Category Archives: A Complete Overhaul of Money Supply

Core Belief 9: A Complete Overhaul of Money Supply – Barter and Trade are fundamental to our species and all money, or any of its derivatives shall in future, be regulated in such a way as to never again enslave humanity in debt.

Capitalism . . . Creator of Poverty

The great enemy of the truth is very often not the lie — deliberate, contrived and dishonest — but the myth — persistent, persuasive, and unrealistic.” – JFK

According to one of my financial heroes, Bill Bonner, money is not wealth. It simply measures wealth like a clock measures time. Wealth is what has been produced, is made available and that which you can buy with money.

When banks print money out of thin air it is like adding an extra hour to a clock. It doesn’t make time any bigger, it simply distorts it and disorients the observer. What counts with money is that it is honestly made available to purchase goods and services. Honest money cannot be separated from the real economy where those goods and services are produced.

Say’s Law offers the wisdom that “You buy products with products . . . not pieces of paper.”

QE in the US, Europe and Japan is following Zimbabwe in separating money from the real economy. Trillions of dollars have been printed that mislead everyone into thinking they are wealthy, until they see the need for a wheelbarrow full of this pseudo wealth to buy real wealth – a carton of milk. We aren’t there yet but that is where we are headed!

Similarly, profit is not wealth but merely a measurement of overall business efficiency. When you combine these two illusions you arrive at the curse of the 21st century . . . debt. Debt offers the most efficient means of producing profit, by producing unreal money with few overheads.

With all of this in mind let me give you my perspective on what is going on and remember I’m no economist, but even to my simple mind we are now heading to an almighty financial catastrophe. I will use the car industry to make my point but the principles can be applied across today’s financial world. Continue reading

Banks & IMF Are Out of Control

As a species we are fallible and we recognise this in our attempts to construct laws and regulations which address human weaknesses and flaws. They are by no means complete and human fallibility continues to wreak havoc, more so when those same laws and regulations are removed or neutered by vested interest.

My regular readers will know that one of my hobby horses is the continued abuse of Greece by the Troika, something that is killing innocent Greek people through deprivation and despair. At the heart of this destruction is the IMF and its policy of ‘austerity’ that obligates countries indebted to it to cut social support programmes and hand over sovereign assets at discounted values.

“The organization’s objectives stated in the Articles of Agreement are to promote international monetary cooperation, international trade, high employment, exchange-rate stability, sustainable economic growth, and making resources available to member countries in financial difficulty.”

Further on from this, the frightening scope of its powers are clearly laid out.

Whilst the Fund can “make contracts, acquire and dispose of immovable and movable property and institute legal proceedings” from which nobody is immune, the Fund and its employees “are immune from every form of judicial process” and its assets “free from restrictions, controls and moratoria of any nature.” This includes freedom from any form of personal taxation for all 2400 employees!

With this unprecedented level of unaccountability, the Fund can do whatever it likes. In the case of Greece, it has done precisely this without seeming care or concern, in what has now been described as the ‘immolation’ of Greece. (Merriam-Webster’s dictionary defines immolation as “to kill as a sacrificial victim”, which is the stand I have personally taken over the whole violation of this country.)

This lack of accountability has now been firmly placed in the spotlight, (with similar brutality), after its own internal watchdog, the Independent Evaluation Office (IEO) submitted a report  to the board, (to whom they are solely accountable), which has roundly condemned how the Fund is being run.

Its top level staff have misled and misinformed their own board into becoming the champions of the euro project and which has led to catastrophic misjudgements on Greece. They have also failed to grasp the basic concepts of money theory that ensured they completely ignored the warning signs of an impending crisis within the EU, a ‘serious scientific and professional failure’.

EU insiders have used the fund to rescue their own pet project, with an unprecedented 80% of all available funding being used to bail out Greece, Portugal and Ireland. An ethos of misleading seniors was also extended to the IEO, in its investigations of the activities of “ad-hoc task forces”, where decisions and provision of information remained elusive.

Heads have turned to its managing director Christine Lagarde, who is now to stand trial in France over corruption charges and who has responded to this report with a statement that offers ‘qualified’ acceptance of its contents. Something I interpret as “I hear you” and no more.

This arrogance, by the boss and her organisation, has led to an era of negative interest rates that is devastating savings and the future of pension schemes, whilst ruining the banking system in its wake. Their policies continue without any recovery, or hint of recovery in sight. Here lies the true cancer created by the inbuilt lack of accountability written into the Fund’s Articles of Agreement.

It goes to the very heart of why we need regulations and accountability to guard against the horrific abuses that can occur when human fallibility is not held in check. Millions of people’s lives have been ruined by the mismanagement of this powerful organisation and its independence must surely now be put in question.

And all of this at a time when the European Banking Authority has just conducted a ‘stress test’ across the European banking sector and nobody has failed, nor has anyone passed, as there are no criteria for such assessments.

Instead a rescue package has been put together to stop Italy’s Banca Monte dei Paschi di Siena collapsing and Deutsche Bank, defined by the IMF as “the world’s most systemically risky bank” is being ‘scrutinised’.

Of the 123 lenders covered in the last stress test in 2014 less than half have been covered this time and none of Portugal or Greek banks have been included. Neither will the results of 56 other banks that have taken the tests be published.

Like the IMF, lack of accountability and secrecy reign and beg two questions. Firstly, what was the point of these tests, other than giving the appearance that some form of regulation is being carried out. Secondly, what is the true extent of the fragility of these banks, given the millions of people are dependent upon them for running their personal and business finances.

This last point is even more significant when you consider that the world banking system is a carefully controlled cartel that is not open to competition. Cartels and monopolies offer the very worst of attributes of human fallibility in the unaccountable power and control they provide and a complete immunisation from healthy regulation and governance.

Thatcher and Reagan opened up the financial markets to unlimited growth and power, which has accelerated exponentially in the last 40 years and is now bringing the world to its knees, with an impending financial collapse that will make 1929 and 2008 seem but hiccups.

Only today the man convicted of the UBS £1.4 billion fraud, the biggest in British history, said that “major banks have done little to tackle the culture which allowed him to carry out his crimes”.

Indeed, the Financial Conduct Authority dropped a long-running enquiry into the culture of banking at the beginning of the year, with suggestions that former chancellor George Osborne had exercised pressure on the industry following last year’s surprise election win.

Never has there been the need for the re-emergence of democratically supported political power to bring these financial monoliths back under control. We need regulations that have teeth and can break the conglomerates up and return us to a banking sector that supports the needs of Society and not the needs of the few.

I worry that we hear nothing about the regulation of the financial sector from those seeking political office, either at home or abroad. It was strong leadership that gave them their power and it is that self-same strong leadership that can take it away again now.

Until the next time

 

Thinking from his Book: Global Magna Carta. Returning Power to the 99% . . . If They Want It! By J T Coombes