Archive for Monetary System
Unlimited Debt in Printing
“If any other country announced that its finance minister could print unlimited debt to do something similar, financial markets around the world would dump both the country’s debt and the country’s currency.”
“It may well be different because this is the United States of America.”
Sure, we’ve heard many time of people saying “It is different this time”. Back in 2000 everybody is saying that .com bubble will never burst because it is different. Look at where we at now?
Hank Paulson’s Financial Bubble: http://online.wsj.com/article/SB121754567926302543.html?mod=opinion_main_commentaries
The Fall of Roman Empire
From the monetary point of view:
Somebody said that history repeats itself:
China to Protect it’s 1.8 trillion from Dollar Crisis
New Bretton Wood agreements in the loom? What was Gold/Silver’s role in the Old agreement from 1949/1970s again?
http://www.reuters.com/article/reutersEdge/idUSL0221460620080603?sp=true
Dollar was pegged to Gold at $35/oz at that time. But don’t forget, today there’s over $30000 Dollars out there, for each oz of Gold. Don’t even ask me about Silver: http://midsouthgold.com/Silver2.htm
Oh yes, here is this year’s Chinese best seller on economy, urging it’s people and government to convert 200 billions of it’s Foreign Reserve into Gold every year: http://www.lierwa.com/book/23/.
Penalty of Death, for de-basing the coins
Coin Act of 1792, and maybe 2012:
Penalty of Death for de-basing the coins. Section 19. And be it further enacted, That if any of the gold or silver coins which shall be struck or coined at the said mint shall be debased or made worse as to the proportion of the fine gold or fine silver therein contained, or shall be of less weight or value than the same out to be pursuant to the directions of this act, through the default or with the connivance of any of the officers or persons who shall be employed at the said mint, for the purpose of profit or gain, or otherwise with a fraudulent intent, and if any of the said officers or persons shall embezzle any of the metals which shall at any time be committed to their charge for the purpose of being coined, or any of the coins which shall be struck or coined at the said mint, every such officer or person who shall commit any or either of the said offenses, shall be deemed guilty of felony, and shall suffer death.
And a few fundamental about silver: (www.silverseek.com):
1. The world is no longer using silver and gold as money, and thus the primary demand could not be lower.
2. The world started consuming silver in electronics after World War II, and has continued the pace of silver consumption of about 7 tenths of an ounce of silver per year, per person, in industrialized nations ever since, consuming perhaps over 25 billion ounces of silver.
3. With the rise of inflation beyond 20% per year, many people in the financial world are turning their attention once again to buying gold and silver.
4. With $14 trillion in M3, according to private sources, and with annual silver investment demand at barely $1 billion, and with 60-90% of the U.S. population concerned about inflation and the devaluation of the dollar, we are on the edge of a tidal wave of investment demand for silver.
M3 Continued
FED has discontinued reporting of M3 since April 2006. Many websites have been trying to publish the continuation of M3 since then:
http://www.nowandfutures.com/key_stats.html
http://www.shadowstats.com/alternate_data
From what we see, M3 is growing at an alarming rate. The money supply is considered an important instrument for controlling inflation by economists who say that growth in money supply will only lead to inflation if money demand is stable (see Money Supply wiki page).
The Debt Engine, and a new Monetary System
Current Monetary system is merely a Debt Engine, it creates unrelenting, forever increasing private and government debt. While it’s good to drive the economy growth, it does lead to resource depletion and the destruction of the ecosystem as we’re witnessing.
Going forward, we need a new, sustainable Monetary System that will redirect the focus of the nations: A Monetary System for the new Millennium.
Fool’s Gold
Ever heard about fool’s gold? Bunch of small, square crystals – often found with quartz, which, actually looks a lot like Gold until you examine it closely. During my last visit to Vancouver Mining Museum I was able to pan out a few of those.
Mistaking “fools’ Gold” (iron pyrites) for real Gold is comparatively harmless. Most people only do it once in their life. There is a much more serious – and foolish – mistake; one that seems impossible to make, that is, mistaken Paper for Gold! In this world, no one has carried Gold in his or her pocket as spending money since for long. That memory grows dim. People have been, carrying paper instead.
The above is from eye-opening series from www.the-privateer.com, pay them a visit, it changes the way you think about the whole modern financial system.
So you’ve been working for paper? And saving Paper? Who’s hand you’ve been putting your family’s future in?
Fiat money, Hyper-inflation and Gold/Silver
As many of you know that the fiat money system has collapsed many times in the history, each time it leads to the end of a mighty empire. Social instability follows, riots, war, revolution, many suffers, many dies.
Is it coming again to the modern civilization? Some people see it as a possibility which could happen as early as 2010. It’s not something that one likes to see, but one must be prepared for any slim chance of it happening. Those who don’t prepare, is prepared to fail.
(From wikipedia.org) Rates of inflation of several hundred percent per month are often seen. Extreme examples include:
- Germany in 1923 when the rate of inflation hit 3.25 × 106 percent per month (prices double every two days).
- Greece during its occupation by Nazi Germany in 1941-1944, when the rate of inflation hit 8.55 × 109 percent per month (prices double every 28 hours).
- Yugoslavia‘s rate of inflation hit 5 × 1015 percent inflation between 1 October 1993 and 24 January 1994 (prices double every 16 hours).
- The most severe known incident of inflation was in Hungary after the end of World War II, peaking at 4.19 × 1016 percent per month (prices double every 15 hours).
Other more moderate examples include:
- Other Eastern European countries such as Ukraine in the period of economic transition in the early 1990s
- Chile from 1972 to 1974
- Mexico from 1982 to 1988
- Bolivia in 1985
- Argentina and Venezuela in 1989
- Peru from 1988 to 1990
- Nicaragua from 1985 to 1990
- Brazil from the 1980s to the early 1990s
- Zimbabwe from 2006.
What is money? What would you rather believe in, paper or gold/silver?
Money is nothing but an interchange media. As long as you can use it to exchange goods with other people, it is money – no matter what it actually is, gold, paper, stick, electronic cards. However, over the few thousand years of human history, people has chosen gold/silver as money because of the following attributes they have:
What would you rather trust? What would you rather save your value in, Paper or Gold/Silver?
