Tuesday, July 19, 2011

Facts of the ages – what you should know. Part I

While the Greatest Depression continues to gain momentum most people seem utterly clueless as to why, and what is possibly worse is that no one seem to understand the scope of it.

So what do I see that others don´t? And are there actual evidence to my claims? I´ve compiled a wee tiny thingy (in two parts, next to come) to point to reality.

Remember this is not the ramblings of a madman, it’s not made-up stories to frighten you, and am not a tin-foil hat seeing reptiles taking over the world through Illuminati.

These are facts. Hard, straightforward, irrefutable, undeniable and absolute facts. Although I´ve here in this post left out the scam of GDP and how governments “work”, this is the base and from this you can draw the same conclusion as I have.

As a final note this is a pretty long post, but this is what you need to know, please read and maybe, just maybe, we can avoid making the same mistakes going into a post-apocalyptical world.

Fact 1 – Money


If there´s one thing I want you to know and understand it is the subject of ´money´. If you don´t want to read everything in this post, at least take your time to read this first part. Because the existence of and the deceitful dealings that comes with FIAT currencies are the most sinister things you can possibly imagine.

This is how you get robbed in open daylight. This is how they steal your hard earned cash. This is why the Greatest Depression is just around the corner. This is the main reason why empires of history has crumbled and fallen. If you understand money you will understand almost everything that goes on in the world.

What it all comes down to is money. If you don´t know what money is, how it works or what difference there is between value, price and cost you simply don´t understand. Sadly many ignore economics and won´t listen when someone show graphs – they think that it’s too difficult, too much over their heads.

It’s not.

Economics is based on reality, base-A math and common sense. You do NOT need to understand M1, M2, M3. You do NOT need to grasp trade surpluses. You do NOT need know what “asymmetric shocks” is and how it correlates to the euro. Actually you don´t even need a degree or any official education to understand.

This is, coincidently, also why many cornflake-economists and knowitall tricksters keep throwing about words seemingly thought-up within padded walls of a psychiatric clinic. They protect their area and their own “expertise”.

This is what you need to know:

FIAT currencies – that we have today – are useless and totally worthless pieces of paper with totally arbitrary numbers attached to them. There´s no value whatsoever in our paper (or digital) money. None!

There are two reasons we use these made-belief pieces of crap in commerce. Firstly because government say we should and government have your hard labour (taxes) to back this claim up. Secondly because you, the people, accept it.

But FIAT money is, at its core, without backing. There are no cars, no refrigerators, and no production as a base for our money. Nothing. And you cannot use it for anything, except maybe as toilet paper. Its phantom “money” printed out of thin air.

Real money (i.e. gold, silver) actually do have value. Precious metals are equal to real money. Gold for example have had real intrinsic objective value and have been THE key go-to commodity since the dawn of civilization.

If you think about it this isn´t that strange. Gold is beautiful, you can make jewellery out of it, and as a metal it has other practical applications – it has value above and beyond the purely monetary. Most importantly though is that gold comes in limited supply. You cannot magically bring forth gold! This is why governments hate it, this is why “experts” say that gold-based money is archaic and obsolete – because they cannot manipulate the amount. The Powers always arguing that in a real modern society we don´t use gold as money, we use paper...

Why is this important?

Because if governments and their prolonged financial arm of big banks have the power to print money and control its supply, they can also decide where that money go first and they can use this power as way of extra taxation. Before I explain why and how, there´s one additional thing you should know. This is probably the most confusing part of this entire story, so please pay attention...

...Money is a static thing that actually cannot be changed comes to cost and value. If the cost of a snickers is $1 million or $1 dollar have no meaning. It doesn’t matter. Think about it. Does it really matter if that note you´re going to pay with have 6 zeroes or no zero if all you want to do is buy one item and everything in society changes accordingly?

This is probably confusing to you but if all else stays equal it doesn’t matter what a note say or how many of them they print – again, comes to cost and value. If money gets equally distributed throughout the economy nothing would change. They could print $985684499 trillion or withdraw almost every dollar in circulation and nothing would change. It doesn’t matter whether a cookie costs $1 or $100, as long as all else stay within the same parallel.

Today’s fiat currencies are just numbers, fictive and arbitrary numbers, and so if equally distributed to all at the same time, nothing changes!

Let´s say one snickers costs $1 dollar today and then you have the cost of everything else (whatever the cost may be) and then – over night – you put on 6 zeroes on each $. The cost of one snickers is exactly the same - just as with everything else, including your salary, taxes etc. Everything have only adjusted to this new situation. The only difference is that now you pay $1 million/snickers instead of $1 dollar/snickers, but the cost is still the same!

If everything stays equal at any moment of time, the amount you pay or earn will be exactly the same no matter the amount of zeroes on and no matter what it says on those useless pieces of paper we call “money”.

Stop here for a moment. This part you haft to understand! If you do not understand, read it again, and again. Check online. Do whatever until you do, because this is a key element.

When you think you do understand think about the following: what if those zeroes aren´t distributed equally? What if, oh... let´s say: Banks(!) get all those extra zeroes first. You´ll get them to, but not at first, only later when they have trickled down through the system.

What effect do you think this has?

This is what´s going on right now, and has always been going on within all FIAT systems and will always go on until the system blows up and/or the people have had enough.

When, a couple of years ago, our Great Leaders went forth on their epic adventures of Quantitative Easing (QE – i.e. print money) in order to “save us” from The Great Recession they did just this; They printed shitloads of money and handed it over to banks, financial institutes and government.

You didn´t get any, the poor didn´t, the unemployed didn´t. Almost all that money went to the already rich and powerful.

What they did with the cash? Well, what would you do if you get trillions of “free” cash? After they, sort of, paid off their debts they went out and bought stuff, mainly stocks, real-estate, commodities and used it to take over competitors. Did you see how prices exponentially increased comes to stock markets etc during that time up until now? That happened because that newly freshly printed FIAT aimed at certain areas from those deemed better inflated those markets.

The fictitious effect: GDP went up! Yey! We´re rich again...

... uhm, hold on... what?

Remember what I told you above? The effect of that printed cash would have been zero if it had been distributed equally, but here they printed and gave it to certain areas of the economy. Important areas. Areas that contribute to political campaigns. Areas with tons of lobbyists. Areas from which many of the high-and-mighty cometh or have plenty of friends within.

And in this case that printed cash actually matters! The extra zeroes actually have effect!

You see the ones who get that cash first and can use if first can take full advantage of it. We don´t have a equilibrium, the money is not equally distributed throughout the economy and so the elitist sphere can, in the short run, claim larger parts of the market and in doing so drive prices up and so drive GDP up.

The real effect: INFLATION! (additionally the rich get richer...)

This is what they CAN DO within a FIAT currency system. This is what they CANNOT DO with real money.

Again: why do you think the elite hate gold and love “paper”?

Here you should go: Aha! And start grasping after that pitchfork, but you see things are a lot worse than you realise this far...


Fact 2. Inflation


As mentioned above one undeniable effect of having paper currencies is inflation. It’s sort of built-in. Automatic. Money printing is only one part of inflation, but the biggest and most important one. When they print money each note loses in ´value´. This is also, for some reason and for most people, hard to understand.

Partly because it’s hard to understand and partly because those above don´t want you to know the secrets of inflation it has been decided, over time, that inflation isn´t inflation anymore, instead it has been morphed into ´an increase in prices´ - which also increase the confusion.

They also want you to believe that ´increase in prices´ is the normal state of the economy. Increasing prices is good! Prices going down (deflation) is bad! This, coincidently, is also one of the main reason for the bail-outs and stimulus being thrown around – to keep prices up.

This is one of the most malevolent misrepresentation of the truth in history. If you fully understand the implications of this you should be loading your guns right now.

If you grasped Fact 1 above you now know that:

a) (FIAT)-Money is useless paper at the very best
b) They print that cash out of thin air and on whims
c) The already rich and powerful get printed cash first

This is important because when inflation start to effect the whole economy it will effect those who get that printed cash last the most. This because “When they print money each note loses in ´value´”.

If we only look at money (again the FIAT variant) and we double the money supply (=inflation) you´ve effectively doubled the amount you need to buy something. Very simplified a lollipop that cost $1 before the doubling will cost $2 afterwards.

Now this isn´t exactly true since there are a lot of other factors that have a say in the matter, so the actual effect is usually much lower.

A main factor that contribute to this equation – in a positive way for those in charge – is higher production. If we produce more, faster and more efficiently it increases the total value of the entire economy so over time the effect should be that prices should go down and wages go up.

But in steps inflation! They print money which makes each note worth less. This means prices instead of going down go up and eat up some (if not all) of that increase in productivity. Since much of government income is based on prices (VAT, salaries etc.) a lot of people will also pay more in taxes.

The Real effect: Over time you can work harder and harder, earn more and more, produce more and more and still get less and less.

THIS is why your grandparents could buy a house and two cars on one salary and still be debt free after some odd years, while in your family - today - you need two salaries and are still paying your mortgages well into your retirement. Inflation happened. Sure we have more stuff today and in total terms live slightly better, but in actuality you should work even less today than back then and still be able to live much better.

Except for that hidden government tax the actual effect of FIAT currencies and money printing consequently becomes: IT MAKES THE RICH RICHER AND THE POOR POORER.

Getting an itch in that trigger finger yet...? oh, but hold on...


Fact 3 – fractional reserve banking


I am not going to tell you what this exactly is, you can read about that yourself. What I am going to do however is to point to the fact that this system is dependent on one single thing; debt!

Without debt this system defaults. Automatically.

I have seen a lot of comments online and heard people argue that this system really is poor people´s best friend since it’s very hard to get hold of money for common folk in any other system. A person making such a claim is either totally ignorant or is lying to you. Whichever the case that person is your enemy!

The system of fractional reserve banking arose when history’s early “banks” figured out that they could keep a fraction of real money (Gold, Silver etc.) that people kept with them and lend far more “notes” in exchange for that real money to people than the actual value.

As long as people didn´t withdraw all their savings (=gold) all at once, “banks” could lend 10 times, 20 times or more of the actual value. People could consequently use “notes” as currency instead of gold and silver.

If one person put 1kg of gold into the bank, then the “bank” could lend people notes equivalent to 10kg (or more). This they could do since most people didn´t want to carry around their gold and if they withdrew, they seldom withdrew it all. So “banks” sort of had full coverage.

The “banks” then figured out that they could charge people for keeping their gold safe and, later on, take out interest on “money” (notes) they lent out to people. And so modern fractional reserve banking saw the day of light.

Those notes then became “money” and later on the only form of money – the reason of this have been told above.

Already here you should understand that the entire system is built upon debt, but as with any tale from the crypt the scariness doesn’t stop here.

You see it is here where these 3 first topics converge!

Remember: printed paper money goes to banks firstly and foremost.

It is said printed money is “lent” to banks from the central bank (usually the entity with the printing machine) since they also pay a fee or “interest” to the central bank. However the banks in turn use that phony money as base for their lending practises – as they used to do with gold. And just as they did with gold they DO NOT lend out the actual amount, but instead 10-20-30 or even 40 times that amount.

This far, comes to fractional reserve banking, it’s not that bad. It could work, and as history shows; it has decently worked.

The “first” problem however is that in order to earn more money, they need to lend more money to the market. Consequently there´s an incentive for banks to have as many loans and mortgages as possible. This also means they will, sooner or later, lend to people/businesses/governments that cannot pay back.

The “second” problem arises when the market is sort of full and don´t want any more loans. There´s only so much people want to borrow or need to borrow. So in order to keep ahead and keep increasing the borrowing (and consequently increase debt) banks come up with schemes unheard of except maybe told in comic books.

Firstly they regard that debt they have from lending out as “having value on their books” (your loan is “money” regardless if you can repay or not) and so they can lend it out again to another person, and then again...and again...

Secondly they come up with new names on paper based on paper based on debt that is based on debt and they lend it out again.

Ever heard of derivatives? There are countless of names for these debt-soaked fraudulent dealings, but the most common name and the name I normally use as a collective name is “derivatives”.

There are trillions of derivatives floating around out there. All of which have very little (or mostly nada) value attached to them. Its only debt borrowed upon debt, lent on top of debt, re-lent to get more debt that they can lend out to increase debt so they can get more debt they can lend to people.

...puh...

...I get tired only from writing...

The real effect: our entire economic system is built upon, dependent upon and totally infected with debt.

And remember: there´s very little value in the bottom of this debt-pile, and the value that is there, can never, ever, never, ever, never, ever, never (!!!) make up for even a fraction of that debt.

So if the system were to collapse... oh my... You cannot believe the fall-out, you can´t imagine what this will do to us all. Our entire way of life would come crashing down. Everything would change.

The funny things is: it will come down!

You see math doesn’t tell lies.

We are, today, at the end of the road comes to this debt-economy.

Have you watch the news lately? Or did you actually take some time off from American Idol to listen to what our Great Leaders said comes to the bail-outs and stimulus packages? What they did say was that we had a problem of liquidity. Banks didn´t have enough money and people weren´t borrowing enough. Of course government then needed to step in and borrow for us. If the market and people won´t do as they are told, government need to do it anyway.

It still didn´t help, it couldn´t help. Partly because the economy couldn´t take more debt and partly because our soul-sucking suits malicious purpose was to increase the scam of GDP.

So instead of letting the markets crash and take a temporary pain of a few years. Instead of letting capitalism work its magic. And instead of flushing out a fraudulent system and start the world fresh anew they pressed more debt into the system, they rushed more regulations into already overregulated areas, and they handed over even more trillions to the very same banks highly responsible for the crisis.

Before you blame the banks for everything here, you should know that this system “works” with the good memory of government and since government is the main beneficiary of this scam they have no reason to abolish it or fight it.

If you pay attention there are still voices demanding more credits available, more printed money to banks and more regulations. Look at what they say about and what they see as the way our for the European PIIGS.

Can you say ´clueless´?

There´s only one way this can end; through a total bust and crash of the entire system. It can happen tomorrow, it can happen a month or a year from now, we cannot be fully sure of when. We can however be sure that it will happen and indications lately points to a total upheaval very soon.


Is there any way out of this mess?

Is there a way out? Sure, three possible scenarios can “save” us from the Greatest Depression.

1) Alien invasion of benevolent beings correcting all and bringing with happy joyjoy feelings to cute kittens everywhere.
2) Devine intervention from God(s) correcting all and bringing with happy joyjoy feelings to cute puppies everywhere.
3) A couple of inventions that will totally change our way of life and bring with a massive increase in productivity. A mixture of cold-fusion plus a magic elixir that can cure all diseases and teleportation would do it. However it should be noted that such things would probably not save us entirely, only postpone the Depression.


Conclusion
So there you have it. The basis of our current dilemma spelled out for you. If you read this post and a few years/months from now still blame ze Jews, Muslims, immigrants or capitalism when you´re roaming the countryside in search for food and employment, well then there´s no hope for humankind.

Since most of you are idiots, I have no illusions about where this lead and how it will end. You will, as people always have, turn towards totalitarian ideas for your salvation. That means tens of millions more dead from wars and famine.

Hopefully even nuclear holocaust! I keep my fingers crossed for this one because I prefer to go out with a bang instead of decades of misery...

2 comments:

  1. Spelling's not easy. "Survaillance" was an interesting spelling...

    ReplyDelete
  2. Haha... thanks!

    ReplyDelete