Digital Currency – The Last Refuge of a Banking Scoundrel?

Posted on Updated on

In the news over the weekend, we heard the story that Andrew Haldane, the chief economist and executive director for monetary analysis and statistics at the UK’s Bank of England, has tried to run up the flagpole, the prospect of a digital only currency. America too is discussing this.

Now, why would a Banker do this?

What is a Bank? Primarily it stores savings (Capital) for its customers, and loans out this money (well we’ll call it money for now) to businesses and others to finance the development of new products and services, which add value, assist in growth, employ people, and spread prosperity throughout the nation (or currency union).

However, when a country has excess savings, these are liabilities on the bank’s books, and has been touched on several times throughout the time of this blog, these have to be paid back. However, there may be times when there are fewer good opportunities to loan money out for the banks, with huge amounts of money sitting in savings and today is one such time.

The driving force behind this excess savings is demographics. Demographics is the study of populations. The studies look at birth, and death rates, gender etc, and at how those births and deaths impact the society, and the economy. Where we build schools, hospitals, and even infrastructure like industrial parks.

After the second world war, all those returning service personnel got busy making babies. It happened in America and the Pacific region in ’47, it happened in Europe in ’46, as those two major conflagrations came to an end.

Twenty years later in the sixties, those babies, now young adults drove the swinging sixties, and Carnaby Street, the music and fashion scene as they all began doing what young people do. The children of those people reached maturity 20 years later, in the 80s and early 90s, driving Punk music, New-wave and the New Romantics, the “Acid house” scene, and the Brit-pop and Indie scenes of the 90s. This was the shadow boom as you might call it. These children of the baby-boomers are driving the economy now, as they reach their 40s, and lead consumption spending, but soon this too will slow.

Of course the baby-boomers as they are known, those born after WWII, are now frantically saving for their retirements, buying buy-to-let properties, and investing in their pension funds and therein lies the rub. All that capital going into savings has led to several booms; in Technology, in Housing, and since the 2009 credit crunch, the stock-markets in general. But since early 2012, the baby-boomers have been retiring in droves at the rate of circa 8-10,000 people per day, in the U.S. alone, and because of the low interest rates, and the drive to “save the economy” the Central Banks have loaned the people, and their representatives (governments) huge amounts of money.

America has an $18 Trillion public debt. Britain is in an even worse situation (person for person) with a public debt of £1.4 Trillion ($2Trillion+) And those Bankers are now worried that they might not get their money back.

And what IS money? When money was just Gold and Silver, the Bankers got rich, by lending pieces of paper, that were exchangeable for Gold and Silver, that they had mysteriously created out of nothing more than paper and ink. This fractional reserve lending, grew their power, and grew their immense wealth.

The Houses of Rothschild, Morgan, Seif, Rockefeller and others who ran or owned Banks became the powers behind the thrones of more countries than could be imagined.

Digital Currency Drawbacks?

If we can just take our money “out of the banks”, this should force Bank Presidents to be prudent with it, or, as we saw with Northern Rock, we get a run on the Banks. When our money (or rather currency) is just digits on a Bank Balance sheet, we cannot. This means Bankers can fund whatever they want, without worrying about us cutting off their drug supply.

But a purely digital currency has several other drawbacks too.

With a purely digital currency, EVERY transaction will register on a computer somewhere. Tax Authorities will therefore be able to trace every transaction – And TAX it. That tax goes to pay salaries of government employees, but it also pays for those in politics, who may not always disclose where that money goes: Funding Wars overseas, providing incentives and making deals in private rooms under the guise of “National Security”, and it pays off the loans that bankers make to governments – all made possible by greater tax taking.

But a further worry is that the account details of every person will also need to be held somewhere too, making the prospect of 1984 as written about by George Orwell a frightening reality.

The informal economy disappears too.

Tipping a waiter, a Cabbie, a Pizza Delivery boy or even the Bin-man come Xmas time, becomes almost impossible. The loss of these ways of showing appreciation, potentially makes poor service a given, as with no financial incentive to provide excellent service, these people may offer mediocre service at best, or even leave the industry making many restaurants forced to pay higher wages forcing up costs, and thus reducing the number of visits per week, per month or per year. Giving someone a £50 note for a Birthday present, or Xmas present becomes impossible too. Teenagers everywhere will suffer, and grand-parents will actually have to get to know them and find out what their kids actually need – or want – and they may get a few unusual requests or worse…

But, the one big drawback for everyone, is not zero interest, it is negative interest rates. Which means charging you to hold your money. Anyone with savings in an account, or perhaps as the result of a house sale, becomes just another potential donor to a Banker’s lifestyle.

BUT the ultimate issue is one of liberty and trust. A business deal of old, demanded nothing more than the money, and a handshake. This relied on trust of the money, and the person. In a digital world, all trust comes down to is your credit rating, and your government granted identity number. Perhaps ultimately your radio frequency identification (RFID) chip implanted under your skin, so you don’t even need to carry a bank card.

But it also opens up a world of potential to deny you access to things the government thinks you shouldn’t see, or get access to. In effect WE become slaves to government, and the people who pull their strings, instead of government working for us. And that is the most important reason, why it should NEVER be considered the only way to pay.

“Bank paper must be suppressed and the circulation restored to the nation to whom it belongs.
“The power to issue money should be taken from the banks and restored to congress and the people.
“I sincerely believe that banking establishments are more dangerous than standing armies.
“I am not among those who fear the people. They and not the rich, are our dependence for continued freedom. And to preserve their independence, we must not let our rulers load us with perpetual debt.”

Thomas Jefferson – Former President of the U.S. of A.

And in his farewell address to the people, March 3, 1837, President Andrew Jackson solemnly warned the people against the Banker’s power, after the recent financial crisis; as the “Credit Crunch” is still ringing in our ears, it appears VERY apposite

“We are not left to conjecture how the moneyed power, thus organized, and with such a weapon in its hands, would be likely to use it. The distress and alarm which pervaded and agitated the whole country, when the Bank of the United States waged war upon the people in order to compel them to submit to their demands, cannot yet be forgotten.

The ruthless and unsparing temper with which whole cities and communities were oppressed, individuals impoverished and ruined, a scene of cheerful prosperity suddenly changed into one of gloom and despondency, ought to be indelibly impressed on the memory of the people of the United States. If such was its power in a time of peace, what would it not have been in a season of war, with an enemy at your doors.

No nation but the freeman of the United States could have come out victorious from such contest; yet, if you had not conquered, the Government would have passed from the hands of the many to the hands of the few; and this organized money power, from its secret conclave, would have dictated the choice of your highest officers, and compelled you to make peace or war, as best suited their own wishes. The form of your Government might for a time have remained, but its living spirit would have departed from it.”
(Read more at: The Coming Battle 2013 )

And Finally, if the above comes to pass, what will our International trading partners make of a currency, that can be conjured up on a computer by a banker? If China sells us Cars, Computer Equipment, Smart-phones etc, and all they get in return is a ledger entry on a computer, what confidence will they have that those digits will be worth anything, when they decide to spend them, possibly years later. What would you do if you were China?

If we are ever to have international finance based on trust, then there is only one solution – currency must be in the final analysis, backed by precious metals. and those metals represent true value, even if their value may vary from time to time – but Gold is still gold, and Silver is still silver. Platinum, and Palladium too are useful – usable in catalysts, jewelry and other uses. Silver is usable in 10,000 uses and rising, and its value and availability are about to get a whole lot rarer, and a whole lot more expensive as a result.

So if this does come to pass, who is really in charge in the UK? The Government? or its Financiers?

If you want to move your money out of the Bankers’ way? Then Click Here to get started.
PS:
After posting this I discovered a video clip by Max Keiser of the Keiser Report, which mentions the speech by Andy Haldane. Let me know what you think below.


W.

Advertisements