The cons and cons of debt monetisation

From Goldseek, Tuesday, 17 July 2012: By: Steve Saville, The Speculative Investor Below is an excerpt from a commentary originally posted at www.speculative-investor.com on 8th July 2012. Although it probably won't happen within the next couple of months, it's a good bet that the ECB will eventually be prodded into monetising a large amount of European government and commercial bank debt. It is therefore appropriate for us to discuss the pros and cons of such a development, but since we can't think of any pros* we'll have to focus on the cons. A critical point to understand is that monetary inflation carried out by the central bank is a problem for the same reason that private counterfeiting is a problem. It results in an exchange of nothing for something and is therefore a form of theft. Nobody would argue that a private counterfeiter was providing a valuable service to the economy if he printed-up money to buy the bonds of financially-stressed governments, so why do many people believe that the central bank can do some good when it buys bonds with money conjured out of nothing? Even believing that under certain conditions the central bank does no harm (rather than does some good) when it creates new money requires disabling the part of the brain devoted to logic and common sense. Of course it does harm! Adding to the supply of money cannot possibly add to the total wealth in the economy, and yet some people get richer as a result of the monetary injection. If some people get richer while the total wealth is not increased, then other people must be made poorer and what we are dealing with is a forced transfer of wealth. We now get to the essence of what central bank debt monetisation is: a means of transferring wealth from some people to other people. In the specific case of the ECB using new euros to buy-up the bonds of insolvent governments and banks, it would be a transfer of wealth to the investors in these bonds from everyone with euro-denominated savings. In effect, the costs of making a bad investment in bonds would be shifted from those who made the ill-conceived investment decision to those who had nothing to do with the decision. Furthermore, the shifting of costs would be done surreptitiously. If all euro savers were sent a bill for their share of the wealth transfer there would be an uprising, but when the transfer is done via monetary inflation not even one person in one hundred will be able to figure out why he/she has become poorer. The costs to euro savers are hidden from view because rather than there being an immediate transfer of money there is a gradual transfer of purchasing power. Bondholders and banks see an immediate boost in purchasing power because they are the first receivers of the new money, but savers see a gradual decrease in purchasing power as the new money works its way through the economy. It should also be understood that the price-related effects of the new money will be lumpy, in that some prices will be affected more than other prices. This leads to mal-investment and means that the debt monetisation not only brings about an unethical transfer of wealth, it also brings about a reduction in the overall pool of wealth. All of which prompts the question: Why do it? Why would a central bank monetise debt when doing so helps a small number of speculators at the expense of a large number of savers and brings about a reduction in the total amount of wealth? It clearly has nothing to do with protecting bank depositors, because the depositors at a bank don't lose anything when the bank's shareholders are wiped out and bondholders take large losses. It is done, we think, due to ignorance and a willingness to engage in unjust practices for political or financial gain. Ignorance plays a part in the following ways: 1. Most people don't understand the link between monetary inflation and the eventual decline in their standard of living. 2. The top people at a central bank will necessarily be bad economists because a good economist would never want the job or would never be considered eligible for the job. For example, Ben Bernanke would not currently be the head of the Fed if not for his strong belief that creating money out of nothing can benefit the economy. 3. Almost all politicians are clueless about economics. A willingness to do whatever it takes to achieve political or financial gain plays a part in the following ways: 1. The ability to create money out of nothing provides politicians with far greater scope to buy votes than would exist if their promises had to be funded by direct taxation. 2. Monetary inflation often creates the false impression of a more vibrant economy in the short-term, thus helping to boost the re-election chances of the incumbents. 3. The people who benefit the most from monetary inflation often exert a disproportionately large amount of influence over the central bank and the government. 4. Due to the promises made by politicians in the past, a lot of voters now have a vested interest in continuing the inflation because it is only via the wealth transfer brought about by monetary inflation that these people will ever receive their so-called entitlements. Due to the combination of ignorance and vested interests outlined above, there will be a lot more monetary inflation in the future despite it being both unethical and economically debilitating. The question is when, not if. _____- Related: [Never Believe Anything Until It Is Officially Denied]: The euro is "irreversible" and not in danger, says Draghi

AFGHAN WAR PROGRESS

From The Onion, July 16, 2012 | ISSUE 48•29:

Commanding General In Afghanistan Has No Idea How War Is Going, Just Trying To Ignore It At This Point

Gen. Allen acknowledges that he’s “definitely put the war in Afghanistan on the back burner.”

KABUL, AFGHANISTAN—Admitting he hasn’t been following combat operations all that closely lately, Gen. John R. Allen, the top commander of U.S. forces in Afghanistan, told reporters Monday he has “no idea” how the war is going and, at this point, is trying to ignore the whole situation as best he can.

“As far as I know, we’re still slowly making progress with our counterinsurgency efforts against the Taliban, but to be honest, I haven’t been keeping up with all that stuff and couldn’t really say for sure,” a shrugging Allen told reporters at NATO headquarters in Kabul. “It’s not really part of my day-to-day anymore, so I can’t help you out with any specifics on current missions or casualty figures or anything like that. It’s really not where my focus is at right now.”

“Sure, I hear things about ongoing operations here and there,” the four-star Marine Corps general continued. “But for the most part I’m pretty much checked out of this one.”

Allen, who commands more than 130,000 coalition troops and possesses full oversight of the combat mission in Afghanistan, confirmed he attends multiple briefings on the status of insurgent movements each week, but stated “they all kind of blur together after a while” and nowadays he simply prefers to tune them out.

Questioned about last week’s deadly attack by the Taliban in Bamian Province, Allen responded by asking whether that was the bombing at the American military checkpoint or “one of those police station ones,” and then acknowledged he was “probably not the best guy to ask about that sort of thing.” Pressed about tactics, Allen conceded he wasn’t certain exactly where his forces were currently deployed, but suggested all inquiries be directed toward one of his lieutenants, the Joint Chiefs of Staff, or “the British commander, maybe,” as one of them was probably handling such matters now.

Additionally, the general said that if reporters really needed a high-level source on an important war-related matter, they should “just go ask the president.”

“These days, unless there’s something going on that’s monumentally important, my staff knows not to come to me,” said the man in charge of the 50-nation International Security Assistance Force. “I do check with my advisers every month or so to see if there’s anything new going on here in Afghanistan, but honestly, there never is. It’s usually the same old, same old—market bombings, militants infiltrating the Afghan security forces, helicopter crashes. By now the guys here can handle all that without my help.”

Admitting he no longer arrives for work at NATO’s Kabul headquarters before noon, Allen said he typically leaves most of the routine decisions on military offensives and drone strikes up to others, because many of the newer individuals on his staff seem to take a greater interest in the conflict and are still eager to do “all the typical war stuff” that Allen flatly stated he’s tired of dealing with.

The general claimed he now skips over any news article that mentions the word “Afghanistan” and barely skims the many combat reports and e-mails he receives from the Pentagon, saying they seldom have any new or helpful information to add regarding the 11-year-old conflict.

“You know, after so many high-profile Taliban prison escapes and accidental civilian deaths, you kind of just throw up your hands and say, ‘All right, you got me,’ and then move on to something else,” Allen said. “So I’ve taken a step back, and now I see myself as more of a consultant who just gives general advice on the war now and then.”

“Frankly, there’s not much more I can do out here, anyway,” he added.

At press time, after being notified of a massive, coordinated attack on the American embassy in Kabul, Allen stared blankly at his staffers for several moments, eventually telling them to do whatever it was they did last time that happened.

The Financial Crisis Was Foreseeable … Thousands of Years Ago

From ZeroHedge:

We’ve known for 4,000 years that debts need to be periodically written down, or the entire economy will collapse. And see this.

We’ve known for 2,500 years that prolonged war bankrupts an economy.

We’ve known for 1,900 years that rampant inequality destroys societies.

We’ve known for thousands of years that debasing currencies leads to economic collapse.

We’ve known for hundreds of years that the failure to punish financial fraud destroys economies, as it destroys all trust in the financial system.

We’ve known for hundreds of years that monopolies and the political influence which accompanies too much power in too few hands is dangerous for free markets.

We’ve known for centuries that companies will try to pawn their debts off on governments, and that it is a huge mistake for governments to allow corporate debt to be backstopped by government.

We’ve known for 200 years that allowing private banks to control credit creation eventually destroys the nation’s prosperity.

We’ve known for 200 years that a fiat money system – where the money supply is not pegged to anything real – is harmful in the long-run.

We’ve known since the 1930s Great Depression that separating depository banking from speculative investment banking is key to economic stability. See this, this, this and this.

We’ve known for 80 years that inflation is a hidden tax.

We’ve known since 1988 that quantitative easing doesn’t work to rescue an ailing economy.

We’ve known since 1993 that derivatives such as credit default swaps – if not reined in – could take down the economy. And see this.

We’ve known since 1998 that crony capitalism destroys even the strongest economies, and that economies that are capitalist in name only need major reforms to create accountability and competitive markets.

We’ve known since 2007 or earlier that lax oversight of hedge funds could blow up the economy.

And we knew before the 2008 financial crash and subsequent bailouts that:

• The easy credit policy of the Fed and other central banks, the failure to regulate the shadow banking system, and “the use of gimmicks and palliatives” by central banks hurt the economy

• Anything other than (1) letting asset prices fall to their true market value, (2) increasing savings rates, and (3) forcing companies to write off bad debts “will only make things worse”

• Bailouts of big banks harm the economy

• The Fed and other central banks were simply transferring risk from private banks to governments, which could lead to a sovereign debt crisis

Given the insane levels of debt, rampant inequality,  currency debasement, failure to punish financial fraud, letting the private banks take over the system of credit creation, de-linking of fiat money from anything real, growth of the too big to fails, repeal of Glass-Steagall, refusal to rein in derivatives, sovereigns taking on banks’ debt, crony capitalism, endless war, and other shenanigans … our financial crisis was entirely foreseeable.

NSA Insider: You Are the Target: “They’re Pulling Together All the Data About Virtually Every U.S. Citizen in the Country”

Mac Slavo July 19th, 2012 SHTFplan.com

Few Americans would believe that the government has the technological capability and wherewithal to monitor, track, log, and analyze the everyday activities of American citizens. The idea that the National Security Agency, an organization responsible the collection and analysis of foreign communications and foreign signals intelligenc, would operate on US soil to turn the surveillance apparatus on the people they are tasked with protecting has up until now been reserved for conspiracy theorists and Hollywood movies.
It turns out that it’s not a conspiracy, and not only does the NSA operate within the borders of the United States, they are assembling detailed dossiers on every single one of us.  William Binney, an NSA whistleblower who recently resigned his post at the NSA over its illegal domestic surveillance programs, notes that the agency is engaged in implementing a total surveillance net over America with the help of private businesses like internet and telecom companies – and their target is YOU.

Domestically, they’re pulling together all the data about virtually every U.S. citizen in the country and assembling that information, building communities that you have relationships with, and knowledge about you; what your activities are; what you’re doing.
So the government is accumulating that kind of information about every individual person and it’s a very dangerous process.
…from one company alone… they were sending, according to my estimate… I reckon there were between 10 and 12 [companies] that were participating… that one company was providing 320 million average logs per day since 2001.

As we’ve noted previously Everything You Do Is Monitored. The NSA’s technological capabilities far surpass anything that has ever existed. Not only is the NSA now building a massive surveillance facility in Utah capable of monitoring and logging multiple yottabytes (1 Trillion Terabytes of information) of data like emails, cell phone communications, text messages, shopping records and social network interactions, there are over fifty fusion centers across the United States where data is processed on a local or regional level:

All of this information will eventually be fused into one large database. In fact, the government has already setup well over fifty fusion centers around the nation. What goes on in these centers is kept strictly confidential, and there doesn’t seem to be any agency in charge of them, but we know they exist, and we know that their purpose is to acquire, aggregate and act on whatever information they have available to them. These are fairly new, appearing just over the last several years. But be assured that as processing power and software technology improves, so too will the surveillance capabilities of fusion like facilities, whether they belong to government, private industry or criminal industry.

Of course the NSA denies the existence of a spy center designed to monitor US-based communications and activity, but we already know from past experience that government denying something exists doesn’t necessarily mean it’s not real.

They are watching everything we do. For what reason? We can’t say for certain, but history tells us any time government(s) start making lists and collecting data it often turns into a mechanism of intimidation, control and a culling of those who are perceived to be acting against the state.

Our Republic is on very dangerous ground.

Hat tip Satori

Author: Mac Slavo
Views: Read by 6,471 people
Date: July 19th, 2012
Website: www.SHTFplan.com

Copyright Information: Copyright SHTFplan and Mac Slavo. This content may be freely reproduced in full or in part in digital form with full attribution to the author and a link to www.shtfplan.com. Please contact us for permission to reproduce this content in other media formats.

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Rockefeller’s Depopulation Dreams Published by Foundation Linked to Mass Graves

From theintelhub.com, July 19, 2012

By Shepard Ambellas

What is most interesting about the eugenics based Rockefeller Foundation’s ideology (an ideology which shined brightly in a recent 2010 publication) is the fact that it essentially forecasts future events but claims that it is not a forecast in anyway, thus leaving the doors wide open for the possibility of staged future events.

Please keep in mind that the scenarios in this report are stories, not forecasts, and the plausibility of a scenario does not hinge on the occurrence of any particular detail.

The following few pages are excerpted from the Rockefeller Foundation publication, Scenarios for the Future of Technology and International Development.

The meat of it starts with an introduction into future scenarios and reads;

THE SCENARIO NARRATIVES

The scenarios that follow are not meant to be exhaustive—rather, they are designed to be both plausible and provocative, to engage your imagination while also raising new questions for you about what that future might look and feel like.

Each scenario tells a story of how the world, and in particular the developing world, might progress over the next 15 to 20 years, with an emphasis on those elements relating to the use of different technologies and the interaction of these technologies with the lives of the poor and vulnerable.

Accompanying each scenario is a range of elements that aspire to further illuminate life, technology, and philanthropy in that world. These include:

• A timeline of possible headlines and emblematic events unfolding during the period of the scenario
• Short descriptions of what technologies and technology trends we might see
• Initial observations on the changing role of philanthropy in that world, highlighting opportunities and challenges that philanthropic organizations would face and what their operating environment might be like
• A “day in the life” sketch of a person living and working in that world

Please keep in mind that the scenarios in this report are stories, not forecasts, and the plausibility of a scenario does not hinge on the occurrence of any particular detail.

In the scenario titled “Clever Together,” for example, “a consortium of nations, NGOs [non- governmental organizations], and companies establish the Global Technology Assessment Office”—a detail meant to symbolize how a high degree of international coordination and adaptation might lead to the formation of a body that anticipates technology’s potential societal implications.

That detail, along with dozens of others in each scenario, is there to give you a more tangible “feel” for the world described in the scenario. Please consider names, dates, and other such specifics in each scenario as proxies for types of events, not as necessary conditions for any particular scenario to unfold.

We now invite you to immerse yourself in each future world and consider four different visions for the evolution of technology and international development to 2030.

The prelude to the writing is ominous in nature alone, eluding to 4 different visions of the potential future.

The scenarios start out rather interesting, I was actually glued to the authors writings as a pandemic in 2012 is detailed as one of the scenarios wiping out 8 million people in the first 8 months of release.

It’s almost as if David Rockefeller himself wrote the text based on one of his own sick fantasies.

The excerpt reads;

A world of tighter top-down government control and more authoritarian leadership, with limited innovation and growing citizen pushback

In 2012, the pandemic that the world had been anticipating for years finally hit. Unlike 2009’s H1N1, this new influenza strain—originating from wild geese—was extremely virulent and deadly.

Even the most pandemic-prepared nations were quickly overwhelmed when the virus streaked around the world, infecting nearly 20 percent of the global population and killing 8 million in just seven months, the majority of them healthy young adults.

The pandemic also had a deadly effect on economies: international mobility of both people and goods screeched to a halt, debilitating industries like tourism and breaking global supply chains. Even locally, normally bustling shops and office buildings sat empty for months, devoid of both employees and customers.

The pandemic blanketed the planet—though disproportionate numbers died in Africa, Southeast Asia, and Central America, where the virus spread like wildfire in the absence of official containment protocols. But even in developed countries, containment was a challenge.

The United States’s initial policy of “strongly discouraging” citizens from flying proved deadly in its leniency, accelerating the spread of the virus not just within the U.S. but across borders. However, a few countries did fare better—China in particular. The Chinese government’s quick imposition and enforcement of mandatory quarantine for all citizens, as well as its instant and near-hermetic sealing off of all borders, saved millions of lives, stopping the spread of the virus far earlier than in other countries and enabling a swifter post- pandemic recovery.

Africa, Asia, and Central America appear to be in Rockefeller’s dreams as he and others such as Henry Kissinger openly admit they want to depopulate the third world.

The excerpt continues to go on about China’s preparation for such a virus;

China’s government was not the only one that took extreme measures to protect its citizens from risk and exposure. During the pandemic, national leaders around the world flexed their authority and imposed airtight rules and restrictions, from the mandatory wearing of face masks to body-temperature checks at the entries to communal spaces like train stations and supermarkets.

Even after the pandemic faded, this more authoritarian control and oversight of citizens and their activities stuck and even intensified. In order to protect themselves from the spread of increasingly global problems—from pandemics and transnational terrorism to environmental crises and rising poverty—leaders around the world took a firmer grip on power.

What is alarming about this is that all of the preparation and staging that took place to achieve pandemic preparedness on a massive scale nationwide and worldwide scale is leading up to something. But what?

Mass graves were prepared worldwideto be used in the event of a future impending doomsday scenario.

In fact, the World Health Organization (WHO) along with others instrumental in the scam, actually achieved pandemic 6 martial law in the United States, secretively suspending the constitution and allowing for the fast tracking of poisonous vaccines to be released to the general populace.

This is where the Rockefeller publication starts to get even more interesting. I was glued to this next part which reads;

At first, the notion of a more controlled world gained wide acceptance and approval. Citizens willingly gave up some of their sovereignty—and their privacy—to more paternalistic states in exchange for greater safety and stability. Citizens were more tolerant, and even eager, for top-down direction and oversight, and national leaders had more latitude to impose order in the ways they saw fit.

In developed countries, this heightened oversight took many forms: biometric IDs for all citizens, for example, and tighter regulation of key industries whose stability was deemed vital to national interests. In many developed countries, enforced cooperation with a suite of new regulations and agreements slowly but steadily restored both order and, importantly, economic growth.

This is literally the blueprint for the globalists, ablueprint for their New World Order which unfortunately is coming into view just like George H.W. Bush stated during his presidency.

The next few paragraphs of the publication dovetail into current times as terror rhetoric is at a peak, reading;

Across the developing world, however, the story was different—and much more variable. Top-down authority took different forms in different countries, hinging largely on the capacity, caliber, and intentions of their leaders. In countries with strong and thoughtful leaders, citizens’ overall economic status and quality of life increased. In India, for example, air quality drastically improved after 2016, when the government outlawed high- emitting vehicles.

In Ghana, the introduction of ambitious government programs to improve basic infrastructure and ensure the availability of clean water for all her people led to a sharp decline in water-borne diseases. But more authoritarian leadership worked less well—and in some cases tragically—in countries run by irresponsible elites who used their increased power to pursue their own interests at the expense of their citizens.

There were other downsides, as the rise of virulent nationalism created new hazards: spectators at the 2018 World Cup, for example, wore bulletproof vests that sported a patch of their national flag. Strong technology regulations stifled innovation, kept costs high, and curbed adoption. In the developing world, access to “approved” technologies increased but beyond that remained limited: the locus of technology innovation was largely in the developed world, leaving many developing countries on the receiving end of technologies that others consider “best” for them.

Some “IT IS POSSIBLE TO DISCIPLINE AND CONTROL SOME SOCIETIES FOR SOME TIME, BUT NOT THE WHOLE WORLD ALL THE TIME.” – GK Bhat, TARU Leading Edge, India governments found this patronizing and refused to distribute computers and other technologies that they scoffed at as “second hand.” Meanwhile, developing countries with more resources and better capacity began to innovate internally to fill these gaps on their own.

Meanwhile, in the developed world, the presence of so many top-down rules and norms greatly inhibited entrepreneurial activity. Scientists and innovators were often told by governments what research lines to pursue and were guided mostly toward projects that would make money (e.g., market-driven product development) or were “sure bets” (e.g., fundamental research), leaving more risky or innovative research areas largely untapped.

Well-off countries and monopolistic companies with big research and development budgets still made significant advances, but the IP behind their breakthroughs remained locked behind strict national or corporate protection.

Russia and India imposed stringent domestic standards for supervising and certifying encryption-related products and their suppliers—a category that in reality meant all IT innovations. The U.S. and EU struck back with retaliatory national standards, throwing a wrench in the development and diffusion of technology globally.

Especially in the developing world, acting in one’s national self-interest often meant seeking practical alliances that fit with those interests—whether it was gaining access to needed resources or banding together in order to achieve economic growth.

In South America and Africa, regional and sub-regional alliances became more structured. Kenya doubled its trade with southern and eastern Africa, as new partnerships grew within the continent. China’s investment in Africa expanded as the bargain of new jobs and infrastructure in exchange for access to key minerals or food exports proved agreeable to many governments.

Cross-border ties proliferated in the form of official security aid. While the deployment of foreign security teams was welcomed in some of the most dire failed states, one-size-fits-all solutions yielded few positive results.

By 2025, people seemed to be growing weary of so much top-down control and letting leaders and authorities make choices for them.

Wherever national interests clashed with individual interests, there was conflict. Sporadic pushback became increasingly organized and coordinated, as disaffected youth and people who had seen their status and opportunities slip away—largely in developing countries—incited civil unrest. In 2026, protestors in Nigeria brought down the government, fed up with the entrenched cronyism and corruption.

Even those who liked the greater stability and predictability of this world began to grow uncomfortable and constrained by so many tight rules and by the strictness of national boundaries. The feeling lingered that sooner or later, something would inevitably upset the neat order that the world’s governments had worked so hard to establish.