Our Money System, In A Nutshell
Economics involves all Human Action so it is no wonder that it requires a long and convoluted explanation to get the complete story. However I thought it might be worth while to attempt to summarize our knowledge at this time.
For 6000 years gold and silver have been the preferred money for the peoples of the world.
Kings and emperors always took control of the money system as they realised that this is where the power lay. The tendency was then for the kings and emperors to reduce the gold and silver content of the coinage but to keep the face value up thus defrauding the population.
Eventually after paper was discovered gold smiths gave people storage receipts for storing gold safely and these receipts began to be used as money. Gold smiths became bankers and started the deliberate practice of printing more receipts than they had gold and thus defrauding the public.
Banks could overcome this, for a while anyway, by organising a central bank that would come to the rescue of a bank under pressure and provide extra gold until the pressure reduced - thus saving the bank from ruin.
Eventually the banking leaders in the United States conspired on Jekyll Island to start a Central Bank with Senator Aldrich called the Federal Reserve System. (See http://www.apfn.org/apfn/reserve.htm)
Eventually in 1971 Richard Nixon repudiated the last vestige of connection between the paper dollar and gold and the world entered the paper money era.
During the early to middle part of the 20th century some economists attempted to put economics on a mathematical and scientific basis just as scientists had done with the study of physics. Unfortunately their work was deeply flawed and the results produced mathematical relationships that just did not relate to reality.
This suited the Banking elite and the politicians as it provided good cover for manipulating the money systems of the world for their own private advantage.
And so the scene was set for the "Great Inflation".
Central Banking was surrounded in secrecy, for the good of the people, the Government could promise great things for an election as they knew they could be paid for eventually with inflated currency and the economists wrote complex papers and developed computer models which showed that they could all together control the economy for the good of all.
Unfortunately this is all the dream of La-la Land. As Ludwig von Mises deduced and showed clearly in his economic writings expanding the money supply by issuing credit, ie printing paper money, would inevitably lead to the destruction of that money system.
This is now happening. No matter how the powers that be twist and turn they cannot cure the problem that they have created. Paper money will return to its real value of nothing, eventually. Just as it did in Zimbabwe, and in every other previous period.
It is just that the world is so large and interconnected that the process of unwinding the great paper money swindle will take some time. Either we choose to change directly onto a gold standard and accept the disciplines involved or we take the easy road and try to inflate our way out. Ben Bernanke is taking America down the inflation route and we will see a very big mess when the reserve currency of the world accelerates into an inflationary spiral.
The only means of protection for the individual is to own REAL Assets and no debt while this process is unfolding. REAL Assets consist of REAL Money, ie gold and silver, REAL Estate and selected commodities especially oil and food. It will also help if you own a REAL Business which has no debt, and provides continual cash flow from day to day over and above all expenses. Finding such a business is not easy, and finding one that will continue in the same way during the great financial contraction will be very difficult. Warren Buffett had all the answers during the money expansion phase and his enterprise may well survive the the big bust. But big is not best as General Motors demonstrated and governments are capable of destroying any business just as well as incompetent management.
Anyone who can find any flaw in the theories espoused in this work on REAL Economics should write and let me know. I would be greatly relieved if we really could live forever using freshly printed paper money disbursed by our governments.
Life would be easy.
Jan 13, 2011, 13:18
Why the State Demands Control of Money
So here is a quick and clear explanation of why we have our current system:
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Jan 10, 2011, 12:06
How REAL Economics Explains Everything
For those of you who want more aspects of Austrian Economics explained in detail this book gives a concise description which shows in a short time how everything ties in together without the problems that other economists encounter.
I am continually amazed that economists have been taught most of this yet still "believe" Keynesian theory. And believe their computer models which fail to predict the future time after time.
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Jan 9, 2011, 13:01
Rethinking the Future Seminar Series
This note appears at the beginning of the Home Page: "The Johns Hopkins University / Applied Physics Laboratory is sponsoring the 7th year of its highly acclaimed Rethinking Seminar Series. This year’s topic is Rethinking the Future International Security Environment. Video and other files from the Dec 7th Rethinking Seminar by Mr. James Rickards on Economics and National Security will be posted on the Video Archives page as soon as they become available.
The objective for this series will be an exploration of possible future international environments including potential adversaries and threats to US National Security."
This seminar not only explains exactly where the world is, in economic terms, as at the end of 2010 but gives us some idea of the thinking behind their conclusions (it is scientific) and some idea of the likely possible futures.
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Dec 20, 2010, 16:05
Ludwig von Mises: Scholar, Creator, Hero
If you would like to learn more of the life and times of Ludwig von Mises then read this essay. He was truly the Einstein of economics.
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Sep 30, 2010, 16:50