Day: Mar 4, 2014
However, I have also been critical of Governments who use legitimized counterfeiting (QE) to stem the natural economic downturns that occur in all mature markets as producers fight for market share, and prices are forced down as a result when the growth in incomes is stagnant, or falling, or savings rise in preparation for retirement, because this fixes one part of the economy at the expense of others, and that is never a good thing, as it merely transfers wealth to the few from the many.
The markets boom or bust as people switch their buying habits, change their tastes, or prepare for their retirements, and either begin borrowing, or saving at different times in their lives. And the demographics of the population (the birth rate, average age, sex and range) determines what is likely to happen and when.
For those with pension plans, their savings build up on Pension Company books increasing that company’s liabilities, and if the investments they’ve chosen fall significantly (such as during a stock market correction) then they risk not having the liquidity to pay out for those retirees when their bills come due, and in April 2012, that reached 10,000 people per day – in just the U.S. alone.
I am prepared to admit, that the Central Bankers, may, MAY, be raising the base money level for perceived socio-economic reasons, but the people who benefit most from such actions are always the Central Bankers, and those closest to them in the Banking Elite, as they receive the money first, enabling them to buy government securites, and draw huge salaries, while securing a steady income from future tax-collection.
Of course future taxes MAY or may not, cover the government’s debt obligations, as economies shrink or change shape, when the buying public changes its tastes and some industries prosper, as others decline, perhaps at just the point when welfare payments rise due to a faltering economy, but raising taxes on the apparently wealthier members of society is not always the way to go, as this discourages further investment, which of course is the best way to create meaningful jobs.
The problem for economists and politicians alike, is that the world is changing, and in ways we are only just beginning to perceive.
A CHANGING WORLD – NEW INDUSTRIES
Robots and other programmable production machines have capital costs – Eg: Robots, 3D-Printers, CNC & DNC machines etc, (you need to buy them) and they have operational costs, in the materials they use, or financial costs because you need to depreciate that capital cost over time, to ensure you have sufficient capital to replace it at some future point in time, whether to replace it on a like for like basis, or whether you want to, or need to improve its functionality.
But robots don’t have an income (except to the owner) and that income doesn’t always get spent in the location of the factory, typically like the human capital does – the worker’s wages. Which means the benefits don’t always flow equally in the factory location. The owner benefits – perhaps from a low taxation status in one country, and the factory produces little in economic benefit in the country in which it operates. A problem for governments the world over.
And, in a zero-sum economic world, there will always be winners and losers (Until we start trading with Martians, or Venusians if you prefer.) the trick is to not be on the losing side.
Money was invented to facilitate trade, and to ensure that value for value was transferred. Money is really – savings – and was initially just Gold and Silver as well as copper for small transactions – the origin of the British £,s,d (Pounds, Shillings, and Pence, which were gold, silver and copper respectively) because when I trade my wheat or sheep, or cows, maybe I want to buy something not now, but in 3 months or 3 years time perhaps: seed or fertilizer or a new Barn, for the new industry I want to create, and Gold and Silver retain their value over time, making saving possible and these metals perfect for money purposes.
The first currencies, were Gold and Silver certificates of deposit, as Mike Maloney of GoldSilver.com outlines – A currency is a receipt for money. Certificates of Deposit which were a claim on the gold and silver that was in the vault (the money was in the vault, the currency was in circulation) then began circulating in trade and the Bankers hit on a wonderful idea – they could make more of these certificates than there was Gold and Silver available to back them. Thus modern Banking was born, and bankers became richer than Midas. But if there’s no money there in the vault when people want it… Then what?
Now in recent years the world’s Central Banks have been inflating their Fiat currencies (Money dictated by government, and NOT backed by metal) which means that the value of currencies fall, as the amount or quantity of currency now rises – through QE., (Quantitative Easing) and the purchasing power falls. (the cause of Price-inflation)
ANTIDOTE TO QE – CRYPTO-CURRENCY
As an antidote to this debasement of the currency supply, Satoshi Nakamoto (If you want to read more on this person – Click HERE – Who is Satoshi Nakamoto) developed a series of pieces of software to create a digital currency, with a fixed supply of 21,000,000 units and a system for transferring that value to others by digital means. Currency is initially earned by “mining”, which is a way of linking the world’s networks together to transfer the currency between users, and earning credits along the way. Or you can buy them, and transfer them to your digital wallet.
Of course the value of these digital currencies will rise and fall, like any commodity or currency, and one of these currencies is, if you have not already deduced – BITCOIN.
As Bitcoin has grown, and others have realised its features, there have been many who have emulated it. Max Keiser, of RT fame, has already launched MaxCoin, and there are dozens of others – upto 80 as I recently read, However, it is also obvious that governments have now decided that it is time to legislate these digital currencies for political reasons – some valid, others less so. The perhaps valid reasons are that it has been used to purchase goods and services, that the government would rather you didn’t, such as: Drugs, Ammunitions, Firearms, and other items of dubious morality.
In use, no means of identification is necessary, though the block chain can be followed to trace ownership, however, this means that to all intents and purposes it is a private transaction, but increasingly governments want to track ALL transactions so that they can extract their pound of flesh (to pay off the debts to their banker paymasters amongst others.)
Mount Gox, a Japanese built business in Shiboya, acted as a coin exchange has been recently attacked several times, and money stolen by attackers, such that Mt Gox had to file for bankruptcy protection in Japan. Was this government sanctioned or controlled? Was it the Banker elite fighting back? Time will only tell. Though as in all financial systems, fraud is a possibility. However, much has been made that the Banks received Billions in subsidies to stave off bankruptcies, and little has been made of that wealth stolen from the citizens of various countries.
However, while researching this article, I found other web-sites that will perhaps replace Mt Gox, but one that is still in the early stages of development is QoinPro. The business strategy is unclear (and I asked them, but was unable to get a straight answer) however I suspect they will become a coin exchange, and trading house for which they will charge transaction fees as Mt Gox, They are registered in the Netherlands, and Hong Kong, so appear legitimate. To encourage memberships, they apparently mine for coins of several crypto-currencies, and for those participants they deposit sums directly into their accounts on a daily basis. So no mining fees, or set-ups for those who become members, and they have an affiliate system, whereby you receive between 7.5% and 16.5% on all currencies issued to those who you recommend, and who sign up under you. (dependent on the number of people at each level)
That means you get an initial deposit just for joining, but you also get daily top-ups, which though low at the moment, are designed to rise as they iron out any wrinkles over the coming months.
As a devout skeptic, I could not see the value of these crypto-currencies, but as I have given it some thought, it is just possible, that all existing fiat currencies will disappear, and be replaced by cryptographic-currencies. That will mean the banks will suffer as they will not have control of the money supply, and essentially the banking system becomes the network. However, we can expect them to fight back. Governments will not have control, as these are essentially stateless currencies, and the currency will be resistant to legislative processes, and these new currencies will circumvent legislation as it tries to keep up. Evolution happening faster than the bureaucrats can keep up. The Chinese recently made trading of BitCoin illegal, though it can still be used for purchases, but will the legislation stop other currencies from emerging? It has not so far. And will it stop peer to peer transactions?
Having thought extensively through the implications, it is clear, that crypto-currencies are here to stay. So what happens if crypto-currency exchanges begin, backing the digital currency with real money – Gold and Silver, and the crypto-currency digital wallet becomes in effect a bank account?
Then we have a parallel banking and finance system outside the control of any government, and true free-market principles will flourish. Having become a member of this web-site, I have to-date in a little over a week received over 100 coins split amongst 5 currencies, and two more currencies to be added shortly.
That end result, may be a few years away, so in the absence of monetary metal backing, it is safe to say, that you will still need to use some of your savings for Gold and/or Silver, and use the crypto-currency (or currencies) of your choice perhaps for everyday transactions – Of course, eventually it may be possible to buy these precious metals with them.
The following tables are not exhaustive and only serve to give an impression about coins available. Some of these coins can also be collected through QoinPro.
|NMC||Namecoin||SHA256||21,000,000||2,016||50 NMC / Block|
|PPC||Peercoin||SHA256||No Limit||1||103.10 PPC / Block|
|DVC||Devcoin||SHA256||No Limit||2,016||5000 DVC / Block|
|TRC||Terracoin||SHA256||42.000.000||540 Blocks||20 TRC / Block|
List of Scrypt based Alt-coins
There are many Scrypt based altcoins.
|LTC||Litecoin||Scrypt||82,000,000||2,016||50 LTC / Block|
|DOGE||Dogecoin||Scrypt||100,000,000,000||240||250,000 DOGE / Block|
|WDC||Worldcoin||Scrypt||265,420,800||120||50.79 WDC / Block|
|FTC||Feathercoin||Scrypt||336,000,000||504 Blocks||200 FTC / Block|
The last three were discovered on another coin exchange – McxNOW., which offers exchange of some of the above, but also offers interest on deposits, based on the value of the trades conducted on the exchange for each of the currencies – So if you hold BTC, your interest gets paid in BTC, and if you hold one of the others, in that too.
This video tells you a little more.
And if the currency or the alternatives listed above follow the path of Bitcoin, their value wil rise in line with it.
BUT it won’t be a straight line, and the unpredictability for some will be too much to handle.
However, in time, they may, just MAY replace currencies created by the Banks. And unlike those currencies, they are not simultaneously a debt to the Banker class.
In Africa, already many people now use these crypto-currencies exclusively for daily transactions, perhaps because of the distances involved, and the costs of installing fixed line telecommunications systems, is such that the newly emerging technologies in wireless telephone masts have been the engine of growth, and as banks were only available in cities, this has meant many Africans have leap-frogged the west as these technologies have become actively entrenched in the economy, allowing that continent to develop at a much faster pace than hitherto.
The West may have to run to catch up. YOU can begin your journey HERE –
And if you wish to learn why Bankers are a menace… Watch This.
Addendum. 23rd April.
And is it all about to come crashing down around their ears?
This video page of the End of the Bankers might just be the Clue…