Showing posts with label Central Banking. Show all posts
Showing posts with label Central Banking. Show all posts

Thursday, November 9, 2023

Creditors And Debtors In The Real Sector Of The World


An interesting picture is emerging: China is a creditor to other countries in the world to the tune of more than 1,300 billion dollars. This is according to a report published by AidData: "With new data from more than 700 state-owned lenders and donors in China, we show that Beijing remains the largest source of international development finance in the world. It continues to surpass all other bilateral and multilateral sources of aid and credit to the developing world, including the US and the World Bank." Note that China, together with Hong Kong, is by a wide margin the world's largest lender. The top 8 largest debtor countries have not changed for many years (Ireland is to be overtaken by Italy early next year), but the amount of debt is growing: 1. US, 2. UK, 3. Japan, 4. Netherlands, 5. France, 6. Ireland, 7. Italy, 8. Germany. G8 total external debt ~ over $63 trillion. 

Wednesday, February 22, 2023

Modern Fractional Reserve Banking - A Ponzi Scheme | Murray N. Rothbard

The banker issues fake warehouse receipts and lends them out as if they were real warehouse receipts represented by cash. At the same time, the original depositor thinks that his warehouse receipts are represented by money available at any time he wishes to cash them in. Here we have the system of fractional reserve banking, in which more than one warehouse receipt is backed by the same amount of gold or other cash in the bank’s vaults.
 

It should be clear that modern fractional reserve banking is a shell game, a Ponzi scheme, a fraud in which fake warehouse receipts are issued and circulate as equivalent to the cash supposedly represented by the receipts.

 
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Tuesday, October 4, 2022

On Fiscal Mismanagement | Martin A. Armstrong

Martin A. Armstrong (Sep 13, 2022) - Don’t mix the problem of the quantity of money with what is actually money. They are two separate issues. The theory that inflation is tied to the quantity of money truly extends back to when metal was the money supply. The sudden discovery of America led to a huge wave of inflation in Europe. The FISCAL MISMANAGEMENT of Spain led to its total collapse. They were borrowing against the next shipload of gold coming in from the New World. They would not wait even to get it in, and they were so excited to spend it before it arrived.
 

[...] The amazing Decline and Fall of Spain is perhaps the greatest lesson if someone wishes to write “How NOT to Manage Government For Dummies.” The Spanish became both the richest nation and the greatest debtor, not that dissimilar from the United States, and succeeded in ending up as the poorest. Spain became a serial defaulter beginning in 1557, followed by 1570, 1575, 1596, 1607, and 1647 ending in a 3rd world status without hyperinflation. Their economic model was one of conquest and plunder rather than developing domestic industry and a viable economy.

[...] The endless increase in the supply of dollars is not the problem [...] Our problem is NOT that money is paper. The problem is those in charge of the government [...] No matter what is money, it CAN NOT be fixed in value. It must be allowed to float, for there are always trends that shift back and forth. Therefore, the relentless creation of money is not because they are paper dollars. As I said, you are blaming the gun rather than the shooter. This is fiscal mismanagement created by Marxism, where the politicians no longer know how to run for office without bribing the people for their votes. This is the system that is completely doomed.

Wednesday, August 24, 2022

The Magic of Money | Hjalmar Schacht

Hjalmar Schacht (1967) - Man needs money and cannot exist without it. The diabolic magic of money is here clearly visible. It has helped mankind to make immense strides in economic development, and has at the same time enslaved him. Regression to a money-less condition, or the modern method of exchange by means of money any kind of money, but still money - these are the alternatives. Money plays the role of the sorcerer's apprentice - created to serve a master who cannot now rid himself of his indispensable sprite. It is the master now. 


Hjalmar Schacht (1877 – 1970), President of the Reichsbank.

[...] Modern paper money, the banknote, is backed by its creator, the State. It is true that John Law, the inventor of paper money, recommended a kind of cover based on landed property, but Law too saw that the principal security for paper money lay in confidence in the government, which has legal control over all kinds of things which would provide security. The failure which put an end to Law's measures was not so much caused by a paper money inflation, as by a collapse of speculative activity in the shares of the overseas enterprises he had founded. The value of his paper money was not based on these public companies, but only on their relationship with the state. Law rightly recognised that money, if it does not consist of tangible metal, is purely an internal affair of the national state. This remains true today.

For this reason there is no such thing as international currency. It is unlikely that it will ever come into being. International money would have to be granted the status of legal tender in all countries in which it circulates. In all these countries it would have to be possible to settle every state and private obligation in this currency. Any institution controlling this. currency irrespective of whether it is a bank or a government department would dominate the world an unthinkable situation. Currency is the most nationalistic factor in political life. Every central bank responsible for issuing it is dependent on the government of the country by whose laws it was instituted, and which makes its notes legal tender in the country's home territory.

The granting of credit is unthinkable without a central bank. No central bank can be allowed to act against the government of the country. The government is over the central bank, and influences its policies. It is thus also in a position to inflate the currency by taking up too much credit with the central bank. No international central bank could countenance such a situation. It cannot permit one of the governments with which it is associated to misuse its facilities unless every other government is in agreement. This however is a condition which cannot be reconciled with the fight of all against all in time of economic difficulty. No state will surrender so much of its sovereignty that its partners or competitors are given the power to prescribe its economic and financial policies. Standing over and above central bank and government, both of which are led and administered by changing personalities, there is a higher, impersonal, and substantially necessary law: the stability, the constancy of value, of money. This higher law has in the past granted the central banks an autonomous, independent position. Governments change, and can pursue good or bad currency and credit policies according to whether or not it is to the advantage of the party in power. 
 
Schacht in an Allied internment camp, 1945.
"Dr. Schacht, you should come to America. We’ve lots of money and that’s real banking".
Schacht replied, "You should come to Berlin. We don’t have money. That’s real banking".

[...] Even if common currency is regarded and desired as the crowning achievement of the European Common Market, it would be wrong to leave the relationship between the government and the central bank out of account. [...] The closer the economic ties between various countries, the easier will it become to reach agreement on currency policies. Whether these will ultimately lead to a unitary currency will always depend on the extent to which the participants are prepared to surrender their sovereignty. Here in fact is the Common Market's chief problem.

Tuesday, August 23, 2022

The Conspiracy of the Counterfeiters | Nikolai Starikov

Everything was going smoothly until 1965. Almost right after having been reelected to the post of President of France, Charles de Gaulle announced that his country would start to use real gold for international payments. According to the Bretton Woods Agreement he demanded that the USA exchange 1.5 billion dollars, kept by France, for real gold at a price of 35 dollars per ounce. It was the worst nightmare of a banker, when all creditors of his bank came to demand their ‘deposits’, as all FRS dollars were just obliging to pay the holders a certain amount of the precious metal. However, the required amount of gold had never existed, and consequently it was especially important to prevent the precedent. 
 
 Georges Pompidou, successor of President Charles de Gaulle, in 1969.
Guy de Rothschild's stooge in the Elysée.

The USA started to bias obstinate de Gaulle, who had already caused them trouble during his first presidential term, and even before that, when he was leading the Opposition in 1944-1945. Then during his second presidential term de Gaulle catastrophically endangered the mere fact of the ‘printing machine’s’ existence. Furthermore, the French President was determined, and when pressed, he withdrew from NATO and drove its formations out of his country. The USA had to exchange paper money for gold. In turn Germany, Canada and Japan made similar demands, though not in public like France, but secretly. Finally, the gap between the global amount of dollars and gold reserves in the USA was reduced even further. From 1960 until 1970 the dollar reserves kept in other countries tripled (and in 1970 came to 47 billion dollars, whereas the gold reserves of the USA came to 11.1 billion dollars at that time). It was necessary to urgently find a way out of this situation, but firstly the one who had entrenched the ‘printing machine’ must be punished. In 1967 de Gaulle returned the paper cash to the USA, and in May 1968 disturbances in France began. Demonstrations, the confrontation with the police, walkouts […] After almost a year of pressure Charles de Gaulle had to resign on 28 April, 1969. On 9 November, 1970 the ‘gravedigger’ of the dollar died due to heart failure.

The system established by the bankers was close to collapse. The gold default of the dollar concurred with the military defeat of the Americans in Vietnam. [...] Being aware that the capability of the USA to exchange dollars for gold at a fixed rate would be increasingly distrusted, they decided to get over this precipice in several steps. On 17 March, 1968 the Americans cancelled the dollar conversion into gold at a fixed rate for private traders. Central banks still could exchange dollars for gold at an official rate of 35 dollars per 1 troy ounce. At this, all ‘independent’ central banks in all countries were privately commanded to prevent such conversion by any means. On 15 August, 1971 the USA President Nixon, during his speech on the national (!) TV, incidentally announced the temporary taboo on the dollar conversion into gold at an official rate in central banks.

 Emmanuel Jean-Michel Frédéric Macron, the latest Rothschild stooge in the Elysée.
La république en marche. Allons enfants de la patrie.

That was a scandal indeed. However, it could become even greater, when it appeared that in the period up to the end of July 1971 the gold reserves of the USA descended to a threshold of less than 10 billion dollars. The affair proceeding any further could lead to complete catastrophe. On 17 December, 1971 the USA devalued the dollar by 7.89% in relation to gold. The official price of gold increased from 35 to 38 dollars per one troy ounce, but, curiously enough, the exchange of dollars for gold did not recommence. On 13 February, 1973 the dollar descended even lower in relation to gold, the rate became 42.2 dollars per 1 troy ounce. However, gold could not be acquired at this price, either. The American currency was not trusted anymore, and nobody hurried to sell their gold. The USA and Great Britain therefore had to share the benefits from the reserve currency emission with other countries.
 
The only way out of the dead end was to print more paper money, which the global financial community would agree to treat like absolute values. It must be assumed though that this money was not financially assured by anything. On 16 March, 1973 during the International Conference in Paris, a compromise was found. The gold content of the dollar was officially cancelled. It goes without saying that the International Monetary Fund (IMF) confirmed and approved this decision, which would cancel all the principles of the financial system of that time and the system of the IMF itself. The epoch of floating exchange rates began in the world.

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The Gold Price (U.S.Dollars / Troy Ounce) 1792 to date
The Gold Price (U.S.Dollars / Troy Ounce) 1257 to date

Who Ever Sets the Price of Gold and Silver | Stephen Mitford Goodson

There was an increase in trade and Rome became one of the most prosperous cities in the ancient world. [...] bronze coins represented national money and were paid into circulation by the state and each was only of value in as much as the symbols on which its numbers were recorded, were scarce or otherwise. This money was thus based on law rather than the metallic content. [...] This can be considered as an early example of the successful use of fiat money.

While fiat money is much criticised in some quarters, for example by the followers of Austrian economist Ludwig von Mises, there is nothing wrong with it, as long as it is issued by government, not by private bankers, and is carefully protected against counterfeiters. Non-fiat money, in contrast, has the serious drawback that who ever sets the prices of gold and silver, i.e. private bankers, can control the nation’s economy.

[...] in September 45 BC, Caesar found the streets and cities crowded with homeless people, who had been forced off the land by usurers and land monopolists. 300,000 people had to be fed daily at the public granary. Usury was flourishing with disastrous consequences. [..] Caesar fully understood the evils of usury and how to counter them. He recognized the profound truth that money is a national agent, created by law for a national purpose, and that no classes of men should withhold it from circulation so as to cause panics, in order that speculators could advance the rates of interest, or could buy up property at ruinous prices after such panic.

Caesar introduced the following social reforms:

  1. Restoration of property was done at the much lower valuations which held prior to the civil war (49-45 BC).
  2. Several remissions of rents were granted.
  3. Large numbers of poor citizens and discharged veterans were settled on allotments.
  4. Free housing was provided to 80,000 impoverished families.
  5. Soldiers’ pay was increased from 123 to 225 denarii.
  6. The corn dole was regulated.
  7. Provincial communities were enfranchised.
  8. Confusion in the calendar was removed by fixing it at 365¼ days from 1 January 44 BC.

His monetary reforms were as follows:

  1. State debt levels were immediately reduced by 25%.
  2. Control of the mint was transferred from the patricians (usurers) to government.
  3. Cheap metal coins were issued as the means of exchange.
  4. It was ruled that interest could not be levied at more than 1% per month.
  5. It was decreed that interest could not be charged on interest and that the total interest charged could never exceed the capital loaned (in duplum rule).
  6. Slavery was abolished as a means of settling debt.
  7. Aristocrats were forced to employ their capital and not hoard it. 
These measures enraged the aristocrats and plutocrats whose “livelihood” was now severely restricted. They therefore conspired to murder Caesar, the hero of the people. 
 
The 'Ides of March' Denarius (43/42 BC), a declaration of the Republic's 'liberation' from tyrannical Caesar.
Ironically, Brutus appears on the obverse professing he killed Julius Caesar on the Ides of March.
This is one of the most sought-after coins from the Roman world.

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Stephen Mitford Goodson (1948 - 2018) was a South African banker, author and politician who was the leader of South Africa's Abolition of Income Tax and Usury Party. He stood as a candidate for the Ubuntu Party in the 2014 General Elections.

Monday, January 4, 2016

When Not To Put Money In The Bank - Negative Interest Rates in Europe

econfix (Jan 4, 2016) - It seems that in Europe negative interest rates are common place. Below are the current rates of some central banks:
 
European Central Bank -0.3%
Swiss National Bank -0.75%;
Danish Central bank -0.75%
Swedish Central Bank -1.1%
Why are they in negative territory? For all these countries it is the exchange rate against the Euro that is important. Negative interest rates weaken a country’s currency and make imports more expensive and exports cheaper. Furthermore central banks could be trying to prevent a slide into deflation, or a spiral of falling prices that could derail the recovery.
In theory, interest rates below zero should reduce borrowing costs for companies and households, driving demand for loans. In practice, there’s a risk that the policy might do more harm than good. If banks make more customers pay to hold their money, cash may go under the mattress instead. Janet Yellen, the U.S. Federal Reserve chair, said at her confirmation hearing in November 2013 that even a deposit rate that’s positive but close to zero could disrupt the money markets that help fund financial institutions. Two years later, she said that a change in economic circumstances could put negative rates “on the table” in the U.S., and Bank of England Governor Mark Carney said he could now cut the benchmark rate below the current 0.5 percent if necessary. Deutsche Bank economists note that negative rates haven’t sparked the bank runs or cash hoarding some had feared, in part because banks haven’t passed them on to their customers. But there’s still a worry that when banks absorb the cost themselves, it squeezes the profit margin between their lending and deposit rates, and might make them even less willing to lend. Ever-lower rates also fuel concern that countries are engaged in a currency war of competitive devaluations. Source: Bloomberg

Thursday, November 19, 2015

The Cashless Society | A Totalitarian’s Dream Come True

Casey Research (Nov 19, 2015) - In 1661, Sweden became the first country in Europe to issue paper money. Now it’s probably going to be the first in the world to eliminate it. Sweden has already phased out most cash transactions. According to Credit Suisse, 80% of all purchases in Sweden are electronic and don’t involve cash. And that figure is rising. If the trend continues - and there is nothing to suggest it won’t - Sweden could soon be the world’s first cashless society. Sweden’s supply of physical currency has dropped over 50% in the last six years. A couple of major Swedish banks no longer carry cash. Virtually all Swedes pay for candy bars and coffee electronically. Even homeless street vendors use mobile card readers [...] Sweden, Denmark, and Switzerland all have negative interest rates. Negative interest rates mean the lender literally pays the borrower for the privilege of lending him money. It’s a bizarre, upside down concept. But negative rates are not some European anomaly. The Federal Reserve discussed the possibility of using negative interest rates in the U.S. at its last meeting. Negative rates could not exist in a free market. They destroy the impetus to save and build capital, which is the basis of prosperity.

Thursday, September 3, 2015