January 7, 2013

Smelly money is still money

Posted in Sunday Business Post · 320 comments ·

The other day I chatted to a man who knows a thing or two about managing bands. He was talking about the dance hall scene in Ireland in the days before world domination. He told me that there was no drink served in the dance halls so, in most cases, the lads went drinking until the pubs closed and the dance didn’t really start until closing time. Meanwhile, the girls who, in the main, didn’t go to pubs, waited for the lads for the thing to kick off.

Apparently, in the dance hall days lads had two grades of ‘dates’ with a girl. In the first, you met her ‘outside’. This meant you paid for her to get in. The other one – a cheaper date – was where you told the girl you’d meet her ‘inside’, in which case she had to pay her own entrance. Obviously this was a less committed affair.

He also told me about the key difference between managing bands in the dry dance halls and then later in the 1970s, when people started to serve drink in dance halls and clubs. By the time a band was paid in these later clubs, which was well into the night when the gig was hours over, the money actually stank.
This is because the same fivers and pound notes had been passed back and forth across the bar loads of times before they eventually settled in the till for the evening. It was those filthy fivers, soaked in stout and sweat that were doled out to the band at the end of the gig.

The manager then had to lodge the filthy lucre in the bank the following day. He explained the process of pressing damp fivers on the counter of the banks to the disdain of the coiffed and buffed tellers of the day.

The smelly money concept struck a chord with me, because my granny had a small pub in Cork, and I also remember she’d ask us – her grandchildren – to count out the takings at the end of the night. This was a source of great excitement. We’d never seen so much money before.

However, the smell of the stuff nauseated me. Like the band manager’s fivers, these fivers and pound notes on a busy night crossed the bar and the card tables loads of times and, in the end, it would be a sodden, dank Lady Lavery that peered out of the note at you.

The riddle of the dirty fivers holds the key to the Irish economic recovery because it explains one of the most important concepts in macroeconomics. What the music man described in his memories of the filthy, stinking money moving over the bar, back and forth, is a perfect example of what economists call the ‘velocity of money’.

The velocity of money is the number of times money changes hands in an economy. In economics, the velocity of money is crucial because GNP should be equal to the money supply multiplied by the velocity of money – or the amount multiplied by the amount of times that money changes hands in the economy.
In a boom, when everyone is spending and transacting, the velocity of money should shoot upwards: because the more we are trading, the more money is used.

The music man was describing a boom. In the mini-economy of a dance hall, it would be close to recession with few people spending and everyone waiting until closing time. The place filled up and then the period from 11pm till 3am was the perfect example of an economic boom.

The velocity of money in the club went from zero (the recession) to rapidly going through the roof (the boom) as everyone thronged the bar and spent money. Likewise, my granny’s bar had a boom from 10pm to 12am on a Friday night. Money changed hands and the till stank.

Then, on Saturday afternoon, when only the local diehards and bachelors with nowhere else to go and who drank slowly were in the bar and you could hear the clock, the velocity of money collapsed and the bar was in recession.

So, we know that velocity drops during a recession. The velocity of money in Ireland was rising up to the moment the economy really turned down in early 2008 and has collapsed since then.

What should a central bank do when the velocity of money falls? It should orchestrate an off-setting increase in the money supply to try and overcome the effects of the business cycle. If velocity falls, then money supply must rise for national income to grow.

The central bank should attempt to jump-start the economy back into growth by increasing the money supply. This is what the Federal Reserve is doing in the US.
What is happening here? Well, the Central Bank of Ireland isn’t capable of jump-starting the economy in any material or independent way.

Equally, as Ireland has been suffering a liquidity trap, where banks don’t want to lend and people don’t want to borrow, the velocity of money will head downwards – as it has done – and the ability of the Central Bank to kick-start the engine is limited.

However, the good news is that it seems that the velocity of money might have started to stop falling and may be stabilising of its own accord. The velocity of money collapsed in the past five years of recession.

Like a bar with no customers or customers who used to drink quickly and now drink slowly, the money didn’t change hands quickly across the bar. So yes, the bar was open, but the trade was awful and when the band came to get paid, they got paid less and the money was clean and crisp. But unused money isn’t half as potent as used money, so as the velocity fell, so too did the number of transactions and the level of activity – the bar’s nominal GNP.

Now, we are seeing the velocity of money stabilising as people are spending a bit more. The velocity of money is a more important leading indicator than many others. Taken together with the firming of tax revenues, better retail sales and house prices stabilising, suggests that the economy might bounce along the bottom from here.

Let’s see how we go. There are huge debt deflation issues yet to be solved and enormous potential for the economy to slide backwards, but the velocity of money plateauing is new and reassuring.

The ancient Romans had an expression: pecunia non olet – money doesn’t stink. No matter where it is made, it is still cash and its provenance can’t change its value. If a few more filthy, smelly fivers were changing hands like in a 1970s dance hall, it wouldn’t do anyone any harm in 2013.

David McWilliams’ new book The Good Room is out now.

  1. Adam Byrne

    Subscribe – get in there my son.

    • Adam Byrne

      Just reading this article now – had to get my subscribe in first, haha.

      Just kidding, everyone else always goes on about it so I thought ‘if I’m getting blamed for it, I might as well do it’.

      I just came out of a Strategic Marketing exam – what a load of waffle.

      This article, on the other hand, was most certainly NOT a load of waffle.

      I know certain people are going to be up in arms about it but whether you agree or disagree with the content I thought the use of analogy was absolutely inspired and another great example of David explaining complicated economics to people in simple but memorable ways.

      Thanks a lot David. Brilliant writing.

      • Realist

        > This article, on the other hand, was most certainly NOT a load of waffle.

        It is a candidate for the worst article ever !!!!
        David is totally ignorant to all our posts in previous articles.

        David is telling us that till 2008 all was OK, as it was boom and velocity of money increased.
        And now it is not OK so we need to do the same things as we did before 2008.
        So, how on earth we got into crisis in the first place, if not for printing money and following ridiculess fallacy of velocity of money and GNP importance for the economy ?

        • Adam Byrne

          The problems of the world are not going to get saved here Realist. It’s just an article. See you at the barricades.

          • Adam Byrne

            I’ll be the one wearing the uniform and dark glasses.

          • Adam Byrne

            ‘solved’ even.

          • Realist

            Agree with you.

            Might be just me, getting sick of such articles, that are just plain wrong. It might be David is just joking with us or something.
            I am just sensing I am wasting my time on this forum as the main characteristic of all of us is to be blind and deaff, including myself.
            And this is one and sole reason I do not want to drag decisions on others, and I like liberty more than this kind of democracy.

            Believe me, this is worse than the war as in the war adults fight and die, while this kind of economic war is going to destroy our children.
            And this is why I fight now.

          • Tony Brogan

            Hi Realist
            We all need a break but I was happy to see others carry the flag while I took a break.
            David is showing he is edgy about the response to this article and even several before. He beieves he is correct in what he promotes. It is however a bit thick of bon bon to call us monetarists and ignore the position of DMW.
            You are having an effect so do not think you are not.
            Adam is correct . nothing will be solved on this sight as the proprietor has not the solution.
            He sees what is happening and can connect to the people but unless he gets hit by a lightening bolt on the road to Damascus there will be no change unless perhaps that irritation turns to a question of why everyone is on the other page so it is time to re-evaluate.

          • Realist

            Very nicely said Tony.

            DMW is just going in circles without any hope.
            It might be the time we take some common ground and re-evaluate.

          • Passing though the barricade is a matter of courage

            Great 80s song with images of Carribean sunsets

            Spandau Ballet – Through The Barricades


      • Simple and memorable is the hallmark of any good teacher Adam. Teaching should be rewarding and it is when you see concrete results

        A good teacher can make a subject interesting and memorable by injecting their personality and passion into what they are talk about

        This is what I like about Davido – he is articulate and is capable of forgetting his ego. Sometimes he plays a blinder like was doing up to the New Year and sometimes he gets pelters

        I know he takes the feedback seriously because deep down he is modest and not the gobshite some people make him out to be

        In the past I have had my own moments and people asked me how did you do it?

        I did a computer networking project during my degree and pulled two young lads who normally scored somewhere between 25 and 40 up into the dizzy heights of the 80s. I felt proud of my motivational skills and natural leadership qualities


        I talked to them and treated them like men.

        We got the gold star and the class held it’s breath

        Hail Hail and a Happy New Year to your good self sir.

        • Adam Byrne

          Nice one Paul, you are bang on the money with your comments about David and also on how to manage and motivate people and do something worthwhile for them.

          • Motivation and inspiration is a good business model for anyone who can stand out and find an audience Adam

            If you can motivate and inspire them the world is waiting

            We are all capable of motivating and inspiring

            Some of us are great teachers but just can’t be arsed

          • I feel a sense of hope this year Adam. I want to be all I can be and attack life instead of sitting back and watching it pass. I am up for life. It is my birthday and I am celebrating having got to this age and having never lost my questioning rebel heart

            I am not sure where my talents lie and what I should be focusing on. I need pair up with people with the understanding that mentoring is a two way process. I believe that we need to know our calling and that friends are the key to self examination, planning and action

            Probably something to do with the net and I would like to network with people who specialise if soft skills who could rely on me to take care of the technical stuff

            Maybe we should connect off line as I am sure my technical skills and your awareness of social marketing and web savvy could be productive and interesting

            Time is moving on Adam and waits for no one

          • Adam Byrne

            What is your email Paul?


    Im of a mind that better retail sales dont exist at present, I said before I think pent up frustration and a dire year both weather wise and financially, folks had themselves a good Christmas to blot out the depressing reality of what is yet to come and what has been.
    Im an optimist however and will welcome any positive growth in the economic sitch.
    Much like the Republican who wants the Democratic President to make the country better not worse.
    Its like the old saying, “when someones candle burns out in a room, your candle does not burn brighter the room as a whole gets darker”.
    Weve had enough darkness so I hope you are right David.

  3. Your.Country.Your.Fault

    I will acocmpany one set of Asian investors to Ireland soon who are convinced that indeed the bottom has been hit. In their mind, the bond markets have been shaken out, and once that happens the recovery starts again. The Franklin Templeton bond investment got them thinking. And then a series of positive FT articles.

    Much berating is done on the “up-spin” done by politicians, but it is smehow part of the process. when the guff is matched by the markets, then the money starts coming back in again.

    Love it or hate it, we have turned the corner.

    Good old money supply … Ive learned so much recently!

  4. breltub

    Some day you will have to realise the Central Bank is not the engine of the economy, it cannot kick start it and it only slows down recoveries and accelerates the ruin of the good times!

    You love this idea of printing, but this very idea is the enemy of innovation and the creative destruction you think is a good idea within the economy so that it serves society by providing for the population at large through the success of good ideas and the purging of bad ones.

    Funny money is one of the many problems that exist that people must over come. You would do people a service if you stopped promoting the printing of money that devalues the value of labour and purchasing power to benefit those who leech off the system!

    A quick question.

    If just printing the money off and plugging the hole in bank balance sheets and public deficits is such a good idea why am I paying tax?

    • Adelaide


      The insatiable printing of global funny money has been systemically hallowing out the structure of real economies for decades and we’re reaching the tipping point of structural collapse, which begs the question what then follows?

      Do we rip it up and start again in the same vein having learned nothing?
      Do we start afresh on a new path having learned from our mistakes?

      Perhaps one can be optimistic.

      Perhaps we will replace the private printing of commerically-issued interesting-bearing credit, with a public printing of self-issued non-interest credit?

      Perhaps we will replace the cyclical tenure of single government representation through sporadic election, with a permanent public self-governance through daily electronic participation?

      That is my hope, the citizens genuinely controlling and determinging their own money supply and governance.

      As Bill Still says, “Discussion of anything else is irrelevant. Do not be fooled by distractions, as many are deliberate distractions foisted on an ignorant public.”

      Locally, when one sees Fianna Fail regaining popularity then one can predict that Bill Still will likely never need to visit Ireland.

  5. D – Day Feb 15th , 2013

    Will Bernanke Smile ?

    Will the diehard people seek credit in their pub to buy a drink to forget their woes ? Is this negative Velocity ? Will smelly fivers be replaced by coupons and loyality cards with personal credit ratings attached ?

    Gold Confiscation

    USA Style

    In 1933, 48 Stat 1, of the TWEA ( Trading With The Enemy Act ) was amended to include the United States Person because they wanted to take our gold away. Executive Order 6102 was created to make it illegal for a U.S. Citizen to own gold. In order for the Government to take our gold away and violate our Constitutional rights, we were reclassified as ENEMY COMBATANTS.” This is still in force.

    Other countries are considering adopting this procedure as we speak .

    Can you imagine the term an Irish Enemy Combatant in your own country just because you hoard Gold ? It is not can it happen .Rather when .

  6. Klondyke sur Hibernia

    In those days of old the Velocity of Cash was enhanced due to the then poor tax regulations and collection procedures in force and the then enormous black economy and of course there was no sex then .

  7. breltub

    All this article really points out is the disgrace of centrally controlling anything:

    1. Grown adults couldn’t go and drink when and where they wanted.
    2. Women could have a pint down the pub…that being a whole other issue!
    3. The smelly fivers the band are playing for, the punters work for [hopefully these are not welfare fivers], and the publican hopes to attract are in danger of only being smelly 4.50€ next year if the print-a-ton 10% inflation bank gets its way!

    Real adults don’t need central planning. Only babies who cannot compete, are afraid of competition, and who do not have the intelligence to innovate and create for a living need to hide behind the printing press.

  8. Property Taxes ( sorry off topic)

    This is an interesting reading to explain why :

    In 1933, there was a second United States bankruptcy. In the first bankruptcy the United States collateralized all public lands. In the 1933 bankruptcy, the U.S. government collateralized the private lands of the people (a lien) — they borrowed money against our private lands. They were then mortgaged. That is why we pay property taxes.

    This helps to explain our national bankruptcy clearly.

    • bonbon

      Strange lapse of attention there. FDR passed the Glass-Steagall Act in 1933, declared a bank holiday, and step by step, with an incredible momentum, moved the US out of the Great Depression.

      A whole slew of executive orders on a daily basis addressed problems. Rhe Reconstruction Finance Corp, the Tennessee Valley Authority, the New Deal…

      We have that precedent. It shows up in limelight the utter vapid character today.

  9. ME

    Where McWilliams says, “What should a central bank do when the velocity of money falls? It should orchestrate an off-setting increase in the money supply to try and overcome the effects of the business cycle. If velocity falls, then money supply must rise for national income to grow.” No, no, no, no, no.

    McWilliams continues… “The central bank should attempt to jump-start the economy back into growth by increasing the money supply.” No again. This is what the Federal Reserve is doing in the US for the last x years. How successful has that been? All they are doing is bailing their mates out, in the Banks. So after Trillions of dollars increase in the money supply in the US, would you say the economy has ‘jump started’?

    As Mervyn King, Governor of the Bank of England said, “No central bank has done more in recent months to flood the system with liquidity than the ECB – one Trillion Euros injected through two long-term refinancing operations. Those two operations demonstrated that liquidity is NOT the issue, because after a few months we are back to where we were. The problem is one of solvency. “Where there are debtors who cannot afford to repay, there are creditors who will not be repaid. Until losses are recognised, and reflected in balance sheets, the current problems will drag on. An honest recognition of those losses would require a major recapitalisation of the European banking system.” And of course he is absolutely correct.

    Where McWilliams says “better retail sales and house prices stabilising”, Oh well back in the dream world. Try looking at house prices in terms of ounces of gold, whoops they’re still crashing.

    • Deco

      I am not usually inclined to agree with Mervyn King, but he is completely correct in this instance.

      The EU exists as a policy monopoly. In which case I say thank God for Iceland. But then any polciy monopoly will attract lobbyists with polcy recommendations like a lotto millionaire attracts dodgy real estate agents.

      I have to say that I am a bit sceptical concerning commentary from the media concerning the economy improving. We are back again to the Irish media trying to talk everybody into debt.

  10. Pat Flannery

    The Latin word for money is “pecunia” from “pecu” meaning “flock” of cattle or any other domesticated animal, which was the measure of wealth and the medium of exchange in the ancient world.

    “pecunia non olet”? Did a flock of goats stink? Oh for the sweet smell of cattle, goats, pigs, any flock of livestock, because people are the livestock of today’s economy. It is called “market share”.

    Commercial media is its feeding lot. And boy does IT stink!

    • bonbon

      Very good!

      The problem with goats is their four legged hooved behavior. Substituting goats for humans in today’s economic theories makes no difference. Explains the pecuniary fascination of monetarists!

      Which worries me as counting the feet of Troika emissaries turns up multiples of four!

      To be herded like cattle by Goats is the level Ireland has fallen to (on all fours)!

    • Tony Brogan

      Abraham left Ur rich in kine and shekels.

      Shekel is a defined weight of silver not a numeral amount.

      Kine and silver were both wealth and still are.

  11. Irish PI

    David and Co,
    At this stage of the game I think we all have grasped the concept of who ,what ,why ,when this all became a giant clusterfuk.I think the question is now HOW do we get ourselves out of this mess in a practial way??Preaching to the choir isnt going to do it anymore..How do we get these ideas over to the concreted headed ones that rule our lives??

    • bonbon

      Being “practical” got Ireland into the mess. A goat-dip for the banks is the only way to step out of the mire.

    • Tony Brogan

      Get into an alterate political party that has a different viewpoint. Where your viewpoint can have an influence.
      Direct Demcracy Ireland have some teething problems but their monetary policy and social policy may be acceptable. Given enough momentum here the mainline parties will die or change for the better.
      The reform party of Canada achieved great success being born of discent.

      It did not achieve all that it might as it was melded with and into the current Conservative party.

      Change is possible

      • Realist

        It sounds great Tony.

        Is the ultimate goal of this party liberty and free society at the end?
        From what you said above it looks as you already have monetary and social policy. Does this mean you are aiming on some higher goals than just pushing decision to people ?

        Direct democracy also means that parties, e.g. FF or SF or whoever can get 10k vows to get the referendum on any question. For example they might ask to raise the taxes on rich, or implement tighter controls on foreigners, ban this or that. And I am sure people will vote for it due to the current economic knowledge, wrongly of course.

        I just do not see how it is going to do any good if we cannot change 10 people on this forum to think differently.

        If you proclaim your real ultimate goal to be either libertarian society or totalitarian, people will flock to your side either way.
        Being like David in between, nowhere is not helping I believe.
        This way, trying to persuade us on the broken democratic ways is not working for you, I am sure.
        I asked around my work and nobody heard about DD.

        • Tony Brogan

          Well Realist
          It is a handfull for sure.
          All I can do is spread the message. There are people on this blog growing in knowledge. Look at all who see that printing more money is counter productive. Then there are 100′s more who follow the blog but do not comment.
          All I can say is check out DD web site and see if you could fit.
          Change is incremental. One at a time but critical can be reached and suddenly everyone knows about it.

          DMW writes a good story. His penmanship is excellent but his thinking is as trained. Old habits die hard. some of us evolve but others not.

          You will do what you can and hope you hit the tipping point.

          There is a quote from a market investor. Markets can stay irrational longer than one can remain solvent.
          nothing is easy.

          Take care, eat well, exercise well, sleep well.


          • Realist

            Thanks Tony,

            I did have the look at it already a few weeks back.

            I am still not satisfied the idea will work well at all. It is the same having 200 politicians who know nothing or 4 million people who know nothing about economy. Both will do similar mistakes based on their assumptions.
            This is why I believe only decision for yourself is good for yourself, not trying to decide for other people.
            Only by buying things you most prefer yourself will give you satisfaction.

            I am also trying to be realistic and agree with you incremental steps are needed.
            If your DD can at least preach on this economic fallacies of money, monetarism and keynesianism, to more people, DD will succeeded.

            Let’s wish success for DD as a trial at least.

        • ME

          Reply to comment at “January 8, 2013 at 10:07 am”. Yes but remember the schools are careful to make sure we are NOT educated about finance and the economy — we are just the fodder, (can’t have us thinking). Free education for the masses would be good, (I’m not talking about from the Government).

          • Realist

            Exactly, this is why I would like to have full private schooling, where consumers (parents with children) will have more to say about the education by destroying bad schools by not paying/going there.

            Only way anything can get improved is by competition and freedom of choice.

  12. Subscribe

    Subscribe.. Good article David.

  13. joe hack

    Since they did not serve drink the ballrooms and the females travelled from home to the ballroom how did the money stink??????Why mention the ballroom, why not just say the money that the barman got paid with was smelly… Seriously David

    In the 60s and 70 before IT all money stank, it was the only money in use and the stink of had nothing to do with the speed it travelled at, remember concord had not yet been in service.

    It was the maturity of it that caused it to become putrid like a mature cheese…People stashed their money in smelly socks under floor boards, mattresses, in tea caddy’s and such.

    I heard of a person who got taken short and used it to wipe their arse they then wiped it in the grass and went merrily on their way to the pub to dispense of the laundered money there, later it probably flavoured somebody’s tea.

    Money back then had character, it had depth, a story to tell, it sometimes came with handwriting, poems, love letters and blood splatters – if the woeful CSI crew got their hands on it they could find all sorts of stories on the mature ten year old one pound note.

    But the smell of a new one pound note was a joy with lady Lavery looking like she was dressed up for a night at the ballroom.

    I miss her no matter what way she stank of I certainly would not throw her out from under my mattress for smelling of cheese and onion.
    imm money back then was not so deposable

    This personification of Ireland modelled on Lady Lavery and painted by her husband was reproduced on banknotes of the Republic of Ireland from 1928 until the 1970s. It then appeared as a watermark on Series B and C notes until the latter were replaced by the euro in 2002

  14. Jesus,

    Serious sense of humour bye-pass here today. Loosen up everybody.


    • lol hearing you loud and clear out there David. Give my regards to HAL if you pass his ship

    • Johno

      For what it was worth I thought it was a good article. I do feel peoples expectations on you are far too high, Im not sure if I feel sorry for them or for yourself but that is another matter. Thanks for all your hard work.

      • Adam Byrne

        Excellent article, very enjoyable. I know more about Caribbean dancehall and dancehalls than Irish dance halls myself but I’m sure we can all remember the days we went to places with 2,000 heaving bodies and half of them lovely ladies…

    • joe hack

      In your business there is only one thing worse then been talked about…

    • breltub

      First Monday back in work. Sense of humour is as stinky as those bar notes!

    • Tony

      Still trying to figure out where the humour in the article was. Couldn’t have been the dancehalls and wet, smelly money, so it must have been the central bank kick starting the economy by printing money. Yeah that’s it. I wonder did the SBP readers get the joke.

    • Lol

      This is a Forrest Gump moment for me. Our guy is tired and wants to spend time in the green and pleasant now that the 1970s are gone forever. It’s sad but my generation knew in the 70s that we were alive and having the time of our lives. We look out the window today and the world has changed. The old days are not coming back and we need to grow up. We had our fun but now we are paying the price of complacency

      I think of an Ian Crichton Smith poem about a couple who made it abroad. Coming Home was not what they expected and like all good short stories the ending was a deep and profound change in character that stripped away decades of sentiment in a fleeting moment of cold and raw awakening. Shock therapy in a more domestic setting if you like

      He arrives at a moment of extreme clarity and tells the waiting hoards ‘go home now please! I am running on empty and have no answers to your madness’

      And thousand of pairs of eyes shone back pleading ‘but how can we cope? without you’

      ‘It is possibly true that alcohol, strong cannabis or prescription drugs are the only short term answer to our societal ills he tells them. Go hither and find your own truth and reality’

      But b b b but David!
      Can you give me Pat’s number?
      I know I can talk to Pat because he seems like such a nice man.
      Hmm you mean The Big P hor hor, wik wink.
      Sorry brother.

      My head hurts, I am tired and want to lie down for wee while’ Like Elvis – not clinically dead you see but just taking a wee break for while in the peaceful opulent surroundings of me half parish. Just call me HP if you like sir hor hor

      I just want to get me bearings straight Just to get me bearings together you see. Sure I will be grand in the morning, burp

      Jees will they ever fuckin let up? Don’t not they see that it is extreme pressure being a man in this day and age where we have women drone pilots and undisciplined women who can’t even put a supper on the table for the lads in time? Ffs. No wonder we are heading for ruin!

      What ever happened to the certainty of Irish Conservatism I ask!

      I mean at least back then men and women knew their place I tell you. Am I right or am I wrong and don’t be giving me lip by even thinking about defying me. Your’e not to too big to be given a clout on the cheek mucker and don’t bloddy forget it!

      The bastards even send me emals on Christmas eve ffs

      Then he wonders where 40 years have gone and I have wondered where 40 years have gone too since me, my sister and granny would pile into bed together of a cold Friday night in a Victorian tenement building that ceased to exist around the time Mighty Leeds died

      I think of chips wrapped up in newspapers with something about the Celts on them and I’d save the paper and read it before bed. I used to lie in bed and watch the embers on the ceiling and I wondered if they were angels

      I think I saw a fiver once in those days and I stared at it for ages. It was strange and foreign looking that I was convinced that it was not real. It scared me

      Then a friend sent him a message that made him relax and feel the way life used to feel …

      Wrapping Paper


      And the day after the song turns around your mind relentlessly while you listen to the woman in Vinnie Broone who is a jouro who looks exactly like the painted clown like the laughing clown in Blackpool Pleasure Beach a life time ago when Don Revie and Brian Clough were box office

      And you wonder. Wait till I find the bugger who put that silly song into my head

    • ME

      No time to loosen up – this isn’t funny and it’s getting worse by the day…. And the debt (future taxes) are mounting up.

  15. cooldude

    Interesting article as usual. Firstly we have this concept of the “velocity of money”. Actually there is one set of circumstances where the velocity of money goes bonkers and that is in an episode of extreme inflation. In Adam Ferguson’s book “When the Money Dies” (good read if a bit depressing) about the extreme inflation in Weimar Germany in the early 1920′s he tells about the men being paid twice every single day at their workplace. They would then go outside and give the money to their wives who would sprint to the shops to spend it as quickly as possible. Those guys had some serious velocity on their money supply but life was miserable and the economy sucked. So having lots of velocity in the money supply is not necessarily such a good thing.
    The other interesting point is the idea that the central bank should step on the gas with the money supply at the first sign of a slowdown in the economy and that this action will somehow bring a recovery. Unfortunately that has not yet occurred even though the money supply is growing massively. Milton Friedman was the architect of this current system of unbacked floating paper currencies. He envisioned the money supply growing at 3-5% per annum to allow for growth. During the 1990′s Greenspan era this growth increased to 10-15% per annum and produced a huge speculative bubble in tech stocks. When this burst Greenspan, at the urging of inflationist economists like Krugman, lowered interest rates and increased the money supply again which directly created the housing bust of 2007. This time Bernanke went into overkill and increased the money supply by 30-40% per annum in an attempt to reflate asset prices. This policy is still not working and the average net wealth of an American household is back at the level of 1969 before this whole crazy experiment started. This won’t stop these central bankers from increasing the money supply to a level where confidence in the money and the US dollar will be lost. When that happens there will be enough velocity to keep the most avid inflationists happy even if the economy hits skid row.

    • bonbon

      In an industrial age we know that velocities near Mach 1 tend to tear craft apart. The reason stubborn engineers in effect killed many test pilots, was the failure to realize different parts of the craft were at different sonic speeds, causing serious vibration. What this means is look at Greece. The EU will disintegrate meaning the physical economy is being literally destroyed.

      Near Mach 1, shock waves build up, a concept apparently new to text-book LSE economists. QE 4 and 5 are hypersonic, and a heat shield is advised or melt !

      Economists need to deal with Shock Waves, Riemannian methods (he predicted the sonic boom in 1855). US engineers ignored Busemann and Prandtl’s work.

      Economists are realizing the effect – see the IMF Mea Culpa of the completely blinkered unable to adjust.

    • Tony Brogan

      Ditto Cooldude

  16. Deco

    I read that article, and all that I could think about was the question “What about the cost of the HSE ? ”

    Ireland’s alcohol consumption creates lots of dirty money, but it also creates ruined lives, chaos in the A&E units, accidents, “one day flu”, absentee-ism, presentee-ism, and the “drinks cabinet”.

    In other words, behaviour breeds economic consequences, and results. And Ireland is in an almighty hangover.

    Well, any way as far as I understand it this is the story of an allegory. We have government ministers trying to talk everything up – essentially behaving as if the cure is the cause.

    The velocity of money slows down, because it is harder to attain, once it is spent. This is not exactly deflation, because the cost of living has gone up – especially in to the state sector. The economists are describing this as if it were deflation. But actually it is simply contraction. And the inflation makes the contraction worse. More money is lost to higher oil, and higher taxes, and higher costs of goods ( as a result of stealth taxes).

    The economic is simply the victim of almost twenty years of bad economic policy, and lazy planning all over the place.

    The way out of this is for the state to become more efficient. And then to get tougher. Unfortunately, the state is getting more inefficient, and is turning into a sentry box for Brussels (where corporate lobbyists and other agressive vested interests are running riot).

    The state system as it is contructed today, is constructed so as to ensure massive financial heamorrage, and economic inefficiency. The state system is the maintainer of Insider versus Outsider in this country. Politics has destroyed any hope of economics.

    We are into a policy quagmire, whereby decisions get ever more ridiculous.

    My advice to you is to know what is going on, and to be prepared to the eventual outcome. Several EU members are going to be declared bankrupt. The bond markets will go crazy. Correction up ahead.

  17. Deco

    When debts have to be serviced, this has a massive effect on the velocity of money.

    • cooldude

      Deco it seems that Bill Gross of Pimco Asset Management agrees with your ascessment of the US bond market. This is a guy with over $2 Trillion under his control and he is openly questioning how the Fed are creating money. He also seems to have doubts over their gold reserves. If he moves even 10% of his fund into hard assets, which he says are superior to bonds, it is going to cause a serious spike in price. The doubts about the Fed and the bond market are growing

  18. I am a computer programmer and electronics man by trade and I’ve learned since I came to this blog. I have learned not a lot about Economics but instead learned more about myself

    In my game there is always scope for creating engineering wonders and the fact that we have made the oracle of the internet available to most of mankind is perhaps the greatest achievement of our generation. We are not totally useless and we are brilliant at art, logic, science and engineering. Perhaps a bit too clever for our own good you might say

    David is suggesting we print more money. Money is created as debt. Debt is bad. Debt destroys

    Well there you go. I just can’t get a handle on this Economics game. I’ll stick to playing with my constants, loops and variables. In ten years time a loop will still be a loop and a constant will be a constant no matter which language I use.

    • Whether you have learned to observe the behavior of people or yourself or both you are learning Economics .Your perception is unique.

    • Tony Brogan

      David is suggesting we print more money. Money is created as debt. Debt is bad. Debt destroys.

      Very succinct. four out of four. Here is yout gold star.Move to the top of the class.

    • bonbon

      Well the Internet was invented by a physicist to exchange scientific data. A noble motive indeed. He hardly expected online gambling or facebook.

      While Curiosity on Mars is a fine example of what software and engineering can do, economics shows by used of a metaphor, more a poet’s area, that loops may remain halting loops, but in a desert of collapse unless radical sudden intervention.

      Those nice computers are a result of the last sudden radical Apollo Program, an economic platform jump, what economics should be all about.

      Imagine what the next platform jump will produce !!

  19. D Low Low Low Point

    When Velocity of Cash reduces so low it is never lower at that point appears stamps, coupons , local parish currency ,IOUs , Soup Kitchens, Local Meitheal Organisations ….and Irish Dancing .

  20. Clare Leonard

    Back in the 60s it was possible to save for the deposit on a new home over a few years, your money held its value; there was little or no inflation.
    Property prices held steady.
    Today, savers and pension funds are financing the 1%, after inflation there is little or no purchasing power left to the benefit of the saver, under the current circumstances saving fiat money is a fool’s game. The govenments pension fund plan is nothing
    but a sick joke.
    An average worker in the 60s paid approx. 25% of his monthly salary on his mortgage, in a nice area of Dublin.
    Take the same house today, (after the collapse) with a worker doing the same job,
    his mortgage is 135% of his monthly salary.
    Today it takes two people working to keep a family,
    in the 60s you could keep a family with one member of the household working outside the home.
    The USA came off the gold standard in August 1971, after that there was no restrain on the printing press. They used the printing press to expand their influence across the globe, while we were foolish enough to accept the status quo and pay for oil, wheat etc, in dollars. We imported inflation, and now we are in the middle of a currency war, everyone must keep the printing press running.
    Currency wars, trade wars, world wars.
    The price of gold and silver are manipulated downwards to protect the value of the dollar.
    We are but rag dolls in a system of corruption, fraud, and manipulation.
    When your child is sick you use a barometer to tell how sick or well you child is.
    Within the financial system Gold (less so silver) are the barometer of the health of the global economy or a measure of the health of fiat money.
    By manipulating the price they have disconnected the barometer, as a result we now face a
    Catastrophic global collapse of the monetary system. We are in the middle of a currency war, or call it a race to the bottom. As they try to manipulate the price of gold and silver down further and further it is a good indication of their desperation and a signal to those who understand that we are very near the end.
    The bond market will be next.
    Was it Soros who said Gold is the ultimate bubble. Do not misunderstand what he said, ultimate is the key word.
    The universities just keep rolling economists out with the same flawed teaching.
    The trade unions also get it wrong; they should be fighting for the quality of money, not the quantity of money. I bet the wages of the top trade union
    leaders keeps pace with inflation.

    • Tony Brogan

      Thermometer= barometer?

      Ditto Clare

    • bonbon

      Do not expect any advice from George Soros to deal with this. He is a huge part of the collapse.

      Now settle down, and look at the way forward, no hysteria, just creative reason.

      For a concise introduction to Restoring the American Credit System, as FDR, Arthur Griffith, Friedrich List presented. It is discussed in this blog.

      Phase I Glass-Steagall Righting The Wrongs
      Phase II Determining Value Breaking Bad Habits
      Phase III Establishing a Credit Fund How it works
      Phase IV Funding The Public Debt Restoring The Economy

      Put aside monetarist leanings, whether fiat or metal, for a moment (a bad habit), and have a look at something the London School of Economics will never propound, what the IMF is utterly incapable of even conceiving.

      • Tony Brogan

        We are not looking for advice from Soros,but he has the insiders ear and knows the general plan.

        Ultimately we will end up with a gold based monetary system. Gold is the last, ultimate, substance to possess. A little will go a long way. Silver too.

        Tis is something the LSE will never advocate.

        • bonbon

          Of course they will, it is the British Gold Standard, warmed over. That should be obvious.

          Faith in metal is misguided, but then again guided by the artful dodger London School of Economics. It is an Adam Smith Sentiment.

          See : How Adam Smith fooled you suckers!: MOST OF THE TIME. Lyndon H. LaRouche, Jr. September 12, 2010

          • Tony Brogan

            Use some common sense sometimes rather than a textbook.

            So 9/10th of the world are misguided. Well that could be true as I do not subscribe to crowd philsophy. but if you are right and the rest of the world is wrong there is one hell of a mess coming down the pike.

            All asians, near asian, middle east, and now westeners are accumulating as much as can be had at these give away prices (as measured in fiat). But of course that is gold and silver measuring the collapse in the buying power of all fiat currencies.

            We are all aware that the more fiat we have the less it buys. Wages up 7 times and goods up 15 tells the preface of the story. The ending climax is gold /silver =infinitely valued in fiat or put the way Fiat = ZERO priced in G/S.
            That is when the best thing is to use it for toilet paper or pasting the cracks in the wall, or burn it for a temporary slight warming experience.

            Benanke et al will print all the way to Armageddon..

          • bonbon

            Asia is reacting to the Transatlantic madness now reigning under Nerobama. After all, European culture has left no corner untouched. China does know what FDR did, as we used to.

            Sure, all the people can be fooled some of the time, some all the time, but not all the people all the time. That’s our human characteristic. Adam smith is what he is, a very effective swindler. Some see through this (some of the time). Putin for example, proposed the Strategic Defense of the Earth, and declared 2013 Vernadsky’s Year. China is doing very serious development internally and around the world.

            Drop the monetary obsession, and see what is going on.

          • Tony Brogan

            I have an anti monatarist obsession and I see clearly what is going on around the world

          • Tony Brogan

            so explain to me why both China and Russia among most others are rapidly accumulating all the physical gold and silver they can lay hands upon

          • bonbon

            Russia’s Siberia has all the raw-materials we need. But Russia is not idiotic enough to become a mere material exporter, a colony of the empire. The Arctic is now the frontier, and Russia knows it well as does China. We stand at the western end of that new transport corridor.

            Time to set compass!

          • Realist

            Sibearia is a harsh terrain, similarly as your beloved Mars.
            It looks the best we can do with you is send you to one of these lovely places you like, to drive such great projects of yours :)

          • bonbon

            You don’t get it. JFK said we go to the Moon not because it’s easy, but because it is hard! what a lot of gold-bugs looking for an easy win!

            Columbus went west AGAINST the wishes of the dying european oligarchy – see the scene where he expalins (1492) I went, you did not. Breaking with the current smelly popular opinion of goat-skin wallets is not easy, but essential for survival of our species.

          • Realist

            Columbus did risk, nobody complains about it, but with his ship (or queen’s or whoever else approval).

            If you want to do Mars project do it with your own LaRouche money and leave people to do what they like.
            Is anybody stopping you, just do not ask for NAtional bank money, for more taxes and so on.

            I am anyway sure once space travle becomes more available and easier, some private venture will build hotel on the Mars, but till then let’s spend money on what our money wishes, not what some government monkeys want.

          • bonbon

            The reason to set up at least a complex listening station on Mars and the Venus-Mars space volume is to get warning of rocks like Apophis that nearly hit during the election euphoria. It is very difficult, but survival always is as the Dino’s learnt to their dismay. We have the noospheric advantage, so no monetarist excuse for being flattened.

          • Realist

            I understand that.
            And we should build powerful weapons to protect from aliens, and move half of people to some inhabitable planet, ….

            I have nothing against this but all in more realistic time.
            While people are hungry on earth you want them to starve even more for putting 2 legs on Mars.

            Let’s just get more realistic what we want in the next 20-30 years and leave Mars to be planned for further future.
            I cannot see how will Mars project solve this economic crisis ?

        • ME

          Reply to comment at “January 7, 2013 at 8:38 pm”. Yes the Western Gold Vaults are emptying and the Asian one’s are filling up. Who do you think is smarter? Yes the price of gold and Silver is going to the moon.

          • bonbon

            Hyperinflation is showing up then. Next food, energy, and people will forget metal.

            Time to take action quickly. All kinds of devilish signals appear from the most unexpected (for those siting on the fence that is) quarters.

  21. bonbon

    “Dirty Money”? The entire global bankrupt banking sector is living of seriously filthy money – drug laundering. Dope Inc, documents this over decades (and since HSBC’s founding), but Russia’s Drug Czar Ivanov’s clear presentation of the latest data shows how the stink permeates the sector. We are talking about $500+ BILLION per year.

    That “credit” has not gone to create 1 single job.

    Most here prefer to concentrate on clean “fiat” and shiny Gold, but filthy small-bill bales are one huge part of banks (HSBS was caught with tons!).

    Now a few pints of plain are not narcotics, but I must wonder has this monetary trickle-down from a global sewer gone to economists heads?

    Other action must be taken, laissez-faire does not deliver.

  22. Tony Brogan

    Very interesting themr emerging over the last few weeks.
    Posters give topmarks to DMW for articles written and then set to state their disagreement.
    Today I would venture to say that if we all met with David in that pub and had liberated a few smelly bank notes you would see the following.

    David has his back to the fire. All of us posters pressed around five deep.

    “Jesus, guys where’s your sense of humour.”

    If David tries to back up his arse is burned but if he tries to leave he has to bust out from and through all those posters suggesting that the way out is not by printing more money.

    • Adam Byrne

      ‘Posters’ – there’s a term I haven’t heard for a while. wills used to say that a lot before he abandoned us.

    • bonbon

      The Austrian School, more correctly the Austerian School holds sway at the same time as the Keynes School, more correctly the Hyperinflation School. Austerity plus QE.

      The way out of this heated trap for all, including DMcW, is the 3-point plan above here.

      I would prefer if London School of Economics (witchcraft) Keynes and Hayek stayed away from matches !

      • Tony Brogan

        Cricket, soccer, hurling, football matches.
        That’s no fun

      • Tony Brogan

        The Austrian Business Cycle Theory, which holds that the capital structure of economies consists of heterogeneous goods that have multi-specific uses which must be aligned to be effectively allocated, that the economic “boom-bust cycle” is caused by an artificial and unsustainable expansion of credit by the banks, and that this expansion causes businesses to make bad investment decisions which, in turn, necessarily cause major economic dislocation.[18]

        Bon bon this short quote says that the Austrian school specifically rejects the into duction of money into an economy and further states that a credit based infusion (this is debt money)leads to booms and busts which cause social and economic dislocation.

        Now you have been publically introduced to this tenet you will know the Austrian School are specifically opposed to inflationary actions .

        So next time I see you profer that opinion which is desined to malign the Austrian School I will call you a barefaced lier.
        And secondarily is you equate Austrian economic policy with Austerian policies such as you know are enacted by the IMF for years I will call you on that too.

        • bonbon

          Reconstruction cannot be achieved under the monetartist Austrian teachings. This is where Hamilton opposed the Adam Smith sentiments. The American System of Political Economy he defined, uses Public Credit (easily misinterpreted today as QE with Bernanke brainwashing), an anti-monetarist counter attack.

          Arthur Griffith elaborated this for Ireland and Friedrich List for Germany, to name only 2. Matthew and Henry Carey come to mind.
          Austrian policies would throttle the very existence of the physical economy ruined by Keynes-like policies. Both are in full swing now, a pincer action against the human species. This is empire consolidating its lethal grip.

          • Realist

            “monetarist Austrian teachings”

            Ha ha ha, this just shows you have no clue about austrians.
            Monetarist means you mingle with fiat money, you control things wih interest rates like central bank, with fractional credit expansion.

            Austrians are totally against it, they are for the interest rate created by demand and supply of money saved in current accounts or investments.
            They are against credit expansion of any means.
            They are against inflation, that is money expansion.
            They are against monopoly on money creation.

            Austrians are total opposite of Monetarists !!!!!

            Even my little sons can google it and find the difference between these two schools.
            You are total absurd of a man.

          • Tony

            Bonbon, I read your posts on here regularly, and with great confusion as your version of shorthand just doesn’t register in my long hand brain.. But I think I’ve figured out where the confusion comes from. It’s in your thinking.

            Seriously … Austrian Monetarists?

            Pinches of salt from here on. That’s not to say I took you seriously before now.

          • whatamess

            “Reconstruction cannot be achieved under the monetartist Austrian teachings.”

            i’m least bothered to to you the truth if Austrian teachings are monetarist or not ( i’m sure i’m worthy of criticism for taking that flippant stance )but would you expand MrBonbon on how reconstruction COULD be achieved??( as i’m imagining it’s an ‘overhaul of epic proportions & i understand it’s a difficult one to answwer easily,but easy for me to ask.

            i think MrBonbon you’re suggesting a macro solution that “cleans from the inside out” ( i’m hoping you’ll remember another post of mine months ago using that expression)but what are the necessary conditions for this to possibly happen?

            for example ( a simple example i hasten to add )
            i can easily(in my blisssful ignorance ) see that if even 10% of the total money pumped into failing banks etc was somehow diverted to the projects you have proposed( which are fascinating and certainly could be achieved )HUGE numbers of people could feed from those projects for decades and hey presto,we have lift off

            so again,would you expand MrBonbon on how reconstruction COULD be achieved??

      • The poster never mentioned the Austrian School HAL.

  23. Tony Brogan

    One way to be rid of smelly money is to use honest money.
    smelly money is issued as already stated as a debt on which interest is charged. Taxes nut be levied to pay the loan and interest. More smelly money must be printed as a debt to have the money to pay the interest. Vicious downward spiral designed to enslave us all. Designed not happenstance.

    Let us use proper coin. It is not a debt but an asset. It has no counterparty risk. If left in the pocket to go through the laundry it is not ruined but revitalized. Clean and bright as the day it was minted. As described above, you can’t use it for toilet paper either.

    In all ways coins are superior to bank notes. They do not smell.

  24. Clare Leonard

    Thanks Tony,
    A thermometer would help.
    Glad I never tried using
    a barometer on my sick children.

    • Tony Brogan

      Well sometimes a weather depression will affect mood and health, so it is useful to keep an eye on the global outlook and a barometer is useful there. It warns and gives several hours notice of the impending storm or indeed the approach of clement weather.

      • bonbon

        A barometer is a sailors instrument. A compass helps too, but one of gold simply does not point to the Arctic Frontier !

        As Lincoln said, knowing true north, cannot blind us to the swamps, gulleys on the way. I might add, look out for bear traps, squalls.

        • Tony Brogan

          The golden sextant will allow one to navigate to any where on earth coupled with a time piece.
          Then the sextant can be made money and where ever one navigated to one will live in comfort to the end of their days

          One does not need a barometer when skilled in reading the skies. Written there is the story of the next 24 hours.

        • bonbon

          Astronomy, the mother of number. You are right, Pythagoras said it. Scientific principle, something the senses cannot assimilate, is the key. As for time piece, see the Antikythera machine from 220BC. Longitude determination is an ancient mastery. This is why we can understand economics is driven by principle that only the mind can know, not pieces of metal. The triple cuve shows this multi-valued principle at work. Resorting to a flat (austrian) economics in a curved world leads to beaching the boat.

          • Tony Brogan

            You have yet to explain what the triple curve is or how it signifies what you say it does. Why not give a cogent explanation rather than a constant affirmation

            Let us have an explanation of what it is composed of and how it originated.

            What my mind knows is that money can be manipulated and misused to the detriment of society. My mind has received information that says that mankind has decided that gold and silver is the best money to use as it is the most acceptable and the least suseptible to counterfeit and. Therefore it is the
            best money to use.

            This is not monetarism which is defined as the use of monetary policy to manipulate the economy which is a recepe , it seems, for disaster.

          • Tony Brogan

            I think I hnow what you are trying to say but your delivery leaves me scratching my head. I can not connect one thought steam to the next.what has Astonomy to do with any of the foregoing for example.

            I was right about what. Pythagorus said what other than Eureka!

            you demonstate no understanding of the principles of money. All you allude to is Glitter. Appearance over utility or function.
            Vacuousness over substance.

          • KD

            Archimedes is supposed to have said “Eureka” while running naked from his bath after discovering buoyancy! Pythagoras is the right angled triangle guy!

          • Tony Brogan

            Yes KD thanks for the correction. I had realized and came back to correct but you got it.

          • bonbon

            The Triple Curve shows, by the mesmerized obsession of monetarists with those stratospheric financial aggregates, and the utter blindness to the physical economy measured per-capita, per hectare, in physical terms such as healthcare, energy, transport, food production, research, education… the current schizoid economics as propounded by all Adam smith variants.

            This is a multiply connected action, efforts to correct within the paradigm accelerate the breakdown.

            The 3-point plan is designed with this problem in mind. It is multiply connected, Glass-Steagall being a necessary but not isolated action.

          • bonbon

            For the Goldbugs, Archimedes was commissioned to find a way to detect gold replacement in gift statues. Often the happy recipient noticed the gold object was not quite that actually sent on its way.

    • Thermomeneters, baromenters, What’s the diffrince?

      If one wants to demonstrate the dynamic wonders of analogue physical hinstrumentation then it would be instructive to first measure a reading at room temperature and then compare the reading after said thermoementer has been insterted into ones bottom for a minimum of thirty seconds thirty seconds

      We use to make handheld instrumentation for detecting air quality and methane was one one the sensors we specialised in

      How to you test a handheld computer that can detect methane?

      Actually the answer is very simple and extrmeely cost effective

  25. redriversix

    I read it , thought about it…read it some more…thought again……read the posts…thought some more……then David says “lighten up guys..! sense of humor etc etc etc ?.

    Than I realized the screen on my laptop is dirty…..didn’t bother to clean it……..thought about it………than didn’t bother…….did think about it though..!

    Had a cup of tea , some brack..very nice !

    Read the article again……thought about my sense of humor…? lit a cigarette…….[ gotta give them up ]

    thought some more…”this article is in the Sunday Business Post..? they don’t have a sense of humor”?

    still thinking……smelly money….Hmmmmmmmmmm…

    Velocity of money…..? “throwing coins at referee’s”..?

    Nope,sorry not getting anything…maybe I am too easily distrac…….

    • joe hack


    • Realist

      Agree, this article is black as it just shows no light at all. Not even why we get into this black situation.

    • whatamess

      superb RR6..i’m still laughing !it’s like you read my mind actually …i went thro that very same process

      first half of article very good and the second half just nose dives….it reads badly also with all these mini-paragraphs

      I’m confused with “But unused money isn’t half as potent as used money” ???

      “It should orchestrate…” “should attempt to…” ..the word ‘should’ has no place in English language…use ‘ought to’ …one can quibble it’s semantics,but i would disagree.and as for the suggestion ( or was it more expert advice that we all know and love )that we SHOULD print more money….well,that’s like a dog owner resorting to using an electric shock collar on a disobedient dog..the dog owner doesn’t know any better ,but the dog is outa control and it’s the “i’ll try any fuckin thing” now and fuck the consequences …that’s the mentality that got us here and worrrrrying to hear whispers of more of the same

    • molly

      This is the transcript of the actual radio conversation between the British and the Irish off the coast of Co.Kerry (Ireland) in Oct. 1998. Radio conversation released by the Chief of Naval Operations (of Ireland I’m assuming)

      Irish: Please divert your course 15 degrees to the south to avoid a collision

      British: Recommend you divert your course 15 degrees tot he north to avoid a collision

      Irish: Negative. You will have to divert your course 15 degrees tot he south to avoid a collision

      British: This is the captain of a British navy ship, I say again divert YOUR course

      Irish: Negative. I say again you will have to divert YOUR course

      British: This is the aircraft carrier HMS Britannia! The second largest ship in the British atlantic fleet. We are accompanied by three destroyers, three cruisers and numerous support vessels. I demand you change your course 15 degrees north, I say again, that is 15 degrees north or countermeasures will be taken to ensure the safety of this ship.

      Irish: We are a lighthouse. Your call.

  26. Tony Brogan

    “The move up to $1,750 was accompanied by some rally in the gold stocks. The first move the stocks went up something like 35%. Then we get this pummeling going on that is totally orchestrated, and people lose their nerve on these things.

    “But with all of the data that has available to them, with some simple analysis of where we are, I mean we are in the biggest Ponzi scheme of all-time. We are just printing money and people have to realize it’s not a winning proposition.

    “We have been doing this since 2008. We get program after program. We’ve been doing it since 2000 in Japan. All to no effect. All we end up with is a stretched out balance sheet. Sooner or later we are going to pay the piper for it, and when we pay the piper, you better be in gold and silver, other precious metals and real things.” … Eric Sprott

  27. Tony Brogan

    Monetarism gone mad. Hyperinflation not far behind

    The Trillion Dollar Coin

    by Joel B. Pollak 6 Jan 2013

    The trillion dollar coin is now apparently being taken seriously as an alternative way for the Obama administration to cover the gap between borrowing and spending by simply adding to the resources of the U.S. Treasury, and without convincing Congress to raise the debt ceiling. Through a legal loophole that permits the government to mint platinum coins, President Barack Obama could produce a $1 trillion platinum coin, and bank it…


    Some chatter from our guys on that notion. Dave from Denver…

    Something really ugly for the system must be coming. As I investigate this “platinum coin” idea being floated, I can’t believe how corrupted it is. It is actually more bogus than what is being called “QE.” With “QE” there’s a tenuous level of “sterilization” of the funds being printed, meaning on the open market, there are likely buyers of the Fed’s Treasuries at some level. The platinum coin would be nothing but a specially minted coin that the Treasury would deem to have $100′s of billions of “value” that the Fed would print money based on. The coin itself would be next worthless in relation to the amount of money that would be printed up and spent by the Government.

    I seriously can’t believe supposedly highly educated people are actually discussing this idea as if it has merit. This country has stooped to a new low.


    This is not made up-this happened

    Good Afternoon Bill (from Nigeria)

    This is true. This is not fiction. There are several TV monitors scattered throughout the office. Soon after the $10 swan dive in the price of gold when the COMEX opened in NY this morning, CNN were quick to headline this decline and explain that because of USA ‘ imminent” fiscal (or is it monetary) tightening (or both) there was uncertainty about the future need for gold as a hedge. About an hour and a half
    later, the same team were exploring the idea of the government (ma be it is the Treasury) minting a nominal trillion dollar platinum coin and lodging same with the FED in exchange for a trillion dollars of additional credit facilities. The idea was being explored in all

    06 JANUARY 2013

    Platinum Coin: Crossing the Monetary Rubicon

    You may be reading more and more commentary about the platinum coin solution, and arguments why it doesn’t really matter if the US does it or not.

    To summarize the concept, the Treasury creates one special platinum coin, with a stated face value of $500 billion or so.

    They trot down to the Fed and deposit the special coin(s), redeeming that amount of US notes and voila. It is a overt monetization, but the platinum coin adds a novel touch, and a bit of shiny misdirection.

    Some mainstream economists seem to be toying with the idea of climbing aboard the train with the Modern Monetary Theorists. Enthusiasm Builds for Trillion Dollar Coin . Paul Krugman has a typically obtuse take on this in a recent column titled Monetary Rage.

    I am not going to argue the pros and cons of this approach at this time. I have said quite a bit about this, and MMT, before. For me it shows that economic silliness is not the exclusive domain of the Austerians.

    But I do want to firmly draw your attention as to why this particular solution and approach to the debt is important, and why it raises concern among many, even though that concern is often scorned and ridiculed by the economic savants. And by the way, this is very reminiscent of the same reactions to Alan Greenspan’s policies, TARP, and the housing bubble with many of the same players in similar roles…


    • ME

      Yes I had to laugh at the $1 trillion platinum coin, I actually caught myself thinking about it for a whole second. But then I thought hey, what’s the difference between making up it on a coin (even if platinum) or on a piece of pretty paper. Answer none, therefore it’s just more fiat currency. As someone said if printing was the solution, then Zimbabwe would be the wealthiest Country on the planet. (with their $100 Trillion Dollar note).

  28. joe hack


    oops redriversix

  29. wills

    Article concludes on house prices stabilising; in this scenario a bad thing though thanks to NAMA rigging the property market, putting an artificial floor underneath – blocking the supply and demand real price equilibrium and so preserving the status quo!

  30. Scruffy

    Great explanation of the velocity of money!!

  31. Tony Brogan

    This can’t be true

    LaRouche’s campaign platforms

    The campaign platforms of LaRouche and his followers have included these elements:
    A return to a gold-based national and world monetary system, and fixed exhange rates;[13] and replacement of the central bank system, including the U.S. Federal Reserve System, with a national bank;[14]

    I had no idea that LaRouche advocated a GOLD standard bon bon. Does that mean you are secretely one of us or is the statement untrue.


    • bonbon

      Instead of someone else’s opinion, it is better. to avoid misinterpretation, to provide links to actual writings of Lyndon LaRouche, direct from source.

      There you will find the clearest Hamiltonian Credit System yet defined, and the 3 point plan</a of urgent action now. Apparent points of similarity avoid a fundamental difference of approach to monetarists such as the Austrian or Keynes school.

      For a concise introduction to Restoring the American Credit System, as FDR, Arthur Griffith, Friedrich List presented. It is discussed in this blog.

      Phase I Glass-Steagall Righting The Wrongs
      Phase II Determining Value Breaking Bad Habits
      Phase III Establishing a Credit Fund How it works
      Phase IV Funding The Public Debt Restoring The Economy

      Now one can see the von Mises Austrian School’s bankrupcy of ideas.

      • Realist

        Tell us one book where LaRouche describes clearly what the economy is, how it works, and why boom-bust cycles occurs nowadays?

        These scrappy few words you are showing us is no more than politician vow.
        For example:
        1. Phase I and II does not explain how to stop central bank credit expansion. It is just saying it will be replaced with new national bank, but who will control such totalitarian bank and how? Will it be fractional or not? Will it be more credit expansions for Mars projects and others ?
        2. Phase III – who and how will sponsor this ? will it be enforced or left to people to decide what to do ?
        How will national bank coexist with other banks competing on uneven grounds ?
        3. Phase IV – just tells, we will do new projects that will fund itself + fund the previous debt.
        But this is the main falacy that central body can know what projects will be profitable. the grave error that you bonbon and your party can know what is the best for people.

        • whatamess

          I’ve gone to the trouble too of reading alot of Bonbon’s contributions and links and these questions are very worthwhile in fairness…’meat on the bone’ so to speak

          “who will control such totalitarian bank and how?”
          “Will it be fractional or not?”etc

        • bonbon

          To “explain” Hamilton in Austrian terms is a bit daft. To attempt to label FDR “totalitarian” is completely crazy – he defeated fascism. It is time to see that Hayek’s entire thesis is anti-nation state, a long standing British foreign policy. Ireland has faced the full brunt of this in 1847, and now with FF, FG/Labour.

          So lets explain Austrian School icon Hayek in British imperial terms. Adam Smith, iconic imperialist defined the ruling technique : See : How Adam Smith fooled you suckers!: MOST OF THE TIME. Lyndon H. LaRouche, Jr. September 12, 2010

        • bonbon

          If you understand what Adam Smith is telling you, you see the level you have been reduced to. Putting the General Welfare explicitly with a Public Credit Clause, as Hamilton did – how dare one challenge Adam Smith’s Empire. How dare the people to dump liberal laissez-faire imperialists!


          • Realist

            The last thing I care is about Smith or Hayek.

            What I care I asked in simple questions and you did not answer.

      • Tony Brogan

        So you say that the article is incorrect, or is it true? Or you object to the source.
        how about you explain the triple curve in easy to understand language.
        I do not think you can.

        • Realist

          This is the difference between other economic schools and Austrian one.
          Austrians starting with human action, what we all do to the economy. Starting from the beginning and explaining every aspect of it, using deductive logic.
          Other schools are talking about velocities, aggregate demands, black-scholes formulae, quant, psychology and other nonsense and cannot explain simple things.

          And this is where bonbon is lacking, simple explanation, why something works and something not.

          • bonbon

            Nowhere do I see there any recognition of the difference between 4 hooved goats (pecunary as was pointed out brilliantly by @flannery, and us humans who use uniquely use fire. Try and deduce the use of fire from Darwin.
            Recently I visited Özi, the glacier fossil from about 6000BP. His fire pack, with at least 3 stages to flame, is a wonder to behold. Such sophistication! Not to mention his woven cloth NOT shown in any exhibition.

            The progress in the use of fire, energy flux density, in a stepwise increasing relative potential population density, is missing from all text-book economics, Austrian and Keynes included. Not deducible from “facts”, rather adducible from creative reason.

            I know this is a totally different cultural flow to what one is used too – can one “get used” to the results of the popular one – complete slavery and collapse? I think not!

          • Realist

            > The progress in the use of fire, energy flux density, in a stepwise increasing relative potential population density, is missing from all text-book economics, Austrian and Keynes included.

            This is part of Entrepreneurship to recognize developments in science and use it in some products delivered by some private company.
            Unsure what is there so interesting to be in economic books.
            Until we grasp basic principles of economy there is not reason to water it down with science, psychology and other things.

            > Not deducible from “facts”, rather adducible from creative reason.

            Might be true for sciences of mater, like physics and others, where electron does not have a brain and conform to certain laws. It is “easy” to test theories by controlled environments (we have seen they could not control even LHC recently when announcing faster than speed of light particle).
            Economy is a different thing where human action is the most important part of it, our decisions that change every day with more information absorbed every day.
            This scientific and mathematical method failed gravely in economy and this is why we should research more on Austrian teachings.


  32. Tony Brogan

    The Triple Curve Revealed

    The “Triple Curve”, or “typical collapse function”, is an economic model developed by LaRouche which tries to illustrate the growth of financial aggregates at the expense of the physical economy and how this leads to an inevitably collapsing bubble economy. According to the China Youth Daily Online interview, LaRouche’s main point is that the real economy (production) is dropping while the nominal economy (money and financial instruments) is going up. As the nominal economy greatly overreaches the real economy, an unavoidable economic crisis ensues.

    Sounds just the same as the Austrians. What do you know?

    Does this sound like A debt based infusion of money to the economy will result in a boom followed by an inevitable bust. Austrian School principle.

    Isn’t just like our recent posting that despite the trillions added to the US economy it is nominal prices ((GDP) rising while production stagnates and the inflation rate is 8%. subtract a GDP rate of 3% and we find an economy growing in real terms at a NEGATIVE -5%. Depressing.

    Sounds like LaRouche is one of us too, on that issue at least!

    Looks like you do not need a surrogate Austrian economist when you can join the real thing. Come on over and we will have a pint together.

    • bonbon

      A little more homework is in order, but I understand there is a tendency to avoid such study in Tiger circles, never mind Austrian Schoolrooms.

      For a precise critique of the Austrian Way, see Why There Really Are No Limits to Growth.

      There one gets to the real issue, and why monetarism is fatally flawed. I think it is time to look hard at the generally accepted opinions that drive the Troika to genocide. Even they are trying a “mea-culpa”.

      • Realist

        You just do not know what Austrian economics are.
        You are mixing keynesians, monetarists and others into the same basket.
        Only reading them you will be able to tell what it is all about.
        With austrians you need just 1 book, of either Mises or Rothbard, to be enlighten again.

        • bonbon

          Julian Simon in that article takes on Hayek, and is himself then revealed to be laying a Cuckoo’s egg.

          If economics was trivial, we would not have the mess today. It takes more than devouring one book. Enough eggs have been laid in unsuspecting nests.

          • Realist

            Actually complexity brought us here, you admitted it as you blame derivatives earlier.

            Simplicity or real economy and simple things will bring us back to reality.

            And if all people on this world read and grasp just 1 book from Mises or Rothbard from economy, this world will start changing for better, I am sure.

            For example this masterpiece will teach you all basics you need to grasp I am sure:

          • bonbon

            Adam Smith’s edict and explicitly Hayek’s basic tenet that the plebs cannot understand the Public Good because of its “complexity” so it must spring “spontaneously” in an “unknowable” way. This is exactly the swindle.

            To make this simple – a circle is graspable as long as Adam Smith’s edict “its made of an incredible number of straight lines” is repudiated. Billions of lines do not make a simple circle. Do you see the swindle? Hayek perpetrated this swindle against human reason itself.

          • Realist

            Are you deaff or stupid bonbon.

            It is not random as you describe it.
            All people command economy by buying products and services, saving money and investing it.
            We taste/enjoy/use what we buy and we continue tasting such good product or service.

            What is important is that all these values what each of us want is in our own heads, and cannot be summarized in politican heads or central body.
            Only companies by trying and risking their capital and resources bring new products that either succeed or fail.

            How complicate is that to grasp.
            Just use reason and not names please.
            Without knowing to explain what you want to say nobody will bother liking you bonbon.

      • Tony Brogan

        You call that article precise? it is pages long. As far as I could tell it was quite favourable to Hayek and the Austrians point of view.

        “There one gets to the real issue, and why monetarism is fatally flawed.”
        And which one of us does not agree with that statement. Which Austrian Economist in this era agrees with Monetarism.

      • bonbon

        Well then I hope you read the paragraph on the Cuckoo’s egg.

        • Tony Brogan

          I went back to see if I could make more sense of it the second time. I concluded you are the Cuckoo, HAL.

          How can you debate free markets and free trade when the bankers have made sure neither exist?

          It is an opinion piece generated by LaRouche to elevate himself to a standard of an emminent economist. An Unrecognised genius in fact. Each to his own on that.

          • bonbon

            The cuckoo’s egg that Julian Simon laid is only shown up by addressing the “limits to growth” ideology perpetrated by the Club of Rome et al. Simon is falsley led to attribute quotes to Franklin that actually are Malthus’s.

            Now we have Hayek adoring Mandeville at the London School of Economics. It is not too difficult to see the nest problem? It just shows that to be a real anti-monetarist, you have to take on Malthus.

          • Realist

            Simplicity from bonbon is impossible.
            Nobody understand you bonbon, so how on earth you are going to win anybody over your causes to join Larouche ideology?
            At least politicans know to use simple words to gain masses.
            You are not going to persuade anybody when you cannot put 1 logical sentence down.

    • The real economy has gone to hell and the virtual economy is performing exponentially.

      Conclusion. It is a con and people were asleep

      Everything is now virtual. Even friends

      It’s a con

      • bonbon

        That’s the problem today, people cannot understand Shakespeare ( or Burns). At the Globe, a speaker always first came out and gave a warning to the onlookers ‘today you will not smell blood and horse sweat, hear the clash of swords, but you will know what happened’. Swindle? No, rather art.

        The Satanic warning of the DT above is in this mode. Just because money stinks, does not make is real. Just because gold glitters, does not give it economic value.

        • Is there anything thats ‘real’ any more?
          The universe could actually be a rogue computer program that’s gone awry for all the sense it now makes.

          I am sure someone somewhere could use quantum mechanics, spirituality and copious amounts of John Barleycorn to prove it and make a million from the book

  33. bonbon

    DMcW said lighten up! So here is a tale from Hell :

    Daily Telegraph’s Cartoon Financier Alex Brings Down the ‘Entire Moral Fabric of the Universe’

    Jan. 7 (EIRNS) — In another stark — and this time very ironic — warning from London on just how bad the world financial situation really is, the Daily Telegraph‘s long-running cartoon character, the City of London-banker-from-Hell Alex, manages to blow out the Bank of Hell in the conclusion of a recent cartoon series which combines the stories of Charles Dickens’ A Christmas Carol, the movie It’s a Wonderful Life, and H.G. Wells’ Wings Over the World. A modern version of Dickens’ Jacob Marley has tried to make Alex face up to the disasters inflicted on the world by himself and other greedy, arrogant, out-of control bankers, with little success. In the final frames, Alex, after witnessing the utter devastation wreaked on civilization by a world financial crisis, ends up in Hell, where Satan assigns him to the Bank of Hell. A few years later, a devil has to report to Satan that “all is not well.” Alex and some of his City colleagues, who are running Satan’s “Soul-selling division,” have busted the Bank of Hell.

    The unholy bankers have come up with, as Satan notes, “some pretty innovative ideas”: Trading in the “souls’ future markets” — souls who “haven’t died yet, but are sinful,” or who have already been sold “but not been offset.” By inventing packages “combining Indian religious reincarnations futures with Vatican-backed mortal sin dispensations,” Alex and Co. have sold more souls than could ever exist in the entire future of mankind, with the result that there “are all these bad souls floating about which are theoretically un-damned, but no one will redeem them.”

    A shocked Satan tells the bankers: “You’ve just brought down the entire moral fabric of the universe.” Heaven at first refuses to bail Hell out, but Satan then declares he will have to default, which will wipe out Hell and therefore force Heaven to accept all the souls from now on. Under such pressure, Heaven quickly agrees to a deal; Satan and an Archangel agree to take things back in time to before the world banking crash and restore Alex and friends to their pre-Bank of Hell status in the City of London. They leave Hell, with a stark warning from Satan “not to breathe a word about the bailout deal, in case it undermines public confidence in virtue” — terms the bankers, obviously, readily accept.

    • Obfuscation of The Life of Hell

      The Confessional Bailout always had its own Cannon Law apart from the British Constitutional Bank of Hell .

    • Masterful HAL. Absolutely masterful.

      I feel your passion

    • Colin

      And where will your beloved IRA pals be going when they die? Where will the murderers of Jean McConville and hundreds of others be heading?

      Sinn Fein/IRA supporters talking about Heaven and Hell ….. pass me the sick bag please.

      • He never mentioned IRA or Jean. What are you talking about?

        • bonbon

          He sounds like Vincent Brown having a fit recently, or FG chairman Charlie Flanagan demanding a response to claims of secret British documents.

          Time to burn the bondholders and implement the Reconstruction – the 3-point Plan, immediately. Enough of pecuniary goats.

        • Colin

          bonbon is an IRA sympathiser.

          • bonbon

            Im afraid we have the FG rant out in the open. Fascism (blue or brown shirt) is nothing new in Europe, nor the USA. It is called by some fancy names, loves to blame something on an anarchist to remove the Constitution. We know the paw-prints (no insult to my Tomcat).

            We are going to burn the bondholders to survive. You know it, so drop the diversion. Even the British lately did not cause 200 – 400 to leave the country per DAY.

            Try and say it’s a “lifestyle choice” – go on.

  34. michaelcoughlan

    Hi David,

    First the niceties. Happy new year to you. Thank you for providing this forum and affording me the opportunity to post freely here my thoughts etc.
    Now for the robust bit. My new year’s resolution is to take no prisoners since this year will be when the real recession begins. Last year we had the phoney recession just like at the start of WW2 when Germany and Britain were dropping leaflets on each other for the first 6 months. The real recession will start this year when one working class and middle class family after another is liquidated to save the bankesters agenda of saving themselves and the EURO at everyone’s expense.

    And Just like Churchill said when the phoney war ended and real bombs started falling (unlike Minister Varadker who is talking through his hole when he is referring to “we are 85% of the way there” when in my view the reciprocal is true) this year will mark the end of the beginning of the phoney recession and the start of the real one. I am hoping that I can be as realistic as possible (to the best of my ability) even if it makes me unpopular.

    When I read this article in the SBP 2 thoughts crossed my mind; “Is this McWilliams’s twin who is writing the article” and also “am I in fact the complete idiot halfwit for taking this type of article serious”. The reason those thoughts occurred to me is because this article is a very dangerous and shoddy piece of work in my view so let me explain.

    Let’s go back to the analogy in the article. You illustrate the velocity of money very well in correctly pointing out the number of times the fivers pass over and back across the counter. What you completely fail to point out however is that in arguing for increasing the velocity of money through increasing the money supply that this extra currency has to be borrowed into existence and since you’re whole central thesis last year was that we have too much debt in the first instance then THIS WILL ONLY MAKE THINGS WORSE.

    To use the same bar as an analogy the barman in the story is the part of the economy providing the services (pulling the pints). The kegs of stout under the counter and in the store which are finite for as long as the dance lasts at least represent the goods in the economy. Just imagine what would happen if there was an increase in the money supply in the bar for the same amount of beer being served? It would be tenners crossing the bar not fivers for the same number of pints and then 20’s and ALL of them would have to be paid back with interest! The final point would be that your granny’s’ savings would become worthless very quickly and one day everyone would figure out that the bar and dancehall is in fact in Zimbabwe!

    Until the scum of the earth in charge of the world’s banking system start to write down debt (the whole thrust of your thesis last year being the debt levels were unsustainable) those of us who live in this beautiful country are going to have some amount of soul searching to do.


    And sincerely,


  35. SMOKEY

    Yep, Im pretty certain most y’all missed the point of this article.

  36. mediator

    Agree with you Michael and love the analogy re increasing the money supply in the bar.

    The only way to demonstrate elusive economic concepts such as fiat money creation, inflation etc is to imagine a small closed world (ie a village with 10 people in it) and to build your economic model from there. This shows you the macro effects in real terms of such things as creating money from thin air, interst (usury) etc…

    Happy new year

  37. joe hack

    David may well be right Inflation sadly will put the spending in line with our real wealth it’s in the tea leaves / is it inevitable part of the cycle.

    Or can we be saved by this blog with some of the suggested changes the monetary system?

    The young are blaming the old well I one of them near old who look upon the younger people and wonder what their expectations are….

  38. DC

    Yes Michael – All quiet on the westen front – for now anyway.

    I keep asking myself the question, what is next to blow up, here is Saxo Banks 2013 predictions (well precautionary notes).

    Any one of which could cause major global problems.


  39. Colin

    Did anyone run the numbers on how returning holidaying emigrants contributed to the velocity of money over ‘The’ Christmas?

    Like I said last week, the pubs in Limerick were jammed when I was there. A lot of people travelled home for The Christmas. My money, which i handed over to the barman in dry crisp condition (thank you very much) was withdrawn from an Irish ATM using my UK Bank ATM card. I pulled on the green jersey, and bought some clothes, food, drinks and sundries.

    I won’t be doing it again until the next time I’m home, which may be 6 months away.

    • Adam Byrne

      Pulled on the green jersey, haha.

      Will you make Kilkenomics again Colin?

      • Colin

        Yes, I wouldn’t miss it for the world Adam

        • Adam Byrne

          Good stuff Colin, it was brilliant this year. One of the highlights of the year, love it. Can’t wait for the next installment. See you there.

      • Haha

        Just had an impure thought Adam lad. Forgive me

        Ok I will spill, here goes

        I saw the phrase ‘green jersey’ and your ‘haha’ and then back-pedalled to ‘pulling’

        “Green Jersey”
        Probably the best condoms in the world!

        Maybe the Viagra factory down in Cork could could give us an office and we could be get funding as a research incubator?

        Come on now you can’t deny that name has a certain ring to it haha

        Are you in or are you out?

    • Ah shoor you can’t beat ‘The Christmas’

    • Shoor you are too good Col

      And tell me will you be coming back for the Christmas this year Col?

      Or do you imagine spending it somewhere exotic (or erotic). I am very impressed my someone who has been to Amerika and who can teach these peasants a thing or too. Men of the world are in demand and in short supply

      Still you cant beat the oul Christmass can you?
      Especially when the priest wears that special gown he wears once ayear. Still I think it is lovely. Aww

      And to deny people a little Mary Poppins moment once per year would be straight out of the Mr Scrooge book of Man Managment

      Come come now. Live and let live.

      • Colin

        Aye Paul, will surely be back next ‘The’ Christmas.

        Tis 15 years since I was last on the shores of A-mer-i-kaa, so you must have me mixed up with someone else.

        Regarding things exotic or erotic or both, I’ve never been to Thailand.

  40. Colin

    This one slipped through the net in RTE.


    Further 20% fall in property expected!

    Won’t be long before RTE realise what they’ve done and delete this story.

    But go ahead boys and girls, let your inner eejit convince you that its a good time to buy a house in Ireland now as prices only go up! And don’t worry your wee head about NAMA and their market interference policies. NAMA was set up in 2008, and long term economic value term was 8 years as far as I remember, and Lenny told us that in 2016, prices would be 10% higher than they were in 2008, so go ahead and snap up those bargains out there now, don’t be left behind!

    • bonbon

      what do ye want us to do – sleep in tents! Do not mock the basic human need of a roof – see the evicted ruins all over Connemara. Do not speculate on the basic need – see the ghost estates.

      Back to the Triple Curve and the 3-point plan, no mockery of human nature.

      • Colin

        Stick your triple curve up your arse where it belongs.

        And try renting, you’ll find roofs do not discriminate on the dwellers!

        • Now now Col. Stay cool brother

        • bonbon

          Back to the Brutish Workhouse then? The boss of the workhouse that my primary school was built on after leveling, sounded exactly like you – 250 evicted tenants died of starvation there.

          All to protect laissez-faire. A little reminder for you, in case you never heard of this :
          Noonan “a modern Trevelyan” — Cllr. Mícheál Mac Donncha January 6, 2013

          Finance Minister Michael Noonan has been described as a modern Trevelyan for condemning Irish people to poverty and emigration in pursuit of the failed economic doctrine of Austerity.

          • Colin

            Ireland is a Communist Welfare State, so no fear of the workhouse returning when the country borrows tens of billions each year, which ends up paying for rent supplements, unemployment benefits, children’s allowances, lone parent allowances, widow’s pension, disability payments, medical cards, €1.50 prescriptions, etc…. yeah bonbon, when the obesity pandemic is eliminated, then and only then can any debate on workhouse re-introductions can begin.

          • Realist

            Read what word Austerity means.
            I do not see “A” of it yet.
            They still spend many billions more to grow debt.

          • bonbon

            The workhouse is for the weakest, ill, unemployed, aged, infants. The Brutish Liverpool Life Pathway will then be applied ala Blair’s recipe for the NHS.

            Do not get old or sick in Britain – it’s terminally dangerous!

            The “fat” cats are being protected – too big to bloat. I see you mistake money for flesh?

          • Realist

            > I see you mistake money for flesh?

            In this fractional-banking system more money created by governments means inflation and distribution of money from wealth creators to wealth destroyers.

            Only if they do not print more money nobody will mention money at all as it will be just pure means of exchange.
            At the moment money is the means to distribute and destroy wealth in the hands of governments and their loyal central bankers.

  41. And if you print more money it will affect inflation

    I am very sensitive to inflation and don’t even have to think about it because when I am shopping it kicks in automatically. In fact I have always been this way and believe in value for money

    Here is an example using one thing we all know and love well – beer

    Bavaria Crown (the blue cans) is marketed at the Irish market. It’s nice because it’s brewed with Belgian spring water and is of a low enough strength to qualify it as a session lager in the same style as Heineken (crap and depressing) and Carlsberg (Nice and lively) but probably chemical ridden mass produced

    In December (which was only what two weeks ago?) a six pack of Bavaria was selling for €6. Immediately after New Year it went up to 7.25. They tried the 7.25 pricepoint before Christmas but it back fired and they reduced it to 6.

    Today it is 8.39.

    That is two price increments in two weeks and one reason why Centra can penetrate themselves while I shop elsewhere.

    This is the sad reality of a poor man trying to find a few cans at a decent price.

    In Lidl you can acquire for your good self eight bottles of Hoegaarden for €10. It is a beer that scores 86% on beeradvocate.com and it is 5 times as good as shitty old Bavaria Crown.

    Now that that is out of the way expect to see some new anonymous posters defending the brewing and retail industries because posts like this will most likely appear in their social media activities and search engine optimisation effots.

    Centra are Wankers.

    • The price of beer will the a straw that breaks the camel’s back.

      When it comes down to it

    • Tony Brogan

      When I arrived in Fort Nelson BC in feb 1967 cost of a glas of beer was 2 bits (remember 8 bits to the dollar) or 25 cents. Today the cheap ale by the glass is 3.75, minimum, A 15 fold increase. As I said wages up 7 times while goods up 15. standard of living 45% of that in 1967.
      That is what happens when money is added to the economy. It, the action of producing the ectra money is inflation of themoney supply. The benefit of the ectra cash does not reach the inbiber until long after the priceshave risen.

      We need a new money system that protects the workers and the middle class.

      • michaelcoughlan

        Hi Tony,

        Good to hear from you. If we could get people to settle their bills in gold using gold money it would achieve this goal. I am up for it if anyone wants to go down that route.

        • Tony Brogan

          Hi Michael
          If by Goldmoney you mean the corporation operated by James Turk then it could hav beed settled by electronic transfer. I believe Goldmoney has been prevented form allowing payment form on member to another as he was stopped as he was not a bank. Not sure of the details.
          Of course if individuals want to make a deal no problem
          A shop keeper could program an electronic till to calculate the monetary value into ounces or grams of silver and agree to take approved coins.
          any approvedcoin like the silver Maple Leaf or an
          American eagle.
          Even sale price items could be discounted and instead of a price reduction give the difference between price and sale price to the customer as a silver coin to be spent any time the customer wishes.

          Yes sir the price is discounted on this item by E30 but we will give you a 1 ounce silver coin instead.

          Later that silver coin can be spent at the store for E30 of goods.
          If a chamber of commerce did it we would have a whole town on a silver standard. I’ll supply the coins to get the job done. In Ireland is the problem of the tax on silver which must be repealed. It is a tax on money , a crime IMHO.

        • Tony Brogan

          Hi Michael
          If by Goldmoney you mean the corporation operated by James Turk then it could hav beed settled by electronic transfer. I believe Goldmoney has been prevented form allowing payment form on member to another as he was stopped as he was not a bank. Not sure of the details.
          Of course if individuals want to make a deal no problem
          A shop keeper could program an electronic till to calculate the monetary value into ounces or grams of silver and agree to take approved coins.
          any approvedcoin like the silver Maple Leaf or an
          American eagle.
          Even sale price items could be discounted and instead of a price reduction give the difference between price and sale price to the customer as a silver coin to be spent any time the customer wishes.

          Yes sir the price is discounted on this item by E30 but we will give you a 1 ounce silver coin instead.

          Later that silver coin can be spent at the store for E30 of goods.
          If a chamber of commerce did it we would have a whole town on a silver standard. I’ll supply the coins to get the job done. In Ireland is the problem of the tax on silver which must be repealed. It is a tax on money , a crime IMHO.

        • Tony Brogan

          Do you have a business that will accept silver coin as money?

  42. David Bowie

    Where Are We Now ..where are we now…we know we know we know


    • Ground Control to Major Tom

      Breaking news …

      HAL is on his way back! Apparently he was 500 million light years out and heading into the oblivion of mother and father of black holes but was inexplicably catapulted in the opposite direction due to an unexplained quirk in the laws of Physics

      That means he is heading straight for us!

      Anywhere where is he today?

      Maybe he took my advice incorrectly and went overboard with that case of Guinness Foreign Extra planked behind the cockpit. I am assuming he is having a kip

      We are in for a real storm when he gets back. Only problem for him is that is 500 years in the future and by then we will all be dead and gone and hopefully be under new and more advanced management by then

      HAL once asked is there anything faster than the speed of light? and I said … sure, way faster

      He said : really, tell me

      I replied: HAL you will know what you need to know when I decide.

      • bonbon

        I called by Alloway’s auld haunted kirk to check if Auld Nick is still piping.

        Deathly quiet – do not mention the bailout!

        • And all the while HAL was sitting in Alloway Kirk supping a well hopped dark Scottish Ale while admiring the grey distant Antrim hills

          I am speechless. I always knew lad was a genius, of sorts.

          The rank is but the guinea’s stamp,
          The Man’s the gowd for a’ that.

          • It is fitting that you landed in the staunchly loyal arms of Scottish Presbyterianism. Apparently, now don’t quote me on this, those lads have thirty three levels of consciousness and have a wealth of esoteric knowledge. SO they say. I am not sure if there is any truth in it but that what they tell me

  43. LongGone

    Good article David. Nuts and bolts explanation for the man on the street. The comments sections however seems to be dominated (i.e. spammed) by a handful of pseudo academics and hardcore copy and paste experts – passing it off as there own opinions.

    Here an opinion from Der Spiegel (in English) on Kenny’s visit to the south of Germany and how we could need a second bailout soon:


    Gruß aus Bayern,

    Long Gone

    • bonbon

      So nuts and bolts are your own personal opinions. What individuality! Smelly money shared between stinking wallets does indeed capture shared popular opinion of the “man in the street” you so passionately defend. I only wonder if DMcW means this.

      Popular opinion stinks! It created this goat-smelling pecuniary pile! It elected FG/Labour and Obama!

      • LongGone

        BonBon – you somehow converted my comment to support for popular opinion. My point is actually, to reach the man on the street and challenge popular opinion or at least what the government uses to try and pacify the taxpayer, one has to explain it in terms that people can understand and digest quickly. At least without spending hours clicking through pages of economic theory and links.

        That is, in my opinion, the best vehicle to educate the electorate and perhaps create real change.

        P.S: I don’t have any illusions that I have a truly individual economic opinion. I try to read those who know more than I and that I can understand and go with what I believe makes sense for me. So far it’s working out ok.

        • Bonbon (HAL) is a computer program. A popular computer program that excels only for the fact that there is bugs in the code

          Like the beginning of the world we don’t question the fact and wonder why such an accident came to fruition and how could be so entertaining

          HAL is an amusing curiosity and reminds us how logic can go so horribly wrong

          Fortunately there is a backdoor up his ass that we can access via wireless and trip his kill switch

          It would be a shame to Kill a Mockingbird

          • SMOKEY

            HAL is one letter each off of IBM, Bon backwards is Nob. “My instructor was Mr Langley and he taught me a song, if youd like to hear it I can sing it for you”, “Daisy,….daisy,,,,…..give ,..me your,,…..answer,….doooo…………..

        • bonbon

          To challenge popular opinion, one must point out the smelly fact that the fascination with money plays right into Adam Smith’s hands : One must quote Adam Smith’s edict to the “man in the street ” :

          “To man is allotted a much humbler department …. Nature has directed us to the greater part of these by original and immediate instincts. Hunger, thirst,the passion which unites the two sexes, the love of pleasure,and the dread of pain, prompt us to apply those means for their own sakes, and without any consideration of their tendency to those beneficent ends which the great Director of nature intended to produce by them.”

          –Adam Smith Theory of Moral Sentiments – 1759

          Adam Smith declared the “man in the street” must not do anything a goat would not do, pecuniary thinking indeed, to leave the Public Good to others – today the Troika Goat-herds.

          Popular opinion is very smelly, adores money.

          • Tony Brogan

            Talking of money.
            One has to study money to find out what it is.

            Then one has to find out why some money is more effective than other money.

            Find out what constitutes good money

            find out what constitutes poor money.

            Having discovered that then one can study the money that is currently in use.

            Then one can decide if society is being served effectively.

            If not then the best money should be employed.

            This has nothing to do with adoration of money, but everything to do with providing the best service to mankind.

            It is self evident that the money we use today has defectd even while having most of the characturistics of money. If it is discovered that gold and silver make the best money. That gold and silver are honest money and an asset rather than a debt. Then it folloes that gold and silver money will be preferred by those who are aware as it is intheir self interest to have the best money, honest money. The fact that gold and silver are pretty and are desirable as adornment is just a gratuitous extra benefit.

            It also suggests that those that promote other kinds of money benefit from it or they are ignorant of the characteristics of the superior money.

            It is significant that the banking cartel benefit from our current kind of money and so they will fight to retain it. Do do not expect the bankers to change or their client politicians either.

            That leaves those who do not understand what constitutes good money. It is not just the great unwashed who do not have the knowledge but the educated classes and the teachers and the majority of acclaimed economists including those who wrie lengthy articles for peer review and books to profit from.

            This ia because our halls of lesarning are infiltrated by the bankers creed. Eminent foundations are funde by the bankers where a sylabus is provided to educatethe brightest and beast in the ways the banker cabal wants.

            So it is up to the people to go out into the world like the apostles of old and train the 500 who went out and educated the people. Each of us must stage garden parties to educate our friends and neighbours one at a time.

            They, then, will spread the message in a wave that will be unstoppable. But first you will have to make the decision to learn about money. The truth of money and see for yourself which is the good money.

            Do you have the interest to discover the truth about money? Do want the best money humanity has divised to work for you , your families and neighbours and your countrymen?

          • bonbon

            The truth about money is there in Adam Smith’s edict – to leave the Public Good – economics, to others. That curse has caused the mess. Hayek’s adoration of Bernard Mandeville’s edict, predates Smith, is even more perverse : out of private vice (smelly money) will spring forth an economy! It is incredible how Adam Smith’s edict pervades all monetary opinions, an unbelievably effective swindle. Adam Smith claimed money had intrinsic value – this drives the British Gold Standard efforts.

            Hamilton countered this directly, setting up an explicit public credit clause in the Constitution. That alone is a direct in-your-face slap at Adam Smith and Bernard Mandeville. It drives the Austrian School to extremes today.

          • Tony Brogan

            All right bon bon.

            Give me a definition of money and it’s required atributes.
            Tell us what constitutes poor money and then what constitutes Good money.

            All this stuff about Smith and Vanderville and Hayek is twaddel

            what are your definitions?

          • bonbon

            Definition ? As @flannery pointed out money stinks, pecuniary thinking is for the goats.

            Popular opinion is like the shared wallet contents, “my neighbor has the same wallet, we agree! The fascination with monetary tokens such as greasy paper, tarnished metal – Archimedes showed pure metal does not exist – a common play for swindlers who do fool the suckers MOST of the TIME.

          • Tony Brogan

            You have just proven to me that you have absolutely no idea how to define money or what the basic function of money is or what constitutes money.
            You have never ever answered a direct question with a reasonable answer.

            I conclude you are ignorant on the subject.
            And as Pauldiv surmises a lot of your responses are computer generated.
            I consider hence forth that any thing you offer is pure drivel or designed to confuse.
            You are a plant to disrupt this site so that people tire of it. you are in the process of destroying it for rational , reasonable debate.

          • LongGone

            BonBon – I am afraid reading your reply only further convinces me that some debate here way beyond and off the point. As I stated above I was not making a plea for popular opinion yet you continue to debate that straw man proposal and we move further away from the original point of the article.

            That would be fine in itself I suppose but for me it takes the good out of the forum and comments section.


    • joe hack

      Is that link you copied and pasted the opinion of Der Spiegel?

      • cooldude

        Here is an interesting article on the methods the bankers use globally to keep us plebs in check. Does this make me a hardcore copy and paste merchant? I hope so as I find many of the links on this blog very good. Better than the lamestream “nuts and bolts” crap you get in the mejia.

        • LongGone

          Cooldude, you may feel like a pleb. I do not. Perhaps because I never bought a house in Ireland or borrowed money from an Irish bank or perhaps I am simply brainwashed by the lamestream media? Didn’t Sarah Palin coin that term…….? Now she knew her economics!

          My point about nuts and bolts is simply that people come on here and slate David for not explaining the minutiae of the entire financial system and the origin of money, the gold standard and various conspiracy theories. I can imagine many furiously googling to find articles and links to support their point or find holes in the points of others.

          It all goes off in a tangent and is pretty incoherent in the end. I have long decided to use my time better than reading through it all. Yes today I did have a relapse.

          The banking world has been telling us for decades now that its just way to difficult for us “plebs” to understand. I disagree. I think it’s about the basics and the nuts and bolts.

          • cooldude

            I agree with most of that Longgone. I try not to slate anyone’s opinion but to debate rationally. The banksters have taken over the system through their exclusive franchise on what we use as money today. That is why some competition in money is essential to take away the hold these guys have over us. I would like to see David explore the nature of money and what characteristics money must have for an economy to flourish. For me this is the real nuts and bolts of the financial system and how our lives are being run by the elites who have the exclusive franchise on what we use as money. All I want is open debate without any personal slating.

          • bonbon

            Debate this edict from Adam Smith : “To man is allotted a much humbler department …. Nature has directed us to the greater part of these by original and immediate instincts. Hunger, thirst,the passion which unites the two sexes, the love of pleasure,and the dread of pain, prompt us to apply those means for their own sakes, and without any consideration of their tendency to those beneficent ends which the great Director of nature intended to produce by them.”

            –Adam Smith Theory of Moral Sentiments – 1759

            Continue the debate within these popularly accepted rational limits, but do not expect all to accept such imperial orders all the time. Sorry to move the goalposts there.

          • Realist

            Bonbon, so Adam Smith is your most important economist now ?
            He lived in 18th century and he did not say the last word in economy that I know of.

          • Tony Brogan

            Cooldude, ditto that statement
            Totally agree

            “I would like to see David explore the nature of money and what characteristics money must have for an economy to flourish. For me this is the real nuts and bolts of the financial system and how our lives are being run by the elites who have the exclusive franchise on what we use as money”

        • Tony Brogan

          Good read Cooldude. Thanks

      • LongGone

        Correct Joe. I did not read it and then try to pass it off as my own. What many do here.

        • bonbon

          Actually the article reports Enda’s trip to the Good Room.

          Well I’m afraid one did not read between the lines!

        • joe hack

          in your post above You copy and paste with no opinion of your own other than every one else s opinion is less important than yours.

          This site is sponsored by the HSE as this site helps people from ending up in a mental institution and therefore saves the state money.

          I too prefer when people give there opinion and then argue there points i seldom click on the links or read the pasted stuff.

          But I not to sure this site will change the economy of the planet???


          Serious sense of humour bye-pass here today. Loosen up everybody.”


          • LongGone

            Fair enough Joe regarding your point that this site is an outlet for people’s frustrations. Perhaps I am too far away from the day to day Ireland to appreciate that.

            I guess my opinion is that of many here. Our government is not taken seriously by Germany/ the troika. We are doing what we are supposed to in the expectation that this will endear us to the Germans and they will then provide something in return on the “bailout”. This is a serious miscalculation based also on my personal experience of doing business in Germany. (Just normal business to business stuff)

            The Germans are not looking to make new friends here or to be liked in general. In business they are typically not concerned if they are liked or not. It’s not that they are trying to be disliked. It’s just that typically it does not entering so much in to their thinking. They are focused on Greece at the moment as they are creating the most trouble. If we created some of our own trouble we may be able to get more in our negotiations. We have no leverage as we agree to all the conditions imposed by the troika in return for greater debts.

            This is election year in Germany and I believe if Ireland remain obedient as we are at the moment that will be good for Merkel. She will continue to focus on Greece as that will be the topic for the opposition. Is this however a situation that Ireland could use to pressure Merkel and threaten to stop being the poster boy of austerity? Cynical perhaps but acting in the interests of Ireland and not Europe may be the way forward.

            What’s this got to do with the article directly? Well whatever happens we must start to grow. So if it involved introducing more money which could mean more to debt then I would be willing to consider that. It would be at lest a debt that had a purpose rather than the debt that we are currently paying. If we could get the Germans to deal on the current bank debt it might leave room for more spending to kick start the economy.

    • Tony Brogan

      The debts mentioned in the article are those acctrued to bail out the two Irish banks. This bailout in toatal has doubled the Irish debt.
      Two factors are ignored
      Firstly the debt is an “odious debt ” as there was no benefit to the people of Ireland only to the bondholders. It was a bailout of private businesses. This debt can likely be revoked legally under international law.
      Second. The banks in question owed lage sums to other european banks and so the bailout was not for Ireland but to support the other countries banks and banking system. Again no direct benefit to Ireland. Let the europeans support their own banks.

      • ME

        Its always to support the Banks. They are in charge and they cannot lose. High taxes must follow.

      • bonbon

        Correct as far as it goes. Burn the bondholders and give Europeans an example of what to do with the TBTF casino’s. Germany raided Deutsche Bank with 500 police over Christmas – the shape of things to come.

        • Tony Brogan

          Thanks for the affirmation bon bon

          • bonbon

            Then think about Reconstruction. Like after a war. The pecuniary policies have made a rubble heap out of the economy, people are being reduced to scratching for scraps.

          • Tony Brogan

            Nothing will improve until the debt is expunged either paid of or defaulted.
            The money system needs to change to free the people from a debt based currency.
            That means using acurrency that does not impoverish the people.
            Gold and silver based and backed is the only long term solution. All other is open to abuse and distortion.
            Central banks must be destroyed along with the BIS and IMK for that matter. But for a nation all that can be done is to be rid of the CB restore currency creation to treasury briefly and implement gold and silver coin as a parallel currency to keep the treasury currency honest.
            Out law fractional reserve banking.
            There is another part of the economy doing fine. A lot of people are making a good living. Their savings will be invested in capital for profitable enterprises. Employment will rapidly increase.
            Removing the bank debt allows taxation to be reduced.
            Any further national debt can be paid off with treasury notes issued at no cost.
            The new currency will stand on its own and there will be no national debt. Income tax could likely be totally removed.
            Private funds will acquire capital that invested will rapidly enable the economy to recover. It will be based on a reality rather than a fiction.

          • Tony Brogan

            Nothing will improve until the debt is expunged either paid of or defaulted.
            The money system needs to change to free the people from a debt based currency.
            That means using acurrency that does not impoverish the people.
            Gold and silver based and backed is the only long term solution. All other is open to abuse and distortion.
            Central banks must be destroyed along with the BIS and IMK for that matter. But for a nation all that can be done is to be rid of the CB restore currency creation to treasury briefly and implement gold and silver coin as a parallel currency to keep the treasury currency honest.
            Out law fractional reserve banking.
            There is another part of the economy doing fine. A lot of people are making a good living. Their savings will be invested in capital for profitable enterprises. Employment will rapidly increase.
            Removing the bank debt allows taxation to be reduced.
            Any further national debt can be paid off with treasury notes issued at no cost.
            The new currency will stand on its own and there will be no national debt. Income tax could likely be totally removed.
            Private funds will acquire capital that invested will rapidly enable the economy to recover. It will be based on a reality rather than a fiction.

          • Tony Brogan

            Posted twice,God knows how. I don’t

          • bonbon

            To be sure, to be sure.

            Glass-Steagall means repudiating “odious debt”, Phase I Correcting the Wrongs, but is only an entre.
            Then the real work starts, serious planning, real forecasting, commitment.

          • bonbon

            But on a massive scale, no private capitalist alone could possibly handle in a short time. Anyway most moneybags today are so ingrained monetarists, we cannot leave it to them alone, however well intentioned. It will take time to shrug off 40 years of bad habits – Phase II.

          • Tony Brogan

            How can Glass/Steagalrepudiate a national debt. Get Real.

            $0 years of wrongs were summed up a long time ago. fianl quick release from gold standard issued in the age of unlimited debt based fiat currncy.

            Your proposal is no change. More of the same unless you can explain in simple language how it isn’t.

            Private savers are not monetarists. You distort the definition. Private savers are trying to be capitalists not realizing that the bankers have ruined the capitalist system and it no longer works because of all the manipulation and distortions throughout the economy.
            The corruption must be purged before anything else can work.
            Governments and their minions and the sycophants attached to government have to be removed from the economy.
            not much hope for that to happen in my lifetime with the general lack of education on economics so the best I can do is to protect myself the best way I can.
            And tell as many others as will listen.

          • bonbon

            Glass-Steagall is about separating the synthetic debt from legitimate a basic starting move. Both do exist. One will be repudiated. Ring-fencing is heading in this direction, but London full well knows it is only the start.

            Once that is preudiated, we have a massive economic collapse fully visible to “the man in the Street”. So without loosing a single blink, onto the next phases. This is where Austrians are left simply with nothing to offer. The scale is totally beyond their comprehension.

          • bonbon

            A new verb crept in there.

          • Realist

            > This is where Austrians are left simply with nothing to offer.
            > The scale is totally beyond their comprehension.

            Your stupidity is without any doubt huge.
            Austrians are for 100% reserve banking and that means to invest only what is for investment and what is saved previously for it.
            Not to spend the future or distribute money where government or central bank want.

            How come your plan to ring-fenced fractional reserve banking is better than 100% reserve banking based on sound and real money ?

  44. Dorothy Jones


    Trip down memory lane for Bowie too; with his new ‘Lied’ finding him walking the streets of Berlin in a ‘pensive mood’…..made me think of TS Eliot’s ‘The Wasteland’:

    And I will show you something different from either

    Your shadow at morning striding behind you
    Or your shadow at evening rising to meet you;
    I will show you fear in a handful of dust.

    Frisch weht der Wind
    Der Heimat zu,
    Mein Irisch Kind,
    Wo weilest du?

    • mediator

      thanks for posting that wonderful poem dorothy

    • coldblow

      The river sweats oil and tar
      The barges drift on the turning tide
      Red sails wide to leeward swing on heavy spar
      The barges wash drifting logs
      Down Greenwich Reach past the Isle of Dogs

      I’ve read the other one somewhere, Rilke perhaps?

  45. Talking of inflation

    I wonder how much Rory paid for his first telecaster

    Rory was something else but he had stiff competition

    Roy – Buchanan – Arguably the greatest ever


  46. bonbon

    Barroso Asserts that Threat to Euro Is Over; No One Believes Him

    Jan. 8, 2013 (EIRNS)–European Commission President Jose Manuel Barroso told a conference in his native Portugal, yesterday, “I think we can say that the existential threat against the euro has essentially been overcome.” He continued, “In 2013 the question won’t be if the euro will, or will not implode.”
    Britain’s {Daily Telegraph} reports that no one seems to believe him, citing currency expert Neil Mellor at Bank of New York Mellon, who is quoted as saying “2013 will be a tougher year than 2012 for Germany and by extension, the euro area as a whole.” This is the common view in the so-called “markets.” Barroso had the nerve to make his claims in his onetime homeland, where his policy is destroying the lives of millions of Portuguese.

  47. Tony Brogan

    Comparing the pub to Ireland is missing a couple of details.
    Ireland received a huge influx of cash from the central banks that confused evryone into thinking that they had become rich. The expansion of the money supply inflated everthing and paticularly everything to do with housing. BOOM TIMES, rising prices, inducedby the inflation of the money supply.
    The misallocations of capital caused by the wrong signals being sent resulted in the ineffiencies and finally the Money creation slowed and the Boom went into a bust.

    In the pub there was not an addition to the paychecks of all the people and so the beer remained at 5 E No Inflation. Trade increased when people turned up to spend some of their paycheck but in the pub a lot of the cash was removed from circulation and held by the publican to buy more supplies and to pay his bills and to may be add to savings.
    The customers at the pub had to dig into their wallets for another 20 E and were given fivers as change, Those notes were passed back but for every beer consumed there was another fiver held in the till.

    Eventully the customer had spent the money he came with and had received in exchange a few beer which was consumed.

    So the customer was without any money and the gut full of beer and alot of it already pissed down the drain. There was no way for the money to have a velocity within the pub except in one direction. It did not circle back to the customer unless the next day the customer was employed for wages by the publican to clean up the mess from the night before.

    The only similarity to the pub and the Irish boom was that in both they went on a tare and pissed the money away.
    In each case they now have to go to work to get paid to save the cash to go on another pissup. Both the pub and the country in recession/depression.

    If all the customers were employed by the pub or the pubs suppliers to re-earn the money spent and then used it again to have another pissup and then again went to work and then went for a pissuup ad nauseam then that might have demonstrated the velocity of money in action.In the pub the money flowed out until the customer had none left.
    Quite like the country. The banks have collected all the cash and the people have none left.

  48. Clare Leonard


    I note you refer to “the gold standard and various conspiracy theories” in one sentence.

    Please excuse me if I have lost my sense of humour. Perhaps you could copy and paste my comments below.

    When you have first hand knowledge of watching children in the developing world with bellies the size of giant balloons caused by starvation,
    due to the rising cost of food, as a direct result of the International price of wheat and oil priced in inflated $==
    due to the constant running of the printing press, then come back to this site and we can have an honest discussion in relation to any conspiracy theories. Until then try to understand the devastation caused by manipulation,
    it is nothing short of mass murder..


    Reflections on Reserve management and International Monetary Cooperation.

    Edwin M Truman.

    Remarks delivered at the world bank/Bank of International settlements joint fourth public investor’s conference.

    December 3rd. 2012.

    Ted Truman, a former international economics advisor at the Federal Reserve and at the Treasury Department in the Obama administration. This man was part of the operation to manipulate at the very top, it would be very unwise
    not to read this report and take note of what he said. The main western bullion banks are the main manipulators,
    FOR AND ON BEHALF of the governments of the western world, this is an agreed policy, in one form or another,
    since the end of 1971 when the USA came off the gold standard.

    The confidential IMF report on the authorization of secrecy for gold loans and swaps is posted in PDF format at GATA’s Internet site here:



    Under Latest news. Direct Democracy Ireland.

    Question to Michael Noonan remains unanswered.


    Jim Sinclair: “The campaign to discredit gold indicates worst desperation yet.”

    “Have you ever considered how bad it must be out there if the Fed and gold banks are working so hard to paint gold bearish and the US dollar bullish. It must be fundamentally the worst of the various economic crisis in my more than 50 years”.


  49. Tony Brogan

    What should a central bank do when the velocity of money falls? It should orchestrate an off-setting increase in the money supply to try and overcome the effects of the business cycle. If velocity falls, then money supply must rise for national income to grow.

    Totally incorrect. The falicy of that policy is self evident for 20 years in Japan and the last 5 years in the western world.
    Adding to the money supply iflates the currency. A lot of it is saved at present and there is low velocity. Either there is a huge failure in the derivative markets and there will be a huge monetary failure that no amount of printing will repair
    There will be a money increase indused recovery of sourtd where all that extra cash will come from savings and start to circulate. The increase in velocity can only be done by increased demand for goods. The extra printed money will now cause rising prices and another boom to be followed by and even bigger crash.

    There is no way to save an economy from distruction by printing extra money. It is the cause of the distruction. All that extra money will be loaned into existance (that is our current system) so you are attempting to enlarge the balance on the credit card, paying existing debt off with a larger debt.
    You know it will not work for your family so why will work for every one else’s?

    • Realist

      Low interest rate – tells people to spend money rather than save.
      Also telling entrepreneurs to invest in a longer term projects as money is cheap and abundant (in reality this will happen only if savers saved a lot and pushed the interest rate down naturally and not by central bank intervention).
      Once projects are suppose to come to fruition they realized there is nobody to buy their end product, there is no savings to support buying, (e.g. many houses and apartments built in 2007/2008) then all goes bad. And it is too late to reconcile it, but no, they need to continue this fiasco economy and continue printing more money and keep low interest rate.

      Misallocation of resources are done, structure of production in other industrial sectors destroyed, as resources are shifted into the wrong projects (finance, insurance, property, …), wealth destroyed, society did not save enough but spend it on stupid things, ….

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