July 16, 2015

We best get working on a Plan B as the next recession will kill the euro

Posted in Irish Independent · 112 comments ·

The euro is one recession away from implosion and its architects know this. The next time the European economy slows down, this thing will blow apart. Indeed, it might not necessarily need a continent-wide downturn for the next fracture.


We, in Ireland, should be prepared for this eventuality.


Before we discuss the economics and politics of the past few days, let’s examine the appalling management of the euro system. Remember this is a currency with aspirations of replacing the dollar as the world’s number one means of payment.

You wouldn’t run a corner shop the way these bureaucrats try to run the currency. Have you ever seen a worse management style than staying up half the night to make mega-decisions at dawn? If the board and management of a public company dealt with problems like this, the share price would collapse. There is quite simply no corporate governance within the euro; the way the system arrives at decisions is both laughable and terrifying.

Consider the bizarre suggestion tabled last Sunday that the Greeks should have a temporary euro “until we see where we are”. Was this a joke? It was in fact proposed at the 11th hour.

Make no mistake about it, Greece was politically crucified on Monday and this grisly spectacle was cheered on by our own Pharisee political class. In true Biblical fashion, after his surprise Palm Sunday triumph last weekend, Tsipras found himself isolated, alone and impaled by Friday without even a thieving Barabbas for company.

The crucifier, Germany, is now clearly out of control, but who is going to rein the Germans in?

In the old days, France used to be strong enough to stand up to the Germans but this is not the case any longer. France is enfeebled and its president has neither the credibility of Mitterand or Chirac nor the chutzpah of Sarkozy.

The British, who were also an extremely cussed counterweight to Germany, are now on their way out of the club. They can’t be bothered. Britain may leave the EU at the mercy of the Germans and, believe me, the smaller EU countries will come to miss the Brits and their stubborn but oddly principled scepticism.

This weekend in Brussels we saw a Teutonic kangaroo court dressed up as European diplomacy and it simply reinforces the position of the Eurosceptics in the UK ahead of their referendum. When/if the British go, others will too.

A reasonably successful Britain outside the EU will prove to lots of others that the Swiss/Norwegian/British approach – trading freely in a growing global economy – is a lot more pleasant than being a ward of Germany.

Look at Greece. It was given conditions that it simply couldn’t meet and remain sovereign. This is the new reality. This is the implication of German rule. It seems to me that German financial vindictiveness was in response to the Greek electorate having voted No in the referendum. If this interpretation is accurate, we should all be scared, very scared indeed.

When economic negotiations stop making economic sense, you should begin to question the motives of the EU.

So for example, how could the Greeks, or anyone who understands the basics of a broken balance sheet, accept the German insistence that the Greeks hive off €50bn of State assets, put them off-shore and sell them to the first vulture fund that rocks up? How can such financial nihilism make the balance sheet better?

Explain to me how selling valuable assets at a deep discount in order to pay worthless liabilities at a steep premium can improve the balance sheet?

Now let’s consider the deal itself. It leaves Greece humiliated and with no autonomy. How much more will the economy contract? And when the economy shrinks, what happens to politics in Greece? Does it shift to the Left or Right? One thing is clear, it will hardly return to the centre.

We know that the economy has shrunk every time there has been a bout of austerity and we know that every time it shrinks there is a move to the Left and the Right. Remember Syriza is the consequence not the cause of Greece’s problems.

Greece’s problems – like those of Italy, Spain and Portugal – stem from decades of mismanagement and borrowing in the periphery and years of complacency and reckless lending from creditors.

This brings us to what happens next on the periphery.

Five years ago when the inflexible Trichet was at the helm of the ECB, I was sure the euro was on the verge of collapse. I was wrong because his successor Mario Draghi, sensing that the system was about to implode, started printing money and buying up the IOUs of the peripheral countries. He did this with German blessing because the Germans understood that although it can bully Greece, Italy and Spain are a different matter.

Draghi and Merkel maintained the line that the euro was forever.

This line has now shifted dramatically. The euro is now officially conditional. Countries that don’t play ball with Germany will see their banking system used against their democratically elected politicians. The banking system is the soft underbelly and the Germans are prepared to orchestrate bank runs in member states to get their way. This is not only new, it is outrageous.

Italy, Spain and Portugal are next. They all have enormous debts, deficits, insufficient growth and mass unemployment. They can’t compete with the Germans – they don’t have the industrial strength – and as a result, their living standards are rented not earned.

They are large versions of Greece.

The financial markets now know that the euro is conditional and understand that there is a significant political groundswell in Germany to push countries out if needs be.

If central bank support for bonds of quasi-bankrupt countries that can’t even balance their books day-to-day are conditional, then why hold them?

The next time there is a slowdown in Europe, all these factors could come together in a perfect storm.

In addition, with the British on their way out, the world will ask who is next? The world will be looking at us.

What happens here, if all this happens when rates are rising because the overheating German domestic market demands it? Would you want to be a tracker mortgage holder in these circumstances?

What do we do then? Will we be stranded in the mire of groupthink or will we use the next few months to come up with a Plan B?

  1. Brizey

    Good article. Our politicians won’t come up with a Plan B and will be surprised when the end of the Euro happens though. I was disgusted by what happened on Monday morning. Germany taking over Europe once again.

  2. pat.valleymills@gmail.com

    Any Suggestion for Plan B David. Maybe go back to that link with GBP

    • Con Burke

      Aye. Our plan B should be Plan Britain. Bring back the punt. Tie it to the GBP. Shared EU and economic policies. Stronger trade relations. lETS get into bed with the Brits.

      Britain would also be stronger with us as a strong partner.

      (Cue battle cries from the ’800 year’ brigade).

      • EugeneN

        There is no need to tie to Britain. Float.

        Britain is an interest rate increase away from a massive housing collapse.

        • No need to tie a national currency to anything. It is an artificial prop of dependency for the weaker partner who is permanently resigned to malinvestment as the stronger economy dominates.
          Being independent is not easy. All else is serfdom or slavery.

      • Deco

        Britain is now in the process of getting serious about both debt, and growth. It is obvious that the Lib Dems would not do anything that would move Britain away from Eurosclerosis.

        Osborne’s policy framework suggests that he is even prepared to tolerate house prices dropping in favour of improved British productivity. Compare that to the clowns in Leinster House, who are running the Irish economy for the sake of AIB’s balance sheet, and saving the blushes of cowboys like Suds, and IFSC lobbyist in chief, John Bruton.


    In a mean abode on the Skankill Road
    Lived a man named William Bloat;
    He had a wife, the curse of his life,
    Who continually got his goat.
    So one day at dawn, with her nightdress on

    He cut her bloody throat.
    With a razor gash he settled her hash
    Oh never was crime so quick
    But the constant drip on the pillowslip
    Of her lifeblood made him sick.
    And the pool of gore on the bedroom floor
    Grew clotted, cold, and thick.

    And yet he was glad he had done what he had
    When she lay there stiff and still
    But a sudden awe of the angry law
    gave his soul an icy chill.
    So to end the fun so well begun
    He resolved himself to kill.

    He grabbed the sheet from the wife’s cold feet
    And twisted it into rope
    And he hanged himself from the pantry shelf,
    ‘Twas an easy end, let’s hope.
    And with his latest breath before his death,
    He solemnly cursed the Pope.

    But the strangest turn to the whole concern
    Is only just beginning.
    As he went to Hell but his wife got well
    And she’s still alive and sinnin’,
    For the razor blade, twas German made,
    But the sheet was Irish linen.

  4. Colm MacDonncha

    How are things meant to improve for the Greeks as the noose tightens? Maybe we’ll see a mass refusal on behalf of the Greek nation to comply with their Teutonic overlords. Don’t forget that it was in Greece that democracy was born,they were the only Southern European nation to successfully resist the Nazis and hopefully they will be the keystone from which the Fourth Reich will be dismantled.

  5. DC

    On the day Greece surrendered its sovereignty.

    David Stockman paints the true picture – read more than once, you’ll get a lesson in Euro history and a glimpse of the future!


    • Sovereignty was surrendered the day the country opted for the joint currency. We have witnessed the result of such a surrender made manifest this last week or two.
      No country should use another’s currency if it wishes to remain independent.

  6. contact23

    Someone is on holidays? 7 posts in no Adam , losing your edge….

  7. Original-Ed

    Does this not explain the reason behind the German behaviour.

    Kathimerini, the Greek daily

    “It is not only that our EU partners are angry about our lying to them (and to ourselves) about the state of our finances, nor is it only that they will have to help us politically or economically (or both), but there is also the rather damning fact that in many aspects the Greeks enjoy a more privileged life than their German partners in the EU. Through all this borrowing, Greek salaries and pensions rose far above (about 30 percent) Greek productivity. This means that even if salaries in many cases (though not all) were still lower than the German equivalent, pensions were higher, and usually paid at an earlier age. So there is no longer a feeling of the richer EU countries helping their poorer partners – Greece’s mess comes across as exploitation of the underprivileged by the pampered.”

    • Deco

      Well, that does sound familiar.

      I know a country where that was tried ten years ago.

      And guess what – the current politicians are doing it all over again, in an effort to buy the next general election. Howlin seems determined to buy enough votes to ensure that the LP stays unassailable to the more transparency minded Social Democrat/Shortall list.

  8. savagepeter

    Did we have a Plan A?

    • Mike Lucey

      Yes there was a ‘pLan A’, it was play ball with the bankers, bondholders and central banks and at the same time line up the cushy jobs in the EU ….. Oh! …… that ‘Plan A’ was for the establishment politicos and their pals. No, there was never a ‘Plan A’ for ordinary folks.

      David Stockman points out a forgotten workable system here,

      “In the instant case, the doomsday machine is the Euro and, more precisely the rogue central bank in Frankfurt that stands behind it. In fact, the real ill is not a common currency per se—-something that Europe actually had on a de facto basis before 1914 under the fixed exchange rates of the gold standard. The latter, in effect, was a common currency because French francs, British sterling, Dutch guilders and the rest were interchangeable at a constant rate—-an arrangement which helped produce a multi-decade spurt of prosperity that the old continent has not seen before or since.”

      We should just get back to what worked, ‘fixed exchange rates of the gold standard’ maybe with some mod tech involvement and stop playing around with fire.

  9. CorkPlasticPaddy

    Our crowd couldn’t organise ‘a piss up in a brewery on a Saturday night’, period!!!

    • Deco

      …unless they got instructions to do so, from Brussels, or the ECB.

      In which case, they would stay drunk (and delusional) for years afterwards.

  10. DB4545

    Good article David. But why look at Greece when unsettling truths are closer to home? You question the sanity of selling valuable assets at a deep discount in order to pay worthless liabilities at a steep premium? Topaz has a estimated valuation of 400 million Euro. It was sold for 160 million by Nama to a very large elephant in the room. Close to a quarter of a billion Euro of Irish taxpayers money handed over with the same business ethics as the tobacco sellers of Moore street. I’m no economist but I’d call that a deep discount.Puzzling that it’s mostly Independents like Catherine Murphy and Mick Wallace who are asking awkward questions.

    We hand over close to 650 million Euro of taxpayers money (which we borrow and pay interest on) for direct foreign aid to NGO’s. Some of this taxpayer cash helps to fund the lifestyles of the wastrel children of the well connected so they can snort coke off expensive 4 wheel drives and employ maids for peanuts until a suitable position is found in a Semi-State. Some might call that a worthless liability.

    But I digress. Our nearest neighbours who are the ultimate pragmatists are strangely silent in relation to our Teutonic friends.Is it the calm before a perfect storm?


    • Reality Check

      +1 DB4545 and As regards the “Charity industry” in this country; Starve the beast – give them F-all.

      • DB4545

        Reality Check

        We’re moving slightly off topic. Nobody with any decency would deny people in need. If only that’s where it ended up. Check the admin v cash intake of some of them and you probably won’t be surprised. A close relative worked for a well known one and left in disgust. 10K cash in brown envelopes being handed out at Christmas p**s-ups for the higher echelon and that was the early 1990′s. Thorough ongoing audits should be mandatory for any receiving charity donations or taxpayers money. It should be a major concern for anyone handing over cash to these outfits.


        • Reality Check

          I know what you mean DB, I wouldn’t deny people in need either – give directly if needs be, avoid the middlemen.

          Starve the Beast; remember there is no charity “scam” industry in socialist Denmark like there is here.

          No more money for scammers end of.

  11. The Great German Game is now exposed. Whether conscious or not,the weaker economies of Europa were taken hostage, fed cheap credit to rescue the moribund re-unified German economy, then exposed to Germanic economic psychoses. Angela Merkel is a ‘physicist’, presumably her studies stopped at Newton’s Apple, so simplistic is her analysis of Money, stripping it of it’s Quantum Reality as Social Glue, a human construct of language, culture & tradition and insisting that it complies to the dictates of German psuedo-mathematical German logic about ‘sound money’.

    Germany either failed to do Due Diligence before ‘inviting’ the Greek Trojan Horse into Europa, or they fully understood the culture was incompatible, as was the fluid social construct of ‘money’ that the Drachma represented. They just didn’t care, so arrogant were they in their role as Neu Illuminati as Fintan O’Toole pithly labels them.

    There is no Plan B without a new currency, not for Greece or for Ireland. Ireland had it’s chance to stand up to German bullies, but chose to cower before Lisbon 2. The Greeks had the bollix to defy their new Overlords in a referendum but were quickly told that their deomocracy is now defunct. If the Irish had rejected Lisbon a second time, the Iron Fist inside the velvet glove of Solidarity & Subsidiarity would have been revealed then. In this outrageous expnansionism of German power through corrupt German finance and governence, the European continent must once again look to the British (and the Danes) to restore order. The Dutch & The French collaborated blatantly with the last psychoses, but the Danes resisted, as did the Greeks. And the Brits. Of course, there are voices of resistance in Germany, France, the Netherlands and elsewhere but it is once again the manifest destiny of this Isle of Wonder to stand up to #BanksNotTanks Unfortunately, the clowns Cameron & Osborne are hardly Churchillian in their ludicrous contortions. They have opened Pandora’s Box by allowing a #Brexit referendum in 2017.

    William Hague, former UK Foreign Secretary famously described membership of the Euro for weaker countries as equivalent to “”a burning building with no exits” He has been proved prescient beyond UKIP’s dreams. And Gordon Brown saved the UK from Tony Blair’s delusional Europhilia by insisting on the impossible 5 Treasury Tests before surrendering Sovereignty to foreign powers. Those tests could never be met. Clever stuff.

    Here’s the likely Euro End-Game:

    Greece is immolated by Schauble’s fanaticism.

    Germany has to raise bond rates to re-assure markets, interest rate contagion spreads, ending ZIRP as feral footloose international Capital scents blood.

    Germany doesn’t care about this, so leaves the remaining ‘PIGS’ and Ireland (Sicily In The Rain) to save themselves, which is beyond their power whilst trapped in the ECB burning building.

    In Ireland, the implications of what the ‘republican’ parties have done by surrending the currency finally are recognised and then the tumult begins, despite the incessant propaganda efforts of EU/ECB apparatchiks in the Irish media. Ex-Taoiseach Bruton is particularly hysterical in his insistence that the Illuminati be trusted, just as previous Taoiseach’s of the doomed 1st Irish Republic fawned before foreign Cardinals of another bizarre Faith-based sect.Faithonomics, I believe Paul Krugman has labelled this absurd German Hard Money Cult. The ‘Irish Mind’ reels at it all, not understanding why the Germans have buggered them just as ruthlessly as the Roman Christian Brothers and the British Empire before the XXX finale of getting into bed with Germany ended up with yet another traumatic episode of national humiliation.

    #NoCurrencyNoCountry #NoCurrencyNoCulture

    There is no Plan B. You can only plan if you are in control of your destiny. Ireland is now a slave-state, a satrapy, a debt-servicing client state. But Greece isn’t any such thing, it cannot be, as the culture that produced Kazantzakis makes this impossible. People wonder why Tsipras ‘capitulated’. He did no such thing, he worked within the mandate the refendum gave him. Now he will let Schauble go beserk and await the inevitable 4th Bailout & Collapse. Then he (or others in Golden Dawn) will return to the populace and ask for a mandate to leave the Euro, EU and demand Nazi reparations and the return of stolen gold. A war with FYI Macedonia and/or Turkey/Cyprus is baked into the cake if Syriza are usurped by the fascists. And one the ‘real’ IRA realise what the antics of FF/FG mean to the possibility of a United Ireland, you can expect mayhem on the island of Ireland as well.

    Finally, you can expect uproar in Germany as the 70 year project of escaping the tanks to become reviled for banks collapses, which opens up the whole ‘Sixteen Lands Of Deutschland’ debate. Similar mayhem in Italy (Po to Palermo) and Spain (Basque, Catalan, etc) brings the realisation to many that the attempt to force monetary union without fiscal and political union didn’t bring about a solution to Europe’s historical problems, but merely opened up another, possibly final episode in the interminable drama of “what do we do about Germany?” I wonder what Ralf Hutter makes of it all…

    I will be standing on the caldera of Santorini in a few days, looking out to see if the traffic in luxury yachts is grinding to a halt, as a proxy for the shipping index. If Santorini cannot keep itself in the style to which it has beome accustomed, then we know that the world is surely ending! *rollseyes*

    Autofiction: ‘AndrewGMooney’

    • Deco

      You are correct about the Iron Fist, Velvet Glove. It perfectly describes the EU.

      Freebies via political families, and cronies on the outside.

      Extortion, theft, corruption and scams behind it.

  12. McCawber

    I’m all for having a Plan B.
    But I’d much prefer that we had the right Plan A.
    There is far too much Germanphobia about.
    The Germans will do what they’ve always done.
    IE Be efficient hard working etc etc.
    It’s up to us to match or better them.
    That means getting our house in order and keeping it there.
    That means living within our means and getting our borrowing down.
    That means being responsible.

    • savagepeter

      “let’s sign up to what Merkel wants, “more Europe,” well what does that mean? … It assumes that the whole world can work as Germany, which is basically a giant exporter that runs a permanent surplus against the rest of the world. This is madness. You can’t run a permanent surplus. Somebody has to be importing for somebody to be exporting. Who’s going to buy all those BMWs? We can’t all export to Mars” ……Mark Blyth

    • DB4545


      Germanphobia.A joke that does the rounds in Israel born of bitter experience.

      Two Jews are facing a Nazi firing squad.

      Abraham says “F**k this David I’m not putting up with this s**t any longer I’m going to complain to that nice Officer in charge”.

      David says “Please Abraham I don’t want any trouble”.”


      • DB4545

        Or to put it another way blessed are the troublemakers because the meek will become ash in ovens.

        • michaelcoughlan

          Spot on!

          Better to be ash in a burned out tank fighting back!


          • DB4545

            Or as Moshe Dayan said “If I lose this war I’ll start another one in my wife’s name”. I hope that’s what the Greeks have in mind.

    • Daithi7

      I couldn’t have put it better myself. There is far too much German bashing going on. Whether we use the Euro or any other currency as a means to trade goods and services is totally secondary to the fact that we have to be productive, innovative, thrifty and live within our means. I mean that is the first principle.

      I totally agree with David, the Euro has been shown to be potentially fragile, so yes Ireland Inc, and specifically the dept of finance, central bank & other organs of the state need to have that plan ready to roll if necessary but not so obvious perhaps that it could become a self fulfilling reality.

      And I also agree that it’s far more important to have a fully functioning plan A. Why? Well because just 5 years ago Ireland was a complete and total economic meltdown zone. Now 5 years on, within the Euro, we have economic growth, increasing employment, reducing unemployment, increasing investment and a national balance sheet that has stabilised and approaching a balanced budget position. This was done within the Euro zone, benefitting from low interest rates, QE, peripheral bond buying and a weak currency v the USD & Stg. I’m not saying for a second that all is even nearly perfect, is not but if someone can prove to me that we’d be better off having defaulted, fallen out of the Euro, having a punt nua, crippling interest rates and being exposed to the full vagaries of speculative international money markets on a daily basis then I’ll be both enlightened and astonished….

      • savagepeter

        We export to the US and the UK, we are growing because the Euro has fallen in value relative to the dollar and Sterling.

        If there is a slow down in the UK or USA we will also slow down.

      • Pat Flannery

        Thank you Daithi7. I agree.

      • DB4545


        I don’t know if you’re taking the p**s or work in government PR or both. Our real estate is now owned by foreign vulture funds via REITs the structure of which make the 18th century British landlord system seem charitable. Taxpayer assets are being plundered and being handed over wholesale to robber barons via an apparently unaccountable vehicle called the Nation Assets Mismanagement Agency.Another lost generation has been scattered to the four corners of the earth. The generation that remain have moved from being property owners to renters. Do you think that’ll build a stable democracy? Maybe you have a point about the water supply because whatever part of the Country you’re drinking it in it appears to have been laced with hallucinogens. Skip the blue sky thinking shite and come back down to earth. We may believe in fairies but we deal with and in pigs.


        • Daithi7

          Ah jeez Db,

          I know it’s easier to be a doomsayer, I know it’s easier to see the glass half full but will you not at least acknowledge the country is in a much better place than 2010??

          And if you can do that, will you not critically examine if the Euro and being part of the Eurozone from 2010 to 2015 had served Ireland well?! Cos I think it has served Ireland really well over that period.

          Let’s compare not being in the Euro to say being pegged to sterling from 2010-2015 will we? As I see it this would have worked out 1 of two ways, the last worst would be :
          1. The punt nua would be pegged to a currency that would be too strong for us and as a result our exports would have been uncompetitive and the cost of investing here far more expensive so we would have seriously underperformed versus what we did by being in the Eurozone.

          2. The more likely would be that we would have been pegged to stg which would make us so uncompetitive that it would reduce our ability to make our fiscal targets, that the money markets would have attacked the punt nua, our puny central bank would have lost another fortune trying to defend against the inevitable, or currency would crash, our cost of debt become completely unsustainable, hyperinflation, default, etc, etc, etc before having any hope of trying to rebuild Ireland Inc once more….. Hmmm yes, not exactly an appetising prospect, and anyone who thinks it might be, I will argue with until Argentina is great again ;)

          So yes, the Euro may be an ill-conceived project overall, and it certainly did not serve us well from say 2000 to 2009 say, but it has served Ireland very well indeed from 2010 to 2015.

          • DB4545


            I have a happy disposition Daithi7.It depends how you define “us” when you want to consider who has been well served and you haven’t contradicted my points. As others have stated Apple, Bono and others aren’t paying more taxes. Who’s really better off after the meltdown? Iceland had two years of pain but look at it now.


        • Daithi7

          Incidentally just because I believe being in the Eurozone has served Ireland well from 2010-2015, does not mean I think we should stay in it regardless.

          Of course we should not. We should periodically assess whether we are better served within or outside the Euro. What is likely best for day the coming 5 to 10 years say!?
          That should be the criteria imho. In that assessment of course the powers that be in Ireland wood have to weigh up the likely pros & cons of such a conundrum. For the next 5 years I’m pretty sure the better answer to that one is to stay trading on euros.why? Interest rates are low, the Euro is competive v 2 of our biggest trading partners I.e. The USD, & Stg, and are major beneficiaries of the machinery of the Euro e.g. ECB, etc. Also of course, let’s not kid ourselves here, we’re probably not strong enough to go it alone currently.

          However, perhaps in 2020 we’ll be stronger. E.g lower debt/Gdp say and then if the policy of the ecb and Eurozone suit us less well then (e.g. if they get another fool like Trichet as its head, start putting up int rates in a Eurozone recession like they did 6 years ago, etc, etc,) perhaps then the Euro in or out conundrum just might have a different answer for Ireland, but for now I think we’re better in. I may be wrong of course but I’d need some convincing.

    • “It’s up to us to match or better them.
      That means getting our house in order and keeping it there.
      That means living within our means and getting our borrowing down.
      That means being responsible.”

      The only successful way is to remain independent and self reliant.
      Thant means a national currency issued by treasury resulting in no national debt and no interest being charged perpetually to the tax payer.

      The first result of this would be a government budget surplus which could result in the rescinding and abolition of all income taxes.
      That would be the fundamental basis for a sound and prosperous economy. Economic freedom leads to political freedom.

  13. Original-Ed


    Interesting to hear Mick Wallace’s question as to why NAMA hasn’t moved against the great and the good.
    Some years ago, you claimed that NAMA‘s main purpose was to protect this lot from bankruptcy and so prevent the country from becoming leaderless – some leaders!

    I noticed that RTE didn’t cover this on last night’s news – they were on about the 30k bribe – peanuts in comparison to the loss to the taxpayer by protecting this greedy bunch.

    • Deco

      Pravda, will cover scandals from 30 years ago in depth. Like as if they happened last week.

      The scandals that happened last week, will have to wait until the participants have got away with it for another 30years, before the respective scandals are unmasked.

      And now we have two government pieces of legislation being pushed (with the support of the Bertie Party) to make sure that people do not make statements on the internet that do not “annoy” is such a manner, as to upset this arrangement.

  14. Home Counties Girl

    Was the late Milton Friedman the real Mystic Meg?

    Read his piece ‘The Euro: Monetary Unity to Political Disunity?’ from 1997.


  15. michaelcoughlan

    “The crucifier, Germany, is now clearly out of control, but who is going to rein the Germans in?”


    The sons (primarily) and daughters of the working class.

    This is how they did it the last two times;


    Take a good look at the price true patriots for freedom.

    Now Dathi in relation the following;

    “Britain may leave the EU at the mercy of the Germans and, believe me, the smaller EU countries will come to miss the Brits and their stubborn but oddly principled scepticism”

    Never was a truer word spoken. Especially us in Ireland.

    As for;

    “How can such financial nihilism make the balance sheet better”

    The balance sheets of German banks will be made immeasurably better.


    “Countries that don’t play ball with Germany will see their banking system used against their democratically elected politicians”

    No shit Sherlock.


    “The Euro is one recession away from implosion and its architects know this”

    This is hopelessly inaccurate. Let me explain what in my view you should have written;

    We are one recession away from an implosion of the various periphery economies in Europe and chances are Ireland’s will fail first due to the fact we are the most indebted country in the world from and income/debt ratio perspective.

    The events of the past few days has demonstrated that the EURO IS STRONGER THAN EVER because it is in fact the Deutsch mark (but a weaker version) and as such is driving staggering trade surpluses for Germany in excess of 250bn in the last set of published results.

    In fact the weaker the Euro gets, the better that is for German exports. The Germans have clearly demonstrated that they will destroy one country in Europe after another to protect the Euro!

    “What do we do then? Will we be stranded in the mire of group think or will we use the next few months to come up with a Plan B?”

    Our politicians will toe the line. If we the people are to thrive we will have to do it ourselves. The ans to the question is very simply and YOU CAN PROVIDE IT.

    How? Ireland needs to be pegged to the Euro like a hole in the Head. We desperately need to be pegged to sterling. Our politicians won’t do this.

    You David can get the Marble in the Kilkenocomics festival and back it one for one with sterling and roll it out across the country as a complimentary currency for we the outsiders and let the politicians and their crony friend stick their insider fiat currency (the Euro) up in their cosseted pampered holes!

    You suggested the Greeks should start using the Chineese currency why not say to the people of Ireland to start using sterling or are your articles mostly just shit talk?



    • DB4545

      How about plan D the Danish Krone? If you check out numbeo/cost of living in different Countries they seem to end up with more after tax income.

    • “How? Ireland needs to be pegged to the Euro like a hole in the Head. We desperately need to be pegged to sterling. Our politicians won’t do this.”

      A peg is something that holds down the object pegged. Clothes pegs or tent pegs or hair pegs it matters little. Pegged is pegged. Dependent is dependent.

      The answer is independence. Think about it in context of 2016. The Free State dependent on a peg of one sort or another.

      It is time for a free national currency. No central bank. National money issued from treasury, debt free and unencumbered. All other currencies are creatures of enslavement and debt. That is what you will remain if pegged.

      • cooldude

        I agree Tony. What I cannot understand is DMcW,s tears over the 50 billion of real assets that the Greeks have to stump up. David you must never read any of my posts or have read any of John Perkin’s books. This is the endgame and the only thing they are really after along with total loss of sovereignty. This is the template and as Perkins who worked for these wankers clearly explains the loans are forced on the country with the clear and explicit intention of robbing the real assets which always includes the water ” Irish Water” and whatever else they fancy.

        It is about time David you were exposed to the real world of post democratic life led by bankers and operated by gobshite politicians like Noonan and Schauble and armies of technocrats on huge salaries.

        This is our new Hunger Games society yet David is somehow shocked by all of this.

        Get used to it or do something to stop it.

        The bankers now rule and the central banks and the BIS are on top. Check out Carroll Quigley’s book Hope and Freedom or anything by John Perkins to see the real agenda here.

        • http://investmentresearchdynamics.com/sot-ep-43-john-titus-the-powers-that-be-do-not-care-they-spit-on-the-governed/

          This is an article worth the reading. Then thinking about what it says.

          There is much debate on here about this and that. Empty kettles make most noise. Arguing over details of the last war or which currency is better than that is simply akin to arguing in which prison you will receive the better treatment. Never mind that you have committed no crime other than to be ignorant of what is actually going on. Ignorance of the law is no excuse for the breaking of it, it is said.

          So whether you know or not or care or not you get what you deserve because your ignorance is no excuse.

          Until people on here, including David, address the problem of the money supply, the type of money we use, who issues it and who benefits then all else is empty noise and useless rhetoric, a waste of time.

          The more I learn, the more I realize that the Fed is nothing but a criminal enterprise, that the guys at the top know it. Everyone within breathing distance of top slots at the NY Fed is a criminal. Remember, the NY Fed shares space with the Exchange Stabilization Fund/Working Group on Financial Markets even though the latter is formally part of the Treasury. – John Titus, one conclusion from reading the 2009 FOMC transcripts

          What comes out loud and clear from the transcripts is that not everybody is on board with policy decisions. For example the purchase of mortgage-backed assets. There’s lot of uneasiness among Fed members but ultimately they all go along with the plan. I’ve read a lot of transcripts – probably thousands – and what comes out of the Fed transcripts is that the plan has been decided on beforehand. The FOMC meetings are only there to hand down that plan, to discuss the plan, to discuss how to implement the plan and to prop up the idea that FOMC meetings are some sort of democratic process. – John

          “I always thought that the means to accomplish this was money printing and devaluation of the currency. But true extraction mechanism is debt. Banks and bankers create debt and make it readily available to their victims. It’s no different that dealing heroin. Get your target addicted and then keep selling it to the victim until it dies.”

          The Fed does these things knowing full well that these acts come at the direct expense of the economy. The logical outcome is what’s happening in Greece, where the powers that be insist that debt–which they know to be wholly fraudulent and which cannot be repaid–be paid back, with blood money if necessary. The mere existence of TBTF banks is inconsistent with any number of things, including the Rule of Law and national and individual sovereignty.

          Any Plan B is a total waste of time unless the question of the money supply is addressed. All else is a betrayal of the people in which the proposers of any plan B are complicit in the betrayal.

          Ignorance is no excuse, David, but you have been told repeatedly and been warned and you continue to ignore or debate the issue. You can not claim ignorance.

          You will no longer be a part of the problem but a major reason for the economic failure of the nation as you have the ability to change the national debate.

          • The chief enabler of the Greece-ification of the U.S. is, without question, the Federal Reserves and the psychopaths running it…Our choice is stark: We can hang them for treason, or they will kill us. That process formally began with the 2008 bailouts. – John Titus

        • Deco

          John Perkins is a legend.

      • michaelcoughlan

        “The answer is independence”

        We tried that and our politicians squandered it.

        “It is time for a free national currency. No central bank. National money issued from treasury”

        The politicians WON’T allow this to happen.

        My post advocates a currency created by the citizens which is debt free and not controlled by the central bank! It needs to be backed by sterling because they are our closest trading partner but also if they pull out of Europe their currency will fall and that will kill us if we are still in the Euro as the Euro will appreciate against it.

        Using the marble and McWilliam’s profile would create a real revolution that would free the people!

        The people who live here (outside) will have to do something sooner or later like this.

        I think I will launch the coount myself I am getting so exasperated. Its like being on the tittanic and trying to tell the blind ignorant captain that he is about to hit an iceberg with him not listening.


        • Adelaide

          Michael. A few years ago (I’d rather skip the details of who/where) myself and a few like-minded individuals familiar with E.C.Riegel launched such a proposal as yours, the ‘Valun’, on a very small local scale. We put in the preparation and hired a weekend market/venue where the local participants could use their Valuns to trade. It was in a working class area of north Dublin. It actually worked for a cohort of participants but we had to cancel it after six weekends because not enough locals understood its logic. They either thought it was a LETS market (ie favours-for-favours) and poo-poo’ed it, BUT mainly they couldn’t get their heads round the concept of issuing their own money (a cohort did and for them the system worked, and for us, although the market failed due to insufficient support, we proved the concept worked successfully.)
          The lesson I learned was to next time target a younger audience who were not yet completely brainwashed into the ignorance of money, ie near a university or such.

          • michaelcoughlan

            Hi Adelaide,

            My proposal does not deal at this stage with the creation of money itself. Just a complimentary currency GBP backed in my view is vital.

            In Greece at the moment the citizens cant buy goods online outside Greece because of balance of payments restrictions. I feel if a complimentary GBP currency circulates here this will circumvent this happening in Ireland when things go tits up here.

            I have innovated a very simple idea where the citizens create money instead of a central bank in a self regulating way based on riegels principles which I haven’t shared yet on the board.

            I would love to meet with you at some stage as I find your posts very insightful. I doubt ii your valun was backed by an asset which may have contributed to its demise.

            Would it be possible to meet to learn from your experiences as by hook or by crook I am going to do this?

            Very respectfully,


        • “The answer is independence”
          We tried that and our politicians squandered it.
          “It is time for a free national currency. No central bank. National money issued from treasury”
          The politicians WON’T allow this to happen.

          Because it was squandered and not allowed to happen does not mean it is not the right thing to do.
          It will never change with such an attitude.

          Using local currency will be fine for local trade but will not enable e-trade on the net. The local currency will be unacceptable outside its area .

          Local currency is akin to national currency. useful in its area.

          Issuing a local currency in like style to the current fiat currencies or pegged to a fiat currency is more of the same and subject to random over production and resultant inflation.

          As you suggest it must be based on an asset value,… of limited supply and not easily replicated and act as a medium of exchange and be a storage of wealth as well as being fungible. Then you have honest money.

          First you have to educate the population as to what constitutes honest money and why it is a requirement for a sound economy. Currently, ignorance leads to enslavement and social catastrophe.

          • Adelaide

            I have retired to the ‘sticks’ as they say but I wish you well. Putting aside the technicalities of what version of honest money one proposes, the big challenge is as you both point out is sheer wall of ignorance out there.
            That is why we decided to do four things: 1. use an actual physical market/venue so that potential participants could see the ‘currency’ in action (‘a picture paints a 1000 words’) otherwise you end up talking yourself blue in the face trying to persuade people with mere words 2: for that reason we avoided the more easy route of having it online, it comes across as overly theoretical pie-in-the-sky to ordinary people, whereas when they see two traders in action at a kiosk using the ‘currency’ in real time, then the more inquisitive and intelligent get the concept immediately. 3: don’t waste our time trying to engage people who we described as ‘money-blind’. 4: start locally and hope it grows by word-of-mouth.

            I would say lastly that the set-up involves a huge amount of time and we had committed volunteers who did it out of a vocation to demonstrate to people that they need not use the ‘currency’ issued by the bankers to trade, that alone was a mind-blowing realisation for those who traded if only briefly with their own people’s currency.

        • You need to use silver coin, Michael, as proposed by Hugo Salinas Price.

          Get quoted fro a reliable mint for the production of one to a half dozen coins of different weights of pure silver as contained in sterling silver of alloy with 92.5% silver.
          One ounce, half ounce, quarter ounce, 10th ounce, 20th ounce, one hundredth ounce. Give the coins names but no fixed monetary value.

          Get the cost of production and delivery. Add a 10% seigniorage and announce the monetary value of each coin based on a rounded up 5 percentile.
          e.g. if the one ounce coin cost plus 10% = 22% over spot round it up to 25%

          Call this the trade value in the currency at hand, Euros in your case, and this announced value will never drop. It will increase in value if the spot price of silver and costs of production plus seigniorage increase and the coin is raised in trade value accordingly in 5% increments.

          This will result in a valued coin and the issuer is guaranteed the funding to expand the supply at any time.

          Such a coin’s use may spread to beyond the trading area or expand the trade area or both. It would be in all regards a form of honest money. Once the concept was accepted by a core few it would spread inexorably, even internationally.

          • The design of the coin should be of beauty and the name evocative. This will encourage purchase of the coins by merchants and customers as they will be perceived as having value.

            Initially there could be an incentive provide for the use of the coins. The merchant could for example offer a ten percent off , for the initial use of the coins. The coins can be bought by the merchants and offered as change to customers. the coins can be issued by merchants in lieu of gift certificates or other promotions.

            Just some ideas Michael from thoughts of several years ago.

          • Home Counties Girl

            @ Adelaide

            Hats off to you Adelaide! It’s so inspiring to read your experience and effort in putting an idea in motion. It’s a pity I’m not local – I’d gladly meet up with you for a coffee to discuss ideas.

          • michaelcoughlan

            I don’t agree with this. There is an arbitrage problem. Some one would re cast silver to match the coin and get the extra purchasing power of the decreed price.

          • Your Valun currency or any other is subject to counterfeit problems as well. Arbitrage is not the issue.
            In the event others produced your currency it would mean that yours was successful. The local currency would be operating as desired or there is no value in a counterfeit. That means you achieved your objective. Then tackle the counterfeit problem which I am sure can be solved.

            The method I mentioned allows the indefinite production of money as demanded at no cost and a modest profit to the issuer. Otherwise the issuer will be broke producing currency at a cost above the trading value.

            Ultimately money is anything that is trusted to perform as such.

  16. george

    Next time the euro trembles (and the US dollar and sterling), it could well be, plan B for Bitcoin, or other digital currency!
    But before it comes our way, we will know it, because some
    “spectacular, dramatic, and bloody event” will take place…as bloody and murky as 9/ll.
    Part of what the elites need, to impose the new paradigm and curtail even more our liberties, and was called by Naomi Klein: “the shock doctrine”. Shouldn’t we “follow the money” or should I say “follow the Bitcoin”?

  17. michaelcoughlan

    This is the simplified version of how the banks are looting greece;


    Paulie acts as the banker and his simple request;

    “Fuck you pay me”

  18. Deco

    The next time the European economy slows down, this thing will blow apart.

    No need to worry. Central bankers are responding to this, and have been doing so since 2008. By doing what Trichet did between 2002 and 2006, in an even more aggressive manner. By lowering the interest rate, and using the interest rate policy to drive up leverage, debt etc..

    The next country to go to the wall, at a spend of 120 kmp will be Sweden. Sweden is Ireland’s housing boom all over again, with a dangerous monetary policy, little or no improvement in productivity, and an enormous private sector debt load. It is not in the Euro, but is more extended than Greece.

    And when that happens, the entire publicity statement of Northern Europe not being reckless like Greece, or Spain will get blown apart.

    In fact when that happens, the Swedes will envy the Spaniards, because their banking crisis will be worse than Spain’s real estate banking crisis.

    That is another subject for an article. In fact if you did such an article based on the similarities it would quickly get a lot of notice.

    And the subject is sitting there to be exploited. Sweden, which deludes itself that it is better at German-onmics than Germany, is about to blow it’s financial system to bits.

    Again. And it makes the Greeks like sensible, and austere in comparison.

    Personally, I would rather hold Greek state bonds, than Swedish Bank shares.

    Is there an “Anglo Irish Bank” in Sweden ?

  19. Deco

    By the way, the Germans are not the problem with Greece. And not even the Greeks are the problem with Greece.

    EU politics, EU policies, and the manner in which centralized state systems work is the problem with Greece.

    “more Europe” is a recipe for policy failure, and silly straightjackets.

    There is a new economic model, in the Eurozone. Houdini-nomics.

    • Mike Lucey

      Dr. Schäuble’s ‘Plan’ is too flawed to be a final plan. Its only a stepping stone to a single choice engineered option for member states. We (Ireland) stupidly allowed ourselves to be bullied into agreeing to this ‘plan’ the second time we were asked to do so.

  20. Deco

    We are heading to the point that DE/NL/AT/FI will eventually decide on less centralization of power in Europe so as to enable everybody to get along and work together.

    “More (centralization of power in) Europe” is the problem. Decentralization is the answer. I do not think that the peoples of DE/NL/AT/FI will have a problem with that. They might be asked for money to rectify matters. They might be asked to accept punishment in their banking sectors. And even higher interest rates.

    They will have a problem with that. Because that costs money.

    But we all need to have a grown up, and pragmatic conversation. And clowns like Juncker, Tusk, Phil Hogan and Martin Schulz will not do this. Instead they prefer to fudge, dodge and dive.

    And besides vested interests in the financial sector are having too much influence on policy. Influence that is causing serious problems.

    The centralization of power IS the problem. It IS the source of all the misery.

    Let’s be honest and open about that.

  21. StephenKenny

    I don’t often agree with AndrewGMooney, but I do on this occasion. My only problem with his thesis is that ‘Germany will raise rates to reassure markets’.
    The world’s central banks have had an agreed policy of never really raising rates, for years now. Every currency, every commodity, every stock market, every everything, is kept within fairly narrow bands.
    The pension systems in most countries have been totally destroyed, the place is awash with cash, but with nothing to invest in. Every asset class has gone completely crazy – farmland is no longer a viable investment for farming – it’s now just a store of value for billionaires.

    So what should Germany need to reassure anyone?

  22. Adelaide

    What should justly anger every citizen more than the damage caused by a century of The Political Money System is NOT what the Present is BUT what the Present should have been, NOT what the Future holds BUT what the future should have held being free from The Political Money System. When ignoramuses say ‘things are not so bad’ they fail to register how glorious it could have been, should have been, without a century shackled by The Political Money System. How cosmically magnificent our Present and Future would be. Alas, things are not so bad.

  23. Turning to Greece again…

    The so called agreement is not yet a done deal. ALL EURO user parliaments must approve the deal as well as the Greek parliament. The Greek people may yet overturn the government in defiance of the deal.
    Will the EU next send in the tanks and implement a Coup? Democracy must not over rule the Brussel Bureaucrat or the ECB

  24. Grzegorz Kolodziej


    There was an interesting article in Frankfurter Allgemeine about Greece’s 50bn worth of assets to sell. Unfortunately I do not have time to translate it but I thought I’d insert the link anyway as some of our readers read German.


    The gist of the article is:

    1. One of the pillars of the agreement was to create a €50bn fund as a warranty for the deal
    2. This €50bn harks back to PASOK’s 2011 bluff that Greece’s real estate that belongs to Greek state is worth €280bn (this was rounded to €300bn). This was considered pure invention by Greek Central Bank. Greek government has pulled the €50bn rabbit out off its hat as a sweetener for their 50pc debt write-off Greece got in 2011 (David seems to forget that Greece has already got a 50pc debt forgiveness, albeit but more on conditions similar to Poland’s 1991 50pc write-off than Germany’s 1953 write-off; in one word the conditions were: we will charge yous huge interest rates, than we will write off 50pc, than we will lend you more money so that you can incur more debt and meanwhile we will buy your industries for peanuts; the difference was obviously that Greece got lavish subsidies Poland did not get in 1990s or even 2000s, but as I explained before, subsidies are not good for you anyway – just look at Poland’s economic growth in 1996 and East Germany’s growth in the 1990s after pumping DM 1tn into East German hole).


    3. Coming back to FAZ’s article, privatization only brought €2.5bn to Greece. Greece needs €90bn, not €50bn (which is bogus anyway).
    4. Previous miscalculation of the effects of so called austerity (austerity is in reality nothing else but German ordo-liberalism which worked well for Germany in the 50s for reasons me and David wrote about) Greece’s growth misfired. FAZ claims therefore that washout of the deal is mathematically foreseeable.


    As to Milton Friedman, he might have been right not only about the future of the euro but also about its timeline (he gave it 10 years and the fist serious euro crisis was around that time). There was a Nobel Price winner for God’s sake who won a prize for a theory of common currencies of incompatible economies (in the late 1990s), but he was hushed as journalists usually do not read anything serious. But the earliest and perhaps best article on the future of the euro was this 1992 peace:



    On another note, and sorry for oversimplifying as I am really rushing through, the new President of Poland Andrzej Duda (who is really active as his negotiating with Germans, Jeb Bush and the Chinese at the same time, upping the ante), put forward 3 demands to German government via behind-the-scenes diplomacy for Poland to retain the alliance with Germany should Law and Justice win the election:
    1. German agreement to moving their US bases from Germany to Poland.
    2. Poland’s participation in talks about the Ukraine (Poland is asked to splash money on weapons and hospital treatment of Ukrainians but has no say on Ukraine neither is she respected by the ultra-nationalist Ukrainian puppet government).
    3. Abolishment of 1940 Nazi law still valid in Germany and recognizing Poles as ethnic minority thus giving Poles in Germany the same rights Germans have in Poland.

    I found most interesting what Merkel’s legates answered:
    1. Yes.
    2. Maybe.
    3. No.

  25. Grzegorz Kolodziej

    Interesting enough, the economist John Perkins believes that the leaked IMF document urging for more debt forgiveness in Greece (I attached the link to the full version of their paper in one of my previous posts) was influenced by potential threat of China’s possible counteroffer.
    Ecuador’s experience provides a good guide for Greece and other besieged European countries. He also sees Ireland in the group of countries looking for bailouts from China:

    “Mr Perkins said he believed that Italy, Spain, Portugal and Ireland will be actively seeking out the Chinese.”

    Another source (close to BND in the past) claims that the reason IMF’s paper came in at eleventh hour (as the “Dolchstoss” for Mrs. Merkel) was because the US Congress was debating the possibility of a putsch in Greece should Germany force their way, by I could not verify whether the debate took place or not. Anyway, no putsch so far… But all of it including the IMF paper it definitely shows that it’s more complex than NATO v Russia and that talking about Brussels power is no longer accurate as it is more like Germany+her satellites (Holland, Austria, Poland with the current government hatched from Kohl’s missing CDU money – the notable exception was former Finance Minister Mr. Rostowski who represented the interest of the London City), Ireland with any past or future government except for led by David McWilliams – with Sinn Féin licking the Nazis arse in the past this government is by far not the most pro-German Irish government) v the USA v China +(or v)Russia (which can only ally with China as a weaker partner) with countries like UK, Denmark and perhaps France should Le Pen win (which would be good in some ways and bad in others) fighting for their place around the top German shepherd top dog).

    Here is what he has to say:


  26. Grzegorz Kolodziej

    Interesting enough, the economist John Perkins believes that the leaked IMF document urging for more debt forgiveness in Greece (I attached the link to the full version of their paper in one of my previous posts) was influenced by potential threat of China’s possible counteroffer.
    Ecuador’s experience provides a good guide for Greece and other besieged European countries. He also sees Ireland in the group of countries looking for bailouts from China:

    “Mr Perkins said he believed that Italy, Spain, Portugal and Ireland will be actively seeking out the Chinese.”

    Another source (close to BND in the past) claims that the reason IMF’s paper came in at eleventh hour (as the “Dolchstoss” for Mrs. Merkel) was because the US Congress was debating the possibility of a putsch in Greece should Germany force their way, by I could not verify whether the debate took place or not. Anyway, no putsch so far… But all of it including the IMF paper it definitely shows that it’s more complex than NATO v Russia and that talking about Brussels power is no longer accurate as it is more like Germany+her satellites (Holland, Austria, Poland with the current government hatched from Kohl’s missing CDU money – the notable exception was former Finance Minister Mr. Rostowski who represented the interest of the London City), Ireland with any past or future government except for led by David McWilliams – with Sinn Féin licking the Nazis arse in the past this government is by far not the most pro-German Irish government) v the USA v China +(or v)Russia (which can only ally with China as a weaker partner) with countries like UK, Denmark and perhaps France should Le Pen win (which would be good in some ways and bad in others) fighting for their place around the top German shepherd top dog).

    Here is what he has to say:


  27. http://www.bbc.com/news/world-europe-33578778

    Greek debt crisis
    “Reforms are going to fail” (Have already failed , he says.)

  28. http://www.gata.org/node/15560

    All is manipulated. There is no such thing as a free market

    “But then the big issue here has never been merely gold but rather the destruction of free markets by unlimited government — that is, totalitarianism. Fighting that tends to incur capital losses.”

    Ask Greece??? That is what the EU project is all about. Totalitarianism.

  29. Deco

    David – a frank and honest article about the scale of expenditure in Ireland’s state system is badly needed, especially in the context of 75 Billion being borrowed by the current government.


  30. Deco

    I get the sense that Ireland is led by a bunch of jackasses.

    National Debt through the roof.
    Real estate market being regulated for the sake of the banks.
    Investment bubble based on a second Nasdaq bubble, being sold as “recovery”. Then it ends it will be sold as “the fault of .
    Productivity in the state system in reverse.
    IW debacle.
    Internet censorship for the protection of family firm politics.
    Las Vegas on the Liffey still calling the shots in Baning regulation.

    Time to think about Plan B – getting your savings out of the Irish banking system.

    • “Time to think about Plan B – getting your savings out of the Irish banking system.”

      Includes the company pension plan too; Also chequeing and business accounts of any volume.

  31. Michael et al

    ” The private-enterprise money system would accomplish the following:

    Provide a stable price level.

    End the debt-money system. Credit would be extended solely on the promise to pay with goods and services.

    Abolish interest within the system.

    Take the money-creating power out of the hands of government and banks and place it in the hands of private enterprisers.

    Make government operate on a cash basis; prevent deferred and delusive taxes through inflation.

    Assure distribution of goods by distributing money power.

    Prevent inflation and deflation.

    Defeat bureaucracy, fascism, and communism by taking the money power from government

    Defeat hidden money control from any quarter.

    Assure full employment and a high standard of living.

    Give the people the veto power over war and all government extravagances.

    Supply the perfecting element in democracy and private enterprise.

    If the accounting profession will interest itself in the establishment of a true money system it will render an incomparable service to business and the public. The study of the subject is not extra-curricular; it is part and parcel of accountancy. No profession can gain so much from its solution; none must suffer so much from its non-solution.”

    This is an extract from a discussion of the use of Valun as a currency/money.
    The objective stated in the quotation is what we want. A form of honest money.

    The objection I have to money is that there is a man made credit limit to participants that could be arbitrary and therefore subject to manipulation.
    Also there is the requirement for accountancy to manage the system. There is an administrative problem.

    This is the article provided for those interested in the discussion and to gain understanding of Riegel’s Valun proposition.


    The premise that Legal tender laws must be abolished, I agree with as people must be given the total freedom to use whatever currency they wish. Currently legal tender laws force a vendor to accept the national fiat currency in settlement of a debt. Perhaps the creditor wishes to be paid in the local currency and not be forced to accept the national currency. Although there is the option of immediate conversion of one to the other.

    Better yet is a system where money is created spontaneously by mutual agreement. In the past it was the use of precious metals in the form of coin that sufficed.
    Perhaps tomorrow it will be digital money such as Bitcoin. We will see the resolution unfold.

    The system proposed by HSP involves no moderation or accountancy and the demand for the coin will cause its production, subject to the availability of silver itself. Lack of demand will halt production of more coin. The value of a silver coin is largely dependent on the value of silver itself but with the provision that the trade value of the coin will never be adjusted lower but only higher if the value of silver should rise. This means the coin will protect against inflation as the purchasing power of the coin rises.

    The issue of counterfeit raised by Michael is not addressed in the discussion of the Valun but is none the less present there too, as a problem to be solved.

    Modern mints can solve that problem I am sure. The arbitrage suggested to be available will fluctuate somewhat and will increase when the value of silver falls but still is a question of counterfeiting.

  32. “On the heels of another chaotic week, today the top trends forecaster in the world warned King World News that the elite are moving to complete the enslavement of humanity as Greece’s surrender shocks the Greek people and the world. Celente also discusses what this means for Europe and the rest of the globe.”

    PLAN B

    “The only way the Greeks can do that is to default on their debt and go back to printing their own currency, just as they have for thousands of years. That’s the only way to solve this problem once and for all. Until they do that, we are going to see a carousel of bailouts, continued depression in Greece, and Molotov cocktails, fires and riots in Athens Square.”


  33. David,

    I doubt if the next recession will kill Euro. Euro is a very decentralized currency and decentralized economic entities seem to have a knack of surviving, unlike centralized entities which seem extremely strong on the outside but have a tendency to collapse from within like Soviet Ruble.

    An advantage of the Euro is that there is no central political power or a single bank that would be able to print more of it or twist it for a short term goal.

    Euro seems more akin to a currency unions or multicurrency peg similar to 19-th century gold based system, rather than being a centralized currency issued by a central bank like US$, British Pound etc.

    I suspect that the centralized politically controlled currencies like British, Russian, Chinese (and probably US$ at the end), in this order, will be more likely to crash cathastrophically first.

    I believe, what is more likely to happen in the forthcomming financial crash, is the sudden devaluation of paper assets which will dramatically affect the corporations and governments, but not as much the debt-backed currencies. The reason being that the falling assets and falling debt resale values will simply cause a contraction of monetary mass, reduction of velocity of money, both of which will automatically ensure the currency valuation, preventing inflationary currency collapse to set in. Only those currencies that are controlled by governments alone rather than being backed by assets, may collapse. Rubles, Yuans – anyone?
    Regards, Stan (Heretic)

    • Legal information[edit]
      Legally, both the European Central Bank and the national central banks (NCBs) of the Eurozone countries have the right to issue the 7 different euro banknotes.[2] In practice, only the NCBs of the zone physically issue and withdraw euro notes.[2] The European Central Bank does not have a cash office and is not involved in any cash operations.[2] However, the European Central Bank is responsible for overseeing the activities of national central banks in order to harmonise cash services in the Eurozone.[2]

      Issuance and printing[edit]
      The ECB has the exclusive right to authorise the issue of notes within the Eurozone, but most notes are actually issued by the National Central Banks (NCBs) of the Eurozone.[1] As of 2004, 8% of banknotes were issued by the European Central Bank and 92% were issued by Eurozone NCBs.[1] The issuing central bank can be seen from the serial number. Each NCB is now responsible for the production of certain denominations, as assigned by the ECB.[1]


      I am not sure how you arrive at your conclusion. The ECB is the sole authorizer of the issuance of currency although they are printed by or issued by member central banks.

      If confidence in the EURO is lost it will suffer the same fate as any other currency. If the use of the EURO is detrimental to a nation member there will be a demand to return to national currency. As it is, the use of the Euro by a member state is a de facto relinquishment of national sovereignty. When the people realize this they will abandon the EURO even if they wish to remain in the EU. Then the EURO disintegrates. It is that or Authoritarian economic slavery of the people of the EURO zone.

  34. “The Greek financial crisis: a precursor to the deflation of the bubble in sovereign debt
    While Greece is small in relation to the European and global economies, it is emblematic of the disease: excessive money-printing to fund promises to voters that are not financially viable. In our view, the Greek (and the Puerto Rican) drama is reminiscent of the blowup of the two Bear Stearns mortgage-backed securities hedge funds in 2007. Shrugged off by the financial markets at the time, that fiasco was the first sign of trouble to come in the housing/MBS sector that led to the global financial meltdown of 2008. As with the Bear Stearns hedge funds, the Greek episode may well foreshadow a deflation of the bubble in sovereign debt.”

    ” Paul Singer: “History shows that it is fiendishly difficult to preserve the value of money which is backed by nothing but promises…. Our view is that central bankers have chosen, and doubled down on, a palliative (super-easy money and QE), which is unprecedented and extreme, and whose ultimate effects are unknowable.” (From his investor letter)”


    “History instructs us that it is common for politicians of all stripes to rely on overvalued currency to achieve policy goals. We believe gold-price suppression to be a natural adjunct of this predisposition. Paul Singer believes that shorting low-yielding sovereign debt represents an excellent opportunity to profit from the fallacies of “money that is backed by nothing but promises.” We agree. However, in our opinion, the even greater opportunity, and certainly the more accessible one for most investors, is a long position in gold and gold-mining shares. At the very least, it offers protection against potential bear market downside for equities and bonds. At best, and despite the requirement for substantial patience and fortitude to question the wisdom of the investment consensus, it may prove to be an opportunity of generational proportion.”

  35. “Governments Leading World To Economic Collapse And Chaos As China Increases Debt $20 Trillion In Just 8 Years”


    It is the money system. All people will be (are) indebted beyond the ability to pay. The money supply is increasing exponentially. All the new money is new debt.
    Therefore debt is increasing exponentially. Personal, Corporate and National.

    There is no Plan B that will work under these conditions. It like suggesting that a wino who is alcoholic, switch to whisky as then he might feel better. Just as stupid.

    We are in a problem because of debt and associate interest payments. Doing more of the same (increasing the money supply) and expecting different results is the definition of stupidity.

    If the money system is not changed we are stupid. Anybody after a glance at the system and does not see it as a criminal Ponzi scheme is also stupid.

    The only people not stupid are the people proposing and operating the system as they get the results they want. One world government, and control of humanity is their ambition and they are very close to success. Look at Greece. Then take a look in a mirror at yourself and ask if you are also really that stupid.

  36. StephenKenny

    I recently read a very interesting piece from Naiomi Prins. She was invited to give a keynote to a gathering of the great and the good i.e. central bankers and finance ministers. The presentation itself really only gave the sorts of use that are coming on this site i.e. the QE and other forms of borrowing need to be got through to the real economy and diverted away from the asset and bubble economy.

    What was interesting was not so much the presentation itself, but the comments she made to questions afterwards. She was asked about the mood of the conference, what everyone was saying have a coffee and so forth.

    She said that everyone present was very clear on where we were, and had absolutely no idea at all of how to get out of the situation that we are in. It was far too far gone to be fixed, and so the only thing to do today, as it were, was to do what we did yesterday. Just keep on kicking the can down the road.

    The bulletin has been fired, it just hasn’t arrived yet.

  37. Home Counties Girl

    Nice link G to Wynne Godley’s piece.

    I’ve just pulled this out of the Telegraph.

    Iceland’s government is considering a revolutionary monetary proposal – removing the power of commercial banks to create money and handing it to the central bank:


    • It is a good start to remove fractional reserve banking.

      Next step is to remove the Central bank and the issuance of the money as a debt at interest. Currency creation is better from Treasury. Then the money is issued backed by the assets of the state. It is issued as asset backed and not as a debt and there is no interest. Therefore the tax payer/economy is not burdened with this debt at interest as every other country in the world is.

      Then Iceland would be fully Sovereign, prosperous, and debt free.

    • Grzegorz Kolodziej

      You are welcome :-)

      Interesting article. It’s telling how Iceland vanished from the media, not only in Ireland (Pravda, as Deco would call it ;-), but the worlds media in general. I remember being looked at as an absolute loony when I suggested we should follow the Icelandic way when the Celtic Tiger turned out to be a mangy alley cat at times when there was a popular joke going on in Ireland about the difference between Iceland and Ireland (a letter and 6 months):


      I claimed publicly back then that:

      1. The scale of the economic collapse in Iceland was exaggerated – all Pravda was showing us in 9 o’clock news was a group banksters and civil servants protesting on streets against the prospect of being jailed with rural life going as normal
      2. The negative coverage of Iceland was purposely distorted in all EU countries (but in Ireland the most) in order to trigger the panic narrative which would justify borrowing from Peter to pay Paul.
      3. Iceland will be back on its feet earlier than us

  38. Of course GATA would have liked to have had their support a long time ago, since, as you note, it might have made a difference. We’d like their support even now, as it still might make a difference. But we understand their circumstances, just as we understand our own.

    That is, GATA is not respectable, has never aspired to be, and has nothing to lose, having realized soon after our formation that what we valued most — democracy, individual liberty, free and transparent markets, limited and accountable government, and such — already had been lost and was not going to be regained by respectability.


  39. While you can’t get your money out of a Greek bank, neither can you you get your money out of the Chinese stock market.

    “The government has outlawed selling by pension funds and other large investors and allowing half of all listed companies to suspend their shares from trading. When they weren’t taking those steps, the government was threatening short sellers and journalists with imprisonment. Such measures never work and if the market ever re-opens to normal trading, selling will resume with a vengeance.”


    Is Google a bubble stock or the new reality?

  40. The Mandrake Mechanism

    The American dollar has no intrinsic value. It is a classic example of fiat money with no limit to the quantity that can be produced. Its primary value lies in the willingness of people to accept it and, to that end, legal tender laws require them to do so. It is true that our money is created out of nothing, but it is more accurate to say that it is based upon debt. In one sense, therefore, our money is created out of less than nothing. The entire money supply would vanish into bank vaults and computer chips if all debts are repaid. Under the present System, therefore, our leaders cannot allow a serious reduction in either the national or consumer debt. Charging interest on pretended loans is usury, and that has become institutionalized under the Federal Reserve System. The Mandrake Mechanism by which the Fed converts debt into money may seem complicated at first, but it is simple if one remembers that the process is not intended to be logical but to confuse and deceive. The end product of the Mechanism is artificial expansion of the money supply, which is the root cause of the hidden tax called inflation. The expansion then leads to contraction and, together, they produce the destructive boom-bust cycle that has plagued mankind throughout history wherever fiat money has existed.


  41. Morals, which had been loosened by riches and wealth had not been improved by destitution and chaos, for few conditions are more demoralizing than poverty that comes after wealth.

    - Will Durant: Caesar and Christ, page 211.

  42. http://www.lemetropolecafe.com/img2015/Lundeen/0719/0719_html_5153fc0c.gif

    “From Aug 1930 to Nov 1935 EP saw 277 weeks between a new all time high in Power Consumption.
    From Aug 2008 to July 2015 EP has seen 362 weeks since its last all time high.”–Mark Lundeen

    This commentary and graph on the US economy suggests the real economy, as measured by a unit of actual use rather than an inflated dollar value, is mired in continued recession or depression.

    • If you’re wondering why retail chains like Best Buy and fast-food outlets like MacDonald’s are closing stores, it’s because the thugs controlling the Federal Reserve and the ECB have impoverished their countries’ middle class with “economic growth” aka the expansion of credit and currency, an expansion as noted by Doctor B.S. Bernanke, that cost them nothing but will eventually cost the laboring classes everything. We live in a world that has rejected the Judeo-Christian ethics of right and wrong that has served the West so well for so long, choosing instead to embraced the Darwinian notions of academia and their minions in government and finance. So don’t be surprised that today the strong are now feeding on the weak because we now live in a world where might and the ability to create unlimited currency and credit makes right.—————- Mark Lundeen

  43. Was Plan B already implemented

    “Another alternative would be to run the euro printing press at the Bank of Greece, something that is apparently being done quietly already. As precedent, Ireland’s central bank quietly printed €51 billion in 2011.”


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