Latest:

Aug 27, 2015

The Death of Central Banking, Government and The Birth of The Voluntary Era (Part1)

By  
Coming Money Trust

I had spent a few weeks planning and halfway through writing an elaborate post on the evolution of banking to central banking and the inner workings of secret cartels, but I got so bored I couldn’t be bothered finishing it… In these dying days of Socialist central banking, I really don’t think it matters anyway… I find Banking and Interventionist Macro Economics to be so boring lately… So now we can proceed to more exciting stuff…

Historic Trends
If you have studied History in any depth whatsoever, then you will find certain definitive trends in action… For example you will find a definite trend of centralization and decentralization which ebbs and flow throughout
 
From the Fall of the centralized Roman Empire (27BC – 476AD) which included Europe and vast swathes of the East and Africa; while the Byzantine Empire (330-1453) continued in the East, Western Europe shattered into a thousand decentralized localized states, ultimately under the control of the Catholic Church, otherwise known as Western Christendom… This decentralized and localized social order and hierarchical structure lasted roughly a thousand years, until the end of Feudalism and natural aristocracy and the rise of Absolutist and Constitutional Monarchies in the Sixteenth and Seventeenth Centuries, which jostled with the Catholic Church for power and control following the Protestant Reformation (1517-1648)

 Monarchies by centralizing power form what we would call the Modern Nation States… With the advent of the disastrous French Revolution (1789-1799) and culminating with the end of Western Civilization in World War One (1914-1918), the monarchies of Western Europe are dismantled to be replaced with the modern Democratic Nation States

Co-inciding with the centralization of State power (as comparatively weak as it was compared to today), another trend to observe during the Industrial Revolution (1750-1850), was the centralization of the means of production, in this instance manufacturing and agriculture… The population explosion in Western Europe during this time and increasing mechanization of agriculture, led to a mass exodus of people from the country to form new towns and cities… If you are talking about the coal seams of the South Wales Valleys, or the textile and manufacturing towns and cities of England and Scotland, the trend was the same; a centralization of populations in factory towns and around mine collieries… To be clear this centralization was a necessary and organic consequence of the population boom, the mechanization of agriculture boosting hugely the productivity needed to feed this booming population, with the excess booming population employed in factories creating capital goods (machines) and finished goods for exchange with the agricultural countryside… Add to this a network of trains and roads connecting the countryside with urban populations, and you have the Industrial Revolution in a nutshell…

As a natural by product of this population boom and the higher productivity garnered by centralization and mechanization of the means of production, came untold riches to the peoples of Western Europe… And where you have wealth and riches, you will necessarily have banks, as a storage and lending facility of money within this Industrial Revolution… It is no surprise then, that the rise of Banking in Western Europe happened during the Eighteenth and Nineteenth Centuries… So we have centralized Nation States, Industry and Banking leading up to the madness of the Twentieth Century, and a definitive trend

The Inherent Weakness of Centralization

While all the above is effusive to the advantages and really the necessity of centralization at that time in Europe’s history for its booming population to maintain and exceed its standard of living, you also need to acknowledge that there are also inherent weaknesses in centralization… Centralization of States leads to a monopoly of power over a certain territorial area, upon which a Ruler can impose laws, and demand tribute (taxes) for administration of these laws… Centralization of Industry makes it easier to control, as the State can pass laws and regulations enforcing Labour Unions and all sorts of bureaucratic diktats on hardworking business owners, and on the other hand it affords parasitic business owners for the State to intervene in instituting “Licences” and “Regulations” effectively barring and outlawing competition, by lobbying and bribing corrupt State officials…

Banking is of course like any other industry, albeit by far the most dangerous to be centralized, as the industry of money directly affects all other industries… The fullest expression of this centralization is Central Banking, where individual private banks collude to have the State enforce the creation of a Central Bank in the aftermath of some great banking crisis created by the same bankers obviously, for purposes of centralizing risk by means of a “lender of last resort” and more importantly centralizing the public money supply in the hands of a small cartel of private bankers… Once a Central Bank is instituted with control of the money supply, it is only a matter of time before scarce money (gold and silver) is replaced with infinite Fiat paper money and extension of credit, so that the State can fund Wars and Welfare for the benefit of a small kleptocratic psychopathic Elite

As the above should make clear, the biggest failing of Centralization is that is allows a small Elite of very powerful shadowy people, first control of the banks, then control of the State and its monopoly of violence and coercion upon society by means of bribes and blackmail, and then control of all other industries eventually through State power and control of the money supply… Power, compulsion and wealth now reside in the hands of a small clique, from where they can control every aspect of every individual, every family, every business; otherwise known as Central Planning, or Socialism… Welcome to the Modern World…

The Fatal Flaw of Centralization


The inherent weakness of centralization of power in BIG (Banking, Industry, Government) sows the seed of its own demise, and morphs from weakness to flaw to fatal… Control of the money supply leads to the Elitist landgrab Wet Dreams of Empire… These dreams of Empire are easy to fund with printed pieces of paper, with the resulting inflation being borne domestically by hardworking families compelled to use these infinitely printable pieces of paper under the auspices of “Legal Tender Laws”… Credit booms, busts and Great Depressions (1929-1946) abound creating misery and destruction of ordinary people’s lives, with the bankers who control the money supply hoovering the bankrupt REAL assets with more printed paper money… More Wars create more deaths and hardship, leading to a domestic Welfare State and Public Works Projects to further create dependence on Government Handouts and reverence for Government Intervention in the economy, all the while paid for with more printed money which create further booms and devastating busts, and so on… Central Banking, War and Hardship for the masses is offset by increasing power for the small Elite that now control the money, the government and industry (which has morphed from productive industry to unproductive industry, think Military Industrial Complex)…

The longer this Empire lasts, the more debt and money debasement it requires to fund itself, both in its foreign wars and its domestic welfare… Add control of the Law, Media, Education, Academia, Agriculture, Manufacturing, Construction and myriad other industries and sectors, and we are talking a completely planned economy, which is true of the whole of the West today… With more debt comes more instability, which leads to more violent credit booms and busts to fund this by now visibly creaking Empire… The more money that is printed to paper over these cracks, the wealthier the Elites that print the money become, and the poorer the rest of society becomes… In trying to head off rising Public Dissent and in fear of losing control of an increasingly angry populace, the Elites unleash a Totalitarian Police State and 24/7 Surveillance State, paid for again with more printed money… You should see where this Empire is heading, like every other Empire of History

Peak Centralization and Collapse

Instead of downscaling the Central Planning Regime to attempt to salvage what is left, the competing, divided and compartmentalized nature of Elite control of the economy, ensures that they will double down until the bitter end… In their fight to save a collapsing Empire, they destroy it… In the Elites thirst for foreign riches, they have destroyed the domestic economy that paid for it, or if you prefer idiom, killing the goose that lays the golden eggs

And this is the critical point that most miss; the Government creates nothing, the Elites create nothing… Their enormous wealth and power is not due to their own endeavours, but is built on the endeavours of everyone else, overtly stolen through taxes and stealthily stolen through debasement of the money they control… Once the purchasing power of that money cannot cover the debt burden, the system must necessarily collapse in a hyperinflationary debt depression… This is not conjecture, you can point to any fiat money in history, they have all vapourized into the ether; as Voltaire (1694-1778) observed, “Paper money eventually returns to its intrinsic value – zero…”

In this situation if you have any of your wealth in Fiat, you can kiss it goodbye… If you had your savings in a bank, they will be gone… If you had a Pension Plan in Fiat, it will be gone… The whole financial system will collapse under its own weight of debt, as it was designed to do… You can’t increase debt forever, and if it can’t go on forever, it won’t

Reversion to Barter – For a While

When the financial system does collapse things might well get pretty scary for a while, depending on where you live… While physical cash might come in handy as a means of exchange for a short period, in the long run (however many months that is) cash will hyperinflate like the electronic fiat stuck in the banks… Without an electronic medium of exchange to pay for your power, the power companies might well shut down, and possibly you will not be able to utilize another electronic medium of exchange (think Bitcoin) to exchange… This may also be true of water and other utilities, so you should really have preparations for a source of clean water and a limited source of electricity perhaps… If the power stays down for more than a few days, at this stage we will revert to barter… Stack some cash, and store enough food for a few months, and try and stockpile tradeable items such as tobacco and whiskey which could be directly exchanged for other goods and services… And of course physical gold and silver; as a medium of exchange, and as a counter-party risk free form of wealth (savings) outside Central Bank and Government decree

Death of the Banks

In this grim depiction of the near future, with or without utilities, what happens to the banks and the governments? Well the banks collapse, that is clear… The Countries of the East might be able to launch a gold backed currency or trade notes, but they have the gold; Western Europe and the U.S. has only debt… Can the East bail out the West, all hundreds of trillions of dollars in debt?! How can the Central Banks of the West launch new fiat currencies with nothing to back it, and how do you get people to trust the same issuing authority for money that has just hyperinflated the last currency? The problem with a confidence backed currency is once confidence is lost, it cannot be regained… Will anyone ever trust the banks again after the biggest vapourization of hard earned wealth in Human History, especially considering the emnity that the masses have for Central Bankers following the 2008 debacle?! I think not

Death of Government

The Government and the banks work hand in hand… Government legislation mandates Central Bank issued currency as Legal Tender and imposes various taxes on the productive wealth of the citizenry, and after severing the link to Gold, the only limited and stable anchor to chain down the excesses of fractional reserve banking and money printing, the currency is free floating… So once the link to Gold has been cut, what gives pure Fiat money its value? The answer is your goods and services, through forcing you to use Fiat currency for payment of the taxes you are compelled to give the government on these goods and services… Add to this the sales taxes on other producers goods and services, taxes on imported goods and services, and inflation and debasement of the purchasing power of currency (cost of stuff continuously increases), and so on… Outside of  U.S. World Reserve Currency Status (Petrodollar Standard or dollars for oil recycling), all world currencies are free floating and derive their only value, from the theft of value from the goods and services of the productive sector… In other words, without the goods and services to back the currency, it has no value
When the banks collapse and the currency hyperinflates, how are you going to back a new currency without anything to back it? While it might be easy to cut from a gold backed currency to a free floating one, going from a free floating currency to a brand new and improved free floating currency, alas is impossible… If it has zero value to begin with, who will ever use it? They will enforce its use you will say, and I would respond, with what?! How can you effectively tax barter? This is not self assessment tax forms where you are compelled to declare how much the taxman can steal from you, this is direct exchange without using money at all, a purely peer to peer physical transaction… Good luck taxing that! And more importantly, you can’t print barter either! You can’t debase barter like you can the purchasing power of the money supply, because you cannot control the issue of barter, whereas you can control the medium of exchange (the money) that replaces Barter…  

Barter kills Banksters...

And with what will you pay these tax inspectors and State enforcers of “legalized” plunder? Will you pay for Policemen and Soldiers and bureaucrats with more new and improved free floating currency that has zero value without the goods and services now being traded for in Barter? Are tax inspectors and State enforcers some kind of angels willing to work for free for an indefinite period trying to tax localized Barter? Really think this through and you will come to the conclusion that once the financial system collapses, then Government as we know it is dead… The Warfare State will collapseThe Welfare State will collapseLocal Authorities and Public Services will collapseForever… If you can still envision Government coming back in any way shape or form, it will not and cannot ever come back in anyway the same size and extent… You can assume that in many Western countries today, the parasitic Public Sector accounts for 50% of Gross Domestic Product, stolen from the 50% of the productive Private Sector… Put bluntly, private businesses and companies fund themselves, and the thieves and bureaucrats that Government employs to make them poorer, and their life a misery… When the 50% of the productive population cannot shoulder the burden of taxes and inflation to fund the 50% of the unproductive population and 100% of the population in total, the system must collapse… The current state of affairs is clearly unsustainable and cannot possibly continue

The Death of Centralized Industry

A short word on the death of centralized industry… As banking and government become intertwined, and as the power to fund a Centrally Planned society increases, the tentacles of the omnipotent Elites will reach into all aspects of the economy, from Labour Unions to Agricultural and Industrial Subsidies, to the minimum wage, and all other myriad rules and regulations which benefit those large lobbying corporations, at the expense of the small and medium sized business… The longer Central Planning continues, the more congealed and incestuous Banking, Industry and Government becomes, seeing as the Elites own and control all three, albeit under “Public” and “Private” guises… As the banking and government sectors become more bloated and unproductive, so does industry, increasingly dependent on government funding, bailouts, and legislation barring competition to stay alive… The huge multinational conglomerates that have more power than most Governments today, are dependent upon the same Government (Military) and Central Banking system for their survival… With the collapse of first the Banks, then the Government, will come the collapse of centralized industry…

Conclusion
Many people believe that the closing of the Gold Window was the day any semblance of a free market died in the West, but they would be wrong… The closing of the Gold Window and cutting the link to a stable anchor was the day Centralized Government was dealt its death blow… Unhinging from an anchor means unhinging from reality, which we have played out for the last forty five years as the modern world has gone from bizarre to bizzaro… As Government has consumed and directed more and more of the resources of productive society, the closer and closer it has come to death… The Mind Control of a passive, pussyfied population through Compulsory Public Education and Lamestream Media has made it possible for the Confidence Scheme (Ponzi Scheme) to persist this long; however the Lamestream Media is virtually dead, the Compulsory Public Education system will soon collapse along with Government, and the population is increasingly aware of how dumbed down it has become; Declining T.V and newspaper viewership and the explosion of the internet and blogging attest to that simple fact… Confidence in Government and Central Planning is waning as fast as the purchasing power of these disgusting Fiat monies in propping up a dead system…

Central planning has so distorted the functioning of the traditional market (individual, family and work life), and incentivized so much mis-allocation of capital into so many unproductive sectors of the economy built on future demand (debt) that cannot be satisfied by the remaining productive fragments of a thoroughly hollowed out economy, that this Centrally Planned economy cannot be salvagedNor should it be salvaged… Let it collapse, and then it is every individual and family for itself in what might be a very painful adjustment back to the Eternal reality of traditional family life and voluntary exchange, but this time with virtually no Government (outside of localized), and more importantly without centralized power and control

Centralization was a trendThat trend is now at an endThe new trend is Decentralization, which I will discuss in Part 2 of this post