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Digital Currency – The Last Refuge of a Banking Scoundrel?

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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.

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Global Government – Portent of the Future?

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I’ve been giving quite some thought to events in the political, and financial sphere and Gold and other precious metals markets of late, and trying to figure out what the true goals of the global elite are really upto.

Gold for centuries has been the backing for currencies, and the last time we had a global economic and military crisis, in the period from 1914 to 1946, Gold was eventually taken out of the hands of the American population at the princely sum of $25.00 an ounce by Presidential decree, in executive order 6102 in 1933 – just before it was revalued to $35.00.

Some semblance of order was gained when the Bretton Woods agreement was ratified after 1945. The dollar would be backed by Gold, and exchangeable for Gold and the other world currencies would be fixed to the dollar.

This stood the test of time, until the 1960s when the world’s major economies began growing at different paces, and a war in Vietnam, forced the U.S. to spend more on munitions and men trying to hold back the tide of communism than its economy could comfortably afford.

This led countries such as Spain, France and Britain to exchange some of their foreign U.S. currency reserves for Gold in the Fed’s vaults. The final straw was when Britain told its U.S. ambassador to exchange $3billion for Gold, on 11th August 1971.

Just 4 days later, Richard Milhous Nixon – President, made a direct announcement to the people of America on television, that he was “temporarily” suspending the right to exchange dollars for gold.

The ‘Gold Window’, as it was called has remained firmly shut ever since. The reason? Because they were running out of gold. And we know from our history that – “He who owns the gold, makes the rules.” and the last full audit of the Fed, was conducted… in 1954.

At the time, Gold could be exchanged for $35.00 per troy ounce (ozt) by countries only. Over the ten years after 1971, the Gold price would rise spectacularly as people worried about inflation, which rose to 26.9% in Britain, and 25%+ in America, in 1974, as the world oil price rose, in large part to events in the middle-east, but also the number of dollars being emitted to pay for the oil – until Henry Kissinger had a cunning plan.

So, given the recent events in the middle-east, and the number of dollars that have recently been printed, apparently $4 trillion and counting. Then of course there is the Bank of Japan’s recent pronouncement that it would double down on Quantitative Easing (QE) with its own printing presses, and of course not forgetting the decision to: “Do whatever it takes” by European Central Banker in Chief – Mario Draghi, and of course our own ex Goldman-Sachs executive – Mark Carney – Chief Cashier of the Bank of England has cut the government some slack with its own printing presses, so that the government could spend money it didn’t have, on things we don’t necessarily need.

And the reason they didn’t have the money is because governments, especially socialist government’s have a tendency to bribe the electorate with their own money by making promises, that the tax-payer can’t afford. And then the Bank loans them the currency and expects to be paid back with interest – What is their escape plan?

Eventually, those who pay, end up as wage slaves. As Mr Churchill so famously quoted: “The trouble with Socialism, is, eventually they run out of other people’s money.”

Because, of course, when the nation is paying interest on loans from years ago it has less to spend for the here and now – and in Britain we recently paid off our War Bonds – from 1914… So you can see how long that can have an affect. Central Bankers have a tendency to enslave the population by encouraging governments to spend more than they have, in the full knowledge that they will earn interest for years, possibly decades to come. And there’s nothing like a good war for Banking business.

In business, the owners will frequently look at investments through the eyes of a “Cost-Benefit” analysis, so that they can check – before they spend – whether the investment will reap financial rewards and exceed the investment.

But many governments want to invest in socially desirable investments, where it is difficult – if not impossible – to measure the costs and benefits. Of course politicians want their cut – in the form of salaries too.

Bankers also have a tendency towards centralisation – first on a national level, but increasingly on an International level. In Europe, politicians have still not had accounts signed off for several years, as they give money to their own pet projects.

So to come to the meat of this piece.

Gold has been driven down in the last 3 years since it peaked at circa $1980 in late 2011. So, with Central Banks in Venezuela, Germany, Holland, and now France either requesting their gold back from the Fed, or recommending it to the government, either by politically minded individuals, or opposition leaders; what is the end game? I believe it is simply a “One world government” with the Bankers pulling the strings from behind the curtain.

The Swiss Gold Referendum

Switzerland’s referendum vote on Central Bank Gold, on the Sunday, 30th November, didn’t go as hoped, after the Central Bank began a campaign of fear, and Citibank released a report a couple of days ahead of time, which to be honest, smacked of fear and desperation – On the banker’s part…

http://goldsilverworlds.com/physical-market/the-swiss-referendum-on-gold-whats-missing-from-the-debate/

Despite this, the Gold price held up quite well, after an initial dip.

http://www.mineweb.com/mineweb/content/en/mineweb-independent-viewpoint?oid=241985&sn=Detail

Central Banks’ Love-Hate relationship with gold and Silver.

http://www.mineweb.com/mineweb/content/en/mineweb-editors?oid=261075&sn=Detail

So, why do the Banks have a love-hate relationship with Gold? The Central Banks know that money is power… And remember – “Gold is money – All else is merely credit.” – so said, John Pierpoint Morgan, of J.P. Morgan-Chase Bank fame, and if you have been following this blog for a while now, you will know from my many posts, that ultimately we are owned by bankers, and the main protagonist of these bankers is the Federal Reserve. So their objective appears to be to get Gold out of the hands of the people, because that allows the person freedom, and liberty to do as they see fit – as long as they do no harm, nor cause any loss to others. And if you read anything from Ted Butler, you’ll know he thinks the same. Since the beginning of U.S. independence, the constitution has been chipped away at, leaving it a shadow of its original intent. The constitution says that only Gold or Silver can legally be money, yet by sleight of hand, the Bankers have removed every last vestage of real money from the American People, and when they control the money, they are the rulers.

I’ll leave you this video clip which demonstrates this, and is perhaps instructive of where the world is going.

So, if we return to the main reason for this blog, it is to encourage the reader to become an independent thinking human being, responsible for your own actions and have the freedom, and liberty that you were born with, but your parents gave up so shortly thereafter. But you can take some of it back…

Remember:

“He who owns the gold, makes the rules.” Of course, you can buy Gold with silver, or crypto-currency (or some of the paper that they print for you to use.) And at the moment Silver is on sale. As I was writing this, the price of Gold is $1198.10. Silver is at $16.41. So, Silver is therefore 1/73rd as cheap as Gold, though throughout most of recorded history, it was a lot more expensive – it was about 1/15th or 1/16th the price of gold, and sometime in the future, it will be circa 1/10th.

So if you buy 73 ounces of silver at the moment, for the same money you could buy 1 ounce of Gold. But if you wait a while, and silver rises to the price I expect, then your 73 ounces of silver will likely buy between 3-8 ounces of Gold and one day, I expect to be able to buy a house, for circa 30-40 ounces of Gold.

So, are you going to get some now?

You can start your savings: HERE!

And you can get started with crypto-currencies HERE!

So, what is the ultimate goal that I spoke of at the start of this piece?

I believe that the Bankers are using arbitrage – buying something cheap in one place, to sell it elsewhere where it is more expensive (more highly valued) to send Gold and Silver overseas, as the flow of wealth heads East, these Bankers (I believe) intend to establish themselves where the next world hegemon will likely be, in China, just as these Bankers left the shores of England and Europe to go to America when they realised that England was becoming a spent force.

http://kingworldnews.com/chinas-plan-dominate-world-crush-united-states/

And who will be pulling the strings? – That’s right – He who owns the Gold.

You can read more about how these Bankers came to rule the world: Here!

If you like this piece, then please post it to your favourite blog, like it or tweet it.

Money for nothing, and their clicks for FREE.

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Stagnation, Inflation, Deflation, Dis-Inflation – and more – Hyper-inflation?

Back in 2010, in October, William H. Bonner of Agora Financial, a Baltimore based Financial Publishing house and regular commentator on the Financial Markets, released the following piece. Since then, the markets have boomed in some areas, and bust in others. But the real value of many of life’s essentials: Food, Clothing, Shelter and the basic necessities of life, and many of life’s “nice to haves” – Copper, Tin, Zinc, Nickel, Iron, Gold, Silver and of course Oil and Gas, have all experienced significant price changes. But are the prices accurate? Do they reflect the effort and cost of capital needed to extract them, or of their true value, if we run out of them? We may live to find out…

That’s the trouble when you start printing money for nothing, the people who get it first make the most profit, and the further it spreads out from the central bank, the less profit it appears to make. But the good Central Bankers, will do everything they think they can to make things better. The only question is: “For whom?”
Read on to find out.

===========================
Plaza II Accord

Bill Bonner – Friday, October 15, 2010

Keynes was right about one thing…

Peace talks broke down last weekend. Observers had expected the IMF meeting on the weekend to result in the equivalent of the Peace of Amiens or the Surrender at Appomattox. But Treasury secretaries and central bankers went home, unpacked their bags, and resumed their premeditated mischief.

The dollar went down. Why would anyone pay 100 cents for an old, worn out greenback when the Fed promises to create trillions more of them, brand spanking new? Europe and Japan resumed firing with their new QE guns. Asian nations sent out snipers to intervene in the currency markets directly. And China and the US resorted to “trench warfare,” reported The Financial Times, neither apparently ready to give up an inch; that is, neither was prepared to allow its currency to buy more today than it did yesterday. In America, China has become an election-year bogeyman. The electorate seems convinced that any nation that stockpiles $2 trillion worth of America’s I.O.U. greenbacks must be up to no good.

So, the war goes on. But it is an ersatz war. All the combatants really want the same thing – to debauch their currencies at the expense of savers and creditors. Sooner or later, they’ll conspire to get the job done. A full 93% of US financial professionals believe the Federal Reserve Bank is on the case. It is expected to launch major debauch in November. Investors have run up almost all asset classes in anticipation. The Dow passed 11,000 on Friday. Soft and hard commodities hit new highs. And if, on a given day, gold does not set a new record, it is probably because the markets are closed.

What a remarkable period in financial history! We can hardly believe our luck. Absurd things are happening. John Maynard Keynes was wrong about practically everything. But he was right about this:

There is no subtler, surer means of overturning society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction and does it in a way that not one man in a million is able to diagnose.

And we get to see it live. And probably dead. The US dollar fell under the control of the debauchers, partially, in 1913…when America’s central bank was formed…then fully, in 1971, when gold backing for the dollar was completely eliminated. In the 100 years before the Fed was formed, the dollar lost not a penny of its value. In the almost 100 years since, it has lost almost all of them. If the greenback were to lose another 5% of its 1914 value, there would be nothing left at all.

Such slow larceny bothered no one. As long as the dollar slid gradually, and peacefully towards worthlessness it seemed almost natural, even healthy. Central bankers could mix with polite company and hold their heads up. None was arrested, as far as we know. None was so tormented by his crime that he had to be restrained or sedated. But now central banks are committing their felonies in broad daylight. Economists argue for more. But investors are confused and worried. Today, they buy gold. Tomorrow they may buy shotguns.

But what else can the managers do? After increasing for 61 years, the volume of credit in the US – and hence, the volume of sales – is no longer expanding. This leaves householders with debt to pay down and exporters with no alternative but to fight for market share. What to do about it? Lower the value of the currency! But in a correction, the natural thing is for prices to go down with a decline in demand. So, money tends to become more upright just when the managers would most like to see it slouch.

The poor central bankers. They are victims of their own delusions of competence. They have never actually managed anything successfully. When the economy is expanding, they exacerbate the boom. When it is contracting, they slow down the correction. And now, they fight a currency war not of their own choosing, but of their own making. The war is their response to the correction, which results from the bubble, which was caused largely by the managers themselves.

And now they’re looking for a hotel where they can do it again. It was at the Plaza Hotel in New York in 1985 that they managed their Treaty of Versailles. It ended the currency war of the early ’80s…and prepared the way for an even bigger war later on. Back then, Japan was the go-go economy. Like China today, Japan was the world’s leading exporter. It wanted to keep the yen low. The US meanwhile, was losing market share. James Baker and the other US managers threatened sanctions. Japan gave in. By early the following year, the yen was 40% higher against the dollar and Japan’s GDP growth rate had been cut in half. But the managers fixed that problem as they fix them all. In Japan, they cut rates 4 times in 1986, creating a flood of hot money. Four years later, Japan was the envy of the entire world. In January of 1990, the Nikkei Dow hit a new record – 4 times higher than it was when the Plaza Accords were signed. Then, the bubble popped. You don’t need to be reminded of what happened next. The Nikkei crashed. Real estate crashed. Everything crashed. The economy went into a 20-year tailspin, failing to create a single new job in two decades. Neither stocks, nor real estate, nor the economy ever recovered.

No one wants to follow the Japanese down that road. Ben Bernanke manages the dollar, desperately trying to avoid it. And Premier Wen of China said it would be “a disaster for the world” if Western nations tried to force China in that direction. He’s right. But he needn’t worry about it. Disaster is coming anyway. The managers will make sure of it.

Regards,

Bill Bonner,
for The Daily Reckoning
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And once more, the Banks are mired in controversy. Late on 12th June 2014, we heard that the UK., Chancellor of the Exchequer, will outline new laws to regulate the largely unregulated Foreign Exchange markets (For-Ex).
Every day, over $4 TRILLION changes hands globally in these markets, but several Big Banks – those closest to the Central Bankers, have been allegedly manipulating these markets for their own ends.
The Chancellor will make manipulating these markets a criminal offence.

I welcome the attempt to rein in the worst effects of the bankers actions, but it is a brave policeman, or Financial Conduct Authority, who will apply the new legislation, as Bankers have historically threatened governments of all political persuasions with dire effects if they apply regulations too rigidly.

If you don’t believe me, after the scandals that have come to light in the last five years, including LIBOR, Silver, Gold and other events such as the London Whale, then perhaps you need to read my free E-book, all 633 pages of it – “The Coming Battle”, which documents the worst excesses of these “Wizards of Oz” who pull the political strings from behind the curtain. These bankers who threaten governments, who manipulate stock-markets, Foreign exchange markets, Precious metals markets, and use their financial muscle, to wreak havoc when they fail to get the outcomes they feel they deserve.

But who can take them on?

The latest news from Iraq is ISIS appears to have taken control of parts of Western and Northern Iraq, and Eastern Syria.

Their goal it appears, is to create an Islamic Fundamentalist State. Part of me feels they deserve everything they get. BUT I should point out to all, and any who think that we ought to intervene again in the Middle-East, that our last attempts probably created this hotch-potch of anti-western sentiment – rapidly becoming a “Holy War”.

Besides just by ignoring the problem, these radicals will burn themselves out. Apart from the oil-fields in Northern Iraq, what do they have to sell? Oranges? Lemons? Mangoes? I am at a loss to call to memory anything that is exported from the middle-east apart from oil and/or gas. And therein lies the crux of their problem.

A modern economy has to pay for things that others have to sweat to build. German Engineering comes at great expense, and organisational and engineering expertise. British know-how in Financial Markets comes from a few centuries of having travelled the globe, and of having access to a large capital base, and expertise in how to make use of that. (And maybe that’s another topic of discussion for the future). Jamaica has the right climate for sugar cane, and so uses it to make Jamaican Rum. Mexico, has Silver mines, America has its software and computer hardware. Kenya has its tea and coffee plantations, and Japan, its electronics businesses. Each taking advantage of that country’s strengths.

Adam Smith the father of all economists, called it “comparative advantage”. What he meant was that each country should learn to make the best of its natural resources, and use its natural advantages to their fullest.

But as the world becomes more intertwined, the fruits and bounty of this planet will have to be paid for with real money, not money you can just print up at will. Money (Gold and Silver) has to be dug from the earth, smelted, refined into bars and coins, and thus the labour stored up in them – the knowledge, skills, ore, blood, sweat and tears, becomes a tradeable and valuable commodity. Pieces of paper with pretty pictures on, printed in their billions will not.

Education, research, and expertise gained over long periods gives countries an advantage in particular spheres. And asking the Lord Almighty, in whatever guise you see him, will not cut it anymore.

The Lord helps those who help themselves is a phrase I was brought up on. It is time for the middle-east to wake from its 1500 year slumber, and broaden its economic base through acceptance of certain verifiable truths.

Men are the captains of their own destiny not an all seeing prophet, or god from on-high. Such thinking should be reserved for the home and hearth.

Science, and the application of science – truths in physics, if you will, will improve the lot of the many. A country of fundamentalists, however ruled, who do not realise that they can only pay their way in the world by exchanging things of value, will, if ignored, like grapes of wrath, wither on the vine.

Forcing people to live a particular theocratic life in poverty, will mean they will take the first opportunity to leave. And the oil and gas will stay in the ground if others refuse to buy from these tyrants.

In the meantime, those oil and gas producers outside the middle-east, will be reaping the rewards as the oil price rises once more. Two small producers, I have had a smallholding with for over a year, for just such reasons are: Lenigas and Oil (AIM:LGO) and Sound Oil (AIM:SOU). Both have had good news of late and I believe are multi-baggers from here.

LGO operates in Spain and Trinidad and Tobago, and SOU operates in Italy.
As the world price of oil and gas rises due to the increasing political risks, these small businesses will find their product adds increasing amounts to the bottom line, and thus their prospects will rise alongside it.

Eventually, the public will wake up to the fact that the notes and coins in their wallets, and their bank accounts don’t represent real wealth, and demand alternatives to the currency dictated by governments. Alternatives that have stood the test of time, such as Gold and Silver, and newer alternatives such as the crypto-currencies, I’ve mentioned many times will stand out as value and wealth preservers – Bitcoin et-al, and Gold and Silver, will achieve their true place in the realm of matters economic just as they have always done when governments do stupid things like debauch the currency.

If you liked this post, please like it or even just copy and paste saying where from.

W.

Crypto-Currencies and the end of Dollar Hegemony

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ImageWhen I first learned of crypto currencies, some 3 years ago, I have to admit, I was skeptical.

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.

If you want to find out more, click the links – HERE  or HERE and help spread the word.

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.

Abbreviation Name Algorithm Total Coins Retarget Reward
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.

Abbreviation Name Algorithm Total Coins Retarget Reward
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.

You can find out more HERE –  or HERE

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…

W.