By
Darryl Schoon on Financial Sense, February 15, 2009, (hat tip to
ICH) Extracts: "...The fact that in 2008 bankers became victims in the game they created has profound implications for capitalism itself. Capitalism, which began in 1694 with the issuance of debt-based money from The Bank of England, has now over three hundred years later reached its last and final stage.
Capitalism is not ending because those enslaved by bankers revolted. Capitalism is ending because the bankers’ insatiable greed destroyed the mechanism by which bankers indebt others. The sad truth is that those enslaved by debt still wish to remain the slaves of bankers and pay the cost of [their] own slavery [and] let them [the bankers] continue to create money.
Although debtors fervently hope the bankers’ system of debt will continue, they will not have a say in the matter. Neither will the bankers...
...The substitution of paper “money” for gold and the charging of interest on such “money” is the secret of the banker’s wealth. It is also the secret of capitalism as it is the process whereby bankers’ indebt others (businesses, consumers, governments, etc.) through the loaning of paper “money” created by central banks resulting in paper IOUs, IOUs which are then resold as investments to savers, savers being all who need to protect the value of their paper “money” from eroding because of the constant inflation of the paper money supply by bankers.
That such a system has lasted over three hundred years is extraordinary; but it was not until the 20th century when the linkage between paper money and gold began to fail that the problems inherent in paper money systems became more apparent.
England, the major recipient and beneficiary of the banker’s paper money for the previous two hundred years, had been very careful to maintain the fiction that paper money was as good as gold or silver. But in the next century, the 20th, the US the surrogate successor to England, was to be far less considerate of the considerable and questionable “gift” bequeathed to it by England’s bankers.
In 1933, the US government by executive order confiscated the gold of all Americans thus ending the belief that paper money was interchangeable with gold and silver and was therefore a trustworthy medium of exchange.
This confiscation of gold by the US was to be later repeated on an international level. But instead of only forcing Americans to abandon gold as it had in 1933, in 1971 the US would force the entire world to do so...
...Only monetary momentum and residual confidence has allowed paper-based capitalist economies to function since the last vestige of gold was removed in 1971.
Now, ...
a collapse of world economies caused by the default on trillions of dollars of paper debts and obligations has never before happened. Soon, it will.
The consequences will be as devastating as they will be widespread as
personal savings will be wiped out. Personal savings entrusted to banks have been invested in the same paper IOUs, sic bonds, owned by pension funds, investment funds, and insurance companies all over the world.
Savers forced by the constant depreciation of paper money have given their savings to banks, pension funds, insurance companies and investment funds in the hopes of salvaging the value of those savings. But those hopes will prove to be false as the escalating financial collapse reveals such investments, e.g. corporate, government and consumer IOUs, to be increasingly worthless.
Governments that allowed this crisis to occur will then be forced to indemnify such losses in order to maintain civil and social order. But, when done, the indemnification of trillions of dollars of lost savings will cause what remains of the international monetary system to collapse.
Paper “money” is but a paper tiger and when exposed to the twin disasters of economic deflation and central bank hyperinflation, fiat “money” will ultimately revert to its intrinsic value—zero... ...Economies built on credit and debt are by nature unstable. Caught between cycles of expansion and contraction, they are also vulnerable to the vagaries of man and the dictates of nature, i.e. war, famine, greed, drought, etc.
When the backing of gold was finally removed from paper money, it was the final straw that was to bring down the bankers’ house of cards. But before the house of cards collapsed, capitalism was to erupt in one last display of shameless glory. The 25 years between 1982 and 2007 was the longest expansion in capitalism’s history. It was, however, to be its last; for the expansion was built on misallocated and historically excessive amounts of credit—and Davos occupied center stage in the display of this excessive “achievement”.
It is natural that at the end of the banker’s system, bankers would have garnered the largest share of the spoils and so it was... ...Debt, in capitalist systems, is a wondrous device. That is, until it can’t be paid back. Under capitalism, credit fuels expansion but it does so at a cost. As capitalism expands, credit becomes debt and the greater the expansion, the greater the debt... The Achilles heel of capitalism is its perpetual need to expand.
Only perpetual capital expansion can create sufficient capital flows to service and retire previously created debts, the amounts of which are always increasing because of the accruing compound interest being charged. While any slowdown is cause for worry, a contraction bodes far worse....
...Central banks are now engaged in a life and death struggle, a struggle which they cannot win. When the US removed gold from the fictional foundation of central bank fiat currencies, the death warrant of fiat currencies was signed. The execution itself would be only a matter of time.
The central bank struggle to maintain the fiction that paper money is as good as gold is as doomed as the hope that more central bank credit will solve the problem that too much central bank credit created.
The last and only remaining hope of central banks is to prolong the value of paper money by the use of smoke and mirrors in order to hide their declining value. The strategy is to remove as much evidence of that decline as possible...
...
Systemic collapse as predicted by Warburton is now in the process of occurring.
Where does this leave the central bankers? In my opinion, they had better start looking for jobs. As long as people believe bankers can solve their problems, they will continue to be employed. But when people finally understand the role bankers played in the current crisis, they and their cohorts in government may very well be indicted for their unconscionable plundering at the public trough and, also now for the added insult of destroying the trough when done plundering.
When this era has ended, it is not known what bankers will do as bankers are notoriously bad businessmen. Bankers achieve their considerable success not by entrepreneurial talent but by their unique proximity to credit and their ability to leverage that proximity into excessive profit. Stripped of this advantage, bankers would be forced to earn a living on a level playing field—an ability which has never before been tested...
...Professor Antal Fekete stated when the price of gold begins to move rapidly upwards towards its final highs, it will be a time of tragedy; for when gold explodes upwards, the economies built around paper money and paper assets will collapse. The human suffering then and afterwards will be immense. The smoke and mirror attempts of central bank to postpone the inevitable day of reckoning have failed...
...The day people realize that paper money is worthless is the day economic activity as we know it will come to a halt.
What happens next has happened before. Barter begins the movement of goods and services until a trustworthy medium of exchange arises to take the place of the bankers’ debased paper.Currency collapse is a reoccurring story. Because we denied its reality does not mean it would not happen. Denial is very powerful but, in the end, it changes nothing except the ability to effectively respond.
Our wish that gold achieve its rightful price level in today’s accelerating crisis is tempered by our realization that when that day is reached,
the human carnage and suffering will be without precedence.
It is best, then, to buy gold and silver whenever possible and to wait patiently for things to unfold as they will. And they shall...
...
The roots of modern economics are intertwined with institutional deceit on a massive scale because the material rewards are so great. Therefore, the attempt to ascertain the truth about money is not an easy task; and it is not made easier by those who benefit by its deceit.
This is why the discussion of ideas antithetical to those in positions of power are now found only at the edges of society. Writers and readers alike must search for truth in books not easily found...
...Those in power maintain their power because those without power do not understand the power dynamics operant in the world in which they live. Thus, the economic control over the many for the benefit of the few has continued irrespective of the form the economy takes.
We are at the end of an extraordinary epoch, the end of the age of credit. In 1981, Bucky Fuller predicted the collapse of the present power structures in tandem with an unprecedented crisis that would transform humanity.
That time, the collapse of the world power structures, has now arrived. Transformation comes next; and when the crisis finally passes—and it will—tomorrow will be a far better day.
Awareness, community, faith and a bit of gold and silver will be invaluable in the days to come..."
Read all here
