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.
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.
This entry was posted in Money, Politics, Finance and Economics. and tagged America, Bankers, Bitcoin, Central Banks., China, Commodities, Crypto Currency, Debt, Dollar, Earthquakes, Economic and Social Consequences, Economics., Finance, Financial Systems, Gold, Inflation, Negative Interest, Palladium, Platinum, Population explosion, Precious Metals, QE, QoinPro, Resource Wars, Silver, The Coming Battle, War, Zero Interest.
Imagine for a moment, you are sitting on the moon, watching the world as it moves silently across your moon-scape sky.
Down beneath you on Earth, the Japanese are building cars and electronic equipment, Chinese are building new blocks of flats for people who can’t afford them. Building Railroads to cities that are inhabited by ghosts; building roads that cars don’t yet need, buying up iron ore, steel mills, and factory machinery; building ever larger vessels to trade across oceans. Buying American Hotels, Tower blocks, and Bank buildings. And quietly accumulating Gold and Silver, like there is no tomorrow, and a nascent motor industry is taking root.
Americans in their laboratories, are busily inventing new bio-tech remedies to prevent and treat new diseases. Hi-tech entrepreneurs, are designing new software to create new mega-corporations, and software already written, but which we haven’t learned about yet, is being improved upon, and new uses for old energy sources (more of which later) is being developed.
Meanwhile, British businesses, funded by capital from around the world, are building class leading vehicles in Crewe, home of Rolls Royce, and Coventry home of Jaguar Land-Rover, is busy building world-class Jaguars, and Range Rovers as well as numerous other towns and cities too, with increasingly successful manufacturing, all funded from capital raised on world markets, by the financial wizards inhabiting the square mile, where property values there, have been rising in line with the wealth created the world over, but which for its own reasons, seems hell-bent on buying a little piece of this over-crowded country.
Germans are building VWs, Mercedes, Porsches and Audis… Italians their Ferraris, Fiats, Alfas, Lamborghinis and Maseratis, and the French, their Peugeots, Renaults and Citroens – to say nothing of the Russian, Czech, Chinese, Brazilian, Indian, Mexican, U.S. or any other vehicle manufacturer. In 2011, there were 77 million cars, light goods and SUVs, sold worldwide. 2012 saw sales of 81 million, and last year that reached 85 million. By 2018, the world is expected to reach 104 million. Most of that growth will come from China, South America, and South-East Asia.
The world is a-buzz, a hive of activity, as trade and commerce travels around the globe as the world turns, and the sun appears over the Earth’s eastern horizon, only to disappear some hours later, depending on where in the world the worker lives and their latitude.
But unless, you are mistaken, no truck, ship, train, plane, or rocket takes off to trade with another planet.
It is a closed commercial system. Value accumulated on one side of the planet comes from increasing the stock of goods and services, and from extracting value from others. It does not come from outside the planet. What affects one side of the planet, affects the others.
As one side of the planet accumulates, Dollars, Yen, Pounds, and Euros, and all manner of metals, both rare and widely available, precious and semi-precious, and quietly putting them into vaults, or in warehouses.
On that side they are also accumulating holdings in suppliers that give them control, or serious stakes in smaller mining and refining businesses.
On the other side of the world, Americans are accumulating debts and losing their wealth to their Bankers who hold their government in debt to the respective owners of this central Bank – The Fed – $17 Trillion and counting.
Who has the right idea? The world is transitioning. We are moving from the computer age, the PC age, to the information age, where “Big Data”, and “Cloud Storage” is being touted as the way that governments and corporations can grow their revenues.
And, as old industries are dying, new ones are just beginning to emerge and grow. Research and development is going on in labs in Bio-Tech, Energy, Rare-Earths and special metallic elements, and alloys – Beryllium and Thorium, and the 17 Light and Heavy Rare earths.
Where will it all take us?
We can make a guess…
End of the Banking Industry as we know it?
On November 30th, Switzerland goes to the polls. Not to elect a government, or President or any other official. No, the people of Switzerland, concerned at their Central Bank’s abuse of its monetary powers, are voting to return to a partial gold Standard, which would require the Central Bank to carry at least 20% of its reserves in Gold; would not be able to sell any, and would have to return to Swiss soil, any bullion held overseas.
Germany too recently asked to repatriate its Gold holdings at the Fed, all 674 tons of it. To-date, the Fed has been able to send back just 5 tons, and initially stated it would take 7 years, though at current rates it would take over 150.
And nobody really knows exactly how much of the 1,040 tons of Swiss gold is actually stored at the Fed.
And we can only guess how soon the Central Bank would start to accumulate, and at what rate if the vote goes against them (the earliest opinion poll gave the ‘Yes’ camp a small lead). But if or when they do, the dollar is toast, as physical bullion begins being bought, and the market cannot deliver.
When this happens, the premium (the physical price over the paper price) begins to rise. Back in 2011, the premium reached over $50, as India, and China, Russia and the other BRICS nations began their stealth abandonment of the dollar.
India has recanted somewhat on its deal with the devil, as the Indian public began buying Gold and Silver to protect themselves from what is to come, before they (the Indian government) slapped a 10% sales tax on Gold, and instigated legislation requiring that 20% of precious metals be re-exported in value-added form. The so-called 80:20 rule. But Indian manufacturers have been getting creative. Some industry insiders say that manufacturers are turning the gold bars into chains at a mere 1.5% premium, for export, and then re-buying it back as a bar.
Following the legislation, precious metals dealers harangued the government, and the people of India began buying silver with both hands. And a new trend emerged as young Indians began buying 18 carat gold, rather than the 24 carat of historical norms.
However, the Indian Commerce Ministry figures also showed gold imports trebled at $2.04 billion in August 2014, compared with the same period a year ago. In August last year, imports totalled $739 million after the RBI imposed the 80:20 rule.
According to the Gems and Jewellery Promotion Council’s provisional data, gold jewellery exports have doubled during April-August this fiscal year compared with the same period last year. Data also shows exports rising to $2.12 billion against $1.04 billion a year-ago.
The Commerce Ministry data showed gold and other precious metals jewellery rising nearly 25 per cent during April-July compared with a year-ago but Gold imports, on the other hand, were down nearly by half during the period. I’ll leave you to decide whose figures are most accurate… And in the run up to the Indian celebration of Diwali, gold imports soared five-fold over 2013. And are expected to run at 70-75tonnes per month for the rest of the year.
On the one hand, the trade is complaining that gold smuggling is affecting their business badly, but on the other… “When asked how they are managing to get gold, jewellers say that 70 per cent of their demand is met through smuggling,” said Satish Bansal, Managing Director of MD Overseas Ltd, at a gold convention in Pune recently.
China too has been quietly accumulating. And we know (or strongly suspect) from document FT900 (see previous article) that some of the Gold has been secretly coming from the Fed’s vaults at the rate of circa 200+tons a year.
During the last financial crisis, the Fed, added almost $3 trillion to its own balance sheet. But we also know from Lord James of Blackheath that he uncovered that the Fed, sent $15 Trillion in 3 tranches of $5 Trillion each, just weeks apart through the Royal Bank of Scotland, which were passed onto other MTN Banks in Europe. (MTN means Medium Term Note, and is the name given to Banks who handle these in terms of Government and Large Corporation Finance. Monies can be deposited at overnight rates as high as 2.5%)
He released the information live on air, in the chamber of the House of Lords, and those interested can still find the piece on YouTube.
But also via the Fed’s FX liquidity swap lines the Fed also bailed out foreign Central Banks, which in turn took the money and funded their own banks.
It turns out that is only half the story: we now know the Fed also acted in a secondary bail out capacity, providing over $350 billion in short term funding exclusively to 35 foreign banks, of which the biggest beneficiaries were UBS, Dexia and BNP.
Since the funding provided was in the form of ultra-short maturity commercial paper it was essentially equivalent to cash funding. In other words, between October 27, 2008 and August 6, 2009, the Fed spent $350 billion in taxpayer funds to save 35 foreign banks.
And here people are wondering if the Fed will ever allow stocks to drop: it is now more than obvious that with all banks leveraging the equity exposure to the point where a market decline would likely start a Lehman-type domino, there is no way that the Fed will allow stocks to drop ever…
Until such time as nature reasserts itself, we will have market gyrations. The Fed is manipulating the market, and the oscillations of the last two weeks as various commentators have mentioned is because of this, the alternative, is that the Fed is finally wiped out – one way or another.
The Fed in the 08 crisis, also bailed out Barclays and RBS, to the tune of $640 Billion to help these two banks to buy the assets of Lehman Brothers, presumably in the UK).
The $350billion in short-dated paper, was the equivalent of re-capitalizing these banks.
The 35 Banks bailed out were:
UBS (Union Bank of Switzerland)
BNP Paribas (Banque Nationale de Paris)
Royal Bank of Scotland Group
Danske Bank A/S
ING Groep NV
Deutsche Post AG
Erste Group Bank AG
Free State of Bavaria
HSH Nordbank AG
HSBC Holdings PLC
DZ Bank AG
Republic of Korea
Sumitomo Mitsui Banking Corporation
Banco Espirito de Santo SA
Bank of Nova Scotia
Mizuho Corporate Bank, Ltd.
Mitsui & Co Ltd
Bank of Montreal
Caixa Geral de Depósitos
Mitsubishi UFJ Financial Group
Shinhan Financial Group Co Ltd
Royal Bank of Canada
And four days ago, 25 European Banks failed stress tests, forcing them to raise extra capital to reinforce their balance sheets.
When the inevitable happens, the solution to this might just be… to get a whole lot wealthier, and there are two companies I feel, could help in that regard.
One is a Corporation I’ve been researching from North Virginia… Lightbridge Corporation (US:LTBR), and is one of these companies hinted at earlier.
Lightbridge holds U.S. Patent number – 8,654,917 and this provides for a method to develop and use nuclear fuel-rods, that contain Thorium, in such a manner, that this enables existing Nuclear Reactors, including PWRs (Pressurised Water Reactors) which are commonly used in American Nuclear facilities to get better power output, while lowering costs, reducing the risk of meltdown, as the vessel operates at reduced temperature (1,000 degrees less) and the waste material is only one tenth as dangerous when the spent fuel is stored, allowing greater storage density thus saving capital costs going forward, and almost completely eliminating the production of enriched plutonium, thus limiting scope for the further proliferation of nuclear weapons.
The benefits on the face of it, will give energy producers scope to compete on favourable terms with other more unreliable energy sources, and even compete favourably with Liquid Natural Gas and Compressed Natural Gas.
And the number of new reactors proposed or being built, despite the political reticence since Fukushima in 2011, is rising rapidly, even in places like the middle-east – such as Syria, Egypt, Iran and Saudi-Arabia.
Lightbridge’s web-site has this to say about itself:
“Lightbridge is a US nuclear energy company based in McLean, Virginia with operations in Abu Dhabi, Moscow and London. The Company develops proprietary, proliferation resistant, next generation nuclear fuel technologies for current and future nuclear reactor systems. The Company also provides comprehensive advisory services for established and emerging nuclear programs based on a philosophy of transparency, non-proliferation, safety and operational excellence.
Lightbridge’s breakthrough fuel technology is establishing new global standards for safe and clean nuclear power and leading the way to a sustainable energy future. Lightbridge consultants provide integrated strategic advice and expertise across a range of disciplines including regulatory affairs, nuclear reactor procurement and deployment, reactor and fuel technology and international relations.
The Company leverages those broad and integrated capabilities by offering its services to commercial entities and governments with a need to establish or expand nuclear industry capabilities and infrastructure.
Lightbridge is well positioned to serve the growing market for next generation nuclear fuel. Global nuclear power generation which is projected to nearly double by 2030, due to expansion in Asia. Worldwide, there are 435 reactors are in operation today. Another 70 reactors are under construction, with 29 in China and six in India. An additional 473 reactors are on order, planned or proposed around the world. For the first time in more than 30 years, the Nuclear Regulatory Commission in 2012 approved construction and operating licenses for four U.S. reactors. License applications are pending for 27 reactors in 14 states. Nuclear power generation is less expensive per megawatt and more reliable with longer lasting plants, compared with wind and solar generation.”
And the UK., too recently announced the Hinckley ‘B’ power station would be built by French Nuclear Energy Giant – EdF.
Lightbridge also has a $52 million order backlog it’s plugging through right now… and orders keep on pouring in, for consultancy services.
Now any company where the senior management doesn’t have substantial shareholdings, concerns me, but thankfully the Company’s largest shareholder is the CEO, and co-founder – Seth Grae, currently holding 1,255,008 shares representing 8.33% of the total stock. Access to a large Thorium mineral reserve will be important too, and fortunately for Lightbridge, a new vein system has been discovered in Nevada.
Quite frankly, if their material is widely adopted – and why wouldn’t it? – then LTBR’s stock price can only go skyward. Given that they are currently less than $2, and with just 15 million shares in issue where the market capitalisation ends up is considerably higher.
Over the longer term, I suspect this will be at least 10x higher.
The other Corporation is a mining and refining company based in South Africa. The company owns a huge tract of land containing large platinum and palladium reserves (PGMs) on a 5,000-hectare site located south of the Merensky and UG2 reefs being mined by Anglo Platinum and Impala Platinum, two of the biggest players in the industry and is the largest undeveloped platinum project in the world…
In the past, mining these ores was not the problem, but refining them was, as these ores are Chromium rich, which frequently caused problems with the arc furnaces. The company bought the site and the technology in an exclusive licence agreement to use an alternative roasting and smelting process called ConRoast, which was developed originally by Mintek. Mintek, is South Africa’s national mineral research organisation, and reports to the Minister of Minerals and Energy.
Mintek, licenced the new technology to a small miner called Braemore Resources, who ran out of cash during the last financial crisis, and who merged with the company in question. Its prime development asset is the Tjate Platinum project, where it has a 63% interest, and which covers 5,140 hectares adjacent to Anglo Platinum’s Twickenham and Impala Platinum’s Marula operations.
According to independent estimates, the project’s exploration area could contain some 65 million ounces of platinum, palladium, rhodium and gold. At the moment the total is 20.4 million ounces in the inferred category, and 1.97 million ounces indicated, but there is clearly more to come. Tjate can already be described as the world’s largest undeveloped block of defined platinum ore.
Given the above projections for vehicles, and given that most of those vehicles will require catalytic converters, that use PGMs to reduce noxious gases from exhausts, the demand for platinum, and palladium are going to rise, and therefore, shortages are inevitable. China’s smog problems will only get worse, unless each oil-based energy source uses catlysts to remove toxic emissions from exhaust gases.
The company’s technological lead, and patented technology until 2018, should see a rise over the longer term.
And stocks of both of these precious metals are at lows… Jubilee Platinum (JLP:AIM) the company in question which has fallen to interim lows, might just be the turnaround target of larger more cash-rich majors.
My rating for both corporations is a medium to longer term – BUY.
No shares are currently held by anyone connected with this story, and will not be for a minimum of 72 hours from the posting of this story. The story is meant purely for educational purposes, and any rating is for personal use. The reader is strongly advised to seek professional guidance as to any share purchases. Share prices can go down as well as up, and you may lose considerable sums by choosing to invest in them. The author accepts no liability for actions taken by, or on behalf of readers.
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