Origins of Money, Currency, Value, Velocity, Credit, Monetized Debt
Where does our money, the fiat in our bank accounts, actually come from? Ask this first: Is fiat money actually a commodity and also a medium of exchange? Augusto Graziani wrote ‘A commodity money is by definition a kind of money that any producer can produce for himself. But an economy using as money a commodity coming out of a regular process of production, cannot be distinguished from a barter economy. A true monetary economy must therefore be using a token money, which is nowadays a paper currency.’ [He wrote this in 1989, before our modern electronic money system had developed]1
Augusto framed his explanation of money well by stating three requirements for money to be money. It must be a token currency, accepted as final settlement, and must not grant privilege to the person or entity making a payment. This system of money must be overseen by a third party to ensure the satisfaction of conditions. This third party money system makes payment with fiat a triangular transaction involving a payer, payee and a bank. It requires more energy and time than a simple linear barter. Fiat (dollars) in America is now printed by the Treasury on loan from the Federal Reserve out of thin air. On paper but from nothing. Hence, fiat currency.
1878-1968 Silver Certificate; Richard Nixon-2016 USD cost avg $16 per Silver Dollar
What does my money mean, or better yet, what do I get when I trade my time for my money and what am I getting when I give that money (which was traded for my priceless time) away? This should blow your mind and make you rather upset. The money you earn at a job is what you trade your time, a priceless commodity, for. You can choose to earn, save, or spend money. You cannot choose to spend or save your time – it always gets spent and we all want to benefit in that exchange to the greatest extent possible. When you trade your time for your money today, you are unfortunately receiving 97% less for that per dollar devaluation. Make no mistake, wage increases have not kept pace with cost of living escalation or inflation. To put it bluntly, every time you trade your time for US Dollars, you’re giving your time away and in order to preserve any of that value you exchanged the time for, you must rush to find a place for that money to go other than a bank participating in the fiat ring of madness. Some choose mortgage payments so as to store value in real estate. Others choose land. Some select gold and still others choose Bitcoin. It depends on what a person sees as a store of value. After what is necessary is spent, if there is any remaining fiat, it is wise to find a place of value in which to store that.
Banks venture to turn a profit by loaning money. They create money by issuing a loan to a borrower. This is different than central bank [CB] creation of money. As Forbes published, “money is simply a third party’s promise to pay which we accept as full payment in exchange for goods. The two main third parties whose promises we accept are the government and the banks. That’s simply the nature of money: it is not backed by anything physical, and instead relies on trust.” Trust is, at the root, the issue.
When money is simply created out of thin air, what does that effectively do to human innovation? It is actually difficult to say, because the US Dollar is now much undefined. So everything exchanged for it becomes tethered to an undefined intangible idea of a noun.
Why does fiat money depreciate? The 1971 breaking of the Bretton Woods agreement by Richard Nixon was what truly vaulted the US Dollar into devaluation territory. That was the year the US Dollar stopped being money and served as an instrument of debt. Since that day, we have fought voracious debt as a nation. Savers post 1971 do not save money. They lose value in the money they believe is being saved. Meanwhile, the Federal Reserve offers the US Government massive expansion of the money supply in the form of credit or debt. That very printing of trillions of dollars destroys the purchasing power of any savings.
Money printing January 2008-January 2014
The Weimar Republic was the poster child select for failed currencies and a black mark to German monetary policy. Following World War One, the Treaty of Versailles required that Germany pay reparations to its allies. The Diktat, or Dictated Peace, as the Treaty was known, stripped Germany of its own central power. All its foreign outposts were brought into the fold of the League of Nations and Germany itself was essentially demilitarized. Germany’s renegotiation was what led to the rise of the Nazi Party and the monetary issues and deep need to reclaim power led to World War Two.
Putting aside contentious political war stories and ideologies, the economic issue was a fastidious fiat money printing that led to severe hyperinflation in Germany as Reichsbank went to town with the printing press. Germany under Emperor Wilhelm II decided to suspend the gold standard for backing of its currency and borrow money into its own prosperity and victory. Does any of this sound starkly familiar to the world today? From 1917 until 1919 the German Papiermark (Mark) slid from 4.2 marks per one USD valuation all the way down to 48 marks per one USD. Germany continued to purchase massive amounts of currency with its own incredibly devalued paper notes it just kept printing; this was how they planned to buy their way out of reparations set upon by the Treaty of Versailles and the London Payment Plan. This criminal money scam went down in history as one of the worst economic failures of all time. In that tiny bit of history, do you see very clearly how dangerous fiat currency is? It stole from an entire generation of people with no remorse.
The world currently sees the similar cascade of events on an increasing and disturbing scale. Russia, Venezuela, Zimbabwe, Argentina, Chile, Brazil, Italy, Spain, France, and many other nations have fallen victim to the whims of central banking. Further, any and all price discovery mechanisms by which to value true assets, commodities, labor and energy have all but been thrown aside.
Debt is NOT money. Debt is the borrowing of money one does not have enough of to make a purchase that entity or individual cannot actually afford. Money is made FROM the lending of the debt to a debtor and the creditor is the one profiting. Debt is useful for emergencies or for instances in which there is not enough money under normal circumstances to buy something. Most commonly the debt instruments used in tandem with the US Fiat dollar are mortgages, auto loans and credit cards. Does this speak to the increased cost of living in our society, to the ease of printing worthless money, or more to the abject devaluation of our money since 1971? While we had a commodity-backed money system, most American families actually owned their homes and cars outright. Today barely anyone does. Also, there has never been a ballooning credit lending system such as we see today in the revolving debt economy. It is actually quite frightening. Interest is where the squeeze hurts. That is the margin upon which the lender makes money off the borrower.
An increase in interest rates would stifle runaway spending and help to reign in the monetary system but it appears we have passed that point in 2019. With interest rates falling, it is easy to print endless money supplies and inject currency into the economy to mask the effects of nearly every household being overleveraged to varying degrees. We are at a dangerous inflection point in the Old Money System. John Williams in a USA Watchdog interview with Greg Hunter outlined the very real dangers of our debt in tow with narrowing trade deficits that are actually a result of collapsing consumerism as credit reaches its end.4 This is a highly recommended interview. Please find the link below and listen if you are able.
We now live in a world of perpetual debt, writes Paul G. of ‘Money As Debt’. This debt cycle cannot shrink or slow because that would create a shortage of principle in a world where money is actually now just borrowed into existence. People would lose their homes and cars and life savings due to that simple shortage of principle or debt-induced money printing. The current system is only functional while it is growing.3
What does debt do to us today? Tomorrow? To our children? For today, debt increases the amount of products and services we can buy. The debt machine is ensuring that housing prices are unstoppable in their horrendous tear upward as subprime lending and even prime lending are off the charts in terms of volume. Debt is ensuring our slavery tomorrow. As debt increases, inflation in the real world and devaluation of the dollar cause a contraction in money velocity (the rate at which money is moved around, bought, sold and traded). Ultimately this is destructive. As for our children, without simply refusing to participate in the lie of a debt based monetary system, they will experience a third world life, a feudal society and will be unable to enjoy the amenities we so lavishly expand our lives with today. If you are a parent to young children in 2019, you should be very wide-eyed. You should be savvy to exposure to assets other than fiat-backed pensions and retirements which will be pillaged to pay a little interest on the coming quadrillions. You should also be concerned about the future of warfare. As Gerald Celente, the currency wars/trade wars/world wars guy puts it, “When all else fails, they take you to war”. They are the Central Banking Cabal.
In another recent must-listen interview, Gregory Mannarino, former US Navy Lieutenant and day trader laid it out very simply. World Wars One and Two are masked and marred by Black Swans on behalf of Globalist Oligarchs – pushing a fiat monetary system from Woodrow Wilson til present. In his words, “We fought Vietnam to mask the disappearance of the Gold Standard in 1971. We fought every war since for oil. The US Dollar is an asset the world agreed to trade for in US dollars. The payment of US Dollars as the world reserve petro dollar was to insure US Military guarding of International Globalist oil assets. Enter the Military Industrial Complex.”9 He also surmised that we have great potential to enter Venezuela and attempt to conquer that nation for its oil. Interesting theory. Paired with the larger cycles of seven in money movement and opportune to mask the demise of the Dollar and to usher in the New Money System.
So then, why is the stock market at all-time highs and isn’t that good? That can be a curious and laughable question. Since its inception, the DOW, NASDAQ and S&P 500, the stock market, home prices have never gone down. Food prices have never decreased. The cost of living has outpaced wages. So, imagine the DOW at 60,000 points. Can you begin to imagine if the price of homes, food, utilities, clothing and even taxes increased two or threefold? Then imagine if that occurred with only the standard 2-3 percent wage increase for Cost of Living annually. There is no fathomable way the mathematics make sense. That would be ultimate doom for any middle class persons remaining. Money would have to be exponentially created out of thin air and injected into the economy as QE, stimulus, TARP and any other such similar instruments. No one would be better off because the amount divvied out to each person would in no way meet the needs of repayment of debt. It would be a momentary boost to the average family’s grocery or revolving payment bills. And then it would be gone, leaving our future generations saddled with the cost of all that printing.
Stay tuned for Part 3, where we will touch on credit creation, who profits from funny money, lending institutions, monetization of our lives, packaging debt assets for resale, credit default swaps and why the average person stands no chance against the system in its current form. We’ll also toss out an idea or two to remedy this issue. Why present a problem without any probable and workable solutions? If not us, then who? If not now, when?
- Four Horsemen Documentary https://www.youtube.com/watch?v=bdnmmsu6PAA
- Money as Debt DVD http://www.moneyasdebt.net/
- USAWatchdog.com John Williams Interview https://usawatchdog.com/recession-already-in-place-watch-out-john-williams/
- Lynette Zang/ITM Trading
- David Stockman’s Contra Corner – chart of the day and historical archives https://davidstockmanscontracorner.com/author/stockdav/
- Money System Ponzi Scheme film https://www.youtube.com/watch?v=Hkk3T56-t7U&feature=youtu.be
- An excellent history of modern currency https://www.zerohedge.com/news/2018-03-26/money-measuring-stick
- Greg Mannarino, king of BYOCB, interview with Dave at X-22 https://steemit.com/db/@x22report/it-s-time-for-the-people-to-come-together-to-go-after-the-real-enemy-greg-mannarino