When we hear that governments are cashing the gold from their vaults and buying cryptocurrencies with it we'll reconsider our disagreement with Fred's belief that cashlessnes will replace money.
Among other things, Fred contends that a universal digital currency, combined with cashlessness, would wipe out the illegal drug trade overnight. He also notes China hopes to have its digital yuan up and running in time for the Winter Olympics in 2022. He makes some interesting points. How To Eliminate the Illicit Drug Trade
Price plunge in bitcoin.
-
We're used to seeing
big price swings in the cryptocurrency world of bitcoin. Up one
day by $1,000 or more, and down another day by a similar amount.
But the weekend plunge of nearly $6,000 brought the bitcoin price down
to just over $55,000. By Monday morning the price had stabilized at a
little more than $56,000.
One proponent argues that bitcoin is "hard currency" explaining that he doesn't mean "hard" in the sense of intrinsic value such as metal, but hard in the sense difficult to create. Just as gold is difficult to scratch out of the earth's crust so bitcoin is hard to get out of the internet. In fact, supporters claim there will never be more than 21 million bitcoin and most of them have already been found. Where is the authority to maintain this promise?
We prefer the old definition of hard money. A piece of money made of scarce precious metals. "Soft" money was paper IOUs redeemable (until 1933) in hard money.
Positioning cryptocurrency with gold as "sound money" in opposition to the government's fiat currency is a stretch thatl only confuses average Americans.
"Will the new commander-in-chief deter America’s enemies Iran and North Korea—and keep China and Russia from absorbing their neighbors? Joe Biden, and those around him, seem determined to upset the peace they inherited."
~Victor Davis Hansen
There's no question about it. Eisenhower was right when he warned about the military-industrial complex. The winds of WAR have begun to stir. The United States is looking for a way out of its economic dilemma and resorting to a wartime social footing might help - as it did in the early 1940s. The economy had slipped back into depression territory in the last of the '30s and World War II changed everything. We remember well the tenor of the times...the victory gardens, gas rationing, food rationing, constant bond sales (borrowing) in which the acculmuated federal government debt rose from $43 billion in 1940 to nearly $259 billion by war's end. Factories hummed, producing war materiel, and unemployment plummeted as young Americans were drafted into the military.
Subsequent wars, such as South Korea, Iraq, Viet Nam, Afghanistan, et al, did not have the same feeling as WW2 because government had llearned how to pay for civilian social programs and war costs by debauching the currency. (Inflation.)
Victor Davis Hansen examines the possibility of war as a solution to our present problems: HOW TO START A WAR
"A reminder why there will always will be sound money and why bitcoin cannot fill that role.
"With bitcoin’s price still rising and expected to rise even more, there has been a growing belief in cryptocurrency circles that it will replace unbacked government currencies when they eventually fail.
"The assumptions behind this conclusion are naïve,
exposing hardly any knowledge in what qualities are needed for sound
money. This article agrees that current events are accelerating the
path towards fiat destruction, and that historical precedents point to
their eventual replacement with a sounder form of money. But what that
money will be is decided when governments lose control over their fiat;
and the public, its users, through free markets will set the monetary
agenda."
FUTURE MONEY
For example: The official line today is that price inflation (CPI) is running at 1.7 percent on an annual basis. Yet a quick tour of the grocery aisles will show that prices are rising at a faster rate than that - anywhere from 4 to 8 percent. The Federal Reserve is comfortable with its policies concerning the Consumer Price Index and vows to hold interest rates low or at zero until general prices rise at a more rapid rate. This is a disaster for retirees whose life savings earn next to nothing. It's not unusual to hear that retirees sometimes "outlive their resources."
We borrowed a Federal Reserve graph from blogger Charles Hugh Smith to demonstrate the more than 70 years track of one of the several financial episodes it follows. The graph is the Fed's...the notations are Mr. Smith's.
The graph shows the astonishing increase in margin accounts at financial brokers and dealers. Buying financial assets on margin can be profitable as long as the economy expands, but once a bubble is created, and bursts, paying off the debt margins can lead to ruin.
The propagandists are not interested in the facts....just their version of "justice". They seem to be on the fast track right now.
|
STARTLING
NEWS DISPATCH FROM MINNEAPOLIS
"George
Floyd died in police custody after a corner store clerk reported he had
used a fake $20 bill, a nonviolent offense so low-level that police
don't usually take people to jail for it. Now, as the trial over his
death continues to unfold, criminal justice reform experts and
diversity specialists are hoping the case will prompt retailers—from
small businesses to major chains—to reassess how they treat Black and
other minority customers and how they can handle loss prevention cases
more equitably.
Retailers, they point out, are on the front lines of racial justice in
their own stores." ~Minneapolis
Star Tribune
How
times change! When this country was young the penalty for passing
counterfeit money was death. Now the social "experts" regard
passimg counterfeit currency to be a "non-violent offense so
low-level that police don't usually take people to jail" for
attempting to cheat merchants with a fake $20.00 note.
In other words, it's OK to forgive stealing if the offendfing customer is thought to be among the "deserving poor." But who, exactly, makes these legal distinctions? And is it fair? |
<
Whatever
happened to the old rule declaring we are all equal under the law?
When, for example, did the national counterfeit currency laws
become modified to state that "racial justice" should be
practiced by merchants
when they are offered a fake piece of paper
currency? Trying to pass counterfeit bills is flat-out theft and store clerks could personally be held liable if they spot obvious counterfeit currency and fail to report it. * * * * * * * * * |
Writing from Switzerland Egon von Greyerz examines the fall of Archegos, the financial firm whose decline has made headlines lately. This article may help readers understand the certain danger that playing in the derivatives market can produce. Von Greyerz reminds us that derivatives are not the ASSET. They merely derive their value from the asset.
TIP OF THE ICEBERG.
"Trillion
Here. . .a Trillion There."
"During 2020, the federal government provided a total of $3.2 trillion of Covid relief, starting with a mere $8.3 billion, then adding $104 billion, then adding $2.2 trillion, and finishing off the year with another $900 billion.
"We’re now three months into 2021, and the federal government has
provided yet another $1.9 trillion in Covid relief; and, the Biden
administration has just asked for $2 trillion for
infrastructure."
Clifford Theis, economist with the
American Institute of Economic Research is reminded of the late Sen.
Everett Dirkson, a long-serving
Minority Leader of the Republicans in the U.S. Senate, famously
quoted as saying a billion here, a billion there, and soon we’re
talking real money. That was back in 1969. At the time, a billion
dollars was about one-tenth of 1 percent of GDP. And, to make it
clear to the average reader, we add that $1 billion is 1,000 million
dollars. It takes 1,000 billion
to equal $1 trillion.
Mr. Theis does a good job of explaining the immensity of the impact of continuous monetary inflation since Mr. Dirkson's "a billion here" remark of more more than a half century ago: A TRILLION HERE...A TRILLION THERE
Conservative writer Pat Buchanan thinks President Biden wants to emulate FDR and LBJ.
The $1.9 billion stimulus bill was quite easily passed by Congress. The politicos are now being asked to approve $2.3 trillion to "improve infrastructure" and pay for several other big-ticket programs. Folks, that's $4.2 trillion - most which has to be borrowed into existance and paid for, we are told, by an increase in corporate taxes and even A nationwide Value Added Tax (VAT).
Mr. Biden's plan calls for a heap of new spending, such as 300,000 million dollars to care for the elderly and disabled. Another 621,000 million dollars would pay for surace transportation. It's a long listwhich appears to be generating some headwind from the GOP members as well as some Democrats.
But here's Pat Buchanan's take on the subject: "REMAKING AMERICA
<We worry about debt - -
...but most of us don't have the words to describe it.
J. Howard Kunstler has the words.
. . .but if the electricity fails how about WAMPUM?
The late newsletter publisher, Vern Myers, predicted a sharp deflation 40 years ago - but he failed to realize the government could and would resort to extremes of currency creation, aided and abetted by the growing use of electronic digital data transfers. As long as the world demands U.S. dollars for trading purposes, and overlooks the fact that modern dollars are little more than IOUs, price inflation will reign. But the day will come when reality will prevail and the people will demand a more trustworthy currency than now circulates as "money".
They should consider wampumpeag. Also known as warmpum or peag. It was an actual circulating currency among Native Americans who lived along Long Island Sound. The carefully tooled and polished beads were also prized as a kind of jewelry arranged in a decorative way on belts. they came in two colors, black and white. The white ones were made of the ends of periwinkle shells while the black ones were made out of the black part of a clam shell. The finished black peag (wampum) were twice as valuable as the white ones. The beads were used as money by the natives and were adopted by colonists as a barter currency to augment foriegn coin, which was in short supply.
Alas, the clever colonists ruined wampum as a medium of exchange by introducing high tech into their manufacture. By the use of modern machines they were able to create wampum faster and in greater quantity than the native artisans. The result, of course, was wampum inflation. The Europeans never understood that it was SCARCITY that gave wampum their purchasing power.
For a time price inflation roared in double digits.
Don't look now, but inflation is rearing its ugly potential for double digits once more. It has been relatively tame since we and the Misses were married in 1948. In fact, the CPI dipped slightly into negative terriory only twice in the 73 years since...1949 and 1953. But it is accurate to say we have lived most of our lives in the age of inflation.
The Federal Reserve is doing its level best to keep inflation advancing at theannual rate of 2 percent or so. The national government is frantically borrowing vast sums of cash in exchange for its bonds and other IOUs. The administration now talks of imposing taxes to help pay for the borrowing, but the spend and tax approach has never been partiularly popular with Americans.
What are the chances of a DEFLATIONARY episode?
Franklin Roosevelt overwhelmed Hoover in the 1932 election, called in
the people's gold in 1933 and promptly devalued the U.S. dollar in
terms of gold - which Americans would not be allowed to possess again
for more than forty years. Borrowing continued to rise in the
1930s and the economic depression persisted. By the time the nation got
into World War Two its annual deficit was nearly $50 billion. But
the borrowing went into overdrive when war dragged on. The federal debt
had piled up to $259 billion by 1945...122.75
percent of GDP.
There
were a few years in which the national government ran budget surpluses,
but the debt pile grew until it reached $995 billion in 1981. Converted into millions that's 995
thousand million. Still quite a lot
of money - - even today.
The
debt pile began to be measured in trillions in 1982. By 1995 the
accumulated debt was $4.9 trillion!
Politicians have chosen to
ignore the debt accumlation. The Treasury Department says it is
presently more than $28 trillion,
A Sword of Damocles
swings over our heads and something ought to be done about it. But he
main objective is to make
voters happy....and voters have no wish to cough up the thousands of
dollars per capita
to
pay down this towering national debt. The voting majority knows very
well the politians will never ask them to pay back the debt. They'd be
run out of office at the next election.
So - what happens? Can't the debt be declared null and void and just disappear? No - not without wrecking the lives of all those investors in the US and around the world who have invested in all those IOUs in the belief government will make good on its word to redeem them.