WEB OF DEBT BLOG

EU/IMF REVOLT: GREECE, ICELAND, LATVIA MAY LEAD THE WAY

46 Responses

1. 

   Arya, on December 16, 2009 at 4:31 am said:

   Hello Ms Brown,

   Could you please shed some light on the following issue:

   If an African country decided to break free from the vicious trap cycle of “debt” and IMF economic conditionality and financial slavery by printing and issuing its own currency, how could the country protect its currency from devaluation & the resulting (hyper)inflation.

   In fact, under the current (fraudulent) monetary system, the value of a country’s currency is based on the amount of foreign exchange held within the Central Bank of that country.

   However, if a country decided to both stop paying its illegitimate “debt” to the IMF and to break free from the impoverishing “colonial pact” (export of non-processed cash crops (below production price) to pay off the debt)- which in most African countries is the sole/major foreign exchange earner – the country’s Central Bank would inevitably run out of foreign currency which would plunge its currency into a downward cycle of devaluation and result in hyperinflation.

   In this context, how could African countries stabilize the value of their own printed and issued currency locally and internationally?

   I thank you for shedding some light into this important issue.

   Kind regards,

   Arya Tajdin
   Founder & Executive Director
   Yajna Centre
   Dar es Salaam, Tanzania
   Blog: yajnacentre.blogspot.com

   Reply
   • 

     Ellen Brown, on December 16, 2009 at 11:14 am said:

     Hi Arya, great to hear from Tanzania! I used to live in Kenya. Africa is a wonderful continent, but much exploited as you note. As I wrote in my article with references, the local currency can be protected with exchange and capital controls and with limitations on speculation. (Compare Malaysia in 1998 — these things are described in more detail in “Web of Debt.”) Alternative energy systems and other infrastructure can be developed using local currencies. See the reference in my article to AlcoholCanBeaGas.com — that group I’m sure would have many suggestions for self-sustainability and self-sufficiency. Help could probably also be had from China and other well-funded countries outside the Wall Street/City of London circle. Argentina said it simply couldn’t pay, and it was left alone to develop its own resources. The big mistake that leads to hyperinflation is attempting to use the local currency to pay off foreign debts in a foreign currency (allowing speculators to short sell it). Good luck! Ellen

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     • 

       Arya, on December 17, 2009 at 12:36 am said:

       Hello Mrs Brown,

       Thank you for your prompt response to my inquiry. I have unfortunately not yet had an opportunity to read your book, but I shall do so as soon as I get a copy. I have, however, read many of your very informative articles on the fraudulent global monetary system ( fractional reserve banking, private central banking, etc), which is at the root cause of all of the economic depressions, wars, human poverty, misery, destruction & death worldwide.

       I congratulate you for your courageous and noble efforts to reveal and change the fraudulent global monetary architecture for the welfare of humanity.

       I am also fighting to help liberate Africa from the vicious & deadly trap cycle of (so-called) “debt” “aid” and the “colonial pact”.

       As Nyerere rightly said:

       “Africans produce what they do not consume and consume what they do not produce. That has become the basis of African enslavement.”

       The challenge for Africans is to break free from this vicious trap cycle of unending poverty and misery. The future survival of millions of Africans is at stake.

       I also invite you to read an open letter I addressed to Obama on the fraudulent US monetary system (FED) published on my blog. You are welcome to publish this letter on your website if you wish. I welcome your comments. Thank you!

       Link: http://yajnacentre.blogspot.com/2008/11/open-letter-to-barrack-obama-regarding.html

       Take care!

       Kind regards,

       Arya

       Reply
       • 

         Ellen Brown, on December 17, 2009 at 9:24 am said:

         Thanks! I’ll send you a complimentary ebook. Best, Ellen

         Reply
         • 

           Peter Kellow, on December 17, 2009 at 1:56 pm said:

           Ellen, I’m a bit worried about what happens to a Third World country (to use your classification) that depends on imports for many essentials of modern life when it defaults on its debts and issues its own currency. The examples from the past given, Argentina, Malaysia, Dubai, and those mentioned in as future possibles in the article, Greece, Iceland, Latvia, are all reasonably resourced countries of the First (or Second) Worlds. Also all these countries also have fairly robust (if imperfect) civil societies to enable them to withstand the stresses and strains. And let’s not imagine the default process is easy and that it can be repeated again and again. And the phrase “Help could probably also be had from China” gives me a bit of a shiver. I am all for the answer to the problem that you propose but I suspect that for a Third World country it is only going to be feasible with help from others, and preferably not China acting alone. Nothing against China, but I feel it has problems enough of its own and has its own agenda.

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           • 

             Ellen Brown, on December 17, 2009 at 5:30 pm said:

             Well, it isn’t going to be easy, and that’s why they need the model of some stronger European countries to show the way. When Iceland shows that it can become self-sufficient on its thermal energy and all the weeds that can be turned into alcohol for fuel, those little bankrupt islands in Central and South America would have something to copy and get inspired by.

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             • 

               guidoamm, on December 18, 2009 at 11:00 pm said:

               Apologies if I butt in. But capital controls and aid from China is not a solution that leads to independence. It does not lead to monetary independence and it certainly does not lead to independence from an unchecked fiat monetary system.

               Allow me to place the horse back in front of the cart.

               The one necessary PREcondition for monetary independecne is the rule of law. Fullstop! Nothing else.
               If you have an environment where workers can legally enforce their rights and where entrepreneurs and investors are confident they can make their legal claims prevail and where capital goods are protected, a currency will take care of itself.

               No rule of law = no monetary independence.

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               • 

                 Ellen Brown, on December 18, 2009 at 11:36 pm said:

                 Sure, you may butt in! We like a good debate. I can’t disagree with any of that. But in the meantime, it doesn’t hurt to have a big daddy in Asia. We all get help from daddy at one time or other. How are you going to keep the pirates and vulture capitalists out? You need capital controls. Does your rule of law include rules against speculation? Or is it the golden rule — he who has the gold makes the rules?

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                 • 

                   guidoamm, on December 20, 2009 at 8:24 am said:

                   I apologize for any typing mistakes that may occur but I am unable to see a good portion of the text I am inputing into the reply window.

                   In a healthy social environment characterized by separation of power and sound civic institutions, speculation is not a problem. Speculation is not bad in and of itself. We all speculate to a certain degree. Speculation is nothing but the search for profit. But speculation through corruption is not desirable in any environment as it is not desirable in the West although it still happens.
                   The problem of developing countries is not the monetary system,. Developing countries’ greatest problem is their social structures steeped in customs, traditions and tribes.
                   Sort out the social and the economic will take care of itself.

                   With regards to natioanlization. That’s a bad idea. Its a bad idea oon several levels. First, it is a bad idea because if you nationalize you better have the intellectual wherewithal to do something with what you are nationalizing. Second, if you nationalize, you better hope that you have very strong and independent civic institutions. Failing that, you become Zimbabwe. Abhorrent as exploitation by foreign powers may be, it is arguable whether it is worse than genocide which inevitably follows nationalizations in developing countries.

                   Does anyone know how I can get this window to dispaly fully on an iMac?

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                   • 

                     Zarepheth, on December 21, 2009 at 11:50 am said:

                     I believe speculation itself is a problem. Speculation invests resources – usually money – where those resources cannot produce anything for society.

                     Speculation in land, takes land that could be “free”, puts it into private hands, who then demand tribute from everyone else who would use that land. 150 or more years ago, free land was truly available in the United States. If someone disliked their employment in the city, they could move out to the country, claim a few acres for a home, farm it (or hunt in the nearby wilderness) and actually make a decent living. As the railroads developed and expanded, private parties claimed thousands of acres of land for themselves – preventing anyone else from using that land – until land values rose due to the railroads and they sold off pieces here and there for tremendous profit. The problem here, is that 100% of the capital gain was due to the actions of society as a whole. The investors did *nothing* to make the land more valuable, yet they received 100% of the gain while the rest of society received nothing. That gain should have been equally spread through all of society, since it was society as a whole that made the land more valuable.

                     Modern day speculation is quite similar. People buy land and other real estate; they buy stocks, bonds, and similar financial instruments; or they buy various commodities and sit on them hoping for an increase in monetary value. However, their purchase of those assets does nothing to increase they assets’ value. The value increases for reasons that have nothing to do with the individual investor. The land values increase due to population increases, stocks increase in value due to actions internal to the company, and all of these assets may increase or lose value due to the community needing more or less of a commoditity or asset. The individual invester provides *nothing* to produce the increase in asset value. Instead, demand by other investors, or actions by the community as a whole cause asset values to go up or down. Any gain or loss should be shared by everyone who participated in causing the gain or loss, not by individual investors who did nothing.

                     So I believe that most speculation is nothing more than gambling – gambling in the same sense as playing the lottery, playing poker, or going to a casino. These are all zero-sum games – if one person “wins” another loses. Economic transactions are supposed to be “win-win” transactions; that may happen in an honest marketplace where those producing one type of commodity sell or trade for other types of commodities so each party has the right amount of each commodity when the transactions are done, but it does not happen in the casino.
               • 

                 Peter Kellow, on December 20, 2009 at 1:25 am said:

                 My previous comment about the need for a robust civil society as necessary to monetary reform, and my doubts about relying on China to help, did not go down too well judging by the number of thumbs down. But my thanks to ‘guidoamm’ who said just about the same thing.

                 I am seriously worried if there are a lot of people who think that you can introduce a sovereign fiat currency without proper institutional structures. As I have said on my website http://www.republicanparty.org.uk even the UK is not ready for monetary reform with the government creating the money. The UK needs to get its civil society and constitution sharpened up considerably for that to be a success

                 OK, PM Brown creating the money might in some ways be marginally better that corporate banking doing the job, but the overall result would be an anarchic, agonistic mess.

                 Money creation has to be in the hands of the civil and democratic institutions working together. Ellen discusses the idea of a professional “monetary board” on p405 of Web of Debt but does not support the idea. But I think some such is essential, and there has to be a democratic element in it. America has the big advantage over the UK in that it has written constitution into which the provisions of such a board could be permanently enshrined.

                 If we start to see Third World countries implementing sovereign currencies before they have a reasonable civil society and constitution in place I am afraid the monetary reform might get a bad name. The way to avoid this is for rich countries to forgive the debt and develop closer ties and for that we need political movement in the west. That may be nearer than we think. China (and India) should play a crucial role in that process but, please, not acting alone.

                 Reply
               • 

                 Jere Hough, on December 20, 2009 at 8:13 pm said:

                 Rothschild said if he controlled a nation’s money, he didn’t care who wrote the laws. It is essential that property and contract laws be made and enforced. However, when monopolistic money forces are in control of a nation, they can and do write the laws that tilt the playing field in their advantage. When they provide most of the money officials need to get elected, or otherwise placed in office, the rubber stamp to their legislative wishes will be nearly automatic.

                 I say when all the rights of people are written by, for and of the people, then fair and just social systems and economies will take care of themselves.

                 Reply
     • 

       Arya, on December 19, 2009 at 12:35 am said:

       Hello again Ellen,

       I have been further thinking about the issue raised above, and would like to ask you if the following solution would be feasible:

       As you know, Africa is an extremely mineral-rich continent, whose mineral resources are being systematically plundered by Western and other foreign multinational companies.

       However, if African countries nationalized all their mineral industries and backed their own-issued currency with precious minerals (gold, diamonds, bauxite, uranium, etc. you name it, they have it!), would that resolve the above issue and enable them to achieve financial independence?

       Thank you for your feedback!

       Kind rgds,

       Arya

       Reply
       • 

         Jere Hough, on December 19, 2009 at 6:48 pm said:

         Hi Arya, Good comments and questions. I can’t speak for Ellen of course, but I’d say you are on the right track. However, nationalization of natural resources alone will not achieve your goals of financial independence. It will also require honest government, honest elections, and accountability to the people.

         There is simply too much money being offered to those who gain power in these small (and even large) nations in return for favorable rights to those precious natural resources. The few stalwarts who do refuse face huge financial campaigns to overthrow them, often with the help of the CIA, or other special interest assistance.

         Then there is the additional problem of building domestic industries to replace reliance of foreign imports. The goal is to achieve as much self-sufficiency as possible, IMO, and then to keep imports in balance with exports of finished goods. I don’t see how any nation can long prosper while producing most of what they consume, and exporting as much of their excess production as they import.

         That is the reason I see so much economic grief ahead for the US. We have allowed our leaders to dismantle our one great productive capacity in manufacturing, and exchange it for cheap labor overseas. Just about the only thing we have left to make and export are weapons. Ooops, didn’t mean to spoil the secret. We aren’t supposed to notice such things.

         I commend your search for economic independence. Someday we may all find it.

         Reply
         • 

           Arya, on December 19, 2009 at 10:32 pm said:

           Hello Jere,

           Thank you for your feedback. Economic reforms MUST indeed go hand-in-hand with political reforms. In fact, most if not all of the economic problems besieging Africa ( and the rest of the world) are political in nature. The economic solutions exist, but are not implemented because of political corruption, as you point out. In fact, most of the African (so-called) political leaders are simply the butlers and local agents of the banksters, who in exchange for their “paycheck” hand them over all of the real assets of the country (i.e mineral resources, oil, etc.) while economically enslaving, oppressing and impoverishing their entire populations.

           In fact the exact same looting mechanism which operates (more subtly) in the US through the FED and worldwide through Central Banking is operating in Africa through the IMF and the World Bank, using the (so-called) “debt” as a weapon and the IMF as the IRS…

           Breaking free from this vicious trap cycle of economic enslavement and the resulting human poverty and misery is a real “David vs Goliath” struggle not only for Africa but for the entire world. The entire survival of human civilization is at stake.

           However, ” a chain is only as strong as its weakest link…”

           There is a solution to put an end to this enslavement: Peaceful, non-violent, non-cooperation with the system…

           Take care,

           Kind regards,

           Arya

           Reply
           • 

             Jere Hough, on December 20, 2009 at 7:58 pm said:

             Arya, You are most welcome, and thank you for your astute comments. I agree with all points, especially the peaceful, non-violent, non-cooperation with the system. I also believe in community-by-community peaceful democratic civic organization.

             Ellen’s book should be a basic handbook for those states, nations and communities that want improved economic independence.

             Best wishes,

             Reply
       • 

         Malden, on December 20, 2009 at 10:29 am said:

         Hello Arya,

         If I may add, your own-issued currency would be backed not only with precious minerals, but with all goods and services your country produce. National currency is, so to speak, a reflection of the whole production in an economy, including infrastructure for public use made by government.

         Reply
         • 

           Jere Hough, on December 20, 2009 at 7:59 pm said:

           Malden, I totally agree.

           Reply
           • 

             Arya, on December 20, 2009 at 9:43 pm said:

             Hello Malden and Jere,

             Thank you both for your feedback. I entirely agree with your point Malden. However, in the case of Africa, before the currency can play that role (i.e reflect the real value of goods & services produced), infrastructures and other crucial investments need to be made in the economy by the government. Thus, to do so, the government ( hired based on MERIT) would need – at least in the beginning – to back up its own-issued currency with precious minerals to rebuild all the required basic infrastructures (non-existent in Africa), and make other indispensable investments such as power generation, build an industrial base, invest in technology transfer, education, etc

             Once the entire infrastructure is in place, then freedom and human ingenuity takes over and creates REAL wealth of which paper money is only a reflection and a means of exchange ( and a store of value). And believe me there is plenty of that in Africa and around the (so-called) Third World where human freedom and ingenuity is suppressed by the “masters of the world” and their local butlers, while the mineral wealth and other assets of the country are systematically looted using the mechanism described above, leaving the entire human population trapped in a vicious and deadly trap cycle of poverty, misery and death.

             This deadly trap cycle MUST be broken to liberate humanity from perpetual economic slavery, oppression and mass poverty. Nothing less than the future of the entire human civilization is at stake.

             As Tolstoy rightly stated:

             ” Money is a new form of slavery, distinguishable from the old simply due to the fact that it has no visible master-slave relationship.”

             And as Goethe said:

             ” None are more enslaved than those who falsely believe to be free.”

             Take care,

             Kind regards,

             Arya.

             Reply
             • 

               Arya, on December 21, 2009 at 2:26 am said:

               Here are the clauses in the EU Constitution ( Maastricht Treaty ) that (legally) financially & economically enslave all European citizens to
               the banksters:

               EU CONSTITUTION

               ECONOMIC AND MONETARY POLlCY

               Chapter 2

               Monetary policy

               Article 105a

               1. The European Central Bank shall have the
               exclusive right to authorize the issue of bank
               notes within the Community.

               The ECB and the national central banks may
               issue such notes. The bank notes issued
               by the ECB and the national central banks shall
               be the only such notes to have the status of legal
               tender within the Community.

               Chapter 1

               Economic policy

               Article 104

               1. Overdraft facilities or any other type of credit
               facility with the ECB or with the central banks of
               the Member States (hereinafter referred to as
               “national central banks”) in favour of Community
               institutions or bodies, central governments, regional,
               local or other public authorities, other bodies
               governed by public law, or public undertakings of
               Member States shall be prohibited, as shall the
               purchase directly from them by the ECB or national
               central banks of debt instruments.

               2. Member States may issue coins subject to
               approval by the ECB of the volume of the issue…

               Thus, Europeans have been enslaved with just 2 paragraphs…Unfortunately, as I said earlier, the
               vast majority of EU citizens have never read the EU constitution, and even those that did surely do not understand the tragic implications of these 2 articles…
               (i.e. economic & financial slavery to the banksters)

               Full EU Constitution can be downloaded at the
               following link:

               Click to access maastricht_en.pdf

               Kind regards,

               Arya

               Reply
2. 

   Jonathan P. Chance, on December 16, 2009 at 5:24 am said:

   Excellent article and good news, too.

   When We the People of the United States “End the Fed” and implement appropriate monetary reform, most of the world’s institutionally created problems can be solved.

   JPChance.wordpress.com

   Reply
3. 

   Terry Thomas, on December 16, 2009 at 7:37 am said:

   I have never been a fan of the IMF. It seems to be a tool for trouble, which is the way our country operates globally. Of course our interests – or more accurately put – our stock market gambling executive banksters benefit internationally when they collect on the collateral of unpaid debts. It is those few unknown wizards behind the curtains and not our munchkins who benefit.
   So, your second option, at the end of your article, which gives the banking wizards back their investment, don’t make sense to me. Their original aim was at a more profitable outcome. It confuses me in a since that you seem to think they would be happy to shake hands and get back to work. The whole idea of their devious plan was for them not to collect their original investment but, not only allowing our government to take all the risk then which then allow those so called wall street executives to buy these unpaid debts for pennies on a dollar. They ultimately suck the life out of the development they claim to promote. When a developing country defaults these debtors whizzes usually pick up the pieces of these unfortunate countries assets worth much more than the original loan. If they can’t collect we, the poor ignorant patriots, begin hearing the war drum beat.
   For example: I understand there was an agreement which divided up Iraq’s oil reserve last week. Those wizards are partying – behind the curtain of course. Can you imagine them taking their investment back as none negotiable assets (toxic at that) and leaving all that oil to the completely crushed population of that country? The estimate of the oil reserve, back when the price of oil was still about $30 a barrel was about 30 trillion dollars. I think it would be hard to get them to go along with simply getting the investment back.
   But I agree. I’d like to see a little more justice. It is just hard for me to understand how we are going to implant these ideas into our government which seems to belong to these wizards.
   I downloaded your brochure templates for the Brownian PAC. I wish I could help more but don’t know how to convince people that you have the answer. It seems so simple to me. Maybe it’s too simple and peaceful.
   tp

   Reply
   • 

     Jere Hough, on December 19, 2009 at 6:29 pm said:

     Hi Terry, Good comments. My 2 cents: The only way to “implant these ideas to government” is by popular opinion and the elections process. As long as people sit still for electing representatives who break campaign promises and go along with the monied special interests nothing is ever going to change.

     The answers are really pretty simple, but it means wresting control away from the most powerful special interests on the planet, the international central banking syndicate that Includes Goldman Sachs, JP Morgan, Morgan Stanley, and their foreign counterparts, the Lazards, Warburgs, and other Rothschild spinoffs. Power does not relinquish power very easily. Up to now it has been all too easy for them to blackmail small (and even large) nations who default with invasion, or even more subtle economic treacheries. Are we going to “wise up” any time soon? We’ll see.

     Reply
4. 

   Jonathan P. Chance, on December 16, 2009 at 10:46 am said:

   To abolish slavery, war, pollution and other symptoms of fraudulent and usurious fractional-reserve banking, legitimate governments must mandate their treasuries to replace bank debt currencies and junk bonds with appropriately valued domestic hydrocarbon reserve credits and Renewable Energy Credits (RECs) directly to individual citizens:

   JPChance.wordpress.com

   More democracy, less kleptocracy!

   Reply
5. 

   Joseph Danison, on December 20, 2009 at 3:43 pm said:

   The EU is what Kurt Vonnegut called a Granfalloon. The monetary union is for the convenience of the banksters and ignores the reality of the diversity of national interests.

   Nationalism is not a bad word and should co-exist with the emergence of globalization. This is an ancient philosophical problem of the one and the many. The tension that exists between the sovereign prerogatives of the states and the sovereign prerogatives of the granfalloonish US federal government have been decided in favor of the Fed.

   This has got to change in order to prevent catastrophic collapse. Ellen’s state bank proposal is a good step in the direction of more local autonomy. We need not suffer the dictatorial control of a national central banking system or a global IMF predator. The power of the federal entity derives from the reality of the states and an EU has limited usefulness when it presumes to be something more than an administrative expedient.

   We need to rediscover the olde tyme virtue of self-reliance. Again and again Ellen hearkens back to colonial script and we should realize that this solution was only possible because of the democratic values that supported it.

   Reply
   • 

     Arya, on December 20, 2009 at 11:43 pm said:

     Hello Joseph,

     Yes in fact the (hidden) objective behind the formation of the EU is to centralize and to take over complete control over the money supply of sovereign states in Europe through the European Central Bank, which if of course entirely owned and controlled by the same private banksters that control the FED and thus the US.

     In fact if you read through the EU constitution ( Treaty of Maastricht ), european states are explicitly forbidden from printing and issuing their own currencies. They MUST “borrow” all of their money from the ECB, thus economically enslaving all hard-working Europeans to the banksters…( as in the US through the FED)

     Unfortunately, the vast majority of Europeans do not know this…I wonder how many of them have even read the Treaty…?

     As Henry Ford rightly stated:

     ” It is good that people do not understand the workings of the banking system. For if they did, there would be a revolution before tomorrow morning…”

     That day is not far…

     Reply
     • 

       Arya, on December 21, 2009 at 2:31 am said:

       Here are the clauses in the EU Constitution ( Maastricht Treaty ) that (legally) financially & economically enslave all European citizens to
       the banksters:

       EU CONSTITUTION

       ECONOMIC AND MONETARY POLlCY

       Chapter 2

       Monetary policy

       Article 105a

       1. The European Central Bank shall have the
       exclusive right to authorize the issue of bank
       notes within the Community.

       The ECB and the national central banks may
       issue such notes. The bank notes issued
       by the ECB and the national central banks shall
       be the only such notes to have the status of legal
       tender within the Community.

       Chapter 1

       Economic policy

       Article 104

       1. Overdraft facilities or any other type of credit
       facility with the ECB or with the central banks of
       the Member States (hereinafter referred to as
       “national central banks”) in favour of Community
       institutions or bodies, central governments, regional,
       local or other public authorities, other bodies
       governed by public law, or public undertakings of
       Member States shall be prohibited, as shall the
       purchase directly from them by the ECB or national
       central banks of debt instruments.

       2. Member States may issue coins subject to
       approval by the ECB of the volume of the issue…

       Thus, Europeans have been enslaved with just 2 paragraphs…Unfortunately, as I said earlier, the
       vast majority of EU citizens have never read the EU constitution, and even those that did surely do not understand the tragic implications of these 2 articles…
       (i.e. economic & financial slavery to the banksters)

       Full EU Constitution can be downloaded at the
       following link:

       Click to access maastricht_en.pdf

       Kind regards,

       Arya

       Reply
6. 

   Arya, on December 20, 2009 at 11:11 pm said:

   Hello All,

   Please find below a link to an article published on my blog relating to a LANDMARK US legal court case that ruled fractional reserve banking ILLEGAL.!

   This landmark court ruling- which has never been overruled – can and should be used by millions of victims of this banking fraud- especially the millions of homeowners facing foreclosure in the US – and ALL who “owe” money to the banks which has been fraudulently created out of thin air using the fractional reserve banking fraud.

   http://yajnacentre.blogspot.com/2009/07/court-rules-fractional-reserve-banking.html

   I welcome your comments and reflections.

   Thank you.

   Kind regards,

   Arya

   Reply
7. 

   guidoamm, on December 21, 2009 at 10:00 pm said:

   To Zarepheth

   Your input is interesting. On one hand you are describing a problem that is as old as the world. But, more interestingly and I think unwittingly, you are describing inflation.

   There will always be attempts at speculation. That is something you cannot avoid. What you can do however, is build strong independent civic institutions. Extreme cases of speculation only happen when regulators and institutions look the other way. Thousands of acres of forest are incinerated in the south of France, Italy and Greece every year in an attempt to then appropriate the “wasteland” for real estate development (speculation). If government and institutions in those countries carried out their duties objectively, effectively and dispassionately; in other words, if the institutions performed their fiduciary duty as they are supposed to, then there would be much less speculation going on. But that’s neither here nor there. Speculation exists and we can only hope to put in place regulators that carry out their job effectively.

   The more interesting problem you touch upon is inflation however. Inflation is in large part a deliberate policy of state perpetrated through the manipulation of the currency. Inflation is the ultimate speculative policy; it is deliberate and it inherently and necessarily exponential in nature … but…. it is also limited mathematically. You can read more here and on dozen of other essays on my blog. Inflation is my pet peeve.

   http://guidoromero.wordpress.com/2009/11/07/the-utility-of-a-fiat-monetary-system/

   Succinctly, in deliberately opting for a monetary system that has no relation to the underlying economy, government makes the implicit choice to retain the right to increase credit and the money supply to satisfy what it perceives to be its legitimate raison d’etat. As inflation progresses, government is guaranteed to become the largest actor in the economy. As the single largest actor in the economy, as the buyer of last resort, as the manufacturer of last resort, as the financier of last resort, government must necessarily disregard fiduciary duty if not directly collude in criminal activity.

   And that is the beauty of human nature and politics of any persuasion.

   Strong independent institutions are the only hope and the only way to build a reasonable society ensuring a degree of fulfillment for the aspirations of society.

   Today, our civic institutions are being systematically dismantled in the West. I am sure I needn’t point out what is happening with a supine Congress in the USA and the effective suspension of corporate and commercial law by presidential decree…. all in the name to save the system…

   Rule of law is a necessary precondition for monetary independence and the development of society. No rule of law = no economy and thus no monetary independence.

   Reply
   • 

     Jere Hough, on December 22, 2009 at 11:00 am said:

     Rothschild said if he controlled a nation’s money, he didn’t care who wrote the laws. It is essential that property and contract laws be made and enforced. However, when monopolistic money forces are in control of a nation, they can and do write the laws that tilt the playing field in their advantage. When they provide most of the money officials need to get elected, or otherwise placed in office, the rubber stamp to their legislative wishes will be nearly automatic.

     I say when all the rights of people are written by, for and of the people, then fair and just social systems and economies will take care of themselves. Governments will then become instruments of economic justice, rather than exploitation.

     What is needed is a reversal of the landed and monied aristocracy that follows but one universal Law of Greed: “He who has the gold makes the rules.” When governments are controlled by those who follow the Universal Law of Greed, as has been the case throughout most of human history, we will inevitably see laws written that will allow wealth transfers from the poor and middle classes to the rich financiers and landowners. This is economic exploitation, and it is happening now in nearly every nation on Earth, and it is getting worse, not better. We are headed for a series of economic crises that are unprecedented. Confusion can precede growth or disintegration. We can probably expect to see a mixture of both, at different times and places.

     Inflation, speculation, corruption, Ponzi schemes, boom and bust cycles, oppressive taxation – all arise from private money powers controlling governments, and using government to enforce their exploitations of the common citizen. The agencies appointed to guard against monopolies, cartels and trusts become the agents OF those trusts, through bribes, favors and promises of cushy jobs in return for corporate favors.

     200 years of corporate law have been legislated and mis-adjudicated in favor of monopolies that are now “too big to fail”. After years of feeding off the taxpaying citizen they are now forcing citizens to hand over trillions to keep them solvent, and cover their gambling (derivatives, CDS) losses.

     If government is becoming the largest player in the economy it is because the Money Powers wanted it that way, and are profiting obscenely from it. If the government is engaged in criminal activities it is primarily activity that is initiated by the financial and money powers, who get the lion’s share of the profits from cozy deals and then point to the government as the scapegoat when the light shines on them.

     Let us find and root out the major perpetrator – the instigator of the collusion and corruption! It is not the poor and working classes of citizens; it is always and ever the wealthy elites – the bankers and financiers, the money-powers, the money-changers, the crooks that are moving billions around the globe with a computer keystroke.

     In short, guidoman, it appears you are just another voice for the private money monopoly that is at the root of our economic problems. You shift the blame for the failure of the financial establishment to the government you increasingly own and control. Your blog speaks against nearly every point Ellen H Brown makes in her book. You perpetuate the misuse of the word “FIAT” as applied to money. If fact, even those things you say that make sense are only preludes and setups for larger philosophical errors.

     The rule of law is absolutely essential for a healthy economy, but how, and for whose benefit, those laws are written does most certainly matter. It is way past time the laws were written by and for the people! Then you will have your economic stability and a healthy and honest economy.

     Reply
     • 

       Jonathan P. Chance, on December 22, 2009 at 11:44 am said:

       Bravo! Of all economist with whom I’m familiar, Henry George is most articulate at defining the rule of law and proper functions of legitimate government.

       The rule of law defined in “Progress and Poverty” is required for the genuine education of anyone who wants to be a free and informed citizen – or a lawful public servant – rather than a slave or criminal.

       JPChance.wordpress.com

       Reply
       • 

         Jere Hough, on December 22, 2009 at 7:26 pm said:

         Thanks JP. I fully agree on Henry George and “Progress and Poverty”. I’ve done a review on George and his book on my main blog, Clicking on my name will link to the site, and the review can be quickly found from there.

         Progress and Poverty (why poverty always seems to accompany material and industrial progress) stands among the top 10 most influential books I’ve ever read. And I’ve read quite extensively among the most influential books published in the English language. It far surpasses Adam Smith, David Ricardo, JS Mill, Marx, and others I’ve read. In fact, it corrects errors in all those (and many more), even though Marx had not been translated into English at the time HG wrote.

         Put simply, Henry George ranks among the premier philosopher/socio-economists in history. His ideas were never successfully refuted, they were only suppressed by the dominant financial and economic interests of his (and our) time. Someday he will be recognized for the genius he truly was.

         Thanks for your comments.

         Reply
       • 

         guidoamm, on December 22, 2009 at 9:27 pm said:

         Bravo? Bravo for what? Bravo because he launched in a hysterical tirade?

         You guys are a tough crowd.

         Jere proclaims that we need laws to be written by the people for the people and you exclaim “bravo”? Jere obviously forgot to mention that he wants world peace too at which you would have given him a standing ovation I suppose.

         But what has Jered suggested we need in order to write laws by the people and for the people? Who proposes and tries to get laws written? Who monitors that laws are being adhered to?

         YOU NEED CIVIC INSTITUTIONS of course. If you have no civic institutions that are independent and have power, you have no laws.

         As I said before. The horse goes before the cart.

         Reply
     • 

       guidoamm, on December 22, 2009 at 11:45 am said:

       I see you have not taken the time to read through my blog. Either that or, I have not been able to put my point across in a manner that is comprehensible. You’ll have to forgive me as English is not my first language.

       Lets find and root out the major perpetrator! I’m all for it.

       Just to be clear. Given the choice, I agree that though by no means ideal, I’d rather live in a “Democratic” society than in a totalitarian state. HOWEVER, purely from a technical point of view, in my opinion, the ideal political structure would be that of an illuminated dictatorship.

       If you had taken the time to read through my blog, you’d realize that I contend that as a deliberate policy of state, inflation is a characteristic of any political system. It cannot be otherwise.
       In a democracy, politicians must necessarily promise a better future without any reduction in spending. If any politician were foolish enough to try to campaign on a platform of cutbacks or, God forbid, austerity, a rival politician would immediately exploit the situation to promise change without cutbacks. I’ll let you guess which of the two politicians is likely to get elected. So, the Democratic political process is inherently inflationary (Obama anyone?).

       Now; at least in theory, a dictatorship could escape the inflationary trap. Of course, the historic record shows that there have been exceptionally few successful dictatorships throughout history. But at least technically, a dictatorship is better suited to avoid the inevitable conclusion of the inflationary cycle because a dictator can impose preventive measures that are impossible to impose in a democratic society.

       So, who is the major perpetrator of the exploitative and criminal policies that are enacted and abrogated in the nation?

       That is a chicken/egg situation.

       Which came first? Did government come first or did the corporations?

       I don’t have the answer to that question. All I can do is observe that governments in the West have systematically failed in their most basic fiduciary duty to advance society not so much at the material level but, much more importantly, at the intellectual level.

       I am no voice for private or public money. If mine is a voice for anything, it is a voice for fiduciary duty of government.

       Reply
   • 

     Zarepheth, on December 22, 2009 at 7:12 pm said:

     Interesting posting on your blog.

     However, your blog about deflation appears very harsh for your fellow human beings. Unless you are debt free and independantly wealthy, deflation may do you in just as easily as anyone else.

     For anyone who rents, rent is no different than buying a home with debt. Deflation _will_ cause people to lose their jobs which means they will soon lose their home. For those who own their home, debt free, they are not as “debt-free” as they think. Property taxes must still be paid or the government will be evicting them.

     As I look at our nation’s economic situation, I simultaneously seen deflation occuring for 80%-90% of the population and inflation occuring for the top 10%. This tells me we have a serious problem with unequal wealth distribution. When the government is “creating” money hand over fist, but deflationary results are occuring for the typical citizen, something is very wrong. Money is not going where it will spur the economy and enable people to purchase the goods and services they need, instead it is going into cash reserves or speculation.

     Reply
     • 

       guidoamm, on December 22, 2009 at 9:19 pm said:

       Thank you for taking the time to read and understand my position.

       You are absolutely right. Deflation hurts across the board and, at this point, is virtually guaranteed and government action will only make this depression last much longer than needed. But that’s not my beef. My beef is that rather than admitting to failure, our governments will plunge us in a world war.

       I am debt free and relatively comfortable. But I have witnessed the pillaging of whatever savings our family had over several decades of deliberate inflationist policies. My mother whom is 78 years of age today, perceives a pension of Euro450 monthly. This, after over forty years of contributions as an artisan. This sum, I might add, includes also 75% of my father’s pension as he passed away some years ago. Whatever savings my parents squirreled away in presumably “safe” instruments that do not contemplate speculation have been devastated by galloping inflation and a deliberate policy of manipulation of interest rates. You will forgive me if I feel bitterness towards our political system and our governments for having willingly and deliberately failed society on that most basic of human needs that is education thus easily inciting them to make liberal use of credit till they hanged themselves.

       With regards to unequal wealth distribution, that is one of the typical characteristics of inflation. The end of the inflationist cycle is characterized by the concentration of nominal profits in fewer and fewer sectors till profits only show up in the financial sector. This is because in a fiat monetary system, the finance industry is the closest to the entity that creates the currency and is first in line to use the currency.

       I don’t think I am harsh on my fellow human beings. But I would like more people to understand the predicament we find ourselves in.

       Reply
     • 

       guidoamm, on December 22, 2009 at 10:44 pm said:

       http://guidoromero.wordpress.com/2009/11/21/deflation-and-the-state/

       Reply
8. 

   guidoamm, on December 21, 2009 at 10:17 pm said:

   Arya,

   My contention is that the rule of law comes upstream of any other political or economic choice.

   The type of law chosen does not matter. What does matter is that the law is set down and is adhered to throughout time. There must be independent institutions that can ensure the existence of a independent mechanism to interpret the law and arbitrate between disputing parties.

   What matters is consistency AND objectivity.

   Once you ensure that, it does not matter what law you apply. It is up to individual entrepreneurs and investors to choose to get involved or not. You could choose to apply Sharia law. For as long as the law is applied objectively and consistently throughout the land, an investor has the choice to get involved or not. If he/she does get involved, they will do so in the knowledge that any disputes will follow a predetermined process that involves predetermined institutions and he/she will be prepared to interact with them.

   Take the case of Dubai. Today investors are finding out that there is no objective law set out anywhere in the land. The Emyr is the law. If the Emyr says “yes” it is yes, if he says “no” it is no and there are no means to establish beforehand what his decisions are based upon.
   To be brutally honest, this is not news. For those that took the time to read the covenants and the small print and that took the time to go to Dubai to see how things worked, it was all to clear that the rule of law was not guaranteed anywhere by anyone. Today, those truths are coming home to roost and lawyers will make out like bandits handling Dubai for many years to come.

   The rule of law, secular or tribal it may be, is the one and only precondition to the establishment of a healthy economy and a sound monetary system. Nothing comes before establishing a framework for the rule of law. Nothing.

   Reply
   • 

     Zarepheth, on December 22, 2009 at 6:43 pm said:

     I must agree with Jere on this one. Which laws are implemented are just as important as that those laws are properly promulgated and enforced.

     Laws that turn a significant portion of the population into slaves are not only unjust, but will spur uprisings and violence. Laws that guarantee real freedom for everyone and simply help people avoid treading upon their fellow person’s freedom will do the most to reduce violence.

     Laws that set up and enforce a proper separation between that which is private and that which is public will do far more to advance an economy than laws which make everything public (communism) or everything private (extreme capitalism). Both extremes will send most people into poverty. And laws determine where the line is drawn between those extremes.

     Reply
9. 

   Jere Hough, on December 22, 2009 at 7:34 pm said:

   Nice comments. Truth is seldom found in political and social extremes. More often it lies between the two polar opposites.

   Reply
10. 

    Arya, on December 23, 2009 at 12:30 am said:

    Are Ukraine Black Death Cases
    Result of IMF Loans?

    By F. William Engdahl, 24 November 2009

    The Ukraine Government has declared a state of emergency and medical examiners describe results of autopsies on dead patients in chilling terms that recall the Black Death descriptions from the Fourteenth Century in Venice. While everyone is calling it “Swine Flu” and the WHO using it to spread their panic and untested vaccines, there is strong evidence that the deaths―almost all from pulmonary conditions―are from a rising incidence of Tuberculosis (TB). Now a Cambridge University study shows that there is a close correlation between rise in TB and the severe austerity measures that go with IMF loans. Are the Ukraine ‘Black Death’ cases the result of Ukraine’s IMF loans?

    article link: http://www.engdahl.oilgeopolitics.net/Swine_Flu/Ukraine_Deaths/ukraine_deaths.html

    Reply
11. 

    Martin Williams, on December 23, 2009 at 3:30 am said:

    I would like to know when the country borrows so many billion where do they actually borrow it from.

    Reply
    • 

      Ellen Brown, on December 23, 2009 at 7:21 am said:

      Good question. The G20 just authorized the IMF to issue $300 billion in SDRs (special drawing rights) to lend to third world countries. That’s money just created on the books. Not a bad idea in this economic environment, except that they should be giving it as grants for development instead of loans.

      Reply
    • 

      Arya, on December 23, 2009 at 7:31 am said:

      In one sentence, from PRIVATE Central Banks that just create fiat “money” out of thin air ( by entering a number on a computer screen) and lending it at interest to governments/countries, which hard working citizens like you are then coerced to repay through taxation, both of which are illegal and unconstitutional in the US constitution.

      Research Central Banking and Fractional Reserve Banking to learn how the fraudulent global banking architecture functions.

      As Henry Ford said:

      “It is good that people do not understand the workings of the banking system; for if they did, there would be a revolution before tomorrow morning…”

      Rgds,

      Arya

      Reply
12. 

    Mark Johnson, on January 10, 2010 at 3:07 am said:

    Do all central banks around the world function like the FED? As in the reserve bank of Australia, the Japanese central bank, and the UK central bank? Or are they better regulated? Someone mentioned the Chinese central bank was regulated by its government.

    As in do they all lend money to local banks out of thin air and those banks create computer money off it?

    Reply
13. 

    Brenton, on January 18, 2010 at 2:40 am said:

    Please sign the petition on http://savethepeopleoficeland.com and tell your friends to as well!

    Reply

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