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Cashtration: As Goes Greece, So Goes The World
Submitted by Jeff Thomas via Doug Casey's International Man blog,
Recently, we’ve witnessed the bank holiday in Greece, the limitation as to how much the Greek people can withdraw from their accounts each day.
Not surprisingly, the mainstream press have focused on images such as the one above - a queue at an ATM - and discussed the difficulty of the Greek people in trying to run their lives on the €50-€60 that they’re allowed to withdraw each day.
The press then comment poignantly that “Something needs to be done.” The implication is that “someone”, either the banks or the government, need to find a way to deliver these people more money, so that they can continue to function economically.
Of course, the problem, and the very reason for the bank holiday in the first place, is that the money simply doesn’t exist.
For many years, governments have been attempting to expand the economy by encouraging debt. Governments (most notably the EU and US) have borrowed far more than they ever have in history, to the point that they’re now facing insolvency.
Further, the average citizen has been programmed to think that he can get ahead through increased debt. As a result, personal debt has risen to an unprecedented level.
But in order for someone to borrow, someone must offer to lend, and, of course, the banks have been the lenders. Banks typically make their profits by taking in deposits, then loaning out that money to others, making their profits on the interest.
This is a system that began in Europe hundreds of years ago and, although it has repeatedly resulted in disaster, continues to be the standard by which banks operate.
Theoretically, it’s a workable idea.
The banks maintain, say, 10% of the deposits in order to service daily transactions by depositors, and they loan out the rest. As long as depositors do not lose faith in the system and arrive in droves to take out their deposits, the system continues to work.
But today, when a bank provides a loan, it doesn’t hand over stacks of paper bills to the borrower. It simply processes a credit to his account. This allows the bank to offer far more loans and far larger loans.
If a bank holds, say, $10 million in deposits, it could conceivably offer $100 million in loans. That money, of course, does not exist, except as an electronic credit, but it allows the bankers to increase their profits tenfold.
Quite a temptation.
And it’s a temptation that has, at this point, become the norm in much of the world. What we’re witnessing is the greatest credit bubble/debt bubble that mankind has ever seen. What we’re seeing in Greece is not merely a country of socialistically inclined people behaving very foolishly. We’re seeing a small pin pricking a very large balloon.
(Editor's Note: Doug Casey recently wrote a very relevant article on this topic. Click here to read Unsound Banking: Why Most of the World’s Banks Are Headed for Collapse.)
As Goes Greece, So Goes the World
The tedious drama that we’ve been observing in Greece in recent years is far from over. Greek debt is tied to EU debt. EU debt is tied to world debt. The coming debacle may unfold in this manner:
- Greeks try to adjust to subsistence living, on what little the banks allow them daily.
- They make no payments on their own debt, as even mere subsistence is difficult.
- Companies do the same, as they’re having a hard time just paying wages and other overheads and can’t afford to pay interest on their loans.
- Greek banks continue to provide depositors with an “allowance”, whilst their income source (interest on loans) dries up.
- Banks become insolvent and cease paying “allowances” altogether. (And remember, this is the depositors’ own money that will be denied them.)
But, as stated above, Greece is not alone. Other EU countries that are on a similar precipice will be similarly affected. Each country, each “domino”, will fall more quickly than the one before it, as its people, having observed the pattern in other countries, lose faith in the system.
Meanwhile, governments will side with the banks, giving them free rein to do whatever they wish to save themselves, at the expense of depositors. Cashtration has begun in Greece but will spread to every country where banks have overstepped the mark and gone on a loan-provision spree in recent decades.
Further, a country such as Canada, which has not been so cavalier as the EU and US, is so inextricably linked with the US through banking and commerce, it will find itself equally impacted, even though they themselves tried to take a more responsible approach to loans.
In the midst of this, the populations of all affected countries will cry out for their governments to “Do something!”
Governments will respond by trying to cover their own responsibility in this debacle, as they have, for decades, been, not only the enablers of the bank debt spree, but have additionally run the governments themselves into debt beyond what can be repaid.
There will be no “solution”, as such. There will be an economic collapse and a Greater Depression.
At this point the reader may say to himself, “So, that’s it; we’re all toast. If this analysis is correct, there’s no hope for anybody.”
Not so. For anyone who has ever been a guest at a really great party, where the food and wine were seemingly endless and the mood infectiously jubilant, the outside world seemed not to exist. At a great party, the world outside appears unimportant.
Still, there are those who were either not invited, or chose not to go. They continued their lives soberly. In the aftermath of the party, they watch as the hung-over revellers leave. Although they may look upon the partygoers with disdain, they get on with their lives, relatively unaffected.
It’s the same with an “economic party”. Not everyone attends. Which is to say that there are presently countries where it is, and has always been, difficult to get a loan, either to buy a car or house, or to start a business.
Presently, these countries are looked upon as “backward”, as they are not charging ahead, as the more “prosperous” countries are. However, in the aftermath of The Great Economic Party, these countries will continue, relatively unaffected.
It’s left to the reader to determine to what degree his own country is involved in the party and to what degree his country will be impacted as the balloon pops. His assessment will suggest to what degree he will personally be “cashtrated”: forced by emergency conditions to be placed on an “allowance” by his bank and, eventually, to have that allowance end altogether as funds run out.
Sorry to say, it’s likely that the great majority who live in such jurisdictions will, as suggested above, be “toast”.
But there will be some who observe Greece and realize that the condition will spread and that there will be no solution by governments. They will take advantage of the brief time available and internationalise themselves as much as they are able.
It’s not the end, except for those who choose to remain at the party too long.
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Cashtration bitchez!
(oooh.... we lost me bits!)
All that matters is NFLX $1000, that's what CNBC told me. I never doubt their infinite wisdom.
Punk rocker causes bus panic wearing fake bullet belt:
http://tinyurl.com/ofscvor
We're already in debt beyond what can be repaid
http://blogs.wsj.com/economics/2013/05/11/number-of-the-week-total-world-debt-load-at-313-of-gdp/
If you want to see what the New World Order (tm) will look like, Greece gives you a preview.
Or not.
"... So while the European ruling plutocracy is trying to find a new way to further dispossess the Greek people and keep southern Europe subjugated to the rule of international bankers and financiers, the participants of the double summit in Ufa are laying the basis of a new world order, but not at all the New World Order predicted by George H.W. Bush. One could say that they are building an anti New World Order.
Predictably, the western elites and their corporate media are in a “deep denial” mode. Not only do they not comment much about this truly historical event, but when they comment about it they assiduously avoid discussing the immense implications which these events will have for the entire planet. This borders on magical thinking: if I close my eyes hard enough and long enough this nightmare will eventually vanish.
It won’t. "
http://thesaker.is/a-tale-of-two-world-orders-unz-review-column/
"... Get ready for ground shattering geopolitical changes. At the crossroads of Asia and Europe, it has been decided that the Russian city of Ufa will be the point of convergence for all the initiatives and projects of the Silk World Order of trade and integration that China and Russia are spearheading. Ufa, which is the capital of Russia’s Bashkortostan, is being used to simultaneously host an extraordinary summit for both the BRICS—which has increasing become an alternative forum to that of the G7—and the Shanghai Cooperation Organization (SCO) respectively from July 8 to 9 and from July 9 to 10, 2015. ...
...The Silk World Order that is being shaped in Ufa will see the existing Bretton Woods financial architecture of the world unraveled and replaced by one that is no longer dominated by the trilateral grouping of the United States, Western Europe, and Japan. The monopoly of the World Bank and the International Monetary Fund, which has benefited Washington, is at its end. The US dollar as a currency in bilateral and multilateral trade is being scraped by the BRICS, SCO, and EEU— Washington’s flooding of oil markets was partially aimed at derailing this by forcing renewed dependence on the US dollar for energy trade. ..."
http://www.globalresearch.ca/the-us-dollar-and-bretton-woods-are-finished-the-bricssco-summits-in-ufa-marks-the-start-of-a-silk-world-order/5461828
The bailout amounts to more than their previous debt.
They should pay them $1000 to get back the $20 they owe ???
"Greece gives you a preview."
Except in the US there are a lot more of us compared to them and we have guns. Lots of guns. Went to the range the other day. A BIG range. Place was PACKED on a Wednesday. Its gonna be different here.
The rest of western society will soon relearn the lesson that it is not safe to keep your wealth in the banking system.
Must.... keep.... reloading...
Must.....keep... reloading..
This latest situation in Greece reminds me of a blog post of some years past:
http://www.economicpopulist.org/content/global-agenda-privatizing-planet
Do what Australia is doing. Sell citizenships. I'll buy one. The more passports a person has the more options.
yep. buy 5 million dollars in real estate and you go straight to the front of the line. lots of chinese people are taking that offer
I'm guessing the "Cash for Gold" lines are also not very long in Greece. I wonder if Gold and Silver are accepted as payment in some places?
Oh yeah great idea to show up in a desperate impoverished place saying "I HAVE GOLD" you mook!
You and your gold will soon be separated along with most parts of you.
Duh
Bartering will be done with items such as booze, medicines, soap, foods, know how, sex, car parts, ammo....
And the word "trust" will have greater meaning than it has in a hundred years.
Expect a return of religion in a big way too as a means to be trusted.
Cigarettes have been barter currency for the last decade or so. I wonder is this the real reason they're being demonised nowadays, along with cash itself?
During the war, Russians often paid in vodka.
Vodka is a good currency, plus as opposed to Bitcoin, everybody knows what it is.
Buy vodka.
I was getting paid in vodka in the 1970/80's.
Which war ?
Cans of sardines. Last forever, could survive a long time on one can a day, easy to fit in pocket, easy to open can and needs no cooking....
Who runs barter town? Tina Turner?
A population that understands sound money does not get into the kind of trouble the Greeks and the rest of the world are into. Does that answer your question?
If you kept your money in banks after seeing what happened in Cyprus, you are to blame. If you are still not buying gold and silver after seeing the events in Greece, you are beyond help.
one day - you'll post something on facebook about Hillary....during her 3rd term maybe...
and they'll just turn off your chip, man.
you'll be fucked.
I'm alright suckers; gotta a safety deposit box at one of Goldman's Safe Houses. s/c
https://www.youtube.com/watch?v=htz9CS-Zmms
won't get fooled again
https://www.youtube.com/watch?v=tLlDVpPhROU
https://en.wikipedia.org/wiki/Santander_Bank
GOVERNMENTS DEFAULT ALL THE FUCKING TIME.
SO SHUT UP AND STOP PAYING YOU STUPID FUCKING GREEKS!
KILL EVERY GERMAN YOU SEE...PROBLEM
FUCKING SOLVED.
THIS AUTHOR IS TOTALLY FULL OF FUCKING BULLSHIT AND SHOILD SHUT THE FUCK UP AND DIIIIIIIIIIIIIE!
Should be interesting to see the Greek Parliamnet vote on National Suicide though.
YOU HAVE NO CHOICE GREECE! YOU MUST KILL YOUR OWN PEOPLE NKW VOTE YES!
Should be good for lively debate -- with fists for emphasis.
"Should be good for lively debate -- with fists for emphasis. "
This IS Fight Club, Biotchstiat !
"If a bank holds, say, $10 million in deposits, it could conceivably offer $100 million in loans. That money, of course, does not exist, except as an electronic credit, but it allows the bankers to increase their profits tenfold.
Quite a temptation."
Straight bull crap. Of course that money exists. It exists in the banking accounts of whoever the borrower paid for, say, some new plant and equipment, just like any other money exists. Furthermore, the paper that the bank holds against the loan is backed by that plant and equipment, which it will seize and liquidate if the borrower defaults on the loan.
The fraction that is not in reserve in fractional reserve banking is backed by assets against which the banks hold lien, both under fiat and commodity-backed regimes.
I'm sorry that you people missed Econ 101 during your schooling. It sure does make the stupid thick here.
Wait a second – you believe that most, let alone all of the credit created in recent years is backed by good collateral?
You might consider pulling your head out of your...econ textbook, and taking a look at the real world around you.
Yup. Tiinky is spot on. Loans against houses, cars,, plant and equipment, etc would be in a deflationary spiral in the event of a liquidity event.
Where the author MAY be incorrect is in how the CBs play this. They could just liquefy all deposits. Just print the cash and have the banks distribute it to one and all. It would create an inflationary event, but I think that's what everyone would want to purge the system. That's where the deflationists might be wrong. IMHO, the gubbermint won't have the stomach for a deep deflationary depression
"Of course that money exists. It exists in the banking accounts of whoever the borrower paid for, say, some new plant and equipment, just like any other money exists. Furthermore, the paper that the bank holds against the loan is backed by that plant and equipment, which it will seize and liquidate if the borrower defaults on the loan.
The fraction that is not in reserve in fractional reserve banking is backed by assets against which the banks hold lien, both under fiat and commodity-backed regimes. "
There is only ONE form of true collateral in the entire World: HUMAN PRODUCTIVITY.
I've tried and tried to warn family and friends to get a cash stash (Benjamins), but they roll eyes and ignore. I'm done trying.
What happened to Greece was a message from the bankers to the rest of the world that they shall not be denied!
I suppose cashtration is better than castration...I have no money, but I do have a nice penis. :-) It almost works too! 1957 model with all the whistles and bells. Hard to start, but once it gets going, 155 MPH in 30 seconds.
I have the same model, but prefer to drive it a bit more slowly, and take it on longer journeys.
im moving to iceland