This being the anniversary of the new Freegold Speakeasy, I wanted to write a post for both
sites. And after taking stock of the current state of affairs, as well as the
changes over the past year that led us to where we are today, an updated
Debtors v. Savers post was the obvious choice.
What I'm talking about, well… there are a lot of things that happened over
the past year, but I think the main ones are the European migrant crisis which
is tearing Europe apart, at least on ideological grounds, and threatening to
do so literally as well, and in the US, the election, in which we have on one
side a very popular "free everything" (MMT-informed) Bernie
Sanders, and on the other the unstoppable Trump Train. Can you see yet why The
Debtors and the Savers was the obvious choice?
In the first Debtors and Savers back in 2010, I agreed with Karl
Marx's statement that "the history of society is the history of class
struggle," but I disagreed with his delineation of the classes as the
workers versus the capitalists, the rich versus the poor, or the haves versus
the have-nots. My delineation was "the easy money camp" or
"the redistributors," which I dubbed the Debtors for short, versus
"the hard money camp" or "the live within their means and take
personal responsibility for their own future camp," which I dubbed the Savers
for short.
Marx and I merely have two different perspectives on history. But Marx's
perspective is wrong yet almost universally held, dangerous because it often
leads to bloodshed, and politically expedient to the Left because it rousts
envy in the have-nots. Meanwhile, my perspective, being the correct yet
little known one, actually reveals how Freegold is the elegant solution to
one of the oldest conflicts in the world. Instead of trying to force hard
money on the easy money camp to keep their savings from devaluing, the Savers
will simply stop saving in money, debt and financial instruments.
They will stop, because they will get burned in a way that will live in the
collective memory forever, or at least for generations. Easy money systems,
as I discussed in the post, have a typical profile of gradually transferring
purchasing power from the Savers who save in money, debt and financial
instruments, to the Debtors. Then, at the very end of the system, they have
one final, very rapid wealth transfer, from paper's remaining purchasing
power into real things, primarily real wealth items that can be possessed,
because physical possession is wealth's defining attribute, especially at
such times as the end of an easy money regime.
This change won't deprive the Debtors of money to borrow, because if there's
one thing we know about easy money, it's that you can easily make more of it.
What it will do, however, is to keep the Saver's savings from being
disproportionately drained of value by an expandable monetary system. This
will solve, once and for all, one of the oldest conflicts in the world, that
of the Debtors and the Savers trying to use the same monetary unit, whether
easy or hard, for both borrowing and saving, which has always ended in either
bloodshed or tears for the Savers.
Hard money systems tend to end in violence, uprisings, bloodshed and even
war, as I discussed in the post, while easy money systems tend to end in
monetary collapse and financial devastation for unprepared Savers. Today we are
at the end of the longest-running easy money system ever, so "Choose
your camp wisely," as I said in the post, "and prepare to own the
future." Because "it's not a matter of good versus evil at this
point, it is a matter of survival!"
In Debtors v. Savers II - FOA Retro House Mix, I threw up a
mix of FOA's comments about our tribal nature. Here's a sample:
Human society has from the very beginnings formed tribes
and picked sides against each other. When we are not battling nation against
nation, we jockey for position within our own groups. Right down to "me
and my neighbour against the three houses down the street. As a tribe ,,, as
a nation ,,,,,, as a group ,,,,,, our war is really a human problem with each
other and always has been. In better context; the problems are in the way we
use our laws and governments to gain advantage over the next in line.
Whether through force (war) or democratic means, we subject ourselves to the
order of governments. We rightly perceive that,,,,,, the order gained from
this action ,,,,,,, the security of a group, overcomes the rights and
property lost on an individual level that living in a tribe requires. It's been
this way through the ages. It's a political process that has always had its
in-house battles ,,,,, namely portions of society try to circumvent their
percentage of lost rights and property by maneuvering the rules (laws) in
their favor. Yes,,,,,if I can gain the advantages of tribe life and still
keep my "lost portions",,,,, I'm gaining wealth to the disadvantage
of the group…
The "reality" of life on this earth is this: ,,,,,,Some portion of
society will use their influence or control of the leaders to make their
debts easier to pay…
Yes, we can break gold into many small parts,,,,, 'stamp it into coins and
circulate gold certificates as money. We can borrow it, lend it and also
circulate gold bonds as the economy grows. It is the perfect "weights
and measures" monetary system. Exactly representing our productive
efforts in every facet of human endeavour. But, when the losses mount, our
tribal human tendencies will not allow us to support a government or banking
system that forces these real losses on only a portion of the group. Never
has,,,, and never will! Without this escape valve, we go to war ,,,,,,
internally or on a world scale,,, so we all can share the loss,,,one way or
another. As a human society of thousands of years,,, outside of war,,,,, we
have learned to inflate our loses upon everyone as a whole,,,,,for the good
of the keeping the whole from each others throats. Even to the point of a
total loss of the current system,,,,, and all the destruction that entails
for everyone.
Yes, indeed,,,,,,,we will transition to the next fiat system from the dollar,
when the time comes. Believe it!
In Debtors v. Savers III - Back to "honest" gold
money? Or forward on to Freegold?, I put up a post by Randy Strauss
(TownCrier) from 2006, where he tackled a common myth in the hard money
camp—that easy money causes wars while hard money is the key to peace:
"Attractive as it would be to simply take Rockwell at
his word regarding his association between the making of fiat money and the
making of war (essentially saying that war could be abolished if fiat
currency were abolished), history begs us to identify that notion as a
utopian falsehood. Two handy examples from very close to home (in space and
time) provide the necessary instruction on this point.
1) We launched into the U.S. Civil War despite our being on a bi-metallic
(gold and silver) currency system.
2) We launched into World War I despite many of the participants being on a
gold standard.
Sure, paper greenbacks and confederate currency came along to prominence in
the Civil War, as did the abandonment of the gold standard and implementation
of fiat currency in WWI, but this development misses a most important point.
That point being, if the metallic monetary standard fails to prevent the war
in the first place, then all subsequent arguments about the nature of money
go out the window. Because once a nation deems itself engaged in a struggle
for its very survival, there is no power on Earth that can compel such a
nation to cling fast to its metallic currency standard if the legislators
deem that a fiat currency would be expedient to facilitate the war effort...
Because of this difficult truth, "Your wealth is not what your money say
it is," as Another used to say. Instead, your wealth, properly measured,
is the tangibles you've accumulated, the store of resources you've saved. And
among the world of tangibles, gold is globally the most liquid -- the most
universally recognized, honored, and accepted.
In time of war, governments may (and history has shown they often do)
recognize and declare that gold is too valuable to be wasted underutilized
(undervalued) in the representational coinage of national currency.
Therefore, fiat currency is adopted, and gold is instead mobilized in its
fully-valued form -- a tangible resource uniquely and reliably suitable for
any and all international settlements."
And in The Debtors and the Savers 2012, I took a closer look at
the value theories of Marx, Munger, and even MMT:
"You could say, the sovereign borrowed from the rich
(those with surplus wealth which will otherwise perish) and redistributed the
wealth according to the needs of the community. Since everybody received
something, including the ‘rich’, a tax (cancellation of debts outstanding)
kept the system in balance. Very MMT."
What she's saying here is that too much savings is a burden on the system and
the government provides the valuable service of debasing burdensome levels of
savings down to a socially healthy level. How does that make you feel? And
yeah, Izabella is apparently quite fond of MMT, which is why this part
reminded me of someone else who once said that savings above "a certain
level" are a "burden". I'm talking about our very own MMT
Greg:
"I don't disagree with your idea of saving but it
cannot be done to much of a degree on a macro level. There must be someone to
consume your oversupply after a certain level. Savings is a burden when
excessive..."
In part 2 of her bug schooling affectionately titled "Gold’s Anti-Social
Behaviour Order", here is Izabella expressing the same sentiment as MMT
Greg regarding excessive savings being a burden on the system:
[…]
"The problem with promissory notes from a goldbug’s point of view,
however, is that a sovereign always has the means to “manipulate” supply so
as to regulate the system’s excesses and deficits for the benefit of the
group: bringing the purchasing power of the notes down when there is an
abundance of goods to notes “by printing more” […]
In a perfect system the sovereign should provide for you, once you’re no
longer productive anyway."
In other words, it is good that the government can reduce "excessive
savings" through debasement. In fact it is the government's job to do
that, just like it is the government's job to take care of you when you get
old according to Izabella. And here is "gold's anti-social
behavior" in a nutshell:
[…]
"Since gold can’t be “debased”, it begins to attract investment from
those who would rather not consume today’s overproduction (and via that
sharing wealth and ‘favours’) but continue to hoard these for the purpose of
individual wealth accumulation.
[…]
Gold in this way symbolises humanity’s selfish streak.
[…]
What’s more, while gold encourages anti-social behaviour and hoarding in
individuals, a fiat-based system encourages the very opposite: sharing,
distribution, collaboration and cooperation.
[…]
Which leaves two possible plans [to get us] out of the crisis:
1) The goldbug plan: based on encouraging everyone to hoard ever greater
amounts of natural wealth for themselves and themselves in what is ultimately
a commodity you might never be able to eat.
2) The fiat plan: based on encouraging society to trust each other again, and
via that storing, redeeming and returning favours until the system’s ails are
eliminated."
Freegold is not about making easy money a little bit harder. On the contrary,
it is about the debtors and the savers coexisting without the perpetual
monetary conflict embedded in all prior systems…
Izabella has probably never heard of FOFOA's dilemma. Here it is:
FOFOA's dilemma: "When a single medium is used as both store of value
and medium of exchange it leads to a conflict between debtors and savers.
FOFOA's dilemma holds true for both gold and fiat, the solution being
Freegold, which incidentally also resolves Triffin's dilemma."
And from that same post, here's my definition of Honest Money: "My
definition is that honest money is simply money that does not purport to be
something it is not." As I explained in that post, money's two main
functions, medium of exchange and store of value, are actually fulfilled by
two different media, even today: a primary and a secondary medium of
exchange. Today (and in Izabella's ideal world) that secondary medium of
exchange is debt denominated in the primary medium.
[…]
Now would probably be a good time to restate that "the debtors and the
savers" is a dichotomy, not a moral judgment. It is a way of viewing the
world in two camps that corrects Karl Marx's most enduring (and harmful)
legacy. Neither camp is better than the other any more than women are better
than men. It is simply a model for understanding how two groups with
apparently different innate tendencies have always been placed in conflict
with each other throughout history due to the emergence of monetary
systems."
That was from 2012. In February of 2015, Yanis Varoufakis stepped into the
global limelight through Greek politics, and I made two posts about him: Yanis!
and Confessions of an Erratic Marxist, which was what Yanis
himself titled a speech he gave at the Subversive Festival in 2013, an
annual Marxist convention in Croatia.
Yanis is an interesting Marxist to me, because for one thing, he's really
smart, and he comes so close to Freegold you almost can't resist reaching out
to him, yet I don't and I won't. In a paper in 2011, he wrote an interesting
section which caught my attention, titled Conflating wealth with capital (secton 2, pages 2 &
3). And the following paragraph from a 2013 post on his blog also caught my eye:
"But there is no such thing as the Germans. Or the
Greeks. Or the French for that matter. “We are all individuals” as Monty
Python have taught us. Or Europeans, as many of us would like to think. And,
yes, some Europeans are grasshoppers whereas others are ants. But the notion
that the ants all live in the North and the grasshoppers have all congregated
in the South, plus in Ireland, is absurd. There are ants and there are
grasshoppers in each of our nations. During the ‘good’ times of the Eurozone,
the grasshoppers of the North and the grasshoppers of the South went on a
frenzy. And when their feeding frenzy led to the crisis, it was the ants of
the North and the ants of the South that were made to foot the bill.
Tragically, our leaders’ espousal of the grasshoppers’ agenda, everywhere in
Europe, ended up turning the ants of the North against the ants of the South
in a Europe that is losing its soul because of stereotyping, denial and
because of the ironclad determination of grubby so-called elites not to let
go of the levers of ill-gotten power."
I mention this stuff about Yanis as a preface to an email I want to share
with you. I wrote it in early February, 2015, while emailing with someone
about Yanis:
Hello XXXXX,
Don't you think his [Yanis'] false premise is the same one I identified in
Debtors and Savers?...
"Karl Marx predicted the breakdown of capitalism as a
result of class struggle, followed by the establishment of a grand commune in
which all the means of production would become publicly owned and used only
for the public good."
Yanis sees the breakdown of (his idea of) capitalism happening right now.
"Marx writes, "The history of all hitherto
existing society is the history of class struggle." He got this part
right! What he got wrong was his delineation of the classes."
So Marx thought that the history of all society is the history of the
struggle between the haves and the have-nots, and that this struggle would
lead to the breakdown of (his idea of) capitalism.
I bet this is what Yanis thinks too. In this case, the Germans are the haves
and the Greeks are the have-nots, and (his idea of) capitalism is collapsing
because of it.
Well, first of all, I don't really think of the $IMFS and Wall Street as true
capitalism. A lot of phony "wealth" is accumulating on Wall Street,
but that's because of this "global surplus recycling" (as Yanis
calls it) that has been funneling through Wall Street for at least 40 years
now.
People view the Wall Street bankers as the haves and hate them because of
envy. But if you shift your perspective a little bit you can see that the
Wall Street bankers are actually in the same camp as Yanis and the Greeks,
the debtor camp or the easy money camp.
Envy is a derivative of pride which I think is the "Original Sin".
Pride is the root of this "we are all equal" ideology that says
"I am just as deserving as those who have lots, therefore we should all
have the same." See how "I am just as good as you" is a
symptom of pride? And envy flows from that.
So, what you are calling a false premise, I would call a sin. Not in a
religious sense (the seven deadly sins are not biblical in origin, but an
ethical tradition that grew out of the Renaissance period in Europe), but
more in the sense that it is an ethical misstep that, on a big enough scale,
leads to really bad things happening (like the French Revolution or 150
million deaths attributed to Marx and Communism).
Remember that the Debtors and the Savers dichotomy is not meant as a value
judgment that one of the camps is better or more ethical than the other. It
is simply a better description of reality and history. And because it is
correct while Marx's dichotomy is false, it is a premise on which a real
solution can be found, unlike Marx's false premise which usually leads to
bloodshed or tears.
Here's a little more on the seven deadly sins which I wrote in an email a few
years ago:
The seven deadly sins, also known as the "capital
vices" or "cardinal sins", are not discrete from other sins,
but are instead the origin ("capital" comes from the Latin caput,
head) of all other sins. Sins are traditionally divided into two
categories; lesser sins which do not break one's friendship with God but
injure it, and mortal or deadly sins which, if unforgiven upon death, are
said to result in a complete separation from God. "Capital vices"
is probably a better term for the seven than "deadly" because each
of them can be either venial (lesser) or mortal (deadly) depending on the
situation, but they are called "capital" because they engender
other sins, other vices. The seven are:
Lust
Gluttony
Greed
Sloth
Wrath
Envy
Pride
These are said to be the root sins, the underlying cause of all other sins,
and each is a form of Idolatry-of-Self wherein the subjective reigns
over the objective.
Of the seven, pride is considered the original and most serious, and the
source of the others. Pride is generally identified as believing that one
is essentially better than others. It may be true in certain contexts (e.g.,
Kenyans/Ethiopians are better runners and therefore win marathons), but pride
itself is considered the original sin and the source of all others.
Private property (aka wealth) is sacrosanct, good, and a God-given right.
Even in prison, where we strip inmates of everything, they still manage to
accumulate private property. And as FOA clearly stated, the identifying mark
of wealth, throughout all of history, is possession. The only way to truly do
away with private property is to kill a man. There's a great Clint Eastwood
line in the Unforgiven: "It's a hell of a thing killing a man, you take
away all he's got, and all he's ever gonna have."
I think that envy is the root of all Communist thought. Perhaps pride
goes even deeper, as the have-nots mob up and truly believe they are better
(as individuals and as a group) than those who have accumulated wealth.
Wrath, which is the most obvious sin of Islamic jihadists, is a derivative of
envy and pride.
I think that Progressivism is a prideful reaction to envy (kind of a sinful
feedback loop). Progressives are full of pride, greed, sloth, gluttony, lust
and wrath, but they take prideful solace in fanning the flames of envy so
that they can play the prideful role of Robin Hood (a blatant thief) to the
envious sinners they create but cannot control. That's just who they are.
They have always been with us, but they stumbled into a global monetary
system in the 20s and 30s which enabled their proliferation and all but
disabled any opposition.
We all work within the given system. Even Freegolders are doing so by buying
physical gold right now. Fortunes are made through genius, hard work and
deliberate underconsumption. But truly immense fortunes are made mostly
through making the most of the present system and a large helping of luck. Of
course you've got to be capable and intelligent to do so, but first-generation
billion dollar fortunes come from a lot of luck combined with working with
(not against) the present system.
When I say luck, I'm talking about the "tournament effect". It
applies to the Rothschilds and the "robber barons" of the 19th
century as well as to Bill Gates and Steve Jobs. There are plenty of really
smart, hard-working people out there, but the tournament effect rewards just
a few of them in REALLY big ways. The "tournament effect" is an
analogy of life to things like the WSOP, or American Idol, or beauty
pageants. Pro sports are a good example. The teams are relatively evenly
matched in talent, so you only have to be a hair's breadth better than the
second best (or have a little luck) to win the whole thing. Life is a
tournament too, and that luck-based prize is not a bad thing, it is the
carrot that brings so many into the big game!
But envy views the tournament effect as a bad thing. It correctly
observes that the big winners are not necessarily better than itself, at
least not in proportion to their oversized winnings. So it tries to take
those oversized winnings away and do away with the (quite natural) tournament
effect, not realizing the unintended consequence of removing the carrot that
brings so many into the game in the first place.
While we're thinking about oversized fortunes, it should be observed that
they are all won while working within the system at that time. Sometimes that
system included slavery. Sometimes it included child labor. Sometimes it
included war and brutality like in the French Revolution and WWII. And lately
it includes high frequency trading, complex mathematical algorithms and
derivatives, and the "magic" of Wall Street in general, which is a
result of all of the savings of the largest population the world has ever
seen (7bn people, it was half that in 1970) sloshing around, ripe for the
skimming, in one centralized mega financial industry.
If you feel a twinge of envy toward those rich bankers, I suppose the silver
lining is that most of their "wealth" will vanish in a flash. And
then someone else will be quite envious of you, since you bought gold before
the big revaluation. Just remember that and let it help you keep your mouth
shut about your gold when the time comes!
Sincerely,
FOFOA
There are a few readers with whom I email regularly, and I shared that
particular email with three people in addition to the person who emailed me.
That was more than a year ago like I said, and here were their four
responses:
Holy shit, bro. This analysis is just genius on so many
levels. I can see why this might not end up as a post on the blog, but if it
does I think a lot of people would benefit from this lens beyond what they've
read in Debtors vs. Savers.
I had never heard of the tournament effect, but I find it very interesting
using that lens to see why common folk might react with disdain towards
others that won big within the current economic system simply by employing
the rules of the game. I can also see how that might extend to a, "Hey!
He's no smarter than me. That big CEO is just an asshole because he chose to
use the rules to his advantage in a way I wouldn't have done. I also could
have done that so we should all have an equal share of the total pie"
mentality.
I'll tell you what. I didn't spend a few thousands hours behind a computer
studying the history of our international monetary and financial system so I
could shuttle my wealth through a crash to feed the dregs that hang out by
the convenient store around the corner.
Thanks for sharing. This is really good stuff you should try to work into a
future post when the time is right.
-----
Ha ha, he beat me to “holy shit, bro.”
Mine went, “Holy shit I finally understand the universe past present and
future!”
I find myself getting jealous of guys that grew up with money, went to school
with money, golfed with money and now do business with money. I think to
myself, “their wealth doesn’t count because they were given advantages I
wasn’t and on an even playing field we would still be even.”
But then I always remember the first time I heard “living well is the best
revenge” from one of your comments and I think, “those rich guys don’t give a
shit where I grew up, all they know is they’re living well.” I’m not living
well because I didn’t make the right moves at the right time. The moves were
there for the taking, I just made different ones.
But this new language of yours makes it clearer. I’m still in the tournament
and even though I haven’t won yet, I might be just a hair’s breadth away. Ha
ha.
-----
thank you very much for forwarding this. It is so much up my alley, so much
like how I think about communism, jihadists and progressives just to name a
few, it's downright scary to see it verbalized. ;D In a good way that is.
But then again The Debtors and the Savers is one of my all time favorites
that made me realize your blog was something very different....
-----
Oooo I liked that! Deadly sins, Yanis, and the hints of a debtors and savers
2 post. Who could ask for more! Since he is obviously going to read it the
part I think yanis would like, a point often forgotten or glossed over as
maybe opinion, is that savers aren't superior to debtors. Greece isn't bad
and Germany isn't good. Yanis is right that if you shrink the purchasing
power of the net importers it would damage the economies of the net
exporters. Greece simply IS a debtor and Germany simply IS a saver. From a
"think like a CB" perspective both should try to push themselves
towards balance (preferably via automatic adjustment mechanisms) in order to accomplish
a maximized standard of living.
-----
And I should also include this limerick, written by the Speakeasy’s very own
poet laureate, Edwardo:
Jealousy, vanity, greed
Those are some sins you don't need
And anger's a curse
Though pride may be worse
I envy all those who take heed
Which brings us back to Bernie Sanders, Donald Trump, Angela Merkel and
Viktor Orbán. For those living under a rock, Trump wants to build a border
barrier to ensure border security by preventing immigrants from entering
illegally, and Orbán actually did build one last year, on the border between
Hungary and Serbia, in response to the migrant crisis. Meanwhile, Angela
Merkel has made it clear that there is no limit to how many asylum-seekers
Germany will take. This is a very divisive issue, for many reasons and on
many levels.
In general, I try to avoid politics as much as possible on my blog. But as
you will see, the two main political sides in the world align much better
with my delineation of the camps or "classes" than with Marx's. And
because most gold bugs come out of the hard money camp, my readers tend
toward the conservative side of the political spectrum. So it may seem to the
reader, because of his own bias, that this discussion is a moral indictment
of the political left, when it is more fundamentally about how things are
unfolding, how they will ultimately end, and how the two sides will then be
able to live together, each being their natural self, without monetary
conflict.
Peak Progressivism
Progressivism is a name adopted by the political left in its endless push to
"progress" toward a world without a political right, without
opposition to progressivism. Progressivism generally traces back to the 18th
century period leading up to the French Revolution, in which
"progressives" eliminated some 50,000 opponents.
Progressives are very good with words, as evidenced by the name itself. What
could possibly be wrong with progress? And if you aren't for progress, then
you must be a bad person. It's an almost indisputably-positive word, right?
Kind of like "social justice". If you're not for social justice,
then you must be for social injustice, which would obviously make you an evil
person, right? And then they have a whole list of made-up phobias and misused
"isms" with which to label and brand their opponents.
In fact, the French Revolution gave the English language three
politically descriptive words denoting anti-progressive politics:
reactionary, conservative and right. "Reactionary" came from
the French, réactionnaire, meaning "a movement towards the reversal of
an existing tendency, and a return to a previous state of affairs," and
was a pejorative label given to those supposedly opposed to modernity and
progress. So they were doing it even back then!
Here's a comment I wrote back in 2010, shortly after The Debtors
and the Savers:
Hello Desperado,
Desperado wrote: "Gary North has an interesting look
at "Greenbackism" in Cheerleader for Hitler's Economics. He has
researched Ellen Brown extensively. He discusses her and the Greenbacker
links to the tea party, and I would think they would fit together like a hand
and glove. The Greenbackers have historically been against gold based money
and they could easily help push the teaparty into being swept up in an
anti-gold and anti-hoarder populism.
It seems that we are having more than a currency war, we are having a
struggle between monetary philosophies at a very base level as gold reasserts
itself and the $IMFS breaks apart. This is something that has not happened
for over 100 years when the Greenbackers, the Silverites, and others
struggled against the gold standard.
I would love to hear anything you (and anyone else) might be able to add
concerning this re-emerging conflict."
Certainly! First let me say that I thoroughly enjoyed that Gary North piece.
Bravo to him! As always, I only have minor differences with him.
I have been writing about this "re-emerging conflict" a lot lately,
but you simply cannot see it, Desperado. Politically I am firmly on your
side. Monetarily, you are blinded by your intense political focus, in my
opinion.
You say, "It seems that we are having more than a currency war, we are
having a struggle between monetary philosophies at a very base level..."
Yes, absolutely. Go reread my post about the Debtors and the Savers. You can
think of them as the "easy money camp" and the "hard money
camp" if you like. And "hard" means "difficult to
obtain" not "metal" in this case. That's why I used
"easy" and not "soft" for the other camp.
Ellen Brown is in the "easy money camp," as are many others who are
unfortunately frequented by our online peers, like the AMI, Freedom's Vision,
Bill Still, this guy, this guy, this guy, the entire MMT blogging crowd, and
many more, including a lot of deflationist and silverbug names you would
recognize but I'm not going to list.
Hopefully you can tell these people by those they associate with. It is
basically everyone on the left that is anti-Fed and
anti-"banksters," including Ralph Nader and Dennis Kucinich. These
people, and the "greenback historians" that North so brilliantly
illuminates have contributed most of the "anti-bankster" myths that
have lasted 150 years. Just watch the Secret of Oz to see them all laid out.
[…]
The "NWO Socialist Welfare State" (or whatever you want to call it)
is completely dependent on the US dollar's global use in the store of value
role. Something that cannot be controlled. It can only be earned through
confidence. And most simply stated, that's ending. Look no farther than
how the creep of progressivism has paralleled the creep of the US dollar, and
then you will see how far this movement is about to be set back.
They can try a welfare state with an "easy medium of exchange," but
it won't get very far in Freegold. There will be an uncontrollable transition
whereby the "free stuff crowd" goes back to work out of necessity.
There is a fatal flaw in the reasoning of "easy money" thinkers
like Ellen Brown. The flaw is in the cause and effect blame game they play.
Their disdain is directed at the wrong cause.
I dislike debt as much as the next guy… But debt itself is not the cause of
our problems today. Today we have a situation where the vast majority of
surplus production value (surplus capital) is enabling massive amounts of
global malinvestment through new debt creation. That has peaked and is now
contracting. But the problem is not the debt itself. The problem is the
enabling effect of surplus capital not having a viable alternative that floats
against the currency. The problem is the lack of the adjustment mechanism of
Freegold. There is no viable counterbalance against uncontrolled debt growth
today. So we are only left with credit collapse and hyperinflation of the
monetary base to clear the malinvestment from the system.
It is easy to blame this on debt as a principle, but unless you don't mind
being wrong, there are some deeper explanations out there. Debt under
Freegold will not reach such destructive levels. "Easy money"
thinkers may or may not get their debt-free money, but if they do they will
suddenly realize the flaw in their reasoning. Oops! That it can only have
expandable value (needed for the welfare state) if producers are willing to
hold it while it expands. Without that, socialist welfare expansion will
simply dilute the value of the currency and be as limp as a eunuch.
And this fatal flaw in the "greenbackers'" reasoning is, for all
practical purposes, written into their Western genetic code. They won't see
the flaw until it finally fails them. It comes back to the concept of money.
Ever since the Dark Ages, money has been both a medium of exchange and store
of value, for better or worse. They can't even conceptualize the separating
of functions, so they don't bother considering the consequences. They think
"all we need is free money and it will be a wellspring of value, because
money is always valuable." How wrong they are.
If you want a glimpse at how things will actually play out monetarily, it can
be most clearly seen in the structure of the euro. As Wim Duisenberg said in
his famous speech, "It is the first currency that has not only severed
its link to gold, but also its link to the nation-state." Here, the euro
solved TWO problems. 1. It severed its link to the wealth reserve function of
money. And 2. it severed its link to the Triffin Paradox.
The resolution of these two problems with the dollar (1. trying to be
everything to everyone, and 2. suffering the Triffin Paradox) is the
inevitable shakeout of this crisis. This is the final point you should
internalize.
Now, I fully realize that this is the point of the conversation where you
glaze over and start foaming at the mouth with hatred for the NWO Socialist
elites that forced the euro on Europe. So I'll just stop here and not waste
any more of our time.
Sincerely,
FOFOA
Trump
Progressives, “enlightened” academics, the media, and the mainstream
political establishment all seem confounded by Trump’s popularity, but it’s
really quite simple. It’s not because his supporters are all dumb racists and
xenophobic rednecks living in trailer parks scattered across the fly-over
states. Nor is it because Trump is so smart, articulate, and never says
anything regrettable. It is quite simply because:
1. People are tired of being lied to by the “progressive” media under the
banner of political correctness, and are encouraged by a candidate who is not
afraid to stand up to the media…
2. People are tired of being labeled with fake phobias and misused “isms” as
an intimidation tactic, and are encouraged by a candidate who is not afraid
to be labeled and branded by the imbeciles who buy into that BS…
3. People are tired of blatant discrimination, like affirmative action, and
the entitlement attitude of those on the public dole, and are heartened by a
candidate who isn’t afraid to talk about hot-button issues…
4. People who had all but given up on the political process are encouraged by
a “self-funding” outsider who has the courage to say the things that got his
momentum going in the first place…
5. And a whole lot of people are tired of the muzzling effect of utterly
absurd political correctness, and for this reason most of all, Trump is still
gaining momentum!
And by the way, if you think Trump is a racist, you are part of the problem,
and you are wrong:
Peak Absurdity
Back in November, someone sent me an article titled Sorry, Social Justice Warriors: Political Correctness Has
Peaked. The article began like this:
"If you’re Social Justice Warrior, you’re a liar. You
actively spread absurd falsehoods about the nature of men, women, sex, and
culture that can’t withstand even the slightest scrutiny. You change history
and conceal facts to fit preferred narratives, even when it costs human
lives. You claim the best of intentions yet achieve the worst of
outcomes…"
The author pegged October 31, 2015 as "peak PC":
"When universities actually post flow charts to keep your
Halloween party from being offensive, humorlessness is redefined. When
students are so fragile that the very thought of ethnic-themed Halloween
costumes leads to much-mocked YouTube “guides,” then political correctness is
losing its punch:
If you disagree — if you think that political correctness is gaining momentum
— then consider a few facts. First, the top two candidates in the Republican
race for president of the United States attained their front-runner status by
willfully, gleefully defying political correctness at every turn. Ben Carson
shot to the top of the polls when he did the unthinkable — told the truth
about guns, about Islam, about resistance to mass shooters, and about
abortion — without flinching. It’s old news by now that Donald Trump’s
supporters love him for his anti-PC stands…
If there is one thing that’s predictable in this otherwise unpredictable GOP
cycle, it’s that defying the PC police is the path to prominence."
Of course, even if PC has peaked, that doesn't mean it's gone. Just this past
Easter, a UK paper reported that Cadbury was no longer prominently displaying
the word Easter on the front of its Easter egg packaging.
There are too many examples of peak absurdity to list. Just do a Google
search of "absurd examples of political correctness" if you'd like
to see more. The same author who wrote the peak PC article above had a new one out just last week, which started with
"the utterly absurd bathroom wars":
"One of his New York City readers wrote in to say
that her 14-year-old daughter had just finished dressing in a city locker
room when a grown man stepped from the showers wearing only a towel. Girls as
young as seven were present, and they were staring at the man with “concerned
expressions.” The reader ends her e-mail with, “It sucks to be a parent these
days."
For anyone living under a rock, "transphobia" is one of the new
front lines in this progressive push to absurdity. Just last month, Bruce
Springsteen canceled a concert in North Carolina to protest against a
"transphobic" bathroom law, saying, "Some things are more
important than a rock show and this fight against prejudice and bigotry —
which is happening as I write — is one of them. It is the strongest means I
have for raising my voice in opposition to those who continue to push us
backwards instead of forwards."
I couldn't care less about the law in NC, so don't get mad at me if you're in
favor of Bruce Jenner using the same restroom as your wife and daughter (even
though he still has his man parts and is still sexually attracted to women).
I'm not taking sides here, I'm simply pointing out the absurdity of it, and
yes, I am aware that Trump said Jenner is welcome to use the ladies' room in
Trump Tower. ;D
MMT Bernie
As I'm writing this, Donald Trump has just won the Indiana primary, Ted Cruz
just dropped out of the race, and Trump just became the presumptive nominee,
saying in his speech that soon we'll be allowed to say Merry Christmas again,
instead of the PC Happy Holidays. Over on the Democrat side, however, the
race is still too close to call, with Bernie and Hillary neck and neck. But
as I watch the precincts slowly rolling in, I've seen Bernie rise from 49.5%
with Hillary at 50.5%, up to Bernie at 52.8% and Hillary at 47.2% with 72% of
the precincts reporting. And with that, CNN just called it for Bernie
Sanders.
Bernie is especially popular among young people because of his "free
stuff" approach to government. Take college tuition for example. I don't
think I need to tell you how expensive college has gotten, and the student
loan debt these kids face who are just turning old enough to vote. So of
course Sanders' promise of tuition-free college is going to be hugely
popular.
Stephanie Kelton is an economics professor at the University of
Missouri–Kansas City. She is also an economic advisor to Sanders' presidential campaign.
Her economic school is Post-Keynesian economics and Modern Monetary Theory,
also known as MMT. MMT is kind of like the monetary equivalent—in terms of
jumping the shark—of humorless Halloween costume flow charts. Here she is
talking about how giving away free stuff really is the secret to
Bernie Sanders' success:
If you don't know what MMT is, I'm not going to explain it here, but I did
explain it in this post back in 2011. Just scroll down to the
section titled "MMT". Suffice it to say that MMTers love to say the
government can't run out of money, and that government spending grows the
economy. Unbelievable? Just listen to MMT Mike explain it in 7 minutes:
And just in case you were wondering, yes, he "feels the Bern" too:
That's right, the other side not only believes their own nonsense, they think
you're the idiot for not believing it, or worse… maybe you're just
evil! >:D
By the way, I'm not suggesting that Bernie Sanders will win. The Democratic
primary is less democratic and more corrupt (i.e., rigged) than the
Republican one, so he will most likely lose. I'm simply pointing out that his
popularity is another sign of peak absurdity.
Europe
Over in Europe, the migrant crisis is the front line of "Progress"
versus push-back. Of course Europe doesn't have the same idea of free speech
as we do in America, so we don't get to hear as much from the conservative
resistance as we do from the Progressives, who label anyone opposed to
massive immigration from the Arab world, North Africa and the Middle East, as
xenophobic, racist or worse. In some places, you can be arrested for simply
saying the wrong thing about the crisis, or even just tweeting it.
We do get a glimpse, though, at what is developing over there. In Sweden, anti-immigration groups are labeled as Nazis, yet we
continue to hear stories about these "no-go" zones which are
essentially Muslim slums where even the police don't go. Such stories are
considered racist and routinely suppressed inside Sweden, but just a few
weeks ago, an Australian 60 Minutes crew was attacked in one of these areas, and published the
video saying there are now 55 such no-go zones in Sweden. So apparently there
are reasons other than being a Nazi to hold an anti-immigration stance in
Sweden.
In Germany, just days ago, hundreds of "left-wing protestors" clashed with thousands of members of the Alternative
für Deutschland (AfD) party who were meeting in Stuttgart. The protestors
chanted "Keep refugees, drive Nazis away!" But I looked into this
group, and they appear to not be as "far-right" as some.
They are actively trying not to attract more radical
ultra-nationalists, they are fearful of being labeled "xenophobic or even racist," and have shied away from
supporting similar groups as a result. They have, however, labeled Merkel's
decision to accept a million migrants in 2015 as "catastrophic,"
they would like to ban the burqa and outlaw minarets (the towers from which
Muslims announce obligatory prayer time five times a day) in Germany, and
they are also opposed to gay marriage. Freakin' "Nazis" (yeah,
right).
Stories like these just keep on coming, and one might say that peak Progressive
nonsense has awakened the sleeping giant of the European Right. In France
it's Marie Le Pen's National
Front party. In Austria it's the Freedom
Party. In Sweden, the conservative party is called the Swedish
Democrats. And in Britain, the Conservative victory last year has led to
a public vote next month on whether or not to leave the EU.
Many people around the internet see these various political conflicts
peaking, becoming the absurdities that they are, and then feel compelled to
predict how it's all going to end. I have even seen it predicted that WWIII
may break out between Islam and the West, as a guerilla-style urban warfare
scenario in Europe, in an attempt to evict those now being welcomed into the
warm embrace of the leftist welfare state. But that's not how I see it
ending.
No one is on a hard money system today. The entire world is on easy money, so
there will be monetary appeasement, not war, right up until the end. And that
end will be the collapse of the international monetary and financial system
(the $IMFS), not WWIII, because that is what history has taught us.
I agree that it is frightful to have foreign cultures flooding into your
backyard. And it can seem like much of the damage that has already been done
is irreversible, short of war. But you need to understand that it is
happening because it has been financially incentivized, encouraged and even
facilitated by that which has peaked or is peaking. And without the $IMFS,
the incentives, encouragement and facilitation will reverse direction. It won't
happen all at once, but I recommend that you "prepare to own the
future" (as I said in the first Debtors and Savers post), because happen
it will.
The Euro
The euro as a currency is separate from Europe's political division. That's
not to say the ECB isn't susceptible to political influence. Of course it is!
That is one of its strengths, which I will get to in a moment. And as I said
above, the two political camps generally align with the two monetary camps in
the title of this post. So the Debtors, the "easy money camp" or
"the redistributors" are generally the Progressives on the left,
and the Savers, or the "live within their means and personal
responsibility camp" are generally the conservatives on the right.
The EU, as a superfluous layer of big government, is very much Progressive.
And people who hate this Leftist umbrella of Socialist welfare state that now
covers most of Europe, tend to project that same hatred onto an inanimate
object, the euro, as if it is somehow the linchpin of Europe's absurdity.
Unfortunately, they also tend to hate me, Freegold and A/FOA, because they
perceive anything positive said about the euro as support for their political
enemy.
As I say, this is unfortunate, because it prevents them from both
understanding what is actually unfolding, and from seeing the tremendous
wealth opportunity it brings with it. Hopefully this post will make it
obvious that I hail from the right side of the political spectrum (pun
intended), and that I also understand the Leftist nature of Europe. So, with
that in mind, perhaps you (if you are one of "them") should take
another look at why I have positive things to say about the euro.
The euro is, of course, easy money. It is a fiat currency that can be printed
at will by its central bank. So why, if I hail essentially from the hard
money camp, would I have anything positive to say about the euro? The answer
is up in my 2010 comment to Desperado. He was one of those
"right-wingers" in Europe who ultimately wrote me off because he
couldn't get past projecting his hatred for the EU welfare state onto a
symbolic token unit of account.
The reason I have positive things to say about the euro is because, no matter
how it's being used today, it was conceived and constructed to bridge the end
of the dollar reserve system to the next one. Its design, its architecture,
will not only allow it to survive the transition, but also to flourish within
the next system. That design is what I wrote about in the Desperado comment:
"'It is the first currency that has not only severed
its link to gold, but also its link to the nation-state.' Here, the euro
solved TWO problems. 1. It severed its link to the wealth reserve function of
money. And 2. it severed its link to the Triffin Paradox. The resolution of
these two problems with the dollar (1. trying to be everything to everyone,
and 2. suffering the Triffin Paradox) is the inevitable shakeout of this
crisis."
And it is the currency of many different countries, which is why its
susceptibility to political influence is actually a strength, not a weakness.
FOA:
"The dollar is ruled by one country and one country
only. This implies that only one Economy is taken into consideration when
policy is discussed, the USA. The management of interest rates, inflation,
dollar value and crisis intervention, are therefore politically motivated to
benefit one world group, again, Americans. We have seen the news events of
how this tramples upon the needs of other geopolitical groups (countries).
On the other hand, the Euro will utilize a totally different structure of
consensus management. It will be governed by many nations of obvious
conflicting needs. This very weakness, that is so well documented by
analysts, is the "major" strength that will contribute to the
popularity of the Euro. In time, it will be governed by many cultures,
including an "open market" valuation of gold."
So the euro is the "easy money" that the Debtor camp wants, but it
has also severed the long-standing monetary link between transactional
currency and "the wealth reserve function" which the Savers' camp
needs. Each camp gets what it needs monetarily, without fundamentally
infringing on the other camp's needs. A win-win! :D
On top of that, it has further resolved Triffin's paradox or dilemma by not
being beholden to one part of its constituency (the US) at the expense of the
rest (the rest of the world). (If you aren't familiar with the Triffin
dilemma, I explained it in my Dilemma
post.) It's a multinational, purely fiat currency, with an economic zone as
big as the dollar's, that doesn't need foreign exchange rate manipulation or foreign
financial use to survive.
It also has 348 million ounces, or 10,825 tonnes of gold in reserve. So it
doesn't really matter how much "QE" or "helicopter money"
they have to print to keep the peace until the $IMFS finally ends. The euro
won't have the same "denouement" as the dollar. It's the dollar's
system that is ending, the euro is the bridge to the next system, and
whatever it ends up being called, you here today will always know it as
"Freegold".
Freegold
Freegold is kind of like the middle ground, or center, between the two camps.
It is the compromise, the obvious solution, but that doesn't mean that I'm a
centrist when it comes to politics. I can see that, as Ari said, we need our
money to be "easy" in order to set gold free to be the "hard"
wealth reserve par excellence that is needed to keep the peace. We get our
"hard" secondary money, let them have their "easy"
primary money, and learn to appreciate the elegance of the arrangement!
In fact, since most of us intuitively hail from the hard money camp, it's a
healthy exercise to embrace the idea of money being even "easier"
in Freegold than it is today. Easy money saps value from every monetary unit
on record, so today that inordinately taxes the savers through the financial
system, but in Freegold it won't. So I don't expect money to be any
"harder" in Freegold. Since it will have a smaller pool of value to
sap from, it may even be "easier" than today's money.
As FOA said, we have always formed "tribes" or groups, in which we
trade some measure of our personal freedom of choice for the security of
being part of a larger group. Within that group, subgroups tend to jockey for
control in order to bend the rules in their favor, in order to regain some of
what they perceive they have lost by being part of the group, at the expense
of other subgroups. It's just the way we are as a species, and understanding
human nature and how to work within it, rather than forever struggling
to change it, is really what Freegold is all about.
As for the two most general subgroups, most would agree they are the
political Left and Right. But from a monetary, economic and financial
perspective, we always see the divide framed as the rich versus the poor. Yet
there are rich and poor on both sides of the political spectrum, or ants and
grasshoppers in each of our nations as Yanis said, so obviously we need a
better framework of understanding if we are to comprehend what is actually
unfolding.
That framework is the Debtors and the Savers, as I have defined them in terms
of easy versus hard money preference, and in terms of social versus personal
responsibility being primary. This understanding also blends extremely well
with the history of the political Left and Right, revealing an undeniable
connection between political and monetary evolution and change.
With this view, we can see how the rise of Progressivism to absurd levels has
paralleled the rise of the dollar-based international monetary and financial
system to its own absurd levels. It's easy to see what constitutes
Progressivism, but if you are willing to buy the idea that both have peaked,
then it's important to also understand what constitutes the $IMFS. Because
while Conservatism stands ready to take control back from Progressivism,
there's no way in hell that we're going back to hard money.
What most fundamentally constitutes the $IMFS is simply the idea that money,
debt and financial instruments constitute wealth. As Randy said in Debtors v.
Savers III, "Instead, your wealth, properly measured, is the tangibles
you’ve accumulated, the store of resources you’ve saved. And among the world
of tangibles, gold is globally the most liquid — the most universally
recognized, honored, and accepted." This is what will change monetarily:
the simple idea of what constitutes wealth.
If you are still struggling with this concept, just think about what it
actually is that makes the $IMFS seem so absurd today, not just in the US,
but all around the world. It is the perception of wealth held in money, debt
and financial instruments that is so disproportionate to the real economy.
And not just the size, but the rate and direction of change. The perception
of wealth can expand in the $IMFS even while the real economy is shrinking.
This is why Another always said, "Your wealth is not what your money say
it is."
So, basically, Freegold is not about us versus them, it’s about living
together without monetary conflict. And because of pride, envy and the lot of
them, monetary conflict is indeed at the heart of these political conflicts.
So while it might be a bit much to say Freegold will solve every problem, I
think it’s fair to say it will at least reverse the incentives and send us
“progressing” in a better direction. :D
Comments are closed at the public blog, but they are open at the Speakeasy.
So if you would like to discuss what's in this post (and there's plenty to
discuss!), please consider subscribing. The subscription price is $110 for 6
months. In the past year, there have been 30 new posts and well over 10,000 comments
from hundreds of subscribers. Oh, and I've revived the Debrief series:
So far there are four new Debriefs, and I will be doing more. And if you
hadn't noticed, I have hardly advertised at all. A few tweets and a few
posts, and that's it. Yet now we're a year in, and the Speakeasy is going
stronger than ever. So any doubts I might have had at the beginning about
this new format are now gone.
Click here if you would like to subscribe.
Sincerely,
FOFOA
