Won’t Work…

While we were thinking about what was really going on with today’s strange new money system, a startling thought occurred to us.

Our financial system could take a surprising and catastrophic twist that almost nobody imagines, let alone anticipates.

Do you remember when a lethal tsunami hit the beaches of Southeast Asia, killing thousands of people and causing billions of dollars of damage?

Well, just before the 80-foot wall of water slammed into the coast an odd thing happened: The water disappeared.

The tide went out farther than anyone had ever seen before. Local fishermen headed for high ground immediately. They knew what it meant. But the tourists went out onto the beach looking for shells!

The same thing could happen to the money supply…

There’s Not Enough Physical Money

Here’s how… and why:

It’s almost seems impossible. Hard to imagine. Difficult to understand. But if you look at M2 money supply – which measures coins and notes in circulation as well as bank deposits and money market accounts – America’s money stock amounted to $11.7 trillion as of last month.

But there was just $1.3 trillion of physical currency in circulation – about only half of which is in the US. (Nobody knows for sure.)

What we use as money today is mostly credit. It exists as zeros and ones in electronic bank accounts. We never see it. Touch it. Feel it. Count it out. Or lose it behind seat cushions.

Banks profit – handsomely – by creating this credit. And as long as banks have sufficient capital, they are happy to create as much credit as we are willing to pay for.

After all, it costs the banks almost nothing to create new credit. That’s why we have so much of it.

A monetary system like this has never before existed. And this one has existed only during a time when credit was undergoing an epic expansion.

So our monetary system has never been thoroughly tested. How will it hold up in a deep or prolonged credit contraction? Can it survive an extended bear market in bonds or stocks? What would happen if consumer prices were out of control?

Less Than Zero

Our current money system began in 1971.

It survived consumer price inflation of almost 14% a year in 1980. But Paul Volcker was already on the job, raising interest rates to bring inflation under control.

And it survived the “credit crunch” of 2008-09. Ben Bernanke dropped the price of credit to almost zero, by slashing short-term interest rates and buying trillions of dollars of government bonds.

But the next crisis could be very different…

Short-term interest rates are already close to zero in the U.S. (and less than zero in Switzerland, Denmark, and Sweden). And according to a recent study by McKinsey, the world’s total debt (at least as officially recorded) now stands at $200 trillion – up $57 trillion since 2007. That’s 286% of global GDP… and far in excess of what the real economy can support.

At some point, a debt correction is inevitable. Debt expansions are always – always – followed by debt contractions. There is no other way. Debt cannot increase forever.

And when it happens, ZIRP and QE will not be enough to reverse the process, because they are already running at open throttle.

What then?

The value of debt drops sharply and fast. Creditors look to their borrowers… traders look at their counterparties… bankers look at each other…

…and suddenly, no one wants to part with a penny, for fear he may never see it again. Credit stops.

It’s not just that no one wants to lend; no one wants to borrow either – except for desperate people with no choice, usually those who have no hope of paying their debts.

Just as we saw after the 2008 crisis, we can expect a quick response from the feds.

The Fed will announce unlimited new borrowing facilities. But it won’t matter….

House prices will be crashing. (Who will lend against the value of a house?) Stock prices will be crashing. (Who will be able to borrow against his stocks?) Art, collectibles, and resources – all we be in free fall.

The NEXT Crisis

In the last crisis, every major bank and investment firm on Wall Street would have gone broke had the feds not intervened. Next time it may not be so easy to save them.

The next crisis is likely to be across ALL asset classes. And with $57 trillion more in global debt than in 2007, it is likely to be much harder to stop.

Are you with us so far?

Because here is where it gets interesting…

In a gold-backed monetary system prices fall. But the money is still there. Money becomes more valuable. It doesn’t disappear. It is more valuable because you can use it to buy more stuff.

Naturally, people hold on to it. Of course, the velocity of money – the frequency at which each unit of currency is used to buy something – falls. And this makes it appear that the supply of money is falling too.

But imagine what happens to credit money. The money doesn’t just stop circulating. It vanishes. As collateral goes bad, credit is destroyed.

A bank that had an “asset” (in the form of a loan to a customer) of $100,000 in June may have zilch by July. A corporation that splurged on share buybacks one week could find those shares cut in half two weeks later. A person with a $100,000 stock market portfolio one day could find his portfolio has no value at all a few days later.

All of this is standard fare for a credit crisis. The new wrinkle – a devastating one – is that people now do what they always do, but they are forced to do it in a radically different way.

They stop spending. They hoard cash. But what cash do you hoard when most transactions are done on credit? Do you hoard a line of credit? Do you put your credit card in your vault?

No. People will hoard the kind of cash they understand… something they can put their hands on… something that is gaining value – rapidly. They’ll want dollar bills.

Also, following a well-known pattern, these paper dollars will quickly disappear. People drain cash machines. They drain credit facilities. They ask for “cash back” when they use their credit cards. They want real money – old-fashioned money that they can put in their pockets and their home safes…

Dollar Panic

Let us stop here and remind readers that we’re talking about a short time frame – days… maybe weeks… a couple of months at most. That’s all. It’s the period after the credit crisis has sucked the cash out of the system… and before the government’s inflation tsunami has hit.

As Ben Bernanke put it, “a determined central bank can always create positive consumer price inflation.” But it takes time!

And during that interval, panic will set in. A dollar panic – with people desperate to put their hands on dollars… to pay for food… for fuel…and for everything else they need.

Credit may still be available. But it will be useless. No one will want it. ATMs and banks will run out of cash. Credit facilities will be drained of real cash. Banks will put up signs, first: “Cash withdrawals limited to $500.” And then: “No Cash Withdrawals.”

You will have a credit card with a $10,000 line of credit. You have $5,000 in your debit account. But all financial institutions are staggering. And in the news you will read that your bank has defaulted and been placed in receivership. What would you rather have? Your $10,000 line of credit or a stack of $50 bills?

You will go to buy gasoline. You will take out your credit card to pay.

“Cash Only,” the sign will say. Because the machinery of the credit economy will be breaking down. The gas station… its suppliers… and its financiers do not want to get stuck with a “credit” from your bankrupt lender!

Whose credit cards are still good? Whose lines of credit are still valuable? Whose bank is ready to fail? Who can pay his mortgage? Who will honor his credit card debt? In a crisis, those questions will be as common as “Who will win an Oscar?” today.

But no one will know the answers. Quickly, they will stop guessing… and turn to cash.

Our advice: Keep some on hand. You may need it.

 

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Sat, 06/06/2015 - 22:43 | 6170721 Government need...
Government needs you to pay taxes's picture

Logged in to ask the NSA whether they've got their reinforced platoon with an armored detachment ready to come for me.  I'm still waiting. . .

Sat, 06/06/2015 - 23:33 | 6170793 TheReplacement
TheReplacement's picture

Logged in to see if the NSA can restore the backup of my iPhone.

Sun, 06/07/2015 - 04:47 | 6171108 PhoQ
PhoQ's picture

Sorry, the NSA can't process your IP address right now. All of their operators are busy making bomb threats to airlines.

Sun, 06/07/2015 - 00:18 | 6170864 Al Gophilia
Al Gophilia's picture

Logged in to give you a heads up. You're outgunned.

Sun, 06/07/2015 - 21:36 | 6172972 gladius17
gladius17's picture

Logged out so I can hop in the car and head to Papa Johns. While they still have power..

Sun, 06/07/2015 - 00:34 | 6170890 pachanguero
pachanguero's picture

That will go down as one of the top ten ZH comments ever posted.

+1 

Sat, 06/06/2015 - 21:58 | 6170636 NoWayJose
NoWayJose's picture

I always keep a couple hundred stashed - just in case. You never know when the ATMs might go - and you might have to drive a couple hundred miles to a safer place.

Sat, 06/06/2015 - 22:25 | 6170684 Colonel Walter ...
Colonel Walter E Kurtz's picture

Exactly and you are going to need something to pay the local toll collectors when they erect the roadblocks to keep the undesirables out!

Something shiny might even be better to have.

Safe travels.

Sat, 06/06/2015 - 23:52 | 6170824 BrokusDickusMaximus
BrokusDickusMaximus's picture

Think so myself. In the ME they buy extravagant gold jewelry. At those desert borders, shiny stuff will get you across it. When we got to baghdad a 250 Dinar note with Saddam on it wouldn't by a half a tomato.

Sat, 06/06/2015 - 22:28 | 6170693 TheFourthStoog-ing
TheFourthStoog-ing's picture

I keep a cyanide capsule handy in case I meet a Zero Hedger in person and they need to ingest it.

Sat, 06/06/2015 - 22:41 | 6170718 Usurious
Usurious's picture

embrace your USURY you stupid fuck..........

Sat, 06/06/2015 - 23:07 | 6170757 palmereldritch
palmereldritch's picture

It will have dissolved in your ass long before you ever get to use it.

Bottoms up!

Sat, 06/06/2015 - 23:55 | 6170828 tarabel
tarabel's picture

 

 

That's very civic-minded of you.

Sun, 06/07/2015 - 00:10 | 6170854 TheMeatTrapper
TheMeatTrapper's picture

"I keep a cyanide capsule handy in case I meet a Zero Hedger in person and they need to ingest it."

It is you and your type that will self eliminate rather than face reality. 

Sun, 06/07/2015 - 03:57 | 6171057 ZH Snob
ZH Snob's picture

I keep a cyanide capsule handy in case I meet a Zero Hedger in person and they need to ingest it.

 

in what alternative universe is this even remotely funny or ironic?

Sun, 06/07/2015 - 07:39 | 6171274 shovelhead
shovelhead's picture

If it was good enough for Blondi, it's good enough for me.

Sun, 06/07/2015 - 12:08 | 6171618 Not My Real Name
Not My Real Name's picture

I'm still trying to figure out if that comment was literal or figurative.

Sun, 06/07/2015 - 07:00 | 6171224 Refuse-Resist
Refuse-Resist's picture

Trigger Alert!  You have been triggered.  Engage Cyanide escape immediately, fourthstoogeing

Chinese Roadside Shitizenism:   FUCK YEAH!

 

Sat, 06/06/2015 - 22:01 | 6170641 pacu44
pacu44's picture

So what happens during some storm on the east coast or gulf coast and there is no power??? Gas, ice, food and supplies need to exchange hands some way... Cash and more so, GOLD AND SILVER arent going anywhere....

Sun, 06/07/2015 - 00:15 | 6170860 Global Douche
Global Douche's picture

For me, the GOLD and SILVER I possess won't work for me in this particular instance. Physical fiat, not on plastic will absolutely shout, not just talk. The advice is clearly sound and I already practice this, but do be extremely careful as many jurisdictions still have civil asset forfeiture laws where cops are no longer your friends, but highway robbers for the government. A desperate government will do extreme measures, so your resourceful (and DISCREET) planning is paramount in such a circumstance. Do keep your phyzz as it will come in handy later. You must become your own Central Bank as you shall understand soon enough that the ineptitude of your government wasn't limited to FEMA's pathetic response to Katrina a decade back. You've been warned!!

Sun, 06/07/2015 - 05:36 | 6171153 Farqued Up
Farqued Up's picture

Please capitalize Gulf Coast, it is a specific area of world renown. Fuck the east coast it's the bane of the world experience.

Sun, 06/07/2015 - 07:08 | 6171232 Refuse-Resist
Refuse-Resist's picture

Speaking from experience of Katrina and Andrew on the GC, a lot of black undesireables show up in your neighborhood begging for money, food, and of course preying on the unwary as they are wont to do in their  natural urban environs as a matter of daily survival.

Trust me, you don't want them migrating to your neighborhood, unless you love diversity, in which case, open your doors and invite them in.  I'm sure they'll enjoy you and your family before they torture and kill you.

So after experiencing 2 grid down, panic type environments for about 2 weeks in each instance, I decided to move far away frmo the dindus (dindu nuffins TM) and to a lower pop density area where there are far less unprepared sheople,l just because there are just less people around.

The sound of freedom (target practice) is common around here.

The South may not rise again, but Appalachia may be the only place in the South left standing once the dindus have their fun after the EBT stops working and the welfare checks stop direct depositing.  Not enough dindus here to cause a problem that can't be quickly solved. Hint: We're shipping the ragged remnant north and east on the remaining school busses because to you notherners, diversity is strength, so we're doing our part to make you stronger and more resilient to collapse by sending you some moar diversity.  FUCK YEAH!

There are a lot of chicanos here but most of them, being recent immigrants, still know how to work and live in a civil manner. The 3rd generation decendants that live in TX and CA?  Only one small step above the dindus.  fortunately we don't have those here.  Yet.

Stop this train, I want to get off.

 

 

Sun, 06/07/2015 - 21:42 | 6172980 gladius17
gladius17's picture

"The South may not rise again, but Appalachia may be the only place in the South left standing once the dindus have their fun after the EBT stops working and the welfare checks stop direct depositing. "

Right here with ya, brother....northeast AL reporting for duty. Yes, the South WILL rise again.

Sat, 06/06/2015 - 22:02 | 6170645 Bossman1967
Bossman1967's picture

Golld silver coinsespecially my morgan sand peace dollars and hoards of quarters dimes silver of course all need to prepare

Sat, 06/06/2015 - 22:29 | 6170694 unrulian
unrulian's picture

gave you +1 but i think you're drunk

Sun, 06/07/2015 - 05:37 | 6171154 Farqued Up
Farqued Up's picture

Envy is bad.

Sat, 06/06/2015 - 22:08 | 6170649 asiafinancenews
asiafinancenews's picture

So at the same time this is happening:

House prices will be crashing. (Who will lend against the value of a house?) Stock prices will be crashing. (Who will be able to borrow against his stocks?) Art, collectibles, and resources – all we be in free fall.

This is also happening:

something that is gaining value – rapidly. They’ll want dollar bills.

So dollar-denominated assets are crashing in value ... as the value of dollars rapidly increases?

Huh?

Sat, 06/06/2015 - 22:11 | 6170658 Dr. Engali
Dr. Engali's picture

Do you understand how credit "money" works?

Sat, 06/06/2015 - 22:31 | 6170699 TheFourthStoog-ing
TheFourthStoog-ing's picture

Do you have your bug-out bag ready by the door?

Sun, 06/07/2015 - 00:13 | 6170857 falconflight
falconflight's picture

Sheltering in place...come over for dinner, and bring a shovel. ;)

Sun, 06/07/2015 - 07:10 | 6171233 Refuse-Resist
Refuse-Resist's picture

Roadside Shitting =--  Chinese prepper.

 

Nightsoil, it's not just for fertilizer anymore.

China? FUCK YEAH!

Sun, 06/07/2015 - 07:57 | 6171285 Realname
Realname's picture

You should really consider self-immolation...its quite liberating (or, so I hear).

Sat, 06/06/2015 - 22:38 | 6170706 Billy the Poet
Billy the Poet's picture

 

Do you understand how credit "money" works?

 

Apparently they don't.

Look folks -- financial assets are purchased with leverage. That means that money which doesn't exist drives up the price of those assets. When investors get hinkey and want to cash out en mass there isn't enough cash money to make the pay offs. Therefore the demand for dollars goes up.

Bankers and governments will respond by pumping even more cash into the system which will enable the deleveraging to continue thus reducing the demand for dollars just as all that new money is entering the market.

When the dollar begins to crack it will be deflation followed by inflation.

Sun, 06/07/2015 - 00:02 | 6170844 Oscar Mayer
Oscar Mayer's picture

First off, that article is a rehash of what I've been telling people on internet forums for years.

Secondly, there is absoluty no historical evidence available to suport the notion that the gov. will actually print money to bail out specualtors.  

There is historical evidence to support the notion that they won't.  And it would be better for them if they didn't.  Going into and coming out of a collapse with a strong, in demand currency would be a big win for the gov.

 

http://carl-random-thoughts.blogspot.com/

Sun, 06/07/2015 - 00:19 | 6170865 Billy the Poet
Billy the Poet's picture

there is absoluty no historical evidence available to suport the notion that the gov. will actually print money to bail out specualtors.

 

Perhaps you hadn't noticed the $15 trillion or more pumped into the system during the past seven years.

Sun, 06/07/2015 - 00:51 | 6170888 Oscar Mayer
Oscar Mayer's picture

Perhaps you haven't noticed but that $15-Trillion was Fed generated Credit,

Not Money.

And that $15-Trillion is going to POOF! out of existence, just like the $11-Trillion in credit (Bank Debt) that populates people's deposit accounts, when TSFHTF.

POOF!, all gone.

Sun, 06/07/2015 - 01:12 | 6170925 Billy the Poet
Billy the Poet's picture

Unbacked currency created through borrowing and promoted exclusively by legal tender laws and taxation is a debt instrument by definition. The $15 trillion are dollars in the same sense that the dollars you receive in your pay check are dollars.

There is no need to confuse the issue by attempting to clarify it for those who already understand the process.

Sun, 06/07/2015 - 07:55 | 6171180 Oscar Mayer
Oscar Mayer's picture

Clearly you don't know what you're talking about.

Just because the Fed and the banks can use legal tender to create their credit, doesn't make the credit they create legal tender.

And by the way, there is no law anywhere that grants the Fed or the banks the authority to create money.

Nope, not even the Federal Reserve Act.

** 100% of the inflation we've suffered for the past 100 years was the product of Fed and Bankster credit creation.  The legal tender had nothing to do with it except for providing a base and cover for their fractionally reserved inflationary FRAUD.

Sun, 06/07/2015 - 10:05 | 6171434 Al Gophilia
Al Gophilia's picture

Credit's just money that hasn't been printed yet. Buying things on credit has the same function of credit notes, Both have been borrowed into existence as a bond; one personal, one public. Historic money spreadsheets at the Central Banks around the world, show the creation of cash in circulation + M2 and M3. With a bit of a perusal, you will see the cash in circulation totals lagging behind M3 by about 20 years. It always gets to that broad figure eventually indicating that credit is money borrowed from the future printing press, until one day, it surpasses it. That's when you will see hyper-inflation. When nobody accepts credit cards or trusts another's credit, that's when they demand cash. They either print or die later or not print and die immediatly. What do you think the oligarchs wioll do?

Sun, 06/07/2015 - 10:39 | 6171472 Oscar Mayer
Oscar Mayer's picture

You really shouldn't comment cause all you're accomplishing is illustrating your total ignorance of the subject matter when you do.

 

Mon, 06/08/2015 - 02:52 | 6173189 Al Gophilia
Al Gophilia's picture

I'm almost swayed by your input. (Just for you, sarc)

Unless you're going to repudiate my comment with a reasoned argument, you can go and fuck yourself; big mouth.

Sun, 06/07/2015 - 10:54 | 6171500 Billy the Poet
Billy the Poet's picture

You're the one who doesn't know what he's talking about. Of course the system is fraudulent but that doesn't mean that the dynamics of that fraud can't be discussed.

Sun, 06/07/2015 - 15:55 | 6172250 Oscar Mayer
Oscar Mayer's picture

I'm conveying the "dynamics of that fraud"

You're just injecting your B.S. indoctrinated interpretation of the fraud.

Mon, 06/08/2015 - 03:03 | 6173416 Al Gophilia
Al Gophilia's picture

No one else is entitled to express a considered opinion, 'cos you just happen to be the smartest guy in the room, right? Find yourself a stage, spotlight and empty auditorium, with a PA system that only has huge fold-back speakers. You'll be able to hear your self-deluded, high opinion of yourself and swamp yourself with the infallibility of your own opinions. Sell yourself a ticket and lock the doors, you're a star. Yaayyy!

Sun, 06/07/2015 - 07:07 | 6171231 Cloud9.5
Cloud9.5's picture

I have a fifty trillion Zimbabwe not on my desk.  In 2007 they were printing one dollar notes.  In 2008 they were printing fifty trillion dollar notes.  It took less than 24 months to blow up their currency.  Now it isTP.

Mon, 06/08/2015 - 03:04 | 6171441 Al Gophilia
Al Gophilia's picture

Funny that. $1.00 could buy an egg one year yet a $200 Trillion couldn't buy a grain of salt the next.

Sun, 06/07/2015 - 05:49 | 6171164 Farqued Up
Farqued Up's picture

Just like a giant supernova. First it collapses, then reaches super, double-clutching, nitromethane throbbing mega thrusting, gluon popping, quarkimaniacal, fucking nuclear oblivion at thousands of Einstein fucking times the speed of light.

We'll never even see it hit.

Sat, 06/06/2015 - 22:08 | 6170652 TruthInSunshine
TruthInSunshine's picture

Saturday night DOOM PORN TEOTWAWKI.

Sat, 06/06/2015 - 23:03 | 6170751 Arthur Schopenhauer
Arthur Schopenhauer's picture

The Encore to Friday night fucks.

Sat, 06/06/2015 - 23:27 | 6170783 JenkinsLane
JenkinsLane's picture

Exactly, frighten the children to get inside their wallets.

It's gonna be one hell of a growth industry in the future, in the "West" anyways.

Sat, 06/06/2015 - 22:10 | 6170657 Dead Canary
Dead Canary's picture

But will Obama's daughters still get to go on their European vacation?

Sun, 06/07/2015 - 01:37 | 6170950 gonetogalt
gonetogalt's picture

One will still be worth 5o cows and 30 goats or some such shit.

 

"I didn't know baby wookies were worth so much"...Post of the year!!!

Sun, 06/07/2015 - 05:57 | 6171168 Dindu Nuffins
Dindu Nuffins's picture

Obama's sons might make travelling dangerous.

Sun, 06/07/2015 - 07:14 | 6171240 Refuse-Resist
Refuse-Resist's picture

As long as they visit the centers of vibrant Scandanivian diversity (muslim rape gangs) it'll be ok. Maybe they'lll get a taste of that diversity on a global level.

Niggers are one thing but crazed raping muslim fanatics are entirely another.

 

Both can and will be dealt with in the same manner once sanity becomes de riguer and social justice warriors and their political correctness become as common as dinosaurs.

 

That's when white countries will be safe for white people again.

 

So yeah, Obamas adopted daughters (michale obama can't hvae kids, its a man) should go. They should stop in Haiti, Congo, Somalia, South Africa, Nigeria, Liberia, and Zimbabwe to complete their "wonders of diversity" world tour.

 

 

Sat, 06/06/2015 - 22:11 | 6170659 THE 4th Quadrant
THE 4th Quadrant's picture

Gold/silver has instant credibility in the days that follow a full meltdown of joo confetti.

Sat, 06/06/2015 - 22:12 | 6170661 assistedliving
assistedliving's picture

my suggestion?  find out what your butcher, baker, fish monger will except in exchange.  

Sat, 06/06/2015 - 22:13 | 6170663 zebrakid
zebrakid's picture

What a load of rubbish.I don't use cash now I. pay everything with a visa card and pay it off every month; no interest. I have no debt. My money is in term deposits in various banks getting 3% interest in Australia.I did not put the money in in cash. That stopped in 1970. it went in electronically. So why should I expect to take it out in cash to spend when I can spend it electronically. I fully expect this system to go on indefinitely.

Sun, 06/07/2015 - 07:05 | 6171229 Quinvarius
Quinvarius's picture

That just means you will starve to death first in either a real crisis or a banking crisis.

Sun, 06/07/2015 - 07:16 | 6171243 Refuse-Resist
Refuse-Resist's picture

That is some sophisticated sarcasm there. Upvote!  You are the Aussie one million dollar bonus.

 

or, you are one seriously stupid motherfucker.

Sun, 06/07/2015 - 08:19 | 6171300 Debugas
Debugas's picture

are you sure your bank will not go bankrupt ?

Sun, 06/07/2015 - 09:31 | 6171391 northern vigor
northern vigor's picture

Yeah...you and 99% of the rest of society "expect this system to go on indefinitely"

And what happens if it doesn't? Do you at least have a baseball bat to go shopping with or is that plastic also?

Sat, 06/06/2015 - 22:16 | 6170669 stormsailor
stormsailor's picture

need to keep 100k in cash in your stash.  then let the gov do away with cash.   the official rate of exchange in venezuela is 8 to 1. but on the black market it is going up about 100 bolivars a week. last check close to 1200 bolivars to a dollar.  same thing will happen here.  you might have to go up a few back allys but the real cash will be king.

 

gold and silver will have their place, also self sufficiency and the rest of the list.

Sat, 06/06/2015 - 22:21 | 6170678 Bighorn_100b
Bighorn_100b's picture

Flights to Venezuela are still expensive. National Parks are still $40.00. Looked to a vacation there in Venezuela, Alaska looks like a better deal. IMO, traveling from CA.

Sat, 06/06/2015 - 22:39 | 6170710 TheFourthStoog-ing
TheFourthStoog-ing's picture

Will Folger's coffee be worth more than Maxwell House?

Can you teach me a few code words to get to a safe house?

Sat, 06/06/2015 - 23:39 | 6170800 TheReplacement
TheReplacement's picture

Folgers has always been worth more than Maxwell House swill you twerp.

Sun, 06/07/2015 - 01:33 | 6170945 El Crusty
El Crusty's picture

What about Sanka?

Sun, 06/07/2015 - 07:16 | 6171244 Refuse-Resist
Refuse-Resist's picture

30 years after the crash, Sanka  will be the new 'black gold'.

Sun, 06/07/2015 - 21:46 | 6172992 Semi-employed W...
Semi-employed White Guy's picture

No, it will still be shit.  Do they still sell that swill?

Sun, 06/07/2015 - 07:45 | 6171279 Husk-Erzulie
Husk-Erzulie's picture

The zinc penny of coffees.

Sat, 06/06/2015 - 22:17 | 6170670 robertocarlos
robertocarlos's picture

What you talking about Willis? You lift the top mattress and take as much cash as you need.

Sat, 06/06/2015 - 22:19 | 6170673 thinair
thinair's picture

I think the author does not understand the true nature of the problem. In plan B it won't be panic. I will post a seperate post to explain what the whole story is about the banning of cash.

 

There are ten people and resources to feed only nine. What happens to the tenth and why? O’ Humanity, Why are you running and for what? Is anyone on this planet trying to solve this problem?

 

http://just-a-thought-from-thinair.blogspot.com/

 

Thanks zerohedge for you good work.

Sat, 06/06/2015 - 22:19 | 6170674 thinair
thinair's picture

I think the author does not understand the true nature of the problem. In plan B it won't be panic. I will post a seperate post to explain what the whole story is about the banning of cash.

 

There are ten people and resources to feed only nine. What happens to the tenth and why? O’ Humanity, Why are you running and for what? Is anyone on this planet trying to solve this problem?

 

http://just-a-thought-from-thinair.blogspot.com/

 

Thanks zerohedge for you good work.

Sat, 06/06/2015 - 22:19 | 6170675 q99x2
q99x2's picture

Bitcoin last price $226

 

Sun, 06/07/2015 - 21:49 | 6172998 Semi-employed W...
Semi-employed White Guy's picture

Wasn't it supposed to be at $1 million by now?

Sat, 06/06/2015 - 22:21 | 6170679 TheFourthStoog-ing
TheFourthStoog-ing's picture

Is the world coming to an end?  Does anyone have an extra can of Mountain House they can spare? 

I'm shaking like a leaf under the kitchen table, paralyzed by fear....

Sat, 06/06/2015 - 22:28 | 6170691 Arnold
Arnold's picture

Thank you Mr No E.

Sat, 06/06/2015 - 23:41 | 6170803 TheReplacement
TheReplacement's picture

Spare us the sarcasm and post a list of all the fiat/debt based systems that have lasted more than 100 years to make your point.  If you don't mind, of those, please list what happened in the end.  The end?  Yes, they always end.  Sooner, usually, than later.

Sun, 06/07/2015 - 01:43 | 6170956 gonetogalt
gonetogalt's picture

Replacement, good to see a guy take time to skewer a troll, it's worth while as you may influence a confused newbie...

(Ecer BBQ a skewerd troll)???

Hint: use lotsa salt...

Sun, 06/07/2015 - 00:09 | 6170849 falconflight
falconflight's picture

No sorry, well not really...No.

Sun, 06/07/2015 - 00:20 | 6170866 Aussiekiwi
Aussiekiwi's picture

me to, me too.

Sun, 06/07/2015 - 07:18 | 6171247 Refuse-Resist
Refuse-Resist's picture

The dindus that show up will be glad to find you like that. After the collapse, they won't need to keep it on the downlow.

Knowwhamsayin?

 

Submissive is what they like. Cowering in fear makes you a perfect candidate for diversification.

 

Keep on shitting on that roadside buddy.

Sat, 06/06/2015 - 22:21 | 6170680 Aquarius
Aquarius's picture

In either a cashless or cash system, the following is absolutely true:

"They stop spending. They hoard cash. But what cash do you hoard when most transactions are done on credit? "

Everybody stops spending and the Volicity of Money STOPS - Take a look at the VoM Index - it has almost already stopped at the bottom zero point.

What follows:

Cashless: Totalitarian Dark Age led by those in Power today.

Cash: Revolution, Dark Age with the wrong emergent Powers

http://verbewarp.blogspot.com.au/2011/08/delusional-economics.html

If y'all don't think that the global economy has already tanked (for the unwashed) then think again. Down is the trend.

If y'all don't think that it gets worse from here on, then think again.

If y'll think that the TPTB can fix this mess, then please think again.

A Gold based system of "money" is that of integrity.

A non Gold based system of "money" is a corruption - due to the nature of the Collectives of men in power.

http://verbewarp.blogspot.com.au/2015/03/fiat-currency-and-human-behavio...

QE causes unemployment and the Totalitarian State.

A cashless system creates Totalitarianism.

Stupid is the disease of Power and now rules suspreme.

The Banking system (Bankers) have become King

and THEIR Word is LAW

How STUPID is that?

Is there any doubt about this?

Ho hum


Sat, 06/06/2015 - 23:04 | 6170753 layman_please
layman_please's picture

well my question is: will cash only be inflationary or deflationary?

on the one hand, there will be much less money circulating (physical only), while on the other, the velocity will have to pick up because that money will be chasing necessities which might compensate the lack of volume.

Sat, 06/06/2015 - 23:44 | 6170807 TheReplacement
TheReplacement's picture

The answer you are looking for can only be a theory.  Economic theories tend to not account for armed robbery, rioting, and revolution.

Sat, 06/06/2015 - 22:25 | 6170685 new game
new game's picture

panic, baby panic, what is on deck, but when? the 200 trillion dollar question. but 286 percent debt to gdp, we are getting closer to the abiss. 300% percent (some old man said a long tyme ago) is when the wheels start to wobble on da wagon...

Sat, 06/06/2015 - 22:26 | 6170687 new game
new game's picture

200 hundred fucking trillion, lol...

Sat, 06/06/2015 - 22:30 | 6170696 thinkmoretalkless
thinkmoretalkless's picture

Normalcy bias. No one sees the bullet that gets them, but I would still keep my head down. Timing? All is well until it isn't If surviving a crisis was easy everybody would. I often wondered when studying the shorthand prose of history why they couldn't see it coming. Now I kinda know why.

Sat, 06/06/2015 - 23:45 | 6170811 TheReplacement
TheReplacement's picture

You see bullets, as in, in flight?  Nobody hears the shot that gets them is more what you are thinking, I think.

Sat, 06/06/2015 - 22:33 | 6170700 Lazane
Lazane's picture

Barter is Better

Sat, 06/06/2015 - 22:35 | 6170704 TheFourthStoog-ing
TheFourthStoog-ing's picture

THEY'RE BREAKING DOWN MY DOOR RIGHT NOW - GET THE FUCK OUT OF THE COUNTRY!!

THIS IS LIKE THE FIRST RED DAWN MOVIE, THEY DROPPED IN ON PARACHUTES.  GRABBING MY BUGOUT BAG!!!!!!!!!!!!!!!

Sat, 06/06/2015 - 22:58 | 6170728 Billy the Poet
Billy the Poet's picture

Patrick Swayze did not die of cancer because complex systems never break down and life is beautiful forever.

Sun, 06/07/2015 - 00:18 | 6170863 Aussiekiwi
Aussiekiwi's picture

You will remember to pay your rates on time next time won't you?

Sun, 06/07/2015 - 00:22 | 6170868 TheMeatTrapper
TheMeatTrapper's picture

@TheFourthStooging: You're nothing but a little bitch repeatedly screaming "Look at Me", "Look at Me". 

You seem to crave attention and attempt to find it by posting meaningless, but contrarian drivel; never offering facts or opinion to support your premise. 

In fact, you have no premise othe than to ridicule others. 

You are not converting anyone - you are simply drawing attention to yourself; but of course that's the goal is it not? To the meaningless - even negatice attention is desireable. 

You really should grow up; try being a man and say what you mean and mean what you say. There's no satisfaction in being a pussy in fight club. You only get fucked in the end - by everyone. 

Sun, 06/07/2015 - 01:16 | 6170932 Billy the Poet
Billy the Poet's picture

a little bitch repeatedly screaming "Look at Me", "Look at Me".

 

But in doing so he makes an easy target that's good for a few laughs until more worthy prey makes an appearance.

Sat, 06/06/2015 - 22:35 | 6170705 ILLILLILLI
ILLILLILLI's picture

Read "The Day The Dollar Died" by JohnGaltFla...

Sun, 06/07/2015 - 02:07 | 6170735 socalbeach
socalbeach's picture

Author should be comparing the total monetary base of about $4 trillion, not currency, with M2 of $11.9 trillion.

.

The monetary base consists of vault cash, currency and coin in circulation, plus reserves on deposit with the Fed. If people start withdrawing cash, the Mint can increase currency up to a total of about $4 trillion until the banks run out of reserves. They could increase printing of hundred dollar bills vs 20s if they got into a pinch.

So the amount of currency that can be demanded by the public vs what could be available is "only" a factor of 3 (11.9/4), not a factor of 9 (11.9/1.3). If the Fed were to restart QE that ratio would drop as the monetary base would increase faster than M2, like it did for previous QEs.

Sat, 06/06/2015 - 22:58 | 6170742 Zen Master
Zen Master's picture

This sums up this post up pretty well: https://youtu.be/g4bftQ4xxFc

Sat, 06/06/2015 - 22:59 | 6170746 delacroix
delacroix's picture

all the new $100's I've seen, were printed in 2009. none since.

Sun, 06/07/2015 - 04:53 | 6171117 PhoQ
PhoQ's picture

Check the serial numbers. If they're all the same, they're probably real Federal Reserve Notes.

Sat, 06/06/2015 - 23:12 | 6170763 MollyHacker
MollyHacker's picture

I don't see a cashless society however the trust metrics used to offer confidence is fundamentaly ailing. At some point along the way the central banks will need to lower the standards for entery level participants into the banking hedgonimy.

More Shadow Banking

Sat, 06/06/2015 - 23:22 | 6170778 MEFOBILLS
MEFOBILLS's picture

Quotes and context:

“But there was just $1.3 trillion of physical currency in circulation – about only half of which is in the US. (Nobody knows for sure.)

Today, physical tangible currency is banker credit that is converted from the ledger.

Here is an excerpt from Huber, on how a modern “credit” money system converts the ledger to cash:

http://www.sovereignmoney.eu/21-defining-money

“The two circuits are separate. Reserves and demand deposits cannot mingle. Nonetheless the two circuits are co-related—first, by clearing nonbank and interbank transactions, the net balance of which has at some final stage to be settled in reserves; second, by exchanging cash out of and back into non-cash circulation. Cash, at latest since the end of the metal age of money, is no longer constitutive for a modern money system. Today, money at source is digital money in the form of accounting data entered into current accounts, thus existing in the original and constitutive forms of non-cash central-bank reserves and bank demand deposits.

In the past, much of the money supply was coins and sometimes bills that were Treasury money.  This would be exogenous money that was outside of the private (endogenous) bank credit system.

By definition, this outside money was not credit.  Banker credit, as a money type, has a lifecycle and an accounting periodicity.  It comes from nothing and returns to nothing, but acts as our transaction medium during its lifespan.  Also, credits mirror, or the debt instrument makes uneconomic demands and guides humanity down bad pathways.

Credit creates a saw tooth economy, with a swing up as credit acts on itself with positive feedback, driving asset classes in bubbles, and then it has a sharp drop off during depression/panic stage.

The saw tooth becomes more pronounced as private credit becomes an ever larger component of the money supply.

 

Physical money isn’t really the issue; it is the nature of the money.  Intangible ledger money can be made to have the same properties as physical tangible money.  Indeed, ledger money should be currency (not debt based credit accounting) and hence be a permanent asset for the population to then trade their output fairly.

Sun, 06/07/2015 - 03:07 | 6171020 litemine
litemine's picture

Indeed, ledger money should be currency (not debt based credit accounting)

5-3=1

I wonder;  The old $US. Notes when they were lost (burned/eaten) lost who made the gain?

Then, with the Non Green Back, or  a non Gold backed $US.  but again, a system that when the Currency....Vanishes.......Who Gains?

Now.......Do You want these Bloodsuckers to be able to Play with dead accounts.

Just give them the Reigns, they're steering towards the Rocks and there isn't much you can do about it.

Sun, 06/07/2015 - 08:00 | 6171286 shovelhead
shovelhead's picture

Elizabeth Rex reigns

A horse has reins.

Since everyone is so persnickety all of the time around here.

Sat, 06/06/2015 - 23:35 | 6170798 large_wooden_badger
large_wooden_badger's picture

A black market is just a free market, only illegitimate in the eyes of the gov't cabal that only seeks to regulate all markets in their favor. What we need is a black market in real currency, honest money that can represent a true standard of value and can be exchanged for the true value of all human effort and endeavors. Without this nobody anywhere can ever expect to enjoy the true fruits of their own labors or the blessings of freedom.

Sat, 06/06/2015 - 23:42 | 6170804 MEFOBILLS
MEFOBILLS's picture

This quote also needs context:

“And it survived the “credit crunch” of 2008-09. Ben Bernanke dropped the price of credit to almost zero, by slashing short-term interest rates and buying trillions of dollars of government bonds.

Yes, trillions of dollars of government bonds were bought.  But, these were EXISTING bonds, already in the money supply.  MOST OF THEM were already in reserve channels of banks.  Banks hold TREASURIES as reserves because they are near cash.  If a private bank holds reserves in Treasuries, then their reserves earn interest.  Nice deal, yes?

The FED now PAYS interest on cash held in reserves.  Think carefully on this:  Cash is a bearer instrument that pays to the bearer upon demand.  But, cash is not an interest bearing unit.  However, QE has swapped so many TBills out of reserve channels, that bankers were losing their usury.

Also, the way it works is that private banks put their excess “reserve” cash on the overnight market for whatever it will earn from other banks.  To prevent a rate collapse to zero, the FED had to start paying banks for their “dollar” reserves.

To make the author’s statement correct:

Ben Bernanke ..buying trillions of dollars of TBills out of reserve channels.

Also, when FED wants more debt instruments to buy with QE than what their partner banks have ready, then the private banks can make ready via open market operations.  TBTF partner banks can buy on either the primary or secondary bond market whatever the FED desires to monetize.

The FED can only expand its balance sheet, which in turn is a function of double entry mechanics. 

Buying bonds causes bond price to go high and interest rate to go low.  Demand for bonds then changes the overall interest rate structure for private banks to advertise.  New hypothecation victims then show up to take out new debt at the lower rate.  In a balance sheet recession, which America is in, private debts need to be paid down …..not extended with more lower cost debts. I almost never hear any economic pundit mentioning the words BALANCE SHEET RECESSION. 

The fact that these three words are never mentioned is illustrative of deep hypnotic suggestion banks have over the popular press.

 

Creating new debt instruments at lower rates is the objective of QE.  Wherever the FED aims their keyboard, they can inflate an asset class.  But, in all cases the credit money supply is changing composition ratio from less debt instruments to more cash.  The cash in turn channels improperly and hence does not stimulate real economic activity, but instead funds financial oligarchy.

Sat, 06/06/2015 - 23:54 | 6170819 DaveA
DaveA's picture

Since 1933 all small depositors, and since 1984 all big depositors, have been covered by the FDIC/Federal Reserve when a bank failed. Since 2008 banks haven't been allowed to fail -- the Fed just "loans" them some freshly printed money, or buys their bad assets with same, and the doors stay open.

The good news is that bank runs can't happen under this system because a dollar in the bank is as good as a dollar in hand. The bad news is that by getting the banks hooked on cheap money, the government has in effect nationalized them, and will no doubt use them to meddle in other industries (e.g. compel Ford to make electric trucks and compel UPS to buy them).

Sat, 06/06/2015 - 23:50 | 6170821 Latitude25
Latitude25's picture

OK the ATMs don't work and about 10% had the foresight to stack enough cash to last a few months.  The rest are hungry and waiting at walmart with their non-fuctioning debit and credit cards.  Can you figure out what happens next?

Sun, 06/07/2015 - 04:56 | 6171119 PhoQ
PhoQ's picture

They go home and watch TV until they die in their favorite chair?

Sun, 06/07/2015 - 05:13 | 6171137 Latitude25
Latitude25's picture

They go to your house and you die in your favorite chair.

Sun, 06/07/2015 - 09:12 | 6171365 CHX
CHX's picture

Then you're PhoQed.

Sun, 06/07/2015 - 07:20 | 6171250 Refuse-Resist
Refuse-Resist's picture

They go to fourth-stooging's house, find him cowering under his dining room table, and have a DL party. 

 

 

Sat, 06/06/2015 - 23:57 | 6170830 MEFOBILLS
MEFOBILLS's picture

And of course, the usual shilling for Gold:

“Because here is where it gets interesting…

In a gold-backed monetary system prices fall. But the money is still there. Money becomes more valuable. It doesn’t disappear. It is more valuable because you can use it to buy more stuff.

Naturally, people hold on to it. Of course, the velocity of money – the frequency at which each unit of currency is used to buy something – falls. And this makes it appear that the supply of money is falling too.”

In the past it was Credit riding on top of Gold in a 10:1 fractional reserve ratio.  Actually it would be much higher than that, if the bankers could issue more credit and get away with it.

During depressions, debt instruments want to be paid – and to pay them off requires MAGICK swaps.  One can swap their home, or perhaps any Gold they might have laying around.  In this way, the credit issuing banker ends up owning the Gold supply.  Credit issuing banker ends up owning parts of the real productive part of the economy in exchange for their control of private finance.

And yes, people hold onto Gold as long as they can during a depression because they think it is magick.  In this way, the producers of goods and services take a thorough screw job.  All the producers have is their labor and ability to create and produce.  But, their goods and services are perishable in many cases, so they have to sell their output at the lowest possible price. 

If the demands of debts are too great, then labor starts committing suicide and stops having children.

Retarded economists in these conditions may even advocate for “foreign money” especially gold in mercantile trade imbalance, to thus pay off debts.  This sort of mercantilism starts wars, as evidenced well during the Gold era.

This power relation of Creditor over Debtor, especially evident in a Gold system, is usurious.

 

www.sovereingmoney.eu

Sun, 06/07/2015 - 00:24 | 6170870 Oscar Mayer
Oscar Mayer's picture

You know what's really herlarous, it's a "FIAT CURRENCY" but they're applying Gold Standard accounting to it as if the Fiat and gold are equalivant.

The USG doesn't have to borrow or tax to cover its obligations, all it has to do is print.  But we can't have $18-Trillion in legal tender notes floating around the globe, now can we?  Yep, far easier to use bankster credit, less of a visable effect, easier to conceal.

Out of sight, out of mind.  Just a bunch of meaningless numbers.

Sun, 06/07/2015 - 02:37 | 6171001 litemine
litemine's picture

But many will fight and die on both sides over this, won't they?

Sun, 06/07/2015 - 00:37 | 6170893 Billy the Poet
Billy the Poet's picture

This power relation of Creditor over Debtor, especially evident in a Gold system, is usurious.

 

In a free market you would be able to not take out a loan if you found the interest rate to be too high while others may make other choices in other contexts. That's not a crime.

 

 


Sun, 06/07/2015 - 07:17 | 6171236 Quinvarius
Quinvarius's picture

Using gold is a recognition of reality.  Money needs to have value or no one will work for it or accept it.  Your stilted discription of "gold bad" applies to any monetary system when it breaks.  But gold, whether it is offically the money of the land or not, has natural value, and retains value as money to those who hold it in a government monetary collapse.  It is that simple.  Gold is never going away.  But the USD will.  And, as always, when the people stop working for little pieces of paper, little pieces of paper seek and anchor of gold to retain value for themselves.  You don't like it that people hoard gold?  Tough shit.  It is human nature to be smart and act in one's own interest.  That is how humans work.  That is how markets work.  Don't hate on real economics because ponzi economics don't work.

Sun, 06/07/2015 - 00:03 | 6170846 falconflight
falconflight's picture

And the Urban Utopias will quickly resemble the movie "28 Days Later."   Stop supporting the 'tip of the spear.'  Leave the large EBT metro reservations.  

Sun, 06/07/2015 - 00:38 | 6170894 Billy the Poet
Billy the Poet's picture

They come for you in your dreams, don't they?

Sun, 06/07/2015 - 06:54 | 6171216 new game
new game's picture

i woke up and it was real?! ha, pillows for you-back to sleep...

Sun, 06/07/2015 - 00:04 | 6170847 tarabel
tarabel's picture

 

 

Interesting observations pro and con.

My take on it is that the assumed value of currency will keep it useful as a medium of exchange for at least a short period of time in any case.

After that, it depends on who you are dealing with. Some people will lose faith faster than others.

As a short-term hedge against social instability or natural disaster, cash is definitely king. If things do not stabilize or else if there is no realistic hope of them doing so in a reasonable period of time, hard assets will gradually displace cash.

So keep cash and use it up first. As soon as there is any sign of a changeover, use it all up pronto for whatever you can exchange things for.

Sun, 06/07/2015 - 00:10 | 6170853 MEFOBILLS
MEFOBILLS's picture

The banning of cash is a misnomer.  If one understands credit banking, any banning of cash is banning the physical form of bank credit.

Credit is not floating money.  People think that cash is permanent floating money because it is tangible.  Ergo, we need gold.

If all money is bank credit, then banning the physical form makes all money ledger entries.  At this point in time, the ledger can come under further control, for example by taxing savings and forcing velocity.

Taxing credit with demurrage is a double tax, as the credit itself comes into being with usury at its inception.

This mechanism has nothing at all to do with the word FIAT.

Fiat money can be law based volume controlled, channel controlled, and it can be issed without interest.  The modern world does not have this kind of money.  

Canada had a sovereign system from 38 to 74, but that has gone down the memory hole.  Let's not look at that example of a well run economy that was a blessing to its people.

Even coins or physical bills if issued as seigniorage from the Treasury would provide some relief from the death grip bankers have on money supply and the polity.

 

Sun, 06/07/2015 - 03:41 | 6171048 r00t61
r00t61's picture

You keep spouting your Ellen Brown-like Greenbacker "sovereign money" nonsense with as much slobbering earnestness as Krugman defends his Keynes-insanity.

To implement your totally closed and precisely engineered "sovereign money" system would require politicians and government to take power away from banks.  Why would they do that?  Banks give politicians and government power.  They give them the power to print and deficit spend and kick the can.  They also provide a convenient scapegoat to slap on the wrist when something goes wrong.

That is the iron triangle of the bank-industrial complex.  The banks and government give each other privilege and power.  And you propose to break this system, with "sovereign money," which by its very definition, would need to legislated into being by politicians, and enforced by bureaucrats and tax agents and cops with guns?

If your magical "one money system to rule them all" doesn't have a risk management plan to deal with the inevitable corruption of those put in charge of implementing and enforcing that system, then it's a waste of breath.  It's just Quixote tilting at his windmills.

 

 

Sun, 06/07/2015 - 05:16 | 6171139 follicle
follicle's picture

Yes, exactly, we have to break the link between banks and government, by the government taking power over the banks, and putting in place a highly regulated monetary system that controls the money supply. Yes, an anti-corruption / people's oversight plan is necessary, and that's much much easier to do if the government is not tied to the banksters.

A lot of readers of ZH are basically anarchists, it seems, believing that the government is inherently evil. But it is not, and it's necessary. We don't need any more evidence that THE MARKET CANNOT SELF-REGULATE. The only solution is popular democratic government control over the banks.

Sun, 06/07/2015 - 07:03 | 6171227 new game
new game's picture

now that is a in your dreams scenario. everyone has a price. problem is not solvable, hence any system in place has a shelf life. fortunatly i'm living through mostly properous peacefull tymes. that is changing. math baby math. 300 percent. 66 tillion output with 200 trillion overhead coming down to crush the masses. it works til it doesn't. debt forgiveness? lol, ha, that is where the power is. pay up fucker or i'll take your ____________...

Sun, 06/07/2015 - 15:36 | 6172205 TeethVillage88s
TeethVillage88s's picture

I think this Thread has revealed why Sumeria and Babylon/Akadia had to Die.

There laws for Contracts were carved in Stone.

The Bankers and Lawyers had no job or no way to corrupt the system and extract wealth from the King/Government and poor people... tho they probably had slaves to work their land and ranch for them.

Code of Ur-Nammu
Code of Hammurabi

- Value of a slave in Shekels
- birth between slave & citizen
- Liability Law
- First Socialist Law of Education
- Medicine & Liability for Death of Patient

Sun, 06/07/2015 - 00:14 | 6170858 Aussiekiwi
Aussiekiwi's picture

A friend of mine works in the IT section of a very large Australian Bank, recently his department was instructed to document the procedure they would follow if they had to close the Bank.

He said it is ridiculously easy to sever the links between the Bank and the outside world, one command to close the ATM's down, one for the phone banking , one for the Internet banking and the Branches physically close their doors and the Bank is down, he reckons it would take him about two minutes to do.

Sun, 06/07/2015 - 12:32 | 6171317 CHX
CHX's picture

I believe this to be true 100%. When the music stops the system will shut down *almost* instantly, that is why one needs to be positioned accordingly to front run said "freeze". I guess we will not be able to time this singularity which will be followed by a (possibly extended) bank holiday during which a complete bail-in is in the cards. If the bank(s) ever re-open it will be a rude awakening for the 99%.

Sun, 06/07/2015 - 14:53 | 6172069 PontifexMaximus
PontifexMaximus's picture

The 1 mio $ question to be answered remains: who will give this (final) instruction?

Sun, 06/07/2015 - 00:15 | 6170861 RevIdahoSpud3
RevIdahoSpud3's picture

Whenever an article like this appears and I get upset with the projected outcome I buy an additional gun(s) to help calm myself. At this point in time I can be a general in my own army. Gold, Silver??? Whovever owns the lead owns the gold and silver.

Sun, 06/07/2015 - 00:27 | 6170873 TheMeatTrapper
TheMeatTrapper's picture

"Whovever owns the lead owns the gold and silver."

That's what the Yankees thought. They were wrong. 

Sun, 06/07/2015 - 01:22 | 6170937 duck dodgers
duck dodgers's picture

 "Whovever owns the lead owns the gold and silver."

 

Wrong...Its whoever owns the food owns the gold and silver.

Sun, 06/07/2015 - 07:18 | 6171246 new game
new game's picture

whoever owns the land and can protect it owns the food. gold and silver represent value stored, but unusable in a real crisses. knowledge is the only peace of mind that will prevail. knowledge of survival as simple as gathering food in the woods and field. i don't even want your gold, what for? it is heavy and makes me a target. i'll take your high carbon folding blade first. be near water that is clean. all else will fall into place...

Sun, 06/07/2015 - 08:47 | 6171334 lakecity55
lakecity55's picture

Hmmm, I was thinking about adding a .45-70 govt to my collection yesterday..

Sun, 06/07/2015 - 14:13 | 6171929 Cloud9.5
Cloud9.5's picture

Just buy a 458 SOCOM upper.

Sun, 06/07/2015 - 00:28 | 6170875 MEFOBILLS
MEFOBILLS's picture

The Fiat talley system of England lasted from roughly 1100 to 1700.  These were wood sticks that couldn't be counterfeited, hence they were a high form of tangible physical money i.e. currency.

Romes bronze fiat money lasted from 790BC to around the time of the second Punic War.  If not for this law based money type, there would have been no Rome.

Thousands of years of coin history are basically fiat.  The value of the coin was due to its stamp, not its metal content.  Heavily clipped coins would still circulate.

But, hypnotized humans continuously think it is the weight of metal, or because it is shiny, that is what makes money.

Money is law, and it has properties.  If a money system is improperly constituted, then why are we surprised when it malfunctions?

Private credit will malfunction, it cannot help itself.

Sun, 06/07/2015 - 00:48 | 6170895 Oscar Mayer
Oscar Mayer's picture

Thank you MEFOBILLS!

Well Stated!

 

Would you mind a little collaboration?  http://carl-random-thoughts.blogspot.com/

Sun, 06/07/2015 - 01:55 | 6170967 gonetogalt
gonetogalt's picture

Well, I mine the shit, and it's worth about $1200 an ounce right now, and it doesn't have my face stamped on it.

(Idiot)

Sun, 06/07/2015 - 01:57 | 6170968 NoBillsOfCredit
NoBillsOfCredit's picture

currency is not money it is a promise to pay that is due and current.you are incorrect about what money is and why it was considered valuable. it was the metal that made it valuable a mint was created to create coins that were consistent in size and purity. but as far back as we know government and banksters have tried to create money from non money things. Every time they are successful the people get ripped off. capitalization is incorrect because voice to text is not so great.

Sun, 06/07/2015 - 03:56 | 6171056 r00t61
r00t61's picture

Thanks for totally ignoring Gresham's law in your factually incorrect lecture.

People were smart enough to know when coins were being clipped.  They kept the good old coins for themselves and traded the worthless new ones.  When soldiers who were promised wages in silver started receiving useless coins made of copper or nickel, they knew the score.  They either made up the lost earnings by taking spoils, looting the local quartermaster, or threatening to desert.

Your sovereign money system is improperly constituted.  Why?  Because it depends upon the existence of politicians to legislate it and the enforcer gun-and-badge class to maintain it.  It is guaranteed to malfunction.

Unfortunately, hypnotized MEFOBILLS continuously thinks that he has one money system to rule them all.  As if some piece of paper with some chickenscratch declaring sovereign money to be the only game in town will magically make politicians honest and eradicate bankster tentacles. 

Sun, 06/07/2015 - 07:29 | 6171258 Quinvarius
Quinvarius's picture

That is not actually true of Rome's monetary system.  It had repeated and compounding hyperinflations.  Every now and then they would do a reform and reset the metal content in the coins to stop the inflation.  There were times when Rome itself didn't even accpet its own money, only bullion, for tax purposes because the coins were so debased.  And if the hated gold and silver were not around to base money on, you would not have some kind of Utopia.  The money would still become worthless and people would hoard food or some other commodity instead.  It would be a horror show of shortages and economic failure.

Here is a good set of videos on Rome's monetary system:  https://www.youtube.com/watch?v=S4KuDlCaWPA

Sun, 06/07/2015 - 00:29 | 6170878 cherry picker
cherry picker's picture

There are theories and there is reality.

A year ago I lived near a town in the mountains about 1 1/2 hours North of Mexico City.  The town had 3 ATM machines.  More than once I went to get some money to find out they were down.  If one went down, people would go to the other two and drain the money till they were replenished.

I think the longest downtime span for all three ATMs was almost 4 days while I was there.  Many businesses don't accept credit cards or checks, it is cash only and if they knew you they may extend you credit, like the old days.

There is no major employer or corporation, it seems almost everyone has a small business and those who don't have a business work for those who do.  It isn't a rich place, but clean and active and I didn't see anyone who looked like they were starving.  Many people had gardens, chickens, goats, sheep and pigs. 

Funny thing is almost everyone had cell phones. :)

It can be done, survival I mean.  We did it before ATM and credit cards became the norm, if the system went down, we would adjust and keep on going.  I liked that place in Mexico.  It had substance.

Sun, 06/07/2015 - 08:56 | 6171346 Berspankme
Berspankme's picture

In today's america the people of that town would be portrayed as extremists, radicals and potential terrorists

Sun, 06/07/2015 - 08:59 | 6171351 Farmer Joe in B...
Farmer Joe in Brooklyn's picture

There are a lot of these towns all over Latin America and S. America (and presumably all over the world). I strongly suggest people in the US get and go find one that you like and start laying down roots.

A much simpler life awaits...

Sun, 06/07/2015 - 09:48 | 6171410 OneTinTrooper
OneTinTrooper's picture

Live poor and look poor and you might be ok.

Sun, 06/07/2015 - 12:52 | 6171704 plane jain
plane jain's picture

Seconded. Have friends from Mexico with a house there. Wife is afraid to live there because of crime and kidnapping. She grew up in Mexico City before the crime was so bad. She said that they can not do anything to make their house there nice because it would make them a target.

Sun, 06/07/2015 - 00:45 | 6170900 MEFOBILLS
MEFOBILLS's picture

In a free market you would be able to not take out a loan if you found the interest rate to be too high while others may make other choices in other contexts. That's not a crime.

 

Sovereign money systems use targets to make sure there is enough CURRENCY in the money supply.  That is why it is called currency theory, not debt theory.

In the past, free markets used private banks, which issued CREDIT....not currency.  Hence, the markets were never really free.

Markets consist of prices and money, and if the money itself is not volume controlled, then the pricing signals are jacked with.  

The rail road  robber barons enjoyed getting their "credit mobilier" to then buy out the country.

Sun, 06/07/2015 - 01:26 | 6170936 Billy the Poet
Billy the Poet's picture

The rail road  robber barons enjoyed getting their "credit mobilier" to then buy out the country.

 

Reliance on erroneous stereotypes often underpins faulty logic. Compare J.J. Hill's Great Northern to the railroads created by government contractors and perhaps you'll understand free markets better.

Sun, 06/07/2015 - 08:38 | 6171321 Oscar Mayer
Oscar Mayer's picture

Why do you believe that rare exceptions to the prevailing rule mitigates the prevailing rule?

Reliance on atypical examples as proof of concept often underpins faulty logic.

I believe it's called 'conformation bias'.

Sun, 06/07/2015 - 09:28 | 6171388 Lumberjack
Lumberjack's picture
The Northern Pacific and the "short squeeze" of 1901[edit]

With 1901 and the start of the new century, James Hill now had control of both the Great Northern Railway, and the Northern Pacific (which he had obtained with the help of his friend J. P. Morgan, when that railroad went bankrupt in the depression of the mid-1890s). Hill also wanted control of the Chicago, Burlington and Quincy railroad because of its Midwestern lines and access to Chicago. The Union Pacific Railroad was the biggest competitor of Great Northern and Northern Pacific Railroads. Although Great Northern and Northern Pacific were backed by J. P. Morgan and James J. Hill, the Union Pacific was backed not only by its president, Edward H. Harriman, but by the extremely powerful William Rockefeller and Jacob Schiff.

Quietly, Harriman began buying stock in Northern Pacific with the intention of gaining control of Chicago, Burlington, and Quincy. He was within 40,000 shares of control when Hill learned of Harriman's activities and quickly contacted J. P. Morgan, who ordered his men to buy everything they could get their hands on.


The Hill Lines survive the trust-busting era
[edit]The result was chaos on Wall Street. Northern Pacific stock was forced up to $1,000 per share. Many speculators, who had sold Northern Pacific "short" in the anticipation of a drop in the railroad's price, faced ruin. The threat of a real economic panic loomed. Neither side could win a distinct advantage, and the parties soon realized that a truce would have to be called. The winners of that truce were Hill and Morgan, who immediately formed the Northern Securities Company with the aim of tying together their three major rail lines As the Hill-Morgan alliance formed the Northern Securities Company, Theodore Roosevelt became president and turned his energies against the great trusts that were monopolizing trade.

Roosevelt sent his Justice Department to sue the Northern Securities Company in 1902. The Supreme Court in 1904 ordered it to be dissolved as a monopoly. (Ironically, the Burlington Route, Northern Pacific, and Great Northern would later merge in 1970 to form the Burlington Northern Railroad.) Hill moved on without the benefit of a central company, and acquired the Colorado and Southern Railway lines into Texas. He also built the Spokane, Portland and Seattle Railway. By the time of his death in 1916, James J. Hill was worth more than $53 million[citation needed] (almost $2.5 billion (2007) dollars).

The Great Northern Railway and the Northern Pacific tried to merge four times, in 1896, 1901, 1927, and 1955. This last attempt lasted from 1955 until final Supreme Court approval and merger in March, 1970, which created the Burlington Northern Railroad. In 1995, Burlington Northern merged with the Atchison, Topeka and Santa Fe Railway to become the Burlington Northern and Santa Fe Railway.

=============== Now enter Warren Buffett....
Sun, 06/07/2015 - 11:01 | 6171510 Billy the Poet
Billy the Poet's picture

In keeping with his philosophy of encouraging the prosperity of the people residing in the vicinity of his railroad, Hill publicized his views on the importance of crop diversification to the farmers of the region. He didn't want them to become dependent on a single crop and therefore subject to the uncertainties of price fluctuation, as the southern cotton farmers were.[10] Hill also provided free seed grain — and even cattle — to farmers who had suffered from drought and depression; stockpiled wood and other fuel near his train depots so farmers could stock up when returning from a delivery to his trains; and donated land to towns for parks, schools, and churches.[11] He transported immigrants to the Great Plains for a mere ten dollars if they promised to farm near his railroad, and he sponsored contests for the beefiest livestock or the most abundant wheat. His "model farms" educated farmers on the latest developments in agricultural science. All of this generated goodwill with the local communities and was also good for business.

Hill's rates fell steadily, and when farmers began complaining about the lack of grain storage space, he instructed his company managers to build larger storage facilities near his rail depots. He refused to join in attempts at cartel price fixing and in fact "gloried in the role of rate-slasher and disrupter of [price-fixing] pooling agreements," writes historian Burton Folsom.[12] After all, he knew that monopolistic pricing would have been an act of killing the goose that lays the golden egg.

 

Much more of interest here:

 

https://mises.org/library/truth-about-robber-barons

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