Canadian Central Bank Exploring Digital Currency To Better "Track People's Spending Habits"
"...one of the benefits ...would be the ability to collect more information 0n citizens than is possible when people use cash."
snatched the item above from the Internet today as a reminder of the
lengths a government may consider going to nose around in one's
spending habits. Stories like this are increasing as the promotion of
"cashless societies" schemes increases.
At the moment the use of pocket cash is an anonymous
transaction, UNLESS you use a store "bonus" card. For example, it
is rare for a Walgreens clerk at the checkout counter to fail to ask
"Do you have a Walgreens card?" If you have one you present it to
collect more bonus points. And your cash transaction is no longer
anonymous. Your purchases are lodged in a computer under your name.
Let's say it's your habit to drop in at a liquor
store every Friday to buy a fifth of whiskey. You pay cash instead of
using your credit card. The cash register logs the transaction but it
doesn't know your name. The government has no record of your booze
It's easy to imagine that a propaganda campaign can
imply that there's something wrong with the anonymity of a cash
transaction. There will be much talk of cash being used for unlawful
transactions. "Stamp out crime. Use digital currency!" (The anonymity
of BitCoin and other digital currencies should not be confused with a
government sanctioned digital money system.)
It's also easy to imagine citizens going along with
the cashless society. "I don't care who knows how I spend my money. I
have nothing to hide!"
Heads up! Times they are a-changing.
its October 15th front page the Wall Street Journal announced the sad
news that lenders are charging record margins on credit cards
even as borrowers take on more debt. The average percentage rate on
interest-charging credit cards is 17 percent. U.S. households
with card balances owed an average of $8,602.00 in the the 2nd
quarter - up 8 percent from 2015 adjusted for inflation. "The
only way to change th[e] corrupt, exploitive system that
generates inequality as its only
possible output is to eliminate central banks and fractional
reserve banking, and
ban the aggregation of 'too big to fail' entities: a system of 1,000
small banks is structurally
far less vulnerable than five mega-banks that are tightly bound to
virtually every risk-on
Charles Hugh Smith is the author of the
sentence above. We quite agree with him because we've been
observing the consequences of currency inflation since the 1960s when
we became conscious of the dramatic changes being made in our money
system. Paper notes lost their printed official redeemability promise in "lawful
money" in late 1963. Silver coins were eliminated in 1965,
etc. There is no historic evidence that indicates consistent
debauching of the money unit can lead anywhere but
catastrophe. ECONOMIC DECAY
NOTE> In the past 105 years the
Federal Reserve. under pressure from Congress, has driven the
purchasing power of the U.S. dollar down more thgan 95 percent.
The question today is "How long before it reaches zero?"
Not enough consumin' goin' on!
Many years ago when the economy was running on inflationary overdrive
the late S.C. US senator Ernest Hollings said in his Charleston brogue,
"There's too much consumin' goin' on."
The reverse is true
today. The Gross Domestic Product was popping along at 3.1
percent annual rate in the 1st quarter of 2019. In the 2nd
quarter it dipped to 2 percent, and in the 3rd quarter it was limping
along at the annualized rate of 1.4 percent. This does not mean
we are on the cusp of a recession but the trend may mean the Federal
Reserve will be inspired to lower interest rates a bit more later this
month. (How low can rates go?)
economist knows that Donald Trump needs a strong economy in 2020 to
bolster his re-election, but at the moment the forecast is a bit
wobbly. Traditionally the consumer must support some 70 percent
of the U.S. GDP but the same consumer is struggling with a heavy credit
card debt and teetering on life on a paycheck-to-paycheck basis.
There's nothing wrong with using a credit card if
the entire tab is paid when the bill comes in. It's the INTEREST
that is paid on unpaid balances that play havoc with household
Ben Franklin is credited with the addage,
"Pay what you owe and you'll
know what you own." That advice seems to mean very little any more.
Living beyond one's means has become the average living standard. It
invariably leads to trouble.
"When the U.S. Government
adds $814 billion of new debt in a little
more than two months, the public yawns as this is no big deal."
J. Howard Kunstler is quite
right when he says "We’re no longer the
nation we pretend to be and we don’t know it. Jokers are wild and the
joke’s on us." He notes the
Federasl Reserve's report that it has taken on $814 billion of new U.S.
debt in only two months. (That's $1 million times 814,000!)
The enormity of
the accumulated public debt is
nearly $23 trillion and the number
cannot avoid having a negative impact upon the future. As an old
adage has it, "All debt must be paid...either by the debtor or the
creditor." Imagine the screams of holders of U.S. securities
(notes and bonds) when they realize they are left holding the
weeks ago we suggested there may be a comparison of the current
president with Herbert Hoover, who was elected president in late 1928
and took office in March, 1929. The Roaring Twenties were
beginning to slump and the famous stock market crash followed in
Some other commentators have wondered if the
present economy is poised to turn sour and perform a serious hiccup in
the coming months, spoiling Donald Truimp's chances of re-election as
it did Mr. Hoover's in
William Engdahl sees a similarity: ".At this point
the parallels between one-time Republican President Herbert Hoover who
presided over the great stock crash and economic depression that was
created then by the Fed policies, and Trump in 2019 are looking
ominously similar. It underscores that the real power lies with those
who control our money, not elected politicians."Trump-Hoover
Before we become swept up in the notion that
history can repeat itself exactly we should remember that the money of
1932 was based on a gold standard. Mr. Engdahl may be of the
opinion the Federal Reserve could have softened the crush of the
depression by printing up more currency, as it did in 2008-9 to prevent
recession becoming something worse. But the Fed's toolkit was
different in the early '30s and it didn't have the power of creating
huge amounts of currency from thin air that it has now. There is
no need to even PRINT additional currency now because most of the
"money supply" exists only in the form of computer digits. Cash
demand is much less today, per capita, because most financial
transactions are electronic. (!)
The government tried to solve the money crisis of
the early 1930's by removing money (gold) from private hands - paying
$20.67 per troy ounce - in irredeemable Federal Reserve Notes.
After tucking the gold away in Fort Knox it was revalued to $35.00 per
troy ounce thereby enriching the U.S. Treasury. It eventually
changed the price to $42.22 per troy ounce before cutting any tie to
gold in the summer of 1971.
So, the currency of 2019 is in no way related to the
currency held by the public in Hoover's day. Therefore any
economic correction that's waiting in the wings may not play out as it
did at the beginning of the Great Depression.
Conclusion: It's doubtful there is a
political will to officially return to any form of sound
money. Consequently, The bankers must continue to flood the
system with fiat currency. This, however, has never been known to
work for long periods of time without brutally colliding with economics
Security benefit to rise 1.6 percent in 2020
Last week we predicted 1.5 perecent.
So, our guess was
off by a smidge. The raise will amount to an average of less than $1.00 a
WASHINGTON (AP) — Millions of
retirees will get a modest 1.6% cost-of-living increase from Social
Security in 2020, an uptick with potential political consequences in an
election year when Democrats are pushing more generous inflation
The increase amounts to $24 a
month for the average retired worker, according to estimates released
Thursday by the Social Security Administration. Following a significant
boost this year, the cost-of-living adjustment, or COLA, for 2020
reverts to its pattern of moderate gains.
Note the line about Democrats "pushing for
more generous inflation protection." They haven't noticed that
indexing for inflation never works in the long run. The only
ratonal move is to quit inflating the money supply so the purchasing
power of the dollar will cease its constant decline.
Politicians won't do it,
but restoring the dollar to its Constitutional mandate would be a
giant step in restoring monetary stability. Wouldn't it be great
to set aside some money for a baby's education knowing, roughly, what
the cost would be eighteen years from now?
Having weathered so many periods of recession
we have come to appreciate the "feel" when a recession is on the
doorstep. We have that feel now and fully expect to experience
our 12th recession before Father Time calls upon us to cash in our
Notice that unemployment
climbs sharply DURING recession, but plunges steeply as the economy
recovers. Unfortunately, the gain in employment following the
2008-9 recession was mostly at the cost of taking on a phenomenal level
of debt...both the government and private sector. We have
searched the historical record and can find no instance of a policy of
persistent debt leading to anything but a steep and painful economic
correction. The unemployment chart above clearly indicates that a
ten year economic expansion - heavily financed by debt - has set us up
for a stemwinder recession.
It's past time, we think, to quit electing
politicans and seek out old-fshioned statesmen/women who have the
wisdom and fortutude to correct the destructive fiat money system and
force the government and the citizenry to live within their
means. Otherwise there will one day come a revolution of the
young upon whom we have heaped an unpayable debt load.
data indicate that wealthier Americans have cut back
on their consumerism and spending,
which could be a signal that a recession is right around the
corner. A popular theory is the economy can't keep
forward unless consumers support it by spending more money on things
they may not need. Since consumers are said to provide 70 percent
of the Gross Domestic Product, we are all caught between a rock and a
hard place. Putting the brakes on spending in order to trim our
heavy debt loads becomes downright unpatriotic. On the other
hand, if we all - rich and poor - cut back on spending we could
cause the economy to lapse into a recessionary tailspin.
Government = Weak Dependent People
Government = Strong Free People.
The bigger the government the more dependent upon it is the
general population. The problem is the inability of the
government to keep subsidies flowing to the people without taxing as
much as it dares and borrowing the rest. This pushes a formidable
debt load upon future generations. It assures them a lower
standard of living than would have been the case if the voting majority
had not chosen spendthrift politicians to run things.
cannot pass indebtedness on to their descendants. Upon death
one's assets (estate) are used to pay to pay debts and the remainder,
if any, goes to persons described in the deceased's will. If
assets cannot meet debt too bad for the lender. Bills demanding
payment cannot be sent to descendants.
With modern government, however, the reverse is
true. The government may borrow trillions of dollars and the debt
rolled over and over until paid by future taxpayers who have not even
been born yet.
It's unfairly greedy is it not?
2020 Social Security Benefit
increase? We'll find out in less than a week.
Since 1975 Congress has reviewed the rate of inflation each
September and announced in October a cost-of-living adjustment to take
place in January of the following year.
We should get the word on the 2020 increase next Thursday.
Sometimes the increase is zero. That happened in
2016. The guessing is
the 2020 increase will probably be around 1.5 percent. Less than
More than 65 million people receive Social Security
benefits each month. The COLA was established in 1975 while the
nation was in the middle of a run of double-digit price
inflation. However, it does not provide for a CUT in the monthly
check in case of an episode of price DEFLATION. In such a case the
payment would remain the same until the price level rises to inflation
again. (Assuming that Congress and the Federal Reserve recover the
tools to inflate the money supply.)
What to do?
Ninety years ago Wall
Street was flashing
signs of trouble. Everybody had piled into the stock market "on
margin" and were certain they'd soon be rolling in wealth. One
could buy stocks with just a little down and the hope their shares
would rise to the rafters in value and they could sell at a handsome
profit. Bootblacks and taxi drivers were swapping stock tips in
the street. It was a heady time, but the Roaring Twenties were
about to come to a screeching halt in late October, 1929.
Next month marks
the 90th anniversary of the
great Wall Street crash. History may not repeat itself, of
course, and the present financial system is now different than it was
in 1929. But there's an eerie feeling of apprehension afoot in
the global economy and much uncertainty about where it's leading.
caution flag is certainly
waving and the alleged cutback in consumer spending by the well-to-do
may be a cue for the rest of us to rein in our outlays. The
old adage "Live within your means" will cushion economic
Democratic promises of the 1932
campaign were not kept.
honest look at the Democrat political campaign of 1932 clearly shows
Democrats may have deliberately misled the voters. Here are the
first three planks of the
Democratic Party platform of 1932:
immediate and drastic reduction of governmental expenditures by
abolishing useless commissions and offices, consolidating departments
and bureaus and eliminating extravgance, to accomplish a saving of not
less than 25 percent of the cost of Federal government.
Maintenance of the national credit by a Federal budget annually
sound currency to be maintained at all hazards."
Upon taking office in 1933 President
Roosevelt threw the campaign promises overboard and steered the Ship of
State sharply to the political left. To this day there is a general
impression that the New Deal was the best thing that ever happened to
the USA. Whereas the people were once responsible for the government
under which they lived we saw the government assume responsibility for
the people. The world's largest welfare state was born.
is no dumbell when it comes to understanding the whims of people with
President Trump has caught a whiff of economic recession in the
air and is tweeting his head off about it, assuring everyone within
earshot that the present economy is in pretty good shape, thank you,
and privately hoping that a recession will not hit until after the
November, 2020, elections.
He understands perfectly well that consumer activity accounts for about
70 perent of the Gross Domestic Product (GDP) and that consumer
willingness to take on debt accounts for large measure of the
Michael Lebowitz and Jack Scott have tried to untangle general
understanding of the signals that portend recessions, but the general
public is most likely to take its cue from the daily media
"We can follow all the economic data and trends diligently, but consumption accounts for over 70% of U.S.
economic growth. Therefore, recessions ultimately tend to be the
effect of changes in consumer behavior.
If the narrative du jour is enough to trouble even a small percentage
of consumers, the likelihood of a recession increases. The
evidence of such a change will eventually turn up in sentiment surveys,
and when it does, the problem has already taken root. This is not a
dire warning of recession but rather offers consideration of a
legitimate second-order effect that potentially threatens this
record-long economic expansion.
"While the media focuses on the inversion narrative, alerting the
public to recession warnings and driving consumers to re-think their
planned purchases, we care more about when the yield curve will
steepen. The steepening curve caused by aggressive Fed action
after a curve inversion is the tried and true recession warning.
For more, please read Yesterday’s
Perfect Recession Warning May Be Failing
& Jack Scott
Bottom line: The more talk you hear of lowering interest
rates, cutting payroll taxes, capital gains taxes, the more sure you
can be sure political leaders are trying to keep recession
bay. They understand perfectly that when consumers feel more
dollars will come into their pockets the more willing they will be to
spend it. It's when they sense that money is in short supply they
tend to lay out less of it. When that happens the recession bells