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Misplaced
fears are the most dangerous of all
The Muslim
terrorists of Mumbai are not our greatest threat nor will they cause the
greatest suffering in the days ahead. That which will cause the greatest
grief is the banker’s system of credit-based paper money, a house of
cards now in flames and about to burn all inside who still believe it to be
shelter instead of a charnel house.
Those who have
attended Professor Antal E. Fekete’s Gold Standard University Live
(GSUL) are not found around corporate watering holes discussing stock tips. Although
aware of the markets, those in attendance have their focus on the system
itself, on what caused its problems and what can be done to correct it.
Last June at Session
IV of GSUL a group of Hungarian bankers were in attendance. I asked one why
they had come to hear Professor Fekete. His answer was unusual, at least for
a banker. He answered that they had realized their models could not explain
current markets and, as a consequence, they were looking for models that
could do so.
When most people are
confronted with the inexplicable, instead of looking for other explanations
they instead attempt to explain away what is happening. In times of systemic
stress, the usual response is denial. The Hungarian bankers were obviously an
exception.
What is
extraordinarily dangerous today is the ubiquitous ignorance that exists about
our financial system. Those who benefit the most from the current monetary
pathology—bankers and government—through their influence in the
corporate-controlled media and academia have effectively hidden the cause of
society’s problems from society itself.
By controlling the
content and direction of social and academic dialogue, the present
beneficiaries of our credit-based system of paper money have effectively
prevented any real response to correct that which is now our greatest
threat—the collapse of the global economy which will bring unimaginable
suffering to most of humanity, a collapse that is now upon us.
The bankers’
influence over government and the media has effectively stifled social and
academic discussion about the real cause of our problems. Those who live off
debt do not want its origins and their influence exposed to the light of day.
As a consequence, society will suffer immensely though ignorant of the
reasons why—which is exactly what bankers and governments prefer.
A DEPRESSION PLUS
We are about to
experience a depression in extremis. Although similar to the Great
Depression, what is about to happen has never happened before; we are about
to experience something new, a depression in combination with a currency
collapse, une Grande Dépression à la papier-monnaie.
Ralph T.
Foster’s important book, Fiat Paper Money—The History And
Evolution Of Our Currency notes that paper money first appeared in China,
which is also the first country to later ban its use.
Over the course of
600 years, five dynasties had implemented paper money and all five made
frequent use of the printing press to solve problems. Economic catastrophe
and political chaos inevitably followed. Time and time again, officials
looked to paper money for instant liquidity and the immediate transfer of
wealth. But its ostensible virtues could not withstand its tragic legacy;
those who held it as a store of value found that in time all they held were
worthless pieces of paper.
Page 29, Ralph T.
Foster, Fiat Paper Money—The History And Evolution Of Our Currency,
to order email tfdf(at)pacbell.net
While good ideas
often spread, terrible ideas do also. Eventually, the “virtues”
of paper money were too great for the West to resist; and like another
Chinese invention, gunpowder, paper money was to be used in the pursuit of
wealth, empire and, ultimately, war.
But, in the
beginning, the West was highly dubious of this alleged Chinese invention. Foster’s
book notes that the first mention of paper money in the West was found in
Marco Polo’s account of his travels. The chapter heading which refers
to paper money begins:
“HOW THE GREAT
KHAN CAUSETH THE BARK OF TREES, MADE INTO SOMETHING LIKE PAPER, TO PASS FOR
MONEY OVER ALL HIS COUNTRY”
Page 39,
Ralph T. Foster, Fiat Paper Money—The History And Evolution Of Our
Currency
The idea that the
bark of trees could pass for money was met with disbelief, derision and
ridicule in the West. Such a possibility was considered as absurd as the more
modern idea that $ 1.5 trillion of subprime “don’t ask,
don’t tell” mortgages could be sold to banks, pension funds, and
insurance companies as risk-free AAA investments.
The use of paper
money was formally abolished in China in 1661. But, like the proverbial bad
penny, it reappeared again in the 1900s. Bereft of alternatives, China
wholeheartedly embraced the West’s paper-based credit markets believing
that perhaps in its 300 year “journey to the west” paper money
had picked up some “western mojo” along the way.
Unfortunately, as China is about to discover, paper money was no more viable upon its return than in 1661
when it was banished. Once again, economic catastrophe and political chaos
will follow—this time on a global scale.
Foster also points
out that although Kubalai Khan’s methods of encouraging the use of
paper money were brutal, i.e. the penalty for not accepting paper money in
trade was death, the Great Khan was certainly not ignorant in the ways of
money, as Marco Polo noted:
But what really
captured Polo’s attention was how all the gold and silver went to the
imperial treasury, while the population gladly received paper.
Page 41, Ralph T.
Foster, Fiat Paper Money—The History And Evolution Of Our Currency,
to order email tfdf(at)pacbell.net
WE KHAN TOO
Today, paper money
is more common than herpes and far more dangerous (and hopefully not with us
forever). When paper money loses its value, economies collapse which is now
about to happen.
Kubalai Khan’s
experiment with paper money, however, gives us an important clue about what
to do. As long as everyone accepts paper money, we should exchange our paper
money for goods and services. But, like Kubalai Khan, our savings should be held
in gold and silver.
WHAT LIES AHEAD
A depression is now
beginning. The last depression, i.e. the Great Depression, lasted
approximately ten years. While it is not possible to know how long this
depression will last, we do know this depression will be much worse than the
1930s. It will be a depression in extremis, a depression in
combination with a currency collapse.
The US dollar is a
now a fiat currency, a paper coupon issued by the US government stating it is
legal tender. Without the ink, however, it is similar in all respects to
Kubalai Khan’s currency which started out as the bark of a tree made
into something like paper to pass for something like money.
When the US dollar
was accorded the status of a reserve currency by the Bretton-Woods agreement
in 1944, it was convertible to gold upon demand by other nations. Today, it
is convertible only to whatever speculators decide. Someday, as with all fiat
currencies, it will be zero.
Some believe that a US default on its debts will occur this year. Such a default may or may not happen soon but
it will happen someday. When the US allowed private bankers to issue the US
dollar (via the Federal Reserve in 1913) thus changing the dollar from a
savings based currency to a debt based currency, the death warrant of the US
dollar was signed. Its burial was only a matter of time, a time which has
almost arrived.
It has been less
than one hundred years since bankers and businessmen conspired to create the
Federal Reserve Bank to control America’s finances and to profit from
the economic expansion of this once great economic power.
The consequences of
that conspiracy are now around us—a collapsing dollar, a collapsing
economy and, now, a collapsing nation. Using soundbite slogans, the bankers
convinced Americans that its markets were free while they controlled the
markets through the issuance of credit.
Thomas Jefferson
warned about what would happen if private bankers controlled America’s currency. Jefferson’s warnings were ignored, forgotten and buried by
the press, academics and politicians who were paid to promulgate the false
promises of bankers. Americans took the bait, swallowed it and are now about
to be flayed.
THE BANKERS SINK
WITH THE SHIP
BERNARD
MADOFF—THE POSTER BOY OF DEREGULATION
The irony is that,
today, bankers themselves are being destroyed by the very system they
created. The excessive issuance of debt-based money by bankers is destroying
bankers and banks as well as businesses, families, and governments.
Bankers’
influence turned government oversight into culpable blindness giving bankers
the rope they needed to hang themselves. The soundbite of self-regulation
ultimately spawned the largest Ponzi scheme ever, a decades long $50 billion
theft by investment banker and former NASDAQ Chairman Bernard
Madoff—accomplished directly beneath the blind eye of SEC oversight
Madoff’s
extraordinary accomplishment is the pièce de résistance
to the hallowed soundbite of free markets. I am a strong believer in freedom
and free markets but only fools and dupes believe that today’s credit
driven financially manipulated markets are free. Follow the money, not the
soundbites. Follow the truth, not the bullshit.
CHRISTMAS AND THE
COMING NEW YEAR
This year’s
holiday season will not be like last year’s, i.e. “the last happy
Christmas”. Americans especially have been living in a self-induced
bubble of illusion and denial which has now popped along with the real estate
and stock market bubbles.
Reality is finally
beginning to dawn on those who believed their denial would save them from
what they fear. What is happening is a surprise only to the indentured slaves
of debt who believed the banker’s promise that credit would give them their
dreams; instead, that credit has now become debt and their dreams have become
nightmares.
The past year has
destroyed the illusion of eternally expanding growth driven by eternally
expanding credit. Salome was never so attractive; but now, society must pay
the price for having succumbed to the bankers’ beckoning pole dance.
Only if we learn
from history will we not repeat it. But if China’s experience with
paper money is any indication of mankind’s learning curve, I suggest
you put your savings into gold and silver—and soon.
Darryl Robert Schoon
www.survivethecrisis.com
www.drschoon.com
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