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Radhika
Hello and welcome to this third Geopolitical Economy Hour. I’m Radhika Desai.
Michael
And I’m Michael Hudson.
Radhika
As many of you know, in this collaboration with Ben Norton’s Geopolitical Economy Report, Michael and I will present every fortnight a discussion of the major trends and developments that are so radically shaping our world. This includes issues that involve not just politics and economics, but, as Michael and I and Ben like to put it, political economy and geopolitical economy.
Thanks also to all our viewers for your interest and engagement. We would like to say that we do read all the comments with great interest, so please keep them coming, including your suggestions for future shows.
So, as we advertised last time, today we are going to deal with de-dollarization, and this for us is a really big theme, and we are going to take our time dealing with it. We will probably do at least two shows, maybe even a bit more. But in any case, since it’s such a big thing, let’s just get started.
Michael, what does de-dollarization actually refer to? What are people talking about when they say de-dollarization is occurring? Can we make an inventory of the main things people are referring to?
Michael
Well, President Putin and President Xi have both been talking about de-dollarization. So that has put it right in the center of the discussion. Basically, it’s a response to the fact that the United States has weaponized the dollar. It’s become a political tool in today’s Cold War.
For one thing, the dollar is no longer a safe haven. The United States had Britain confiscate Venezuela’s gold supply in England, and the United States and Europe have confiscated all of Russia’s foreign exchange holdings in dollars and euros. So that has made countries realize: if the United States is going to say that it is the world banker, and the world banker is going to just take our money, we’ve got to find another banker. And that means finding another currency.
Radhika
This is certainly one of the ways in which the sanctions have boomeranged. And then there are also other indicators. For example, the level of dollars, the share of dollars in the reserves of central banks around the world, is going down. It had been some 70%, now it’s 60%. It’s still quite high, but it is going down.
And there are also a couple of other things going on. Michael mentioned all these discussions that the Chinese and the Russians and other people are having. There’s also a huge spread of bilateral agreements between countries, particularly over the last year, with sanctions on Russia and so on. They have been proliferating. So India and Iran, Russia and Iran, China and Iran, et cetera — various countries are agreeing to accept each other’s currencies in their mutual trade.
And then there is also the new payment systems they are creating. So when the United States said that they were going to kick Russia out of the SWIFT international payments information system, everybody sort of got the message. In fact, as Michael said just now, the fact of the matter is that the weaponization of the dollar system didn’t start in 2022 with the conflict over Ukraine. It’s been going on for a while.
Michael mentioned the confiscation of Venezuela’s reserves and now of course, Russia’s reserves. But remember also there was that huge and scandalous episode of the vulture funds in Argentina, in which basically the American legal system, completely contrary to the rules of the international game, ruled in favor of vulture funds and against Argentina, which also showed you the casino the United States is running — it is totally loaded in favor of the house, even more than normally.
But there are also a couple of other things that we should probably mention. One is of course the availability of alternative sources of finance, particularly from China, but also the emergence of other institutions like the New Development Bank (NDB) which was created by the BRICS and so on.
Finally, there is also this whole issue of central bank digital currencies which increasingly being named as being quite important as a way of displacing the dollar from its centrality hitherto in the world monetary system.
Is there anything I’ve forgotten, Michael?
Michael
Quite a bit actually. The point that we’re going to be making throughout this whole discussion is that the dollar really isn’t an international currency, it’s a national currency. And being that, it reflects American self-interest.
One of the problems is that right now countries find they have to support the dollar. When they get a dollar inflow, they’re worried about their currency going up against the dollar.
The Global South countries are worrying about the fact that, since raw materials — oil and gas and food and other minerals — are denominated in dollars, now that the United States is raising its interest rates — in order to prevent wages from rising and causing a slowdown — that makes these materials more expensive in the local currencies of South America, Africa and Asia.
Countries want to say, “How can we make these prices of the raw materials — for instance, oil that we’re importing from Russia — how can we make it stable and not going up just because the dollar is raising its interest rates and making it more expensive to pay for oil?”
That’s why they’re doing just what you described: making agreements among themselves to transact their oil sales and other sales in domestic currency. That the Saudi Arabia agreements with Russia, with China — in order to price in their own currency — India is joining the crowd.
People are realizing: We’ve got to have something that is more objective and not subject to national manipulation.
Radhika
And whims. Exactly. In fact we will be discussing all of these things in even greater detail towards the end of this set of de-dollarization shows.
Michael, we should also tell people why both you and I have been writing about this for eons. You certainly have a long head-start on me. Why don’t you tell people a little bit about your own work, particularly Super Imperialism, very briefly, before we go on to our show. And then I’ll say something about my work.
Michael
Well, Super Imperialism is different from the old form of colonialism. Colonialism was all based on military occupation, essentially by force and by blocked currency areas. But Super Imperialism is how the United States has gotten a free ride from the rest of the world — how the United States has dominated other economies, not by the old colonialist form, not by having a military force in many countries, but in monetary forms.
So the new form of imperialism is essentially monetary and financial in character. It works via the American control of the International Monetary Fund and the World Bank, which oblige other countries to focus their economies on helping the United States balance of payments, financing the US. military spending abroad, financing American takeovers, and being willing to balance their foreign exchange by privatizing and selling off their public infrastructure to American and foreign investors.
The new form of imperialism is financial much more than military. And even the military force of American policy has become financialized.
Radhika
Yes. So Super Imperialism is really one of the foundational texts to really try to understand why the dollar system is tottering right now. Because if you’ve always been saying that the dollar system is perfectly fine, then it’s difficult to understand it’s unraveling.
So what Michael did in Super Imperialism was important for me. I elaborate on this argument in my Geopolitical Economy, which was published in 2013. In this book, I basically show — one of the best ways of introducing this book is like this: You may have heard people say that the dollar was once hegemonic and it is no longer so. You may have heard other people say that the dollar has always been hegemonic and will always remain so. But you’ve never heard people say that the dollar never really managed stable hegemony. And that is the argument of Geopolitical Economy.
So Geopolitical Economy exposes the clay feet on which the United States giant actually stands. It exposes the contradictions of the dollar system. Since then, Michael and I have also elaborated both on his own views, which have developed over the decades. Michael has done a lot of other work on this matter.
My own work has continued to develop, particularly vis-a-vis trying to understand how the sterling system, to which the dollar system has always been compared, actually worked. We put together in a very short form the summary of our work in a paper entitled “Beyond the Dollar Creditocracy: A Geopolitical Economy.” This is a short version of our argument. Those of you who are interested, please take a look. We will be sharing the links to all these things in the notes to this show.
This is why we really have a lot to say about dollarization, which is the flavor of the month. We’d like to share our understanding in this show and the next of what the dollar system really was. What were its contradictions exactly? What are the ways in which these contradictions are now maturing? How is the dollar system unraveling today?
This is also interesting because the dollar system has always been very unstable and shaky, so it has always had its doomsayers. But the fact is that until recently, the dollar system has somehow managed to keep on top of things.
There has always been this way of dismissing those who talked about the problems of the dollar system, saying that the dollar’s doomsayers are a dime a dozen and they are never proved right. But now, all the problems to which they are pointing are maturing. So it really helps to have been a critic of the system. And what’s happening now, very interestingly, is that there are people in high places who are talking about de-dollarization. Let me just give you a couple of prominent examples.
One of them is Zoltan Pozsar. Zoltan Pozsar is the Global Head of Short Term Interest Rate Strategy at Credit Suisse, and he has also formerly worked for the US Federal Reserve, as well as the US Treasury Department. Earlier last year, around March 2022, he wrote a fairly controversial piece that made the news called We Are Witnessing the Birth of a New Monetary Order.
He wrote this a week after the United States seized the Russian reserves, as we were discussing just now. And what is the reason that he gave for why there will be a birth of a new monetary order? From the start, Pozsar has pointed to one critical thing — which we will come back to towards the end of the show when we return to discussing the crisis of the dollar more fully — he focused on commodity prices. He said that commodities are becoming more attractive than the money that is produced by the US financial system.
More recently, very interestingly, in an article last month in the Financial Times (“Great power conflict puts the dollar’s exorbitant privilege under threat“) he also added the emergence and the increasing proliferation of central bank digital currencies, particularly in countries that are outside the imperial core of the world system. He named that as another major factor. So that’s Zoltan Pozsar.
Now, a second important and prominent person who is pointing to the demise of the dollar is Nouriel Roubini. Some of you will remember that Nouriel Roubini was called Dr. Doom because, in the run up to the 2008 financial crisis, when the bubble was still inflating, Roubini was predicting its bursting. And actually you can probably still find videos on YouTube where people are laughing at him when he predicts the inevitable crash, which in fact happened in 2008.
Roubini is fingering geopolitics for de-dollarization. In a quite recent article entitled “A bipolar currency regime will replace the dollar’s exorbitant privilege,” he mentions that the emergence of central bank digital currencies outside the imperial core are importantly contributing to de-dollarization.
As Michael has mentioned, in the context of boomeranging sanctions, we also hear it widely reported that President Putin wants to develop an alternative currency system and has appointed one of his advisors who is really big on Eurasian integration, Dr. Sergei Glazyev, as the lead organizer of this system. These are some of the indicators that something quite important is going on.
However, Michael and I also feel that we need to have a more systematic discussion of this, because the fact of the matter is that the story of de-dollarization — that is to say, the dollar system itself — has been such an ideological and deeply flawed discourse, one of whose purpose was precisely to always talk up the dollar, which was always on shaky foundation. So there was always a big industry of people talking up the dollar.
Those who are trying to criticize also end up being like scholars who are the blind scholars who are looking at the elephant — the one who’s holding the tail thinks it’s long and skinny, and the one who’s holding the leg thinks it’s big and thick and so on. So there’s different parts of the story we want to put together. We look at the history and the fundamental instability of the system. Both Michael and I have done that.
We will, in fact, begin by understanding why it’s unstable, why a national currency cannot be a world currency. And we are also going to look at the sterling system. So the fact is that the discussion of the dollar’s career as the world money has been dominated by US scholars who have been professional boosters.
One of the key examples of this is Charles Kindleberger. This is the guy who proposed what’s commonly — or what’s in the literature called — Hegemonic Stability Theory (HST). He basically said that, in the interwar period, there was a big crisis. The Great Depression occurred because the United Kingdom was no longer able, and the United States was not yet willing, to provide leadership to the world system and providing the world with a currency, with its national currency as the world’s currency, was one of the elements of this leadership.
So this discourse has tended to naturalize the dollar’s role partly by naturalizing sterling’s role. And we are going to show that none of this is natural.
In fact, we’d like to structure our discussion in terms of a very clear set of questions. We have ten of them, and we think that we are going to be able to get through the first five in this show and the next five in the next show. So we will be beginning by discussing:
1. What is money? Why does it appear to take national forms? Can there be world money?
2. What is the relation of money and debt? Michael in particular has done a lot of work on this and we want to talk about this.
3. Is money a commodity? We want to talk about whether money is a commodity. I’ve shown, for example, that Polanyi said money is not a commodity and Marx would have agreed with him.
4. What is the ‘theory’ of how the dollar has served as the world’s money?
5. Was the dollar system like the sterling system? What was the sterling system? Since that theory relates to the sterling system, and always refers back to the sterling system, we need to show how the sterling system actually worked, or rather did not work, and what were its instabilities.
In the next show, we want to talk about:
6. How did that sterling system end?
7. What really happened between the World Wars? Michael gave you a flavor of that just now.
8. How did the dollar system really work, both in the Bretton Woods system between 1945 and 1971, and after the dollar’s gold link was broken in 1971? What were the real dynamics?
9. Then we want to ask: Was there really a ‘Bretton Woods II’ system after 1971?
10. As to the crisis today: What are its main dimensions? We want to come to the big crisis as it is unfolding today and ask, What are the major elements of it? What does it have to do with the rise of China, the rise of other economies, central bank, digital currencies, commodities, etc.?
That is our agenda.
Michael, I’ve spoken for a long time and you probably have a few things to add, so please.
Michael
Well, the common denominator of what we’re saying is: We focus on the political instabilities and what used to be called internal contradictions. Radhika is right when she says that the people like Triffin and Kindleberger have treated the dollar’s supremacy as if it’s natural. And if it’s natural, it’s inevitable. And really, there’s nothing you can do to change all of this.
But if you look at the international monetary system as political, then you realize it’s all about change. That’s what politics is all about. And if you’re writing for the kind of audience that Mr. Roubini and the others wrote for, you can’t really come out and talk about what Radhika and I are saying. We’re talking about ‘that which must not be said’ in the major media — about the causes of the instability being exploitative.
People talk about: Wouldn’t it be nice to have commodities as a basis of world trade? Well, nobody’s going to have central bank reserves held in the form of grain or oil. They will hold it in gold because for the last 4,000 years, that’s something that everybody can agree upon is an objective physical thing beyond the ability of individual countries to affect.
But the whole idea is that if we’re talking about money and money is political, you want something that is political — that countries can influence. The question is: How are you going to influence money, and in whose interest?
That’s why we’re explaining this historically in the sequence that Radhika has described, so that you can see — if you understand that historically — what the fight has been all about for the last 100 years,
Radhika
That’s really great, Michael.
Let’s deal with the first question, which is: What is money? Why does it appear to take national forms? Can there be world money?
Michael
Well, all money is debt. The dollar bills in your pocket are technically on the liability side of the US Treasury. And if the US Treasury would get out of debt, it would have to redeem all the money, presumably for gold or something else. And there wouldn’t be any money, but there wouldn’t be any debt.
So basically, if money is debt, who is going to be the beneficiary of the debt? Who is this debt going to be owed to? Well, most money — the government owes debt to the economy, if we’re talking about physical money — the physical currency, the greenbacks. Well, most greenbacks are $100 bills stuffed in the mattresses of drug dealers and arms dealers and people all outside of the United States. Most American currency is held out of the United States, not in it.
But, if you look at what monetary theorists are saying about money, money is what you have in the bank. It’s not only physical currency, but it’s demand deposits. It’s bank credit.
Banks create credit and banks create money. And what do they create money for? Well, they create it electronically. You go into a bank, you say you want a loan to buy a house. The bank creates a bank deposit in your name. And in exchange, the bank has a liability. You sign a note saying, I promise to pay the bank and I pledge my house as collateral and anything else the bank can grab in case I can’t pay the loan. So bank credit is money. And the difference between bank credit and government credit is: when governments create money, they spend it on something that’s supposed to be in the public interest. World War III is America’s main private interest now. So most of the budget deficit is to fight in Ukraine to start World War III. There’s a little bit of social spending in there too for Social Security and Medicare.
But when banks create credit, and we have a chart about this, they create it to buy houses for mortgage credit. They create it essentially against collateral in the form of assets that are already in place because they want something to grab. The money that banks create is used to buy houses and that bids up their prices, which is why housing prices have gone up so much.
Or banks create credit to enable corporate raiders to buy a company and load it down with debt. So the money that’s been created has gone hand in hand with a huge expansion of debt.
The problem with this is that the debts grow faster than the economy. The rate of interest for the last 100 years has been higher than the rate of economic growth. And that’s been the case ever since the Babylonian era 5,000 years ago. The rate of interest grows faster than the economy. Then the debt grows more and more and more. And what people think is: Well, there’s more money to buy houses, more money to buy stocks and bonds under quantitative easing. But it turns out that all this money is debt.
The internal tension of all of this is: How can economies pay debts that grow faster than the economy is growing? The long picture that we’re talking about is that debts tend to grow faster than the ability to pay. Most people think of a business cycle as going very smoothly, like a sine curve, steadily — as if somehow the economy can keep chugging along.
But that’s not how economies work. Over time, every recovery in the United States and Europe since World War II has started from a higher and higher and higher debt overhead. And right now, America has reached its limit. Well, that’s the problem that America is posing for the world economy. How can a country that is deindustrialized, that’s in debt, that is shrinking, dominate the whole rest of the world simply by saying: We’re going to write IOUs and you have to support it? That’s what makes the nature of money the essence of the kind of financial imperialism that we’re seeing.
Radhika
Yeah, that’s great, Michael. What you’ve said is that basically money is debt. Money is debt that is owed to somebody. And I’d like to add to that, because Michael’s already alluded to the fact, that you can have the debt created by a privately owned financial system or a financial system whose financial institutions are privately owned, in which case the money — that is necessary to create and is necessary to create as debt — also becomes the source of private profit for a small number of people.
Historically, we have known other kinds of money where the state issues money, where the money that is created is a liability of the state. Practically all well-organized financial systems — ones that are not prone to crisis, that are not prone to predatory lending, in which debt does not expand exponentially far beyond the capacity to pay — are actually run by states that heavily regulate the financial system, prevent them from going into a speculation, and so on.
So Michael’s already sort of waded into the relation between money and debt.
Returning for a minute to the question of: What is money? I’d just like to say that it is very common, actually, both among mainstream as well as critical thinkers, to tend to talk as if money is a commodity. You will even find many Marxists who say that Marx thought money was a commodity.
In reality, money is not a commodity. Money is actually an ancient social institution. It arises from old practices of keeping accounts: keeping accounts of who owes what to whom, keeping accounts of debt, et cetera. So that’s the first thing one should think.
The second thing is that — and this is very relevant to our present conversation — money is necessarily national. It’s not some kind of quirk of history that means that in the United States, we have dollars, in the UK we have pounds sterling, and so on, all the different national currencies.
The fact of the matter is that capitalism itself tends to create not a single world empire, no matter how strong the United States is — rather, it necessarily creates a world of competing national states, if they are all capitalist.
In more recent times, over the past century and more, we’ve also seen the rise of socialist states. So this tremendously changes the nature of money.
I’m going into the third question as well, that is: Is money a commodity? But let me just say that that is one thing money is not. It is not a commodity. What is true, however, is that capitalism needs to impose upon the functioning of money some commodity-type dynamics, particularly by making it artificially scarce.
Or, as we have seen in the recent past, when it has been issued in abundance by central banks, like the Federal Reserve, it has been issued in vast quantities, obscene quantities, astronomical quantities, but chiefly so that a small elite can use this money in order to inflate asset markets and benefit from that. It has not been for ordinary people. For most ordinary people, money has to be kept scarce.
In that sense, that is the only relation money has to commodities.
So money necessarily takes national forms. Now, this is often explained, particularly these days, when Modern Monetary Theory (MMT) has become so fashionable, by saying that all money requires a state which will not only issue it, but will also accept it in the payment of taxes. And that’s what gives money its currency. But I think this is not the only thing.
There is an additional thing, because this MMT model is almost like a neoliberal model, where the state only performs this night watchman function, which in this case includes the provision of money.
In fact, most economies are objectively national. I mean, take just a simple example of Canada, which is a 10th of the size of the United States, sitting right next to the United States. But the Canadian economy is distinct from the American economy. The 2008 meltdown didn’t happen in Canada, even though in so many other ways, the economies are so interconnected.
So there are more reasons that our national economies — on the whole, the bulk of the economic transactions within an economy take place within national economies
In that sense, money must also take national forms, precisely because there is no world state. In fact, in capitalism, we will not see a world state. Precisely because of that there is no world money, which has a big implication for understanding the dollar’s world role, which is that the attempt to impose a national currency on the world is bound to be extremely unstable, volatile, and contradictory.
Michael, maybe you can add anything you like on the first three questions. What is money? What is this relationship to debt? And we have more to say about whether money is a commodity.
Michael
What makes money not a commodity is that it doesn’t have a cost of production. Gold has a cost of production. Silver does. But a commodity is created electronically. And banks can create a million dollar loan to buy a house simply with a click of the computer keyboard. So there’s no inherent value, but there is a debt. And the debt’s very important.
So money becomes, for the banks, a rent-extracting privilege. An interest on this credit is like economic rent. Basically, banks have the privilege of just creating their own money, meaning they’ve created their own product — debt — for the rest of the economy. And at a certain point — and we’ve reached that point today in the United States and much of Europe — a point comes where the debts can’t be paid.
If we’re talking about international money, the dollars that are held in the foreign exchange reserves of China, Russia, and other countries — there’s no way that the United States can pay off the Treasury IOUs that it owes foreign central banks, if foreign central banks say, “OK, we want to cash it in.” What are they going to cash it in for? They can’t get gold anymore unless they just sell the Treasury Bills on the open market, and that’ll push gold prices way up. What can they do?
The United States can’t even pay its domestic debt, but nobody expects governments to pay off their own money. Nobody expects the US or England or Canada to say, “OK, we’re going to pay off the debt. There won’t be any dollar bills anymore because money is debt.”
Internationally, it’s different. Governments do expect their foreign exchange reserves to have some real value, as if it were a commodity. But it’s not a commodity, it’s a debt, and the creditor has all of the power in this case.
The United States, with Super Imperialism, is dominating the economy, not as a creditor, now, but as a debtor. It owes so much money to foreign central banks that it can say, “Well, if you want your dollars to have any value and you don’t want us to grab the dollars, like we grabbed Russia’s dollars, you’d better follow what the International Monetary Fund and the World Bank — which are right close to the White House — tell you to do.”
Radhika
I further wanted to add that as well. Another way of thinking about it is, if money is debt, then money is a relation. It’s not a commodity. It is not a single object or entity or anything like that. And, as most of you will appreciate, money is also a system. But I wanted to add a couple more points about why and how money is not a commodity.
Because gold has played such an important role in the recent and modern history, or monetary history, of the world, people think that gold and silver were money. Gold and silver were not money. Gold and silver were money material.
Let me just give you a small example.
You may have had a regime of gold coins in which gold coins circulated, but they did not circulate as gold [per se]. If they had circulated as gold, every time you accepted a gold coin, you would have had to test whether it is actually gold, whether it has the right gold content, what its exact weight is. And this is not how money ought to function.
Money ought to function as: you are given a piece of money and you accept it because it is valid, legitimate, et cetera.
Gold functioned as money because it was minted by a sovereign authority. The depiction of the head of the king or the queen that was on the gold coin basically gave you the freedom, the license, to use it as though it were worth what it said it was worth.
Because if it was not — supposing you found that the gold coin that you had just received was faulty – you went to the mint and you exchanged it for a proper gold coin, a gold coin that was worth everything it was supposed to be worth. So what made it money was the minting and the imprimatur of the sovereign.
As Marx says in one of his writings, in this form, these coins were already symbols of themselves. And it was a short trip from here to understanding that money is a symbol and money is sort of circulating as “value-less” pieces of paper, or eventually coins that really did not embody value, they just were pieces of metal. But the most important thing about them was the symbol.
So the first thing you have to understand is that, even when gold and silver circulated, it was not gold and silver that was money. They were the opposite of money. They were commodities, because you always exchange commodities for money. And so you exchange it for a commodity which is not any old commodity, but something that can be used to buy all other commodities. This is what money is.
The second point I want to make about money — which is really interesting because again, we are encouraged to think that everything that is bought and sold in capitalism is in fact a commodity, but that is not true — a commodity is something that is produced to be sold.
Karl Polanyi pointed out that there are three things that capitalism likes to treat as commodities, which are not commodities. And the attempt to treat them as commodities causes a lot of problems. Those three things were land, labor, and money.
Nobody produced the land. Land is just there. It is the common heritage of humankind, the earth on which we live. And yes, different societies have historically occupied different pieces of the earth. But at least within those societies, land is the common heritage of all. And ultimately, the whole earth is the common heritage of humankind. It is not a commodity.
Secondly, labor. We don’t have kids so that we can sell them to somebody. We have kids because they’re part of our families. They’re part of our affection and all those things. Yes, capitalism then treats our ability to work as a commodity. That creates a lot of problems, et cetera.
And finally, money. Money has no cost of production. Money is essentially, like I said, an institution. Yes, in capitalism, we are encouraged to think that money is bought and sold, or at least borrowed and rented and so on. But this is, again, a whole different set of dynamics, which we would examine more fully.
And another thing that’s important about money is that it does not have a cost of production. And you know what’s really interesting, and not do any of these other things.
What’s really interesting is that in classical political economy, before we all became subject to neoclassical economics, classical political economy spent a lot of time trying to discover the special laws that govern the prices of land, labor, and money. Because their prices are not governed by the same dynamics as the prices of ordinary commodities. So in those ways, money is not a commodity.
Michael
That’s a very important point that you made about money being like land. Land doesn’t have a cost of production. But if you privatize it, there’s an access price that you have to pay for access to the land. And that’s economic rent.
Similarly with money, it doesn’t have a cost of production. But you have to pay in order to get access to it. And interest is charged for that access.
Now, in the 19th century, the great fight of political economy was to say, “We don’t want to have — the role of capitalism, certainly industrial capitalism, is to free economies from this legacy of feudalism. We don’t want a landlord class that owns the land on a hereditary basis where you have to pay rent to it in order to have a house on it. We don’t need that. Land should be public in character. And people should have to — if there is a ‘rent of location’, because some sites are more valuable than others, the government should get it, not individuals.”
“Same thing with money. You have access to money. You shouldn’t have to pay bankers who make loans for really pretty bad purposes, as we saw in 2008. You had the whole American banking system, basically corrupt, making loans that couldn’t be paid. So instead of having money as a private ownership, it should be a public utility.” That’s really what Karl Polanyi was talking about.
“And the same thing with labor, of course. You don’t have slavery anymore. You don’t have to buy your freedom. The government should protect labor.”
So we’re looking at things in terms of a balance sheet. And what is the charge for access to something that really is not a commodity and doesn’t have a cost of production, but is going to be a free lunch for somebody? Should this free lunch be for the government in the public domain, or should it be for some private, privileged class, the 1%?
Radhika
Michael, you said something really interesting there. And I just want to add that, just as you said, money has to be regulated in a way that works best for society and for its productive activities, and labor has to be regulated in similar ways — you can’t have slavery, you can’t have overexploitation, et cetera.
Similarly, land also has to be regulated, not only so people do not make unreasonable, rentier incomes out of land. Rent is in fact unearned income. And, as Michael said, classical political economy waged a big campaign against this sort of unearned income.
Also, very importantly for our times of the ecological emergency of climate change, of pollution and biodiversity loss, that you cannot manage the land at the end of the day unless you have some sort of public ownership of it.
Marx has a wonderful little aside, way back in the latter part of the 19th century when he was writing Capital, he says, in his sections on rent, you cannot have rational agronomy while you have private property in land. What he meant by rational agronomy is simply the rational management of the land, its resources, et cetera. So this is all really important to reflect on.
But maybe Michael, we can now go to the fourth question, which is really: What is the theory of how the dollar has served as the world’s money? What would you say are the main things that are trotted out to justify that the dollar can and should serve as the world’s money?
Michael
Well, there was a great reluctance of countries to break free of the power of the banking sector. Of course, the banking sector wanted to treat money as a commodity, because they controlled the money supply. And they said, “If you think of the money we create as a commodity, then we deserve everything we get for it, because we have it and you don’t. And we can put a fence around it and you have to get through.”
So essentially, the United States, if it didn’t have all the money, at least it had all the credit. And without really giving any money to Europe, it said, “Well, we’ve given you arms and now you have to pay. You have to somehow pay in the money that we’ve created, US dollars. How are you going to earn the dollars in order to pay the inter-ally debts?” Well, Europe said, We’ll collect it from Germany. But how was Germany going to pay the dollars?
Well, this is the point, that there was a great argument between John Maynard Keynes and Harold G. Moulton, and the right-wing Austrians. Keynes said, “America, if you’re going to say that Germany has to keep the whole financial system afloat by paying the allies to pay America, then you’re obliged to import from Germany enough material, so that you spend dollars buying German manufacturers. They spend the dollars in paying the allies. The allies paid you. And there’s a circular flow. There has to be a balance of some kind of money, no matter how you look at money.”
Instead, America said, “Well, we don’t want any competition with Germany.” They raised the tariffs against Germany and against countries with depreciating currencies and said, “We’re not going to let Germany earn the money to pay the allies. We’re going to force you all into bankruptcy.”
That’s essentially what started the depression that led to World War II. America forced other countries to try to get dollars, but didn’t give them any way of earning these dollars. And so it broke the whole essence of international money, which is that there has to be an economy that’s able to support this flow of payments and debts and purchases and sales. All of that was broken.
And the ability of America to act as a wrecker is what made it the central power as a record financially, not without having to indeed Europe or Germany until World War II.
Radhika
Very interesting, Michael. So if I had to answer this question of, What is the theory of how the dollar served as the world’s money, I would name a bunch of different elements in this theory.
Perhaps the best place to begin is to begin with Charles Kindleberger. So in the 1970s, and what’s really interesting is that he doesn’t come up with this theory when the United States really, according to him, emerges as the hegemon of the world, the provider of the world’s money after the Second World War. The theory actually emerges when this dollar system is in deep crisis and the dollar’s gold link has been broken.
Nevertheless, what he says at this point is that, “You see, once upon a time, Britain was the most powerful country in the world. It provided the world with money. And so the whole world capitalist system can only function when there is a leading country which provides the leadership, which provides the public services, including the money and all those things.” So he comes up with that.
He says that this system then had become broken by the First World War. And then you had this sort of interregnum. According to him, the book is actually entitled The World in Depression. And funnily enough, you can see how ideological this guy is. Because he says he’s providing an explanation of the Great Depression, not the explanation. But if it is an explanation, how does it relate to all the other explanations? That means it’s just fudging.
Nevertheless, he just wants to use the depression as a peg on which to hang his thoughts. And hang his justification for why the dollar should be the world’s money. So he says that the Great Depression happened because the United Kingdom was no longer able — and the United States, thanks to all the isolationists who dominated the United States, was not yet willing — to give leadership to the world economy. And after 1945, everything was fine. America was the biggest country in the world. It provided leadership and so on.
We are also told that the United States economy at the end of the Second World War accounted for half of the world’s production. I mean, think about that. It did account for half of the world’s production, but not because of the inherent productive dynamism of the world economy. But as we’ve said in previous shows, because the war destroyed the rest of the world economy, giving a massive boost to the American economy as the supplier of all sorts of world arms material.
While Europe was at war, all the gold of the world fled to the United States. And the United States was sitting on top of a heck of a lot of gold reserves
After the Second World War, another argument that is often used to say that the United States is entitled to — and that it is totally natural that the dollar should be — the world’s money, is that the United States was providing a security umbrella to the rest of the world.
We should actually call it an insecurity umbrella, if anything, because what the United States was doing was in fact increasing the insecurity of the world, not increasing its security.
So these are the main elements of this system.
Because the analogy with the UK is so important, it’s really time now to address the final question of today’s show. And as you know, we are going to do another five questions later on in the next show.
But in today’s show, we have to answer the question: What was the sterling system really like? And what was the problem with it?
Figure 3.1 THIS IS WHERE TO SHOW THE MAP WITH THE ARROWS.
Most people [associate the sterling system with gold]. They call it the gold standard system. It prevailed roughly between 1870 to 1914. And people think that it was the link between sterling and gold that gave great stability to the system, and it prevented the system from suffering too much inflation and currency movements and so on.
But in reality, the gold peg was not perhaps the most important element of it. The system did not work because of gold. The system worked because of empire. And this was also made very clear in two books that I’d like to refer to. One was really interesting— Keynes’s Indian Currency and Finance, which is often regarded as the primer for the gold standard. In Indian Currency and Finance, which was published in 1913, it was Keynes’s first book, we see how the gold standard really worked.
SHOW THE KEYNES COVER HERE
But people rarely ask themselves, Why should a book or Indian currency and finance be regarded as a primer on the gold standard? And the answer is very simple. Because India, the jewel in the crown of the British Empire, played a disproportionate role in [the functioning of the gold standard].
This is further corroborated many decades later by another book, which is also worth reading, by Marcello De Cecco, titled Money and Empire. Marcello De Cecco lays bare the relation between money and empire.
SHOW THE DE CECCO COVER HERE.
So what was the sterling system? If we look at that Figure 3.1 again, I can explain to you very clearly exactly what the sterling system was. So basically, in the sterling system, we are told that the UK in particular exported a lot of capital to the rest of the world. How did it get this capital? The UK is a tiny economy in relation to the rest of the world. Well, it got this capital because it extracted surpluses. So you can see here the blue arrows show all the money going from the Caribbean, from Africa, but principally from British India, which at that time of course included Pakistan, Bangladesh and also Burma and so on. So the British Empire income went — all of this was centralized in the UK — and essentially the surpluses came from taxing the empire.
Equally importantly, they came from the massive export surpluses that the Empire ran with the rest of the world, where these poor people, impoverished people in the Empire, were working their guts out to produce the cotton, the tea, the coffee, the rice, the wheat, etc., which was exported to the rest of the world. Quite often people starved. This is not the least reason why you had regular famines in places like India and so on, and it was exported to the rest of the world, earnings for Britain the surpluses which are then exported, we are told, to the rest of the world, but it ain’t so.
If you look at the red arrows, they show you where the capital exports really went. They went to North America, they went to southern Africa, particularly South Africa and to the colonies, and they went to Europe. So they basically went to other parts of what we would call the imperial world.
And without this ability to export capital, Britain would not have been able to maintain the gold standard.
Michael, perhaps you want to add a couple of things here as well.
Michael
Well, there were many books about Europe, the world’s banker, ofBritain, the world’s banker, and then Triffin in his time talked about America as the world’s banker.
I don’t think there is a book called Britain, the World’s Banker.
But what does it mean to be a banker? Well, banks produce debt. That’s what credit is.
The real question is, Do you really want bankers to run the world economy? Do you even want bankers to run the domestic economy?
Right now, you could say that bankers run Britain’s economy and you saw what happened since Margaret Thatcher turned it over to the city of London. You saw what bankers have done running the American economy since Obama’s administration in 2008.
Bankers run an economy in order to take wealth from it and put that wealth into their own profits, which is what Britain did to India. And then it uses profits, as you said, to send on to North America and other industrial countries.
Neither Britain nor America as the world banker really help the world grow. And so what you need, since money is political, after all, is not to let financial bankers decide who is going to get what resources in the world and how do we develop the whole world. But you’re going to have some kind of government say, the public interest is more important than the interest of the 1% of the population that are the financial bankers of the world. The 99% should run the world in the public interest, including fixing global warming and the other things that we’ve talked about, not simply making more money financially by loading economies down with debt. That’s the big context.
Radhika
Absolutely. And, when you mentioned banking, understanding the sterling system fully also involves understanding that, at this time, there were actually two quite different financial systems that were operating.
So the British system, which was really the linchpin of the whole sterling system, which operated the inflows of surpluses from the empire, the outflows to Europe and the European offshoots. This system really was basically the kind of financial system which was inherited from the feudal world. And this financial system basically ran on a short term basis. It gave short term credit for commercial reasons, for speculative reasons, etc.
Though Britain did export capital on a slightly more long term basis, it viewed these investments merely from the point of view of its interest income and rentier income.
Meanwhile, countries like the United States, Germany, and other parts of the world, borrowed this money and invested it productively, which is the reason why this period of the gold standard saw immense industrialization in areas outside Britain. This industrialization also contributed to the de-industrialization of the United Kingdom because it progressively lost a share of the world market to these other competing powers.
Now, these two different systems, which, by the way, Rudolf Hilferding explained in his book Finance Capital — he basically saw these other financial systems, like the German in particular, and to some extent the United States, as systems that were the opposite of the British system. They were not based on short term credit. They provided long term industrial credit for industrial investment.
And these banks had an interest in creating long term relationships and making sure these industrial enterprises succeeded in the long run. They were not for the immediate gain and speculative gain. They were happy to take a stable share of a productive income. This is a very important point that one has to remember.
So this archaic system, the short term system, very interestingly, we will see when we discuss the dollar system, is that particularly after 1971, this short term financial system has been recreated in the United States. The US had, as Hilferding said, this better type of financial system, a productively oriented one. And of course depression era regulation made it even more so. But from the 1970s onwards, you saw a long process of deregulation, which culminated in the repeal of the depression era Glass-Steagall Act in 1999, which began to convert this system into this more British style system. This coincides with the so-called Bretton Woods II period, the post-1971 period of so-called dollar hegemony. And we will discuss the dynamics of that later. But I just wanted to draw that connection for now.
Michael
What you say, about finance living in the short run, is very important. There was an alternative and I have a chapter about that in my Killing the Host. And the alternative was Germany and central banks. The banks worked with the government and heavy industry to take a long term view of the economy. And this isn’t something abstract.
When WWI broke out in 1914, there were articles written in the British press about why Britain was likely to lose the war, and it was likely to lose because they said, “Our financial system is quasi-feudal. It lives in the short run. When a stockbroker in England buys stock, they want to use the company to pay out all of its income and dividends. They don’t want the company to reinvest. They want to make the stockholders rich by paying out dividends and stock buybacks.”
The Germans, with the government, use their dividends to reinvest in capital formation, and they said that because of the Reichsbank in Germany and other Central European practices, it’s likely that Germany and its allies are going to be able to outlast England because English finance is self-destructive.
The difference you’re talking about is between industrial capitalism and the old feudal finance capitalism. But after WWI, it turned out that instead of having the productive, socialized German system, you had finance capitalism or neo-feudal money under the direction of the United States, which has always followed the British system, short term, hit-and-run, grab. The more you can impoverish the debtor, the more money you have in your own hand — as opposed to public banking.
This is all important, as is money and credit. We’re back to: Is it going to be a public utility run in the public interest by governments, or is it going to be run by bankers (whose objective is to impoverish the economy in order to enrich themselves)?
Radhika
We’ve been going on for quite a while now. We have certainly passed an hour. Maybe we’ll wrap up. I just want to make one point in wrapping up. In trying to use the justification that “the sterling system works, so does the dollar system” — we’ve already seen that the sterling system rested on empire — which the Americans do not have, so we will see next week what implications that had.
But there is another point, which is, we are told that the sterling system worked fine until the First World War broke it down. But then the question arises: If that was the case, why wasn’t it recreated after the First World War. [The answer is:] because in fact it was already weakening.
One of the arguments that I particularly appreciate about Marcello De Cecco’s book is, he says that there is a tendency, in discussing world monetary systems, to try to understand the world monetary system in Ricardian terms, or in terms of free trade, as though [there is a] single, seamlessly-unified world economy.
But in fact, he says, we have to understand it in Listian terms — referring to Friedrich List, who emphasized the centrality of national economies — and De Cecco says, one of the things that is very interesting, which is important to understand, is that what we call the gold sterling system was actually quite a congeries of different entities doing different things for their own reasons.
For example, some countries accepted the gold standard because they simply wanted to have loans from the United Kingdom and so on. Other countries actually remained on a silver standard because they felt that, since silver was depreciating at that time, that it would be useful because their exports would be cheaper, and these these countries were feudal countries who exploited their own peasantry so that they could export. And of course India was kept on a silver standard — there’s a whole big story about that.
But the main point is that some other countries that joined the gold standard, like Germany — they did not do so because they thought, Oh, the British were running a great system and we should subordinate ourselves to it. On the contrary, they made the German mark convertible into gold as potentially a competing currency. The sterling gold system was already becoming destabilized well before the First World War.
There was one final point that one should make. This was the external reason for destabilization — is the industrialization of rival powers, contender powers, like Germany.
A second reason for the destabilization was domestic. The increasing organization of the working class was no longer going to accept the sort of punishment that was regularly meted out to a less organized working class in order to maintain the external value of the currency.
If you have a gold parity and then you have some problems, then you have to essentially impose — austerity when your currency is facing downward pressure — you have to essentially raise interest rates in such a way that you are imposing a recession on your economy — something that’s also very relevant today.
So, as working people became more and more organized, it became more and more difficult to impose the discipline of unemployment on working people, which is the other reason why a gold standard was never going to work. So that’s something that we should always underline.
Michael
Yes, I agree.
Radhika
Okay that’s great. I think, Michael, we’ve covered the main points of the first five questions, and I’m really looking forward to discussing — now that we’ve laid the foundation of understanding the basis of our critique of the dollar system — next time we’ll get to the dollar system in a proper way.
Beginning with the questions of exactly how the sterling system ended. What really happened in the interwar period? What was the so-called Breton Woods I — between 1945 and 1971. What was the so-called Bretton Woods II, since 1971. And then finally: What is the nature of the unfolding crisis today, what are the main elements?
So really looking forward to that conversation Michael. Thank you and thanks to all our listeners and thanks also to Paul Graham who you cannot see but who helps with the technical recording and editing [and many other things]. Thank you to Paul as well. And thank you to Ben Norton of Geopolitical Economy Report for hosting our show.
Thanks everyone. Until next time. Bye.
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Countries prefer the US dollar because the USA is most stable and reliable country in the world. And you can buy anything with dollars, just like with gold and silver.
Argentina sold bonds by the billion, bonds that were subject to New York legislation. The buyers had confidence in America and American legislation says “pay your debts”. Imagine the chaos if America had taken the debtor’s side.
The participants in this discussion rightly note the loss of trust in the Dollar’s financial systems, because of the abuse of power by the U.S. Government and others. A relative of mine was labeled a risk by ChexSystems. Almost all banks use ChexSystems to gauge what customers are a “risk.” What followed was shocking. Her bank immediately told her to take her money out, shutting off access to her account. She could not transfer it to any other bank, because they also used ChexSystems. Eventually, they allowed her to go into a branch, to withdraw the money in cash, after dozens of telephone calls, that streched across six or so months. She was forced to withdraw many thousands of dollars in cash, keeping it in her home. Eventually, she found a credit union that was not a member of ChexSystems, that allowed her to deposit that cash. She kept trying to ask ChexSystem why they did this, but never got a response. That is extremely abusive. After this happened, I no longer trust Banks nor our Government. More than likely, our Government wrongly targeted her. She is a quiet and meek individual with no history of ever doing anything wrong. Leftists share the same leftist Red Guard philosophy of canceling people, who don’t share their beliefs. Leftists in Government, Schools, and Industry will cancel anyone they suspect of being a conservative. Watch out, you will eventually be one of their victims. Denying conservatives any services is their first step. Murdering hundreds of millions, as evidenced the 100 million these leftists murdered in the 20th century is the next step.
In 1971, the United States switched from a financial system that was oriented around the long term building up of industry to one that was based on short term speculation and profit. This is exactly the period when a particular notorious ethnoreligious group ascended to the top of U.S. government and business.
I tried hard to read it in full. I just could not.
Keynes, Fabian socialisme, MMT, statism, central planification, global collectivism, technocracy.
Dozens of fallacies, it just don’t end up:
“central bank digital currencies which increasingly being named as being quite important as a way of displacing the dollar”
What is the difference between a $ and a CBDC $?
“United States is raising its interest rates — in order to prevent wages from rising and causing a slowdown”
Raising interest rates cause a slowdown
“Countries want to say, “How can we make these prices of the raw materials stable and not going up just because the dollar is raising its interest rates and making it more expensive to pay for oil?”
Raising interest rates makes the $ go up and the price of oil go down. It is the local currency wich go down faster then the oil.
“But the whole idea is that if we’re talking about money and money is political, you want something that is political — that countries can influence.”
No, I don’t want it. I want something stable, not something managed by statist.
“And if the US Treasury would get out of debt, it would have to redeem all the money, presumably for gold or something else.”
No, they redeem it with taxes.
“Practically all well-organized financial systems in are actually run by states that heavily regulate the financial system, prevent them from going into a speculation, and so on.”
Never. Always turn to political abuse and debasement of the currency.
“In reality, money is not a commodity.”
So, JP Morgan was so wrong…
“The second thing is that money is necessarily national.”
The point of money is specialisation and exchange, wich mean international.
“The fact of the matter is that capitalism itself tends to create not a single world empire”
So, the WEF is so wrong….
Etc.
‘If we’re talking about money and money is political, you want something that is political — that countries can influence. The question is: How are you going to influence money, and in whose interest?’ — Dr Michael Hudson
Politicized money is an appalling thing. US-style ‘keystroke currency’ has ginned up a Superbubble in stocks and real estate, which is now beginning to pop. Don’t want that.
Alternative ‘populist currencies’ are found in places such as Argentina and Venezuela, where the authorities just print ad libitum and hand out increasingly worthless pesos and bolivars to their thieving cronies and to their impoverished masses. Don’t want that crap either.
In fact, history offers no example of a politicized currency that failed to devalue disastrously, on the way to disappearing. How much longer will the fatally flawed euro last, as TARGET2 imbalances spiral out of control?
Contrary to Radhika’s poorly contrived dismissals, gold is an international money and a highly successful one for several millennia now. Nothing else remotely compares.
In fact, both Russia and China are adding to their gold reserves — because gold is internationally accepted, and, being no one’s liability, is unaffected by sovereign debt defaults.
Politicized money, whether managed by plutocrats or populists, amounts to human slavery via neofeudalism and counterfeiting. It is intrinsically a fraud upon the public.
I don’t care about this, I have already read Michael Hudson’s interviews and books he has expounded on Bretton Woods and the end of the Sterling system many times.
What I want to know is what the Chinese are doing and he should know since they have paid him to go give lectures in China. I want to know know more about the economic thinking about Chinese policy makers. this is a way more important, relevant and interesting topic of which there is little information about. This is a way better topic of discussion.
You are talking about who actually wrote the book of how the dollar empire runs, lack of self-awareness is stunning.
But, of course, Dunning-Kruger effect is proven over and over: you simply don’t know how much you don’t know
What is becoming clear is the current system of government is not fit for purpose in todays society, too many “special interest groups” have found ways to “game the system” for the advancement of themselves at the detriment of the majority.
So how do we change the dynamics?
Government is a machine, and like all machines if they are not controlled and kept within certain limits then they run wild and fall to pieces.
What buisness would allows a blank check to be signed by their managers? What buisness allows the managers to steal, sell all the assets and then splurge the money on themselves also drawing IOUs on company credit and handing the bill to the shareholders?
Well we are all taxpaying shareholders and the above is what the crooks are doing to us, so we either throw the bums out and find a new method or watch the society disintegrate into anarchy as the crooks dig themselves in behind their private armies manned and payed for by the people who they screw!
I have a very stupid question and would like it answered in layman’s terms……Why isnt Gold a popular investment? Two weeks ago I had to buy some for an event and selected a piece. I came back 3 days later and the price had gone up. Gold goes up daily in value, as I was told. It’s a physical investment that probably never depreciates. It’s been used for centuries everywhere in history. Why is gold not bought and kept in large quantities by individuals? Meaning personally as an individual why should I not buy gold? Stocks seem confusing and volatile, real estate just seems like a lot of hassle. Id like to focus on my day job and not have to think of my investments all the time. Why not just buy gold and be done with it.
The dollar system?
The Fed creates money out of thin air and then lends it someone. Basically monopoly of counterfeiting. Thus someone pays rent to the Fed for the privilege of owning fake dollars. They can of course spend the dollars but they can’t spend the privilege of paying rent; with some exceptions, all USD command rents for the government. This is called being debt-backed.
Later the Fed creates money out of thin air to buy things. Someone said, “If you don’t work, you don’t eat,” and the Fed’s ancestor was like, “F&^% that noise.” Despite the fact it’s free money, someone still has to pay rent for the privilege of owning it.
Steve Keen has showed that if nobody defaulted on their debts, eventually the banks would own everything. Mostly he’s a Communist but he’s right about that. Folk do default on their debts, and if they do, then some dollars get to hang around without being paid back. They get to live rent-free.
Since the Fed and the subsidiary banks poof the money into existence, they don’t particularly care if you default on your loans. I’m fairly sure they have in fact given money to literally everyone who has asked for it. Technically there’s a fractional reserve limit, but they can’t spread money around like Mary Poppins spreading flowers; they run out of debtors before they run out of limit.
Naturally all this money being poofed into existence, which then owes rent to banks for existing, causes inflation via debasement.
A ‘liquidity crisis’ is when debasement is reversed due to folk paying back their loans instead of rolling them over, and the banks can’t find new
suckersmarksentrepreneurs. Banks hate this, and everyone the banks lobby hates it too.The Fed also price-fixes interest rates. This causes gluts and shortages, the way price-fixing always does. However, instead of a single good or sector suffering these ills, everything which uses USD in trade is affected. So, the entire world.
Because USD is basically valueless and always rapidly getting worse, there’s a huge amount of demand for a store of value. This causes bubbles.
E.g. stocks have an actual objective fair price. They are worth a finite amount. P/E = 20, very approximately. However, due to e.g. 401(k)s there is more demand for stocks than there is value in stocks. There’s $120 chasing $100 worth of stock. The price will go up to $120 – but not stably. It’s a bubble. That stock will crash due to herd effects, but the money can’t leave stocks. New bubble; infinite cycle. It has to go falsely inflate some other stock. See also: real estate.
Because regular folk who shouldn’t be anywhere near stocks are all forced into stocks, when the savvy investors pull out of the stock market and allow it to return to reasonable prices, everyone panics and it causes a recession.
It also causes a recession because Fed interest-rate price-fixing allows unprofitable companies to not go out of business.
Roughly speaking: take out 100 loan, you owe 105 in a year. You make something, sell it for 108. Success! Profit! Get a new loan and do it again.
No. Real interest rates were 12%. The value of the $100 of goods you bought a year ago is $112. You “”earned”” $3 the bank “”earned”” $5 and the economy lost $4 of stuff. If you took out another $100 loan you would notice you can’t afford all your inputs anymore…but of course the bank offers you a bigger loan for your “successful” business. You can get the $112.
This continues until so much seed corn is eaten you can’t pretend to re-seed the fields anymore.
But who cares? Payroll gets made, and value to shareholders, right guys? Sure that business unfortunately goes bankrupt, but it’s okay, the bank doesn’t care if debtors default…
The Fed creates so much money to buy stuff that inflation would go absolutely nuts if some of it wasn’t destroyed. Enter the IRS, which confiscates dollars from whoever it hates lately, and then lights them on fire. In a fiat system taxes are of course irrelevant to funding; the Fed can print however many dollars it damn well pleases. The IRS merely maintains the illusion that this fever dream of a system is still on the rails.
Bretton Woods is basically the system where the Pentagon tells you to use dollars or it shoots you. 75% of USD are held in foreign hands, which means debasement-driven hits mainly the world at large instead of American voters. Based on trade deficits it seems America really likes stealing stuff from places like Canada, Mexico, and Germany. (These places would be dirt poor if they weren’t in turn allowed to steal from lesser feeder colonies.)
It’s not Africa. Africa is poor and has nothing to steal. You have to steal from the almost-rich if you want to get anywhere.
I still figure that the Federal Reserve owns the rights to the dollar and the Domestic USA can fall all the way down , while the Foreign policy will still be the Azzholes they’ve always been. These Central Bank monopolies have to be stopped and we see Russia, China and the others bypassing them, but instead of this war in Ukraine , the war should be fought against these Main Central Banks. Russia should be using those Hypersonics as a threat towards these thieves and manipulators at the MCB, with China, Iran, India and other standing behind them. So, there is something fishy about all of this.
There is nothing wrong with the Dollar or the Swift procedure, other than the elitists that control it. American people should never lose the Dollar and should FORCE a law to state that . No matter what it takes. Someone needs to tell the people that all these Lies, Propaganda and the end of the Free Speech means – MK Ultra is massively being used on you.
Fighting yesterdays battles?
‘Most’ ‘economic thinking’ is ‘short run’ and ‘redundant’? ‘It’ ignores the ‘supply side’?
‘Growth’ {and ‘civilisation’} depends upon ‘cheap’ F.F. – those so called ‘halcyon days’ are ‘over’. ?
“The crisis now unfolding, however, is entirely different to the 1970s in one crucial respect… The 1970s crisis was largely artificial. When all is said and done, the oil shock was nothing more than the emerging OPEC cartel asserting its newfound leverage following the peak of continental US oil production. There was no shortage of oil any more than the three-day-week had been caused by coal shortages. What they did, perhaps, give us a glimpse of was what might happen in the event that our economies depleted our fossil fuel reserves before we had found a more versatile and energy-dense alternative. . . . That system has been on the life-support of quantitative easing and near zero interest rates ever since. Indeed, so perilous a state has the system been in since 2008, it was essential that the people who claim to be our leaders avoid doing anything so foolish as to lockdown the economy or launch an undeclared economic war on one of the world’s biggest commodity exporters . . .
And this is why the crisis we are beginning to experience will make the 1970s look like a golden age of peace and tranquility. . . . The sad reality though, is that our leaders – at least within the western empire – have bought into a vision of the future which cannot work without some new and yet-to-be-discovered high-density energy source (which rules out all of the so-called green technologies whose main purpose is to concentrate relatively weak and diffuse energy sources). . . . Even as we struggle to reimagine the 1970s in an attempt to understand the current situation, the only people on Earth today who can even begin to imagine the economic and social horrors that await western populations are the survivors of the 1980s famine in Ethiopia, the hyperinflation in 1990s Zimbabwe, or, ironically, the Russians who survived the collapse of the Soviet Union.”
https://consciousnessofsheep.co.uk/2022/07/01/bigger-than-you-can-imagine/
‘Gold goes up daily in value, as I was told.’ — RJ Macready
That’s an absurd lie. One look at this 12-month chart of a gold ETF shows both up and down days, typical of all volatile securities. Gold is slightly down over the 12-month period.
https://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=iau&insttype=&freq=1&show=&time=8
The ONLY investments that go up incrementally every day are fixed-income savings accounts, money market accounts, and certificates of deposit. Treasury bills go up nearly every day, but can decline slightly and temporarily on days when interest rates pop up.
If the dollar were gold-backed again, the price of gold would be fixed and unvarying. Thus gold would not be an investment, but simply a store of value and means of exchange — its highest and best use, as exemplified by all of human history until half a century ago, when the utterly aberrational global fiat currency experiment began.
The harebrained, depraved fraud of fiat currency is about to experience CFIT — Controlled Flight Into Terrain. When this occurs, gold priced as a commodity will indeed rise, in terms of worthless paper and keystroke currencies issued by political entities.
In the middle of the 20th century the dollar replaced Sterling. It too will be deposed. It will take a mammoth hegemonic struggle – already in progress – but one that cannot avoid nuclear Armageddon. History warns: every empire eventually gets the conflict it is trying to avert – its own destruction.
https://patternofhistory.wordpress.com/
Keynesianism is failing & tweaking it will only hasten its demise. The world needs a currency that cannot be conjured out of thin air, that’s directly convertible into a hard asset. Huummm, what could that be?
Fiat will return to its intrinsic value eventually. The team that first makes their currency directly convertible to the asset(s) that back it, will explode into usage. Everyone will want it. A big reason why Libya was marked for destruction is they were planning on implementing a gold-backed currency. The US dollar has been propped up via military supremacy but those days are coming to an end. I’m 56 & barring any unforseen health disasters I believe I’ll see the end of dollar dominance.
I understand the money system. Whites work and Jews take.
Id like to focus on my day job and not have to think of my investments all the time. Why not just buy gold and be done with it.
Because there are safer investments than gold.
It doesn’t predictably trickle up like it once used to.
Just look at the period from 2014-2019.
https://goldprice.org/gold-price-charts/10-year-gold-price-history-in-us-dollars-per-ounce
If the dollar were gold-backed again, the price of gold would be fixed and unvarying.
That wouldn’t happen because gold is internationally traded and used in products.
Even if the government basically issued a fixed IOU for gold that wouldn’t change supply and demand of gold in the rest of the world.
Then you run into the problem of what happens if enough people decide to cash in their money for gold when there is a limited reserve. We certainly couldn’t stock enough.
Fixing to gold or silver seems ideal until you realize how much currency is required for the US economy.
The funny money policy has problems but so does hard backing to gold. You’d have to back to something rare and finite that the US largely controls.
I honestly don’t see what the goal would be. If we want a stronger dollar there is a much easier way which is to fix the damn debt already.
How true1
This is one of the things that happen as the Majority is detrimented.
https://www.bing.com/videos/search?q=jimmy+dore&qpvt=jimmy+dore&view=detail&mid=0AEFDC8092EC7CCF04FD0AEFDC8092EC7CCF04FD&&FORM=VRDGAR&ru=%2Fvideos%2Fsearch%3Fq%3Djimmy%2Bdore%26qpvt%3Djimmy%2Bdore%26FORM%3DVDRE
Pick any of the jargon in this article and I say the average citizen does not need to know anything about it.
What he needs to know is that of he is earning $100 and spends $110 he is going to be screwed regardless of what the “experts bray.
These days, the Corporations push people to have the latest and the mostest. Your 6 month old cell phone is shit so you MUST buy the latest version. Although you already have 30 shirts which you rarely wear there is the one in the showcase you do not have and must buy. One year the fashion is stripes, the next year checks and after that flowers.
Its now easier to spend. Back in the day if you had set aside household expenses etc and there was no money left over then you did without. Today, people with no money left over and already in debt are buying !! No need for hesitation just whip out the good old credit card.
The prudent man does not need to understand the international or any monetary system. If he spends less than he earns he will be alright. If he distinguishes needs versus vulgar wants he need never fear the future. Our Grandparents knew that but todays idiots have been convinced that Grandpa and Grandma were dumb.
Thats why the majority end up in a financial mess !
Gold was savagely attacked by Paul Volcker in the 80s, which successfully gave the market a false impression of demand for gold.
Today gold prices continue to be intensely manipulated, using progressively more sophisticated instruments. All either outright illegal of course, or occasionally, would be illegal if anyone but the Fed did it.
USD has a severe East/West Berlin problem. USD is East Berlin…and thus nothing can be allowed to be West Berlin. Result: you have to think about your investments. There is no way to store value that doesn’t come with either negative returns or severe volatility.
That said I still recommend getting a full node (this is indeed hundred of gigabytes) and buying BTC. It’s basically gold except it can only be manipulated if the manipulators are willing to lose huge amounts of money. You will get huge volatility but it’s a perfect anti-inflation hedge.
P.S. Fun fact: a bushel of wheat was 10 pence (not including price shocks) from about 500 BC to 1500 AD. Two millennia, and probably longer but my records only go back to 500 BC. That’s what metal currency looks like if nobody is playing silly buggers.
There is an awful lot of material here to think about. Thanks to Mr. Unz and the two authors for the chance to expand my views about “money”.
The ZUS money has been under the control of the zionists privately owned FED since 1913 and this central bank is one of the 10 planks of the communist manifesto and is unconstitutional, the zionists saddled America with a communist debt creation machine that creates debt with every zionist dollar created out of thin air, that is what is destroying America.
Of course, net of debasement, these all go down every day. They merely all go down less some fixed number.
its not just the Chinese its the entire SCO and BRICS crowd. .. There is a coalition of those who have been deprived, destroyed or inconvenienced by weaponized USD.. SCO and BRICS and many other NHO organizations are working to develop a banking system that leaves the western world’s currency in limbo.
It started with removing Russia from Swift, post SMO sanctions caused Russia to develop a trading system in which any persons currency could be used to trade with a Russia seller and any Russian could deliver payment in the currency of the foreign to Russian Seller. Destroying the dollar and credit and credit cards in USD has become a mindset of those who do business in the East and it is progressing at a rapid rate..
What I am expecting is the day China tells a USA buyer Chinese will only take payment in https://en.wikipedia.org/wiki/Renminbi or yuan or rubbles That day is coming soon I fear.
the current system of government is not fit for purpose in todays society, too many “special interest groups” have found ways to “game the system” for the advancement of themselves at the detriment of the majority.
Yes but how it happened is needs to understood in order to determine what to do about fixing it.
Think of it this way.. In the beginning all monopoly power was vested in the government. Voters
had the power to change the management of the monopoly power and media informed the voters of wrong doing. To avoid media scrutiny and voter rejection, government divided itself and extended itself into NGOs and Private corporations. These extensions are two groups: NGO and privately owned entities.
then government began to give its various monopoly powers to the extensions it has created.
Current government = current government -NGO – private corporation <=all 3 are Non human organizations.
Monopoly power remaining=monopoly power-(NGO monopoly power+private corporation monopoly power)
As you can see the more government spins itself off [extends itself outside of the public domain] into NGOs or private owned corporations the less monopoly power the government has[it is weaker] to control the behavior its spin offs and extensions. Government transfers it monopoly powers to utility franchises, and by rule of law, government creates and transfers its monopoly power to privately owned corporations ( copyright, patents, deeds, and contract). Public access to information is terminated the very minute a new NGO or private corporation is formed. Government no longer has the monopoly powers it has given away, so it cannot control information and it can no longer protect those it governs from exploitation inflicted by the NGO and the corporate entity. No voter has the right to vote on who is to be a corporation president or who is to head f the NGOs.
Today Money is controlled by a privately owned corporation.
Experience has shown government without oversight authority by those who are the governed, conducting continuous unannounced audits, and submitting wrong-doing to an independent of government court [<=a court empowered to remove from office corrupt offenders and to punish the corrupt offender for his or her wrong doing] government will always be the weapon the Oligarch can use to deny those who the government governs and to extract from those who the government governs their wealth.
‘Of course, net of debasement, these [fixed income securities] all go down every day. They merely all go down less some fixed number.’ — Alrenous
Yes, my assertion was couched in nominal terms, ignoring inflation as you point out.
However, just as few vehicles go up every day, very few go down every day either, owing to volatility in both securities and inflation.
Even during the horrific bond bear market of 2022, a very volatile 20-30 year Treasury fund ripped 19% higher from Oct 24 to Dec 7, more than beating inflation. Not that anyone could have timed it so precisely.
https://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=tlt&insttype=&freq=1&show=&time=8
In general over the past century, longer-term Treasuries have delivered a real yield of around 1.5%. Not during the inflationary Seventies, of course. But the Great Moderation from 1981 to 2011 featured an unbroken run of positive real yields. FRED chart:
https://ibb.co/GkQcnRd
April 26, 2022 The Illusion of Freedom: We’re Only as Free as the Government Allows
We’re in a national state of denial. For years now, the government has been playing a cat-and-mouse game with the American people, letting us enjoy just enough freedom to think we are free but not enough to actually allow us to live as a free people.
https://www.rutherford.org/publications_resources/john_whiteheads_commentary/the_illusion_of_freedom_were_only_as_free_as_the_government_allows
Jan 23, 2012 Why the Constitution Had to Be Destroyed | Thomas J. DiLorenzo
Archived from the live Mises tv broadcast, this lecture was presented by Tom DiLorenzo at the Mises Circle in Houston on 14 January 2012.
Please remember, all these info freedom is new. Right now, we are going through a transition.
Although the internet has been around since the 60s and became accessible by the general public in the 1990s but not many people use it. Most info, discussions and forums were done through Usenet which later distributed through Dejanews but only the the most computer savvy people know how to use it.
It was only 2008 the iPhone was introduced. It took another 2-3 years before iPhone, android phones became useful. It was also the time when computers became affordable. Internet and cell phone services were still expensive and all popular social media were still in their infancy. I would say, the turning point was around 2014. It was in 2014, Facebook, Twitter, Youtube and others went mainstream. It took another 5-6 years of people sharing news and info.
When Trump was elected in 2016, the “Deep State” was concerned that the US’s narrative of all things are being debunked. Free sharing info and views were all out there for all. By 2019, that’s when the government took the initiative to “force” Twitter, Google, Facebook and others to hire ex CIA/FBI agents to control the narrative.
That’s how Biden got elected and since then, all the other propaganda including Covid, China and Russia got hyper-propagated. It was a perfect timing as most people were under locked down and stayed at home mostly.
Now we are into 2023, and we are experiencing the blowbacks from of these BS. World War is in the horizon and hundreds of thousands of Ukrainians and Russians are dead. Mainstream media ratings are at an all time low and people are turning to non-mainstream media and social media.
Give it some time and we will see a turn around. Hopefully before nuclear war starts.
The plan to move the Global financial power from North America back to Europe exists. The American people must recognize that we’ve been robbed and the Federal Reserve system demands reorganization. In order to avoid or mitigate a Greater Depression, the Federal Reserve System’s member banks must submit to an audit, put into reorganization, and must pay their debt to the US government or this Globalist, planned ‘controlled demolition’ of the USA, will go out-of-control.
I’m all for ideas when it comes to replacing the Fed but the fakium plan wouldn’t work either.
Demand for an artificial currency or element is still globally relative.
Let’s say the US declares that the dollar is backed to their limited control of fakium.
Well if fakium doesn’t have real value to the rest of the world then it could be disregarded in favor of fakium II. You could in fact cause a massive dollar crash by doing this. Tie the dollar to fakium and then the world rushes to fakium II in response and down trades the dollar.
Then what? Sure you could say that the US currency is still basically tied to mathematical limitations. Whoopdy doo no one cares. We are back to saying “cause fakium is real to us” but that isn’t any different than the status quo. The treasury currently says “cause the dollar is real to us” and the world goes with it. But they still get to decide what it is worth relative to other currencies. The global trading part is what complicates all of this.
Backing to fakium is a huge risk. It doesn’t even have innate value like gold or lithium.
Please watch what the Chinese Intelligence does and just follow the crumbs.
Facebook was sort of infiltrated by US intelligence since 2009 but mostly for non-domestic stuff. China banned Facebook. China didn’t ban Whatsapp even when Facebook took over Whatsapp in 2014. It was in 2016 when Facebook integrated its database with Whatsapp , that’s when China banned Whatsapp the year after.
Sayeth Michael Hudson:
A proclamation like this is an example of why I’m utterly indifferent to Michael Hudson, who is essentially the only “economic analyst” featured on this site.
Money is a medium of exchange. “Modern” (bank issued) money is indeed promissory, but there are a lot of devils lurking in the details of that promissory relationship.
You want to really get deep into the global dollar system?
https://www.eurodollar.university/
And yes, Snider is probably one of (((them))). Still good info. But it’s actually hard – eg until you really understand a bank’s balance sheet, and thus how it “monetizes”, you’ll never “get it”. No wonder many prefer the facile Keynes / Marx midwittery peddled by someone like Hudson.
Your grasp on the basics is a little greasy. I suggest paying a bit more attention to people who are smarter than you.
i am too mentally worn to comment for the moment. However, i just watched a movie that I found interesting for its content regarding markets and corporate gaming.
and for some reason it forced me to reconsider what Lawrence of Arabia was all about in the background regarding political and economic power.
Movie recommend: The Formula
one of the most interesting ends — a wonderful discussion about control and why.
Thecentral issues: monetary balance and stability — or greed
Money was a unit of exchange. Free market economics are the closest thing to a natural law that humans have invented. It works, until it doesn’t.
The big problem with money is that it has “gravity”. Call it the Pereto distribution if you like. The solar system went from an amorphous gas cloud to a sun and planets, and money is the thing that attracts money.
When the elite talk about a post money world, they are talking about a world in which all money is in the hands of a few individuals. When the car you buy, the gas you fill it with, the roads you drive on, the home you go to, the electricity you use, the food you eat etc – are all owned by the same company, they are essentially passing an apple back and forth between their left and right hand.
That’s not commerce.
I don’t know what the answer is, but they want a lot less of us around and UBI for the rest. Sounds a bit communist to me, because when money is dead, that’s all you’re left with.
We can fight, and I intend to do so. Money as a unit of exchange makes sense, and I don’t think they can just kill it.
The internet popularity timeline did not start with the iphone. Shitty 3p per minute has been around since around 1995. Plenty of us were active at that time, and it was great.
She should give the most honest and obvious answer(and she would be right!), i.e. America is all about sucking up to Jews and Zion, and as Ukraine is a pet project of Jewish Supremacists, it’s as American as bagel and cream cheese. This is, after all, a Bagel Republic.
Democrats are for CRT and LGBTQXYZ cuz Jews push it.
Republicans are for ‘Muh Israel’ and suppressing BDS cuz Jews push it.
So, Haley is hardly out of order when she makes such remarks.
Beating official inflation: sure. Beating real inflation: not a chance. Real inflation circa 2022 was ~20%. Officially, what, 6%? Even Shadowstats underestimates real debasement.
Also, I said [debasement] for a reason. Inflation is debasement less GDP-growth-driven deflation. Even if you happen to be able to buy more because the deflation was epic during any particular period, you’re still getting less value back than you put in. All the time. Every time.
“Bitcoin’s last 5 years ROI is 70x higher than average return of five major indices”
I kinda can’t explain why BTC isn’t already super banned.
An instrument with 0% real interest rates, where you just got out whatever you put in, would give at least 4% [real yield].
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The other thing you can do is follow the one piece of good Scott Adams advice: buy a stock index. It’s like a mutual fund, but cheaper and with better performance.
It’s a lot like BTC, except with lower volatility, and doesn’t properly hedge against hyperinflation since they would close the markets in that case.
If you want to learn about money per se, as opposed to dollars in particular, there’s a quick course on the internet that can, in principle, teach you everything important. Cost: $0 and a couple hours.
http://nakamotoinstitute.org/shelling-out/
http://web.archive.org/web/20071117165402/http://johnlaw.wordpress.com/
In particular, pay attention to Szabo’s phrase, unforgeably costly.
To oversimplify, money is the commodity that has a reverse demand curve. Demand goes up when price goes up, and demand goes down when price goes down. (Makes it weird, but it’s still extremely a commodity.)
This is because (for one) everything else is priced in money, and therefore valuable money makes everything else cheaper. Mirror dynamic leads to a mirror demand image.
Per Szabo, money is extremely old. It’s probably so old it’s written into the humanoid genome. If aliens wiped all evidence and memory of money tomorrow, it would probably be invented again by Sunday.
If this doesn’t quite do it for you, there’s a few bits and pieces in Hazlitt’s Economics in One Lesson, which can be obtained for free with a simple google search.
• Replies: @kemerd, @Mr Gen
There’s a name for that: Appeals to authority, argument from authority.
If the Pope and Aristote say: “Earth is the center of the universe”. Then it must be.
fyi, the easiest way for an otherwise harmless person to get into ChexSystems is to be used as a money mule, whether they know it or not. Someone steals their credentials, moves money in and out of the account to launder it, and the bank flags it. She might have not known about it, or she might have been part of some “work from home” scheme that involved depositing money and sending it elsewhere. Lots of variations.
ChexSystems has little to do with the government. It’s just a variation on other credit agencies.
I was on the internet since mid 80s on Unix mainframes at my university. I ran a BBS using MajorBBS in the early 90s where people dialed in with their modems. I had three dedicated phone lines and had two Pioneer CD changers SCSI daisy chained so people can download files. Mid 90s, dialup internet , like you said became available. I “dialed down” my BBS shortly afterwards.
You guys were active but not the masses. That’s what I meant.
I was going to mention credit unions, but you were right on it. From the perspective of bank officers, it’s a busy system dusted with scammers, and so it’s not too hard to get into a Kafkaesque situation. I always try to separate the woke virus in these companies, vs the legit need to stop massive computer/ID theft in all these systems. Why did you never look into legal assistance?
But you’re right about the left, they are smarter at co-opting capital/businesses, although I know many true believers who would recoil at that.
Point taken mate.
Not trying to be a dick, but i lived through that time line and I still can’t get my head around it. Could you elaborate please?
Many moons ago–the most boring course —Money and Banking —but
Money is standard of value, medium of exchange, store of value AND standard of deferred Payment –the devil is the last one —what will the credits receive for somone’s 32 Trillion of Debt –WHAT assets would they be willing to accept and at what discount ?
That is the biggest bunch of bullsh!t since the last US gov’t pronouncement. Read Alasdair Macleod at Goldmoney please. These guys don’t like the US. That’s okay. But it does not automatically make them smart.
I tried reading this but my eyes kept glazing over so I admit I skimmed most of it. That which I read merely skirts around the fundamental issue: Fractional reserve banking is simple fraud. Below is my simple explanation of where we are at, there are many better explanations of the details of fractional reserve banking easily found with a simple search, I recommend Murray Rothbard who made all this fraud easy to understand. The Mystery of Banking and What Has Government Done to Our Money. I read these about 2002 but it took me a long time to fully appreciate how evil this was and all that we read on American Pravda here is enabled by and the result of this fraud:
https://cdn.mises.org/Mystery%20of%20Banking_2.pdf
https://cdn.mises.org/What%20Has%20Government%20Done%20to%20Our%20Money_3.pdf
Historically gold was money, also silver and copper. Gold evolved as money because it was valuable and easily divisible.
Banks did not just appear. When people first wanted to store their gold the safest place was the nearest goldsmith, generally but not always owned by the usual suspects, think Goldsmith, Goldberg, Goldstein, Goldman etc. Since they dealt in gold they would have good security and the biggest and most profitable would have the best security.
Suppose you entrusted 10 gold sovereigns to a goldsmith for safe keeping in their secure vault, the goldsmith would give you a receipt. When you wanted to use the sovereigns you went to the goldsmith and retrieved them after paying for their safe storage. Then you could use them as you wish. Alternatively, you could sign the receipt over to someone else so your receipt was ‘paper money’ but fully backed by gold.
Thus, receipts for gold would circulate as paper money by simply signing over the receipt to another person. As ever in life the most successful are often dishonest – clipping coins, adding lead or iron to gold and counterfeiting. They also made even more money by lending money at interest, a practice then forbidden to Christians. They would loan out money that belonged to other people by either loaning out their gold unbeknownst to the depositor or issuing receipts for gold that did not exist. The bank would merely keep a fraction of the deposits in reserve to make day to day withdrawals. This is fractional reserve banking, now masquerading as debt-based money.
You put, say, £100,000 in a bank account, you no longer own this money, the bank does, you are merely an unsecured creditor. This is confirmed by case law.
The bank thinks, ‘whoopee’ and will lend out £90,000 (sometimes this is £97,000, e.g. 2007) for someone to buy, say, an overpriced house. The £10,000 or 10% is kept as a reserve. This is the fractional reserve, 10% is easy example here but it is often lower, much lower. Lend out means creating £90,000 in their account. So now your £100,000 has become £190,000 at the click of a mouse (formerly the stroke of a pen). You have £100,000 in the bank and the borrower has £90,000 albeit the borrower owes the bank £90,000 which is secured on the house. The bank has created £90,000 out of thin air. This is quite simply fraud, two people cannot have full ownership of the same thing, namely £90,000. Calling it debt-based money does not in any way mean this is not fraud.
Now this works because if you go to withdraw your £100,000 you will be paid from the overall reserves and everybody almost never (but see Northern Rock in the UK 2008) withdraws their money at the same time. When this happens, it is called a run on the bank. These did happen so the bankers, to protect themselves, invented the Central Bank, the lender of last resort. In England this was The Bank of England created in 1694. This was a private bank created a mere 37 years after Cromwell allowed members of a certain religion to return to England having been expelled in 1290 by King Edward I.
Now it gets interesting, the borrower buys a house with the £90,000 from a seller with no mortgage. The seller naturally puts the money in the bank (not necessarily the same bank but it makes no odds). The bank thinks, ‘whoopee’ and will loan out £81,000. And on it goes with your £100,000 eventually becoming £900,000 with the bank earning interest on all the loans made less interest, if any, paid to creditors. Whoopee indeed.
Suppose 320 years ago you started with a £1,000 and lent out 10x that amount at 7% compounded for 300 years, you would now have £10 trillion or about 4x the total UK government debt. This money brings great power. Unimaginable power. More power than any Prime Minister, President or King. A group of you would to all intents own the world. You could and did finance both sides in any war and arrange the death of any president who intended to interfere with this fraud. Your almost total ownership of the mainstream media and Hollywood gives total control to the narrative presented to 99% of the population.
The numbers are over simplified but not much and no matter. Sure, there would be administrative expenses and other costs such as a few million to Churchill, Clinton and Blair as a for instance, plus the occasional regime change to fund and Epstein style honey trap operations. Ex UK prime ministers always join the speaking circuit as Blair did at $100,000 or more a pop. Who pays? Why? Payment for services rendered? This tells you all you need to know. Boris Johnson declared over £1 million in free accommodation and donations in 4 months since leaving Downing Street plus earnings of £1.3 million in that time. Somewhat better than the £165,000pa he earned as PM. A prodigal man with money problems like Johnson is easily bought as was Churchill.
The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks.
Lord Acton (1834-1902)
It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.
Henry Ford
Some of the biggest men in the United States in the field of commerce and manufacture, are afraid of something. They know that there is a power somewhere so organized, so subtle, so watchful, so interlocked, so complete, so pervasive, that they had better not speak above their breath when they speak in condemnation of it.
Woodrow Wilson
What sort of information from who and on what subjects was flowing in the internet in mid 80?
Wasnt internet just a theoretical concept in mid 80s?
“Historically gold was money, also silver and copper. Gold evolved as money because it was valuable and e….n people first wanted to store their gold the safest place was the nearest goldsmihey also made even more money by lending money at interest, a practice then forbidden to Christians paid to creditors. Whoopee indeed.”
This is old and incomplete information.
It has even in the initial days of fractional bankings ( 3 centuries ago ) ,banks were subjected to market competitions from other banks . Qe was initiated by Dutch banking to finance Dutch East India .It went down when the illiquidity of the collaterals mismatched with the amount of debt created by printing of money .
A complex system of free banking existed for at least 200 years before monopolization of tax collections and money printing took hold in East India Company held Indian regions .Inflation was not seen during those 200 years .
Nowadays Fed by printing money and giving to primary dealers have introduced major destabilizing
forces into the finances .
How it works to hurt? many ways . By the time trillions of monetary unit comes down to the mainstream in smallers chcuinks of hundreds , it has done already damage and distorted the wage, salary,pension, cost of living, housing/car/insurance costs and fetched enormous out profits to the recipients at the head of the line ( Hedge fund, big banks, real estate builders , road constructions companies ,corporations ) .
Keeping the in elation at 0 or less than 1 -2% can achieve same results if money isn’t lent secularly but is prioritized one sector over another or public is not compensated for the deleterious effects of swirling of money in the hands of the mega rich .
Kafkaesque describes it. There is much fraud, so I asked them what caused them to label my relative as a risk. They wouldn’t respond. I’ve handled several large civil lawsuits (I’m not a lawyer), so I tried filed a legal memorandum outlining the facts and violations of contract/statutes. I asked them what they disputed, to settle the legal issue through memorandums. They never responded. That suggests to me, they know they didn’t have a case, but were acting on the behalf of the government. I have no proof, but why wouldn’t they attempt to resolve the issue if it were mere identity theft?
That’s a good explanation, but when interacting with them, I found they refused to say why my relative was labeled a risk. I’ve been in several large civil actions. A legal department knows it to their advantage to resolve disputes over facts, statutes, contracts, within a legal framework. But, they wouldn’t even discuss it. I could have easily compelled them to show the risk through civil discovery, but their legal department wouldn’t even respond. That tells me they likely labeled my relative a risk on behalf of the government and didn’t want to get involved.
“keeping the interest at 0 or less than1-2 % can achieve ….”
International soveteign reserve currency has also been distorted and fiat money has destroyed other nations’s wealth by the usuary practioners . When it was supported by gold or other metal or other collaterals effect was not seen.
https://www.shamusyoung.com/twentysidedtale/?p=23793
In short, the internet was fine, socialized, until the CIA flooded the internet with child-like trolls.
Circa Usenet, the number of new internet users each September was smaller than the population of existing users. They would get assimilated. Not to mention it was all university students thus IQ-gated. Smart folks came up with smart etiquette and bullied the newcomers into using it.
Unfortunately, the strategy was: bullying, no gatekeeping. They were ‘inclusive.’ You didn’t have to take a test to sign up for Usenet. They were relying on the universities to applies the tests and gatekeeping. This is idiotic.
September 1993 the new ‘class’ was several times the size of the old population. There was another new ‘class’ in October; they just kept coming. Instead of getting assimilated, they were the assimilators. They bullied Usenetizens into being trolls. They were dumb, they weren’t net-socialized (frequently not socialized at all), and they weren’t going to come up with good norms. They didn’t. They remained trolls. You are here.
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Not coincidentally, spies are socially awkward and stand out like sore thumbs if the population has any manners.
Usurper/deadbeat William of Orange couldn’t borrow money because everyone knew he wasn’t good for it.
Therefore he made a Bank of England which would lend to him anyway and not do anything stupid like ask him to pay it back.
BoE did this without itself going bankrupt through fractional reserve, also known as legalized counterfeiting. It would give Orange money the bank itself didn’t have.
England was induced to give BoE its gold, to fractionally reserve against, because Orange outlawed everyone else’s banknotes.
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Nobody uses gold anymore so you’ve forgotten the transaction costs, such as wear on the coin. BTC makes it legible again.
When you spend BTC there’s an overt, explicit transaction cost. You have to pay the miners a tip to process your payment. As such you want to make few, large transactions, not many, small transactions.
Enter a bank. The bank would hold your BTC for you and handle payments cheaply. You would buy meat for dinner with a BTC banknote (I’m fairly sure this is wholly legal at this point) and at the end of the month the bank would aggregate and settle your balances in one large transaction. Instead of 30 transactions for fresh meat, you would have two: one to the bank, and one to the grocery store. The bank would take a subscription fee to pay its employees and you would save money.
You can of course go back to BTC directly at any time.
Unless a William of Orange outlaws paying fees with coinage, of course. Which DC no longer has the political will to do.
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Blaming the victim is good; usury isn’t a crime, it’s doing the society a favour.
If you don’t want victims you have to use inegalitarian bans. Some folk can’t safely use debt and can’t be allowed to take out loans, regardless of how much interest they charge.
You can do a fun reverse thing.
Make everyone a limited liability corporation. If you run out of money all your loans simply poof out of existence. Automate bankruptcy.
If you want to put up collateral or risk debtor’s prison, you need a license.
Seems like persecution. Except: make it so you’re allowed to decline to offer a loan for any reason. Freedom of association.
Who would agree to loan to someone who doesn’t have to pay it back? (Except idiots who deserve to lose all their money?)
Does he earn/get his fair share?
I might be wrong .My impression was that Bank of England was entered into this realtionship with the crown – after borrowing around less than a million, crown agreed to never pay the principal but onky the inetrest . That i think continued until the 20 th century .
To the family owning the private bank this must have delivered billions of pounds to them over last few hundred years .
“Fun fact: a bushel of wheat was 10 pence (not including price shocks) from about 500 BC to 1500 AD. ”
If you can ,please provide the source .Its a great information that challenges the received sacred wisdom passed by modern economist that the inflation ineivtable .
England: ~10p. One bushel = 0.83 shillings. Shilling = 5.7 grams of silver.
Rome, approximately 1 bushel = 1 denarius = 0.8 shillings (4.55 g of silver).
Actually 0.952 bushels => 1 bushel = 0.84 shillings.
1 sesterces = 1/4 denarius
modius = 0.238 bushels
1 denarius => 0.952 bushels.
Well, sometimes you got cheap wheat at 3 sesterces.
“[Rickman] said that the price of wheat was between three and four sesterces per modius around 150 BCE“ We can simply use this price because it was stable for about 300 years, and almost all the inflation was due to debasement shocks:
“and between five and six sesterces two centuries later in the early Empire. This is an increase of about 50 percent in two centuries. […] a long—approximately three century long—period of stable Roman prices.”
50% inflation over 200 years => 0.2% inflation per year.
England after BoE: at least 24 pence.
Dammit, I autism’d the math.
But, uh, in the wrong direction. 1 d per modius became 1 s per bushel. Turns out Roman prices were actually more expensive than British prices. 400% deflation.
Autism is in part a nerve disorder. Neurons are not wholly reliable, and sometimes they jump tracks. Linked things linguistically rather than mathematically… Also, this is why I (and any good scientist) posts raw data and a representative calculation. My error isn’t secret.
That said, 400% deflation over 1500 years is 0.4% per year. Basically zero. Over a nice solid lifetime, prices would get cheaper by about 25%. (70 years.) So, the reverse 1-2 years of recent inflation.
No. Bank creates an asset for itself since borrower pays interest on loan.
Furthermore, new money spent from loan dilutes currency and borrower gets to spend before inflation sets in. More than that, borrower gets to pay back loan with inflated currency. General population bares inflation liability as long as loan circulates.
There is a glitch in the video at 44:44 which renders Michael’s historically important comment unintelligible. This is reflected in the transcript:
“And the ability of America to act as a wrecker is what made it the central power as a record financially, not without having to indeed Europe or Germany until World War II.” (sic)
I long for a correction as this comment does touch directly on a KEY aspect of world history between the two wars.
Please?
You have an asset, the cash. The bank technically has a corresponding liability, the debt. However, the bank can legally disperse that liability if you default on the debt.
The bank has an asset, likewise corresponding to your liability, the loan contract.
The fake money poofs into existence, and if the money gets misplaced, the liability poofs out of existence. The bank’s debt is to itself, so it can simply forgive its own debt. Meanwhile if you want to poof your liability out of existence, unlike the bank, you face consequences.
Which raises the question: why was anyone foolish enough to accept the short end of the stick on this? Obvious response: stop using banks. Obviously this is going to go badly for you if you let them get away with it. Not worth.
That said, it did already happen. Therefore, never accept a debt under your own name. Always make an LLC and have it accept the debt instead, because apparently navigating a bureaucracy is the legal-privilege tax. Again: buggering the banks is extremely legal.
A key feature of Faustian civilization is laundering. Analogous to money laundering, it’s responsibility laundering.
Functionally Orange printed fake/free money and gave it to himself. He paid the BoE an “interest” rate of 8% or so, not because the BoE could stop him or anything, but for the BoE to take the blame.
“It’s not me! I’m not doing anything weird or special. I’m merely taking the offered loan.” In Reality the BoE was (is) wholly Orange’s creature, but apparent responsibility is divided. Manipulating optics allows outrage to be divided too.
“We were robbed!”
“I accidentally left it unlocked. Oops!”
*””accidentally””
Sure it’s not like you’re happy with the “incompetent” traitor, but you’re not as mad at him as you would be at the reaver. You don’t instantly charge him with a felony and prosecute him to the fullest extent of the law, now do you?
And because it’s easy to politely ask your “friend” to ensure they lock up next time, and chasing the bandit is hard, you don’t chase the bandit. The lock will solve the problem, right? Why go to all the extra hassle and expense and court dates?
There’s even more, but you get it.
Dividing apparent responsibility works.
If Orange’s scheme had been exploded, the Bank would have taken the fall, and Orange would have lived to try again. More recently even the officers of the Bank would live to try again; none of the conspirators experience any significant risk. “Well the Bank failed. Let’s found a knaB.” “Wow such innovation, I’m happy to see you addressing the terrible low-status failures of the Bank.” E.g. gain-of-function ‘failed’ so Pfizer is now doing directed evolution. Totally different, see. All American lawyers agree.
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Which is why [blame] isn’t naturally a problem-solving paradigm. It’s cope. Blame is how you justify not solving the problem. It’s how you disown responsibility. “It’s his fault, so I don’t have to fix it.”
The fact it’s his fault means you have to fix it a fortiori. He is, you’re telling me, incompetent; he can’t fix it even if he wants to.
Or: whether the traitor is really incompetent or not, you need to fire him. But, it’s uncomfortable, so you don’t. So you get betrayed. Even if he really is incompetent, you attract traitors who realize you will let them get away with pretending to be incompetent. That’s why traitors love “compassionate” “empathetic” egalitarianism.
Great insight as usual.
No. Heritage by discovery protects land from the hoards.
That line starved 8 million hereditary petit bourgeois farmers to death in Ukraine under Joseph Stalin hastening agricultural reforms.
Karl Marx eventually admitted his theories couldn’t be instituted without killing and confiscation. I always wonder, did Marx know while writing that his writings would require revolution? Or did the thought of failed work urge Marx to kill and steal? Is Karl Marx a second degree murderer, or a first degree murderer?
My only guess is it would be best to get an actual attorney in a serious situation like that. It’s a racket. I know a loan officer, who, ironically, calls realtors “parasites.” It’s just another industry where the license matters.
perfect summary of financial events since the Bank of England was founded up to and including the Big Event of 1963. Should be printed and handed out to all students .
Manifesto of the Communist Party:
https://www.marxists.org/archive/marx/works/1848/communist-manifesto/ch02.htm
In Asian societies it is very much a popular investment. In countries friendly to the US it is discouraged because specifically it would take away from the other things you noted.
Iraq just announced they will allow trade with China to be settled in yuan. It won’t affect oil yet because the US forces Iraq to keep it’s money in US banks. But of course it is a test run….
No, my point was that you are talking about a lot of nonsense and even don’t know about the man who is very much at the center of every discussion about money and dollar. Clearly, your knowledge on the topic is “limited” as you don’t even know the guy and think you are making some valid points some of which was refuted within the very same discussion.
So, you are an idiot and that you don’t even know that you are an idiot. Hope you understand now.
Many years ago, I went to the local branch of one of the major US banks and applied for what I would call a “signature loan.” I had both checking and savings accounts with them – $9K in my savings account, in fact. I wanted to borrow $5K, as we were remodeling our kitchen and I did not want to draw down the amount in the savings account.
I sat down with a loan officer, who was very nice. He told me that they would need to do a credit check on myself and my wife; I told him that I had no problem with that. Awhile later, I was in the bank and found that my loan application had been denied – with myself having a credit score of 806 and my wife having one of 802. The loan officer said that we had nearly perfect credit scores and could not understand why the bank would not loan us the money.
The next day I marched down to that bank branch and sat in front of a female bank honcho. I told her that I wanted to take ALL my money out of the bank and I told her why. She did not bother to offer to look into the denied loan application, but instead, asked me how much money I thought that my wife and I had in the bank.
I shoved a piece of paper in front of her, which had the exact amounts in both the checking and the savings accounts. She looked into her computer monitor and then looked at me, saying that the amounts that I had written down agreed EXACTLY with the amounts that she was seeing (!).
She had a bank check written for the entire amount and I promptly took the check to the local credit union. I have not banked at a bank since then and I will NEVER AGAIN bank at a bank.
Good luck to you.
From Communist Manifesto, 1848:
Too bad Karl Marx didn’t take a Ph.D. in engineering instead of, “The Difference between the Democritean and Epicurean Philosophy of Nature”. Marx likely would have been able to offer humane transition to modern industrial production without killing surplus labor.
But Khazarian Bolsheviks just wanted to kill as many Christians as possible, so wouldn’t have made any difference.