August 6, 2015

Ireland shouldn't sneeze at the untold benefits of China catching a chill

Posted in Irish Independent · 103 comments ·
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When I was a boy, I had a huge map of the world on my bedroom wall. I loved to look at it for hours to see where all these exotic place were, how their names were pronounced and, using an old school ruler, how far away from Dublin these places were. The yearning to break free from Ireland runs deep, it seems.

 

One of the things that fascinated me with our standard map was just how big Greenland appeared to be. It looked to be about the same size as Africa. It still does if you look at a map today.

But of course the map is deceptive.

In reality, Africa is larger than the US, China, India, Mexico, Peru, France, Spain, Papua New Guinea, Sweden, Japan, Germany, Norway, Italy, New Zealand, the UK, Nepal, Bangladesh and Greece put together. In fact, Africa is around 14 times larger than Greenland.

But a standard map doesn’t indicate this because of the difficulty of portraying a spherical object, the Earth, on a flat page.

Do not also underestimate the biases and prejudices that went into compiling our standard view of the world. In an era of Victorian domination, it made sense to put the UK and Europe at the centre of the world and shrink the size of those countries that the Europeans were busy crushing.

These sorts of prejudices still inform the way we look at the world. For example, in the economic sphere at least, the US is still considered the most important country. All major recessions have, up to now, been “Made in America”.

Traditionally, the world can’t falter if the US is doing well and vice versa. This is because, like the European 19th-century cartographers and their jaundiced view, we are driven by a US-centric bias that puts the US at the centre of the economic and financial world.

Take the 2008 collapse. We accept and understand the narrative that the recent decline started with the US subprime failure, which led to the collapse of Lehman’s, which in turn caused the world’s financial markets to seize up.

The impact around the world was enormous, and the fragility of other so-called miracles, such as the Irish one, were exposed to be little more than dressed-up Ponzi schemes.

What actually makes the US powerful is the extent to which the rest of the world gets the flu when the US catches a cold. It is the ability to project both your power and your distress that makes a country a superpower.

But what if the world has changed and recessions or slumps no longer have to be “Made in America”? Imagine that global recessions could be projected from somewhere else.

Consider whether the next global slump could be “Made In China”.

Up to now, “Made in China” meant manufactured goods coming out of a box. “Made in China” is tangible and, for most consumers, positive. If China can project its power positively through cheap iPhones, washing machines, computers and the like, could it not project its distress through financial markets?

Could the next global recession emanate not in the $16trn US economy but in the $10.4trn Chinese economy?

In recent months, what was a small problem in China has turned into a major worry.

First, China’s growth rate has slumped to its slowest pace since 1990. Meanwhile, China’s trillion-dollar shadow banking system and both the Beijing and local government borrowings have built up the biggest debt load in the history of humankind, which is now a staggering 250pc of GDP.

Could it go the way of Japan? Could 30 years of amazing economic growth, which Japan experienced from 1960 to 1990 and China experienced from 1985 to 2015, lead to a lost decade in China as it did in Japan?

Certainly, the 2015 $4trn bloodbath in the Chinese stock market looks similar to the collapse of the Japanese property market in 1990. And we know that this property slump led to many years of deflation in Japan.

What does this mean for us in Ireland or Europe, when China is so far away? Can it be that important?

In the same way as the maps tell you that Greenland is as big as Africa, our mind map of China still tells us that it is in the manufacturing business and is small compared to the US.

Not so.

Valued at $10trn, China is the world’s second-largest economy. It is the largest export destination for 40 countries worldwide. It is the world’s largest importer of copper, coal and steel. In 2014, China contributed 38pc to global growth.

We have seen the total collapse in the price of crude oil, copper and iron ore from $190 a metric tonne two years ago to $48 now. This means some markets believe China is not only slowing down but going bust.

All these fragile financial markets, as well as the glittering cities in the Gulf and the fortunes of massively leveraged countries such as Brazil, Australia and Turkey, are based on Chinese demand and lots of cheap money sloshing around the globe. What if this Chinese slump comes at the same time as the US raises its interest rates – as Janet Yellen suggested this week?

What does all this mean for Ireland? Well, it could be positive.

In recent months, the main winner has been the US dollar as investors flock there because the rest of the world looks so volatile. This will continue pushing the euro below parity with the dollar. In addition, the deflation stemming from China, added to the ongoing slump in peripheral Europe, will force European inflation downwards. This will cause Mario Draghi to announce another bout of money printing, pushing the euro down further. This will also keep interest rates down here for a while longer.

A rising dollar against the euro will make Ireland an even cheaper destination for US foreign investment; so expect an increase in investment in Ireland in the period ahead. Also, low interest rates will make people feel they are not as indebted as they actually are, so consumer spending and confidence here will remain buoyant.

This is a perfect backdrop for canvassing.

Wouldn’t it be interesting if the timing of an election here was also “Made in China”?

Maybe it’s not only our maps we should redraw and rethink, but our whole way of looking at the world.


  1. Another angle on the Chinese stock market crash – what proportion of all holdings are made up of small retail investors, purchased with borrowed money from Chinese banks? The whole system will eat itself and the “burgeoning Chinese middle class” will cease to exist.

    • “”The main tool of the government to boost stock prices was to relax rules on margin trading, or buying stocks with borrowed money, where the purchased stocks secure the loan. Chinese authorities officially allowed margin trading starting in 2010, but have since regularized it and lowered thresholds on collateral requirements. Total margin trading has increased from 403 billion RMB ($65 billion) to 2.2 trillion RMB ($355 billion) over the past five years, according to various media reports. As of July 9, that figure had shrunk by 37%, The Wall Street Journal reported.”

      https://knowledge.wharton.upenn.edu/article/whats-behind-chinas-stock-market-gamble/

    • CallerNJ

      About 80% retail investors, and still is. About half were leveraged, but is now about quarter. Most QFII’s were selling out or not even touching it after March this yr.

  2. patricia03

    “We have seen the total collapse in the price of crude oil, copper and iron ore from $190 a metric tonne two years ago to $48 now. This means some markets believe China is not only slowing down but going bust.”. Now I don’t see it like that. I see that China is stockpiling and when many of the mines and farms (in Australia and New Zealand anyway) go bust then China will step in and buy them up putting in their labourers, their trucks and their shipping. And we will let them because that is the current religion of globalisation. We are all mad.

  3. Mark Cumisky

    Re map perspective: the West Wing’s contribution: https://www.youtube.com/watch?v=vVX-PrBRtTY

    • coldblow

      I’d never seen West Wing before. It’s better than I thought (admittedly that wouldn’t be difficult). I bet David watched that episode.

    • coldblow

      I’d never seen WW before. It’s better than I thought, though that wouldn’t be difficult. I bet a fiver David watched this episode.

      • Hi Coldblow, Never seen this West Wing thing, is it good? D

        • coldblow

          Just as well I didn’t make it 5 EUROS then. I’d never seen it before and I’d always thought it was set in a hospital, but this clip is funny. At least I think it is meant to be funny. I only hope Aodhán Ó Ríordáin never sees this or heaven knows what he will do to the map of Ireland. Possibly shrink it, turn it upside-down and reserve Leitrim for disabled car parking.

  4. Congratulations David on your recent success being nominated a Leader among your fraternity in economics on the Isles of Britain and Ireland . Fantastic and Unbelievable absolutely Amazing . I call that Real Vision .

  5. We take for granted the terms Markets and Politics as we know them . Until man produced goods there was no markets and no politics .Just like religion, politics and markets are myths created by man to enhance the social order of things.

    The shadow of living today shows that we may no longer enjoy those markets and politics and the religion we ascribe to .

    If David Attenborough were to visit the Decklanders in Ireland today he would probably spend much of his time beneath the wooden decks relaying stories of rare breeds of spiders and venomous insects inhabiting the undergrowth .These revelations would be what is to come next ….a new order in nature and learning to adapt .

    Like the undergrowth history is repeating itself for an attack on Europe including Ireland , from Africa under the guise of Isis . When that happens where will markets , politics and religion be found then?

  6. Grzegorz Kolodziej

    I loved to look at the northernmost place in Europe and Ireland as a 6-years old child. I tried to imagine what they might be like; I wanted to live their because it seemed so exotic to me; I thought Ireland must have a very lush grass since it was so green on the map. I never thought that there is no forest though (or mosquitos, or thunderstorms, or that summers are so mild and fresh, or that there is no snow – in fact I thought that every country in Europe has snow from November till March lol:-)

    That piece of news on China’s expansion did not meet with any resonance even in the Polish media:

    http://www.defence24.com/241159,chinese-navy-is-going-to-visit-poland-for-the-first-time-in-history

    Last time we had the battleship SMS Schleswig-Holstein visiting us it did not turn that well for us, but it is interesting how with the political scene changing rapidly Poland is suddenly a hot spot of geopolitical interest…

    I would like to refer to one of my previous posts on China’s investment in Ukraine’s (and world’s) most fertile land – chernozem (and potential takeover of their military industry) as one of the catalyst for the events in Kiev and Crimea…

    “so expect an increase in investment in Ireland in the period ahead” – hopefully; but hopefully in high-tech industries and not in property?

    • Grzeg!

      I suspect Poland will become more and more important as the West tries to deal with Putin in its own incoherent way.

      Best

      D

      • Grzegorz Kolodziej

        David,

        If Polish elites manage to shake off their post-colonial complex and pursue more sovereign politics (with all the constraints), then I’d say it will become more important.

        The best example that this might be already happening is the US embassy in Warsaw increasing the numbers of their media officers from 3 to 17 – just between the first and second tour of the Presidential election as well as President Duda meeting both with China representatives and Jeb Bush (with Germany pursuing more and more sovereign politics, the US seeks to anchor their future military strategy on the UK-Poland axis (part of their talk was on nuclear weapons deployment; unfortunately, this is not followed by offering any free-military equipment Israel-style or latest technologies transfer).

        I’d say that for a middle-sized country like Poland or small countries like Ireland, the trick is to:

        1. Define their national interest first (which has not been defined in either country: in Poland the ruling party is looking for approval from Berlin, which bribes them with high-posts in the EU in return for toeing their line, while the main opposition party is looking for approval from the US – though the new president Duda shows a bit of independence by expressing his skepticism on hitherto Poland’s blind support for the Ukrainian governments in any shape or form.

        The Irish politicians believe in pan-European slogans the Germans and French do not believe themselves (even Sinn Féin), which disbelief resulted in the Federal Constitutional Court in Karlsruhe making Germany the only country in the EU able to countersign all EU law if it’s not in keeping with German constitution)

        and when the national interest has been defined,

        2. Find an empire which national interest intersects the most with our own national interest and try to use the empire to forward one’s own national interest.

        If the Eu falls apart (the obvious candidate is Britain, but Germany might be an unlikely candidate too if they think they can better pursue their Mitteleuropa plan outside the EU?), then maybe a window of opportunity might open for Ireland, who would find herself at the crossroads and might be able to decide whether she wants to remain part of German Mittel-europa or she wants to liaise between the continent and commonwealth (as its member), withing the framework of the Hanseatic structure you once wrote about?

        As to President Putin, certainly the West’s way of dealing with him is incoherent.

        On the one hand, most people in the West, but particularly President Obama with its legal background, do not understand the Russian mentality. They think that the Russian strategist think like Chicago lawyers: I will yield a bit, you will yield a bit, and we will compromise.

        This is not how they think at all – the entire Russian history tells us that their thinking is: you yield a bit and I will fill the gap you have left.

        That’s why President Putin was able to outplay President Obama in Syria.

        On the other hand, Western media portray President Putin as some kind of a barbarian boor and someone who needs to be constantly mentored about democracy and human rights, concept not only alien to the Russian culture, but also seen in Russia (which was attacked twice by the West in the last two centuries) as veiled threats.

        Americans do all of it blinded by their Chilliastic ideology, senator McCain and Bush’s clan being the worst offenders.

        Here on that point it is the Russians who are more cold and rational in their calculations, whereas the West is fundamentalist in their democratic zeal and more extreme (and uncultivated too – an image of President G.W.Bush chewing a gum in the Hermitage Gallery and spitting it out in front of the shocked Russians comes up to my mind).

        I think it is well worth investing one hour into watching this interview with prof. Dugin, Putin’s chief ideologist and mentor, in order to understand how President Putin really thinks and how little clue the Western press have about Russia:

        https://www.youtube.com/watch?v=tPkEDRSYUpo

        Warm regards,

        Grzegorz

  7. Deco

    The chief “winners” of low officially calculated inflation as an excuse to entertain money printing, are the banking sector, and the asset markets.

    Just look at the Nasdaq. A relentless climb. Revenue has not increased at anything near the same rate.

    Ireland NEEDS this massive misallocation of capital investment to not get found out.

    In the context of there being much less free speech than five years ago, there are only so many ways that it is possible to tell people that things are not as solid as the authorities, the ESRI, and the Irish media’s owners/directors require.

    • McCawber

      The banking sector would prefer higher interests rate, those tracker mortgages are hurting everyone, the banks and the bankees (Who are already paying higher rates than they should be because of the trackers), except those on tracker mortgages.
      I’m on a private pension, I haven’t had an increase since I retired and don’t expect one anytime soon, so personally do I want inflation, absolutely not (Not very patriotic of me I agree).
      People know things are not solid but only a small % of the population actually cares.
      The reason for this is very simple only a small % of the population think strategically about anything.
      I want it and I want it now describes a very large % of the population.
      I’ve said this before but I’ll repeat.
      The CBs have and have stated so many times that they can not fix the Global economy, they can only buy time for the politicians to fix the Global economy.
      The politicians won’t take the tough decisions and the electorate won’t let them take the tough decisions.
      So sure you and Tony are right when you say the banking system needs fixing. Tell us something we don;t know like how would you actually fix it.
      The CBs are trying to buy that time, so what should the politicians be doing about it.
      It’s all about austerity if your a socialist gouging the system like a Greek (and we have a fair few of our own) for example or prudent management of ones finances if you’re a German.

      • “So sure you and Tony are right when you say the banking system needs fixing. Tell us something we don;t know like how would you actually fix it.”

        You have been told and suggestions made a 100 times on this blog but you do not see or comprehend until it is a point of interest for you. That is the problem with us all.

        Now you know that the Banking system need fixing, what do you suggest. First of all what do you see as the problem. (tell us something we do not know). Secondly, what do you see as a solution? You tell me something I do not know!!

        CB are not trying to buy time so the politicians can “actually fix it”. CB were designed to do exactly what they are doing. Skim off the top of the economy, avail solid assets to their shareholders who get rich using free printed money, They deliberately create inflation which acts as a stealth tax on the savings of all people. Inflation is the inflated volume of money supplied. This makes the existing money supply worth less than it was and at the same time drives down real interest rates. This makes savers broke and devalues pension funds for example. At the same time it creates a bond market bubble so the investment is speculative instead of production based.

        The current banking system is highly manipulative of all these things and market forces are distorted. Politicians are manipulated and coerced and bribed and blackmailed by the money used from the banking system. (See Greece for example)

        The only way for real change is to educate the people to the problem. Most know something is wrong but do not know what.
        Those that know what the problem is propose solutions not understood by those who do not know. This is the problem to be unravelled.

        Ron Paul of the US knew and knows what the problem is but even he could not get the message across loud and clear. He was thwarted by his fellow politicians and the power brokers within the political system. He even garnered enough delegates to be nominated a candidate for the republican presidential candidate. At the convention rules were changed so that most of his candidates were deemed to be inadmissible.

        Power corrupts and absolute power corrupts absolutely. The central banking system allows the unlimited production of money by the banking system for their own use. They use it to fund and control every part of the political system. They use it to manipulate every part of the economy. Stock markets are goosed. Precious metal markets are depressed.

        There is no such thing as a free market anymore in any place. All is controlled and manipulated. This causes distortions in all so called market places where no proper price discovery can be effective. Therefore all things are mispriced.
        Therefore all people get incorrect messages on what to spend on and how to invest. This creates massive misallocation of resources of capital and energy. This creates waste of time and effort and dissipation of capital.

        Add to this that the money system is based on debt at interest and the debt loads are increasing with the money supply. The interest added to the economy throttles it until it is no longer payable. The interest alone in now unpayable, never mind the accumulated debt.

        What has to be done is a simple deduction. how to do it is the problem as most people do not see the problem. When I tell people that the money supply is a debt at interest 10 percent listen but 90% of 10% are incredulous and scoff at the idea. That is merely 1% of people listen and evaluate. 9% listen and scoff. Worse yet 90% refuse to listen at all and some even remonstrate that I attempt to talk about money. For most it is a taboo subject.

        They do not realize that the state has seceded its sovereignty to the bankers. The State is no longer in control.

        Want has to be done is to close the central banks and stop using their currency. A state (they are a fact of existence whether one likes them of not) can regain its sovereignty by regaining its control of the currency.

        This can be done by issuing currency directly from Treasury. This is done the same way as the central bankers. BUT it is not issued as a loan at interest. It is issued as a note based on the assets of the state itself. with no debt and no interest a large portion of the expense of the government budget is removed allowing an easy way to balance or have a budget surplus.

        With a budget surplus it would be simple to reduce income tax giving an immediate effective pay raise to everyone at no expense. It should be noted that income taxes were introduced at the same time as central banking. Largely it would seem to enable the government to pay the interest on the newly issued debt masquerading as money.

        Then we still have a problem of the ability od treasury to produce unlimited amounts of money and ruin the economy through inflation of the money supply. How is this controlled.

        Basically until someone comes up with a better idea the money has to represent something in limited supply. Traditionally this was silver. Abraham came out of Ur as I recall rich in kine and shekel. Kine being cattle (wealth) and a shekel being a specific weight of fine silver. Silver as produced as a by product of mining so required an investment to produce. Then the more rare, one 14th of silver in the earth, gold was used as a store of wealth and those who had some were wealthy.

        Ultimately precious metals were the money and any paper notes were the redeemable currency.

        Every time a state attempts to increase the money supply by fraudulent means we run into trouble. This is by debasement of the metal content or filing or clipping coin, or the use of fractional reserve banking and producing more notes than can be redeemed in metal.

        This is always inflationary and produces malinvestment that collapses the economy and eventually the state. The reason is usually because the people learn to rely on freebies from the government which upon which the politicians get re-elected.

        So we are back again to the people. When the people are no longer self sufficient, and self reliant, they expect others to provide for them. They demand their rights!!

        So the solution is in yourself, To be self reliant, to educate your offspring to be so, to encourage your friends to be so, to insist on limited government, to insist on honest government, to insist that the government use only honest money.

        This is a dream no doubt, but not to be abandoned. In the meantime what can one do. Perhaps Bitcoin will provide a universal currency that bypasses all states.

        Perhaps people will bypass the states with the use of universally recognised precious metal coins. Rather than denominated in fiat currency there will simply be a certain weight of specified metal. This will be a return to what used to be before the central banking system. Settlement in ounces, grams or tonnes.

        Perhaps the world will revert to the Real Bills Doctrine of 91 days to settle accounts. This was presented on this blog at least 3 times to zero comment. It involves a discount system and final redemption of the bill by settlement in cash paid by the ultimate consumer of the goods or service.

        Either of these methods bypass the state.

        Look up Atel Fekete or/and Hugo Salinas Price for more detail on Real Bills

        In the meantime we should demand that the legal tender laws be revoked so that the national currency is kept honest by being in direct competition with other currencies, both private and national.

        The solution is in your hands when you recognise it.

        However to separate the Germans from the Greeks in this is to fool us. All peoples, all countries are indebted to the point of no return. The banking system has us all. So far it is the weakest economies that have succumbed. first the undeveloped fledgling economies were raped and pillaged. Then it was the developing nations and now the developed nations.

        That is why it is in Ireland’s best interest not to consider who to be tied to in currency or trading block. Better to break the bonds and provide ones own currency, and better a currency backed by an asset.

        Read Hugo Salinas Price on how to introduce silver coin to a country. That too has been expounded on several times here also to no comment except to say that it will never happen.

        When you are ready for a discussion it will happen but not before. When you are ready for a change it will happen, but not before. In the meantime we are consumed by the central banking money system. Over to you David. What is your position on this?

        “What the mind can conceive and believe, it can achieve.” From Think and Grow Rich by Napoleon Hill.

        Now I go back to my garden to regain my sanity! :)

        • jaysus

          Excellent Tony, I think crypto currency is the way forward given the environmental damage caused by precious metal mining. Anyway have you noticed how much gold and silver China has amassed in the last few years?

          • There is already enough precious metal mined.. The money supply is best left static and not increased. Precious metal currency can also be digitized for easy use. It was already done by Gold Money.
            It is back to the future.

          • Official reports of china’ gold holdings are generally understated. Over 2000 tonnes per year is disappearing into China and the current rate YTD id over 4000 pa. Many experts calculate the minimum tonnes in official hands is 5000 with some as high as 20,000. also the chinese citizen is allowed to save too and is doing so 10 or 20 grammes at a time.

  8. “The world’s financial press, in which leading economists and analysts publish their work, never examines the relationship between the abandonment of the gold standard and unemployment, de-industrialization, and the huge chronic export deficits of the Western world powers. Might it be due to ignorance? We are reluctant to think so, given that the articles appearing in the world’s leading financial publications are written by quite intelligent analysts. Rather, in our opinion, it is an act of self-censorship to avoid incurring the displeasure of the important financial and geopolitical interests that are behind the financial press.”

    http://www.24hgold.com/english/news-gold-silver-the-gold-standard-generator–protector-of-jobs.aspx?contributor=Hugo+Salinas+Price&article=2957948282G10020&redirect=False

    • “The international banking elite always strive to obtain greater profits and to that end always seek to expand credit. ” HSP

    • “Thus, the whole world can benefit from the good things each country has to offer. It is an appealing and sound doctrine, but… there is a crucial catch: the doctrine of Free Trade was conceived for a world where the sole means of payment was gold. When the doctrines of “Free Trade” and the “Comparative Advantages of Nations” were developed, the economists of the day could not imagine a world that did not use gold, but instead relied on a fiat money that could be created at will by a single country.”(The US) HSP

    • “For further reading on the function of London as a clearing centre for world commerce, see “Real Bills” and associated articles by Antal E. Fekete at http://www.professorfekete.com ” HSP

    • “Take for example the US manufacturers of T.V. Some of the famous US factories that built TV receivers by the millions were “Philco”, “Admiral”, “Zenith”, and “Motorola”. The Japanese had better and cheaper products, and since the abandonment of the gold standard allowed Japan to sell without buying in turn, and allowed the US to buy without selling in turn, the result was that all the huge factories producing these TV’s in the US were closed down. That’s how “going off gold” closed down US industry.” HSP

    • “As the nation was de-industrialized and high-paying jobs in industry disappeared, a lack of disposable income for the population was replaced with easy and cheap credit, to conceal the stagnation in per capita income.”

    • ” No one knows the answer, because the answer is not acceptable to the thinkers of today: the correction of “structural imbalances” and re-industrialization, in other words the creation of new jobs, lies in restoring the gold standard worldwide.” HSP

    • “The “globalization” so highly praised by the financial press in recent years, has become the worst imaginable nightmare. It is no longer possible to support the unemployed with government handouts. The Sovereign State is close to bankruptcy. Thus, nature takes its revenge on those who dared violate its laws by seeking to impose false money on the world.” HSP

    • “No final settlement of international commerce debts took place in 1971, nor has any taken place since then; the truth of this statement is obscured by the mistaken idea that tendering a fiat currency in payment of an international debt constitutes settlement of that debt.” HSP

    • “Today, China and the other great Asian exporters have belatedly realized that the dollars they received as “payment” for their mass exports are nothing more than digits in American computers. If the Chinese do not cooperate, the bankers in New York can erase those digits in half an hour, and leave China with no reserves. For this reason, the Chinese and Asians in general are buying gold, and will continue to buy it indefinitely: computers cannot erase gold reserves.” HSP

      • Tony

        Much as I enjoy your ideas, can you please desist from turning every thread into your own personal rant about currencies. Its a bit tiresome and sniffles others from commenting.

        I hope you understand.

        Thanks

        David

      • Tony

        Much as I enjoy your ideas, can you please desist from turning every thread into your own personal rant about currencies. Its a bit tiresome and stiffles others from commenting.

        I hope you understand.

        Thanks

        David

        • Hello David

          I had not noticed any stifling of comments.

          It is tiresome to repeat the same thing to no real response.

          I would welcome your observations and comments on the central banking money system we have essentially for the last 100 years.

          Do you agree it is debt based and we owing every single bit of currency issued.

          Do you agree that the interest to be paid has no currency issued with which to pay it and so must be deducted from somebody else’s principal.

          Do you agree with the statement that ever increasing issuance of money by central banks does not help the general economy but instead adds to the total debt.

          Do you agree that the vast amounts of debt owed by persons , corporations, and countries is kiiling the economies.

          Do you agree that a select few are advantaged by this issue of new money but that the majority suffer only the increased prices and inflation.

          Do you agree that this creates social division where the super rich elites grow richer while the rest are poorer.

          Can you explain how this debt accumulation is to be prevented by any other way than a change in how money is created and issued into circulation.

          If so, how would you see it happening.

          Once I get an explanation of how this is to be solved
          the question will not have to be asked again. It may be tiresome but it is central to the deteriorating world economic problems which are not going away.

          Then the question to ask is, can these changes be made without collapsing the economies. OR have we already gone too far and that there is no alternative to a collapse and that all else practiced today by the Central bank, particularly the Fed, ECB, Japan, and China is merely delaying the inevitable, kicking the can further down the road a little while longer.

          Regards

  9. McCawber

    OK so we’re f^cked. I think we’re all agreed on that but maybe not on the reasons.
    The reason I think we in the doodoo and this is taking a look forward rather than into the past (mostly)
    The CBs and sovereigns have been trying to boost consumption with cheap money and it hasn’t worked and in a sense maybe it doesn’t even matter if it’s borrowed money.
    It wont’ work cos there is only so much consumption people can manage.
    A TV in every room for what it would have cost 40 years ago to buy one.
    (I bought a bush color TV in the 70s for over 450 punts, factor in inflation, relative salary, jaysus I must have been insane).

    So we’ve already reached the point where we can produce ever cheaper and better goods than we are capable of consuming and it’s going to get worse not better. You see it in turnover. Companies have to sell more items to reach the same turnover each year never mind increasing it.
    Microsoft’s solution to this looks like we’ll only sell Version 10 for evermore but you pay on an ongoing basis for the updates, so they realise there is a limit to more new product as a revenue stream so it’s basically a forever income stream, they could end giving away the S/W for nothing and just charging an annual maintenance fee. That’s just one example.
    This is not a problem that can be fixed by any monetary policy.
    This can only be fixed by a total reboot of our value systems.
    The Socialists are right, kind of, but getting from where we are now to where the socialists want us to be is one heck of solution, problem, project, I don’t know.
    Bottomline – We need to correctly identify what the problem is before we can even start to address ways to fix it.
    Does anyone agree with even the direction of my argument never mind any detail.

    • But ignoring the borrowed money factor may be an error.

      On removal of the gold convertibility in 1971 for the US dollar in the 1944 Bretton Woods agreement the US was able to issue as much currency as it wished to pay for cheap imported goods.

      As HSP points out in the essay above trade was usually implemented between peoples with each buying from the other, that is barter. Then the invention and development of money allowed settlement in money and for the money to be spent with a third party. With everyone doing the same thing money circulated freely and trade increased with each profiting from the other. Any excesses were settled in a timely fashion, within the season or 91 days with a small amount of adjustment. This adjustment came to be what silver and gold, two commodities, accomplished. It was the Real Bills Doctrine.

      There was a limited, almost fixed amount of money and so in order to buy one had to have already sold and received monetary metal in order to in turn pay.

      In 1944 the US was still tied to gold albeit loosely on a fractional reserve basis, and all other currencies were priced in turn against the value of the US dollar. De facto everyone was still on a gold standard. In 1971 the US reneged on this agreement.

      The reason they reneged is because they alone of all nations spent more than they earned, they could easily pay with the results of the printing press.

      The misery of expenditure exceeding income was catching up with the US. The US ran a trade deficit year after year. Settlement of trade was done by the surplus nations trading their surplus dollars for US gold. The US gold stash dropped from over 20,000 tonnes to a little over 8000 tonnes.

      When the US went completely off the gold standard so did the rest of the world. Now there was nothing to prevent all currencies being produced in any amount, not just the reserve currency of the US.

      First Japan and then China saved vast amounts of US Dollars. They are held as assets. But if the debt is nullified, or as you put it , it the borrowed money, does not matter.

      It matters or else the Japanese and Chinese have worked to produce cheap goods for the Americans for nothing. They have been slaves!!!

      Until there is a restriction of the amount of money issued there will always be a problem. Until the money problem, you choose to ignore, is fixed, there can be no solution to anything else.

      The reason that the CB stimulus has not worked is also ignored. It is not the lack of will to consume but the accumulation of debt within the economy. The individual debt or lack of credit, the corporate and state debt, the international debt.

      This debt is a function of the CB fiat money system and is getting worse exponentially. It can not be ignored . It is the elephant in the room.

      You have been provided with a lot of information that you do not, did not know. Try reading Antel Fakete, Hugo salinas Price, Lemetropolecafe.com or Gata.org. and The Creature from Jekyll Island by G. Edward Griffin. Gold Wars by Feri Lips, Paper Money collapse by Detlev Schlichter.

      Lovely weather again today. Perfect. Just warm enough with a nice breeze. Enjoy the day.

  10. Saudi Arabia:

    Saudi may go broke before US oil industry buckles: The Telegraph noted if the oil futures market is correct, Saudi will start running into trouble within two years and will be in crisis by the end of the decade. It said if the aim was to choke the US oil industry, the Saudis have misjudged badly. The Saudi central bank said it has become apparent that non-OPEC producers are not as responsive to low oil prices as had been thought. It added that even if scores of over-leveraged shale producers go bankrupt as funding dries up, it will not do OPEC any good. The cartel now faces a permanent headwind. Each rise in price will be capped by a surge in US output. The IMF estimates Saudi’s budget deficit will reach 20% of GDP this year. Reserves has dropped to $672B as of May from the peak of $737B in August 2014, and are falling by at least $12B a month at current oil prices.
    Saudi plans $27B in bond issues: The FT reported Saudi Arabia is returning to the bond market with a plan to raise $27B by the end of the year, in the starkest sign yet of the strain lower oil prices are putting on the finances of the country. Its resort to further domestic borrowing highlights the challenges facing the economy which is reliant on high oil prices and demonstrates the priority Riyadh is placing on maintaining government spending. Lemetropolecafe.com

    • StephenKenny

      The suppression in the oil price is nothing to do with the shale industry. There are a number of reasons that make this very clear:
      First of all, since when did Saudi Arabia ever do anything without the support of the USA?
      Secondly, given that the life of a shale oil well is so short, there is no real difficulty (cost) in closing down shale production when prices are low, and restarting them when prices rise: Just finish the active wells, shut down production, and start up again when it’s worthwhile.
      Thirdly, the countries that are really being hurt are who? The major oil producers: Brazil? Russia? China? Iran? Iraq? Libya? – notice anything about them e.g. the US/UK attitude towards them?
      Fourthly, credit ratings the bond market: Although it’s economy is almost 100% reliant on oil, Saudi seems to have no problem raising money in the international markets – it’s credit rating is AA+. Russia, with a far more diversified, and resilient, economy has a rating of BB+. It might be worth reminding ourselves that when one of the US Credit Agencies said that they were going to downgrade the US rating, the US government suddenly sued them for something or other, and their rating quickly went back up.

      The war drums in the US & UK are beating – their economies are completely banjaxed and war, with it’s resulting acceptable collapse in living standards and inflation, is their chosen path.

  11. patricia03

    Until the left can learn how to present their financial policies in a way that can be understood in three words then the world is doomed to repeat its history of devastation and war. That is not to say the people are stupid but the PR industry has reduced our thinking process to that level. Think of TINA, socialism, deficit bad surplus good, profigilate Greeks careful Germans etcetera. Such statements all have an extreme political content. Conservative parties throughout the world have, most successively, used the services of Crosby Textor to promote their policies in such a format. We haven’t a hope until we can use the same format against them.
    He aha te mea nui o te ao? He tangata, he tangata, he tangata. What is the most important thing in the world? It is the people, it is the people, it is the people.

    • DB4545

      patricia03

      What are the financial policies of the left? I’m middle of the road politically, socially liberal, financially conservative. Socialism seems like a nice idea but the reality of socialist or communist thinking just doesn’t deliver the nirvana it promises. It’s built on the premise that “somebody else” provides for everything and pays the bills. It curtails creativity and individual effort and reward for hard work. Anyone who’s visited the old Eastern Bloc States will tell that the majority of “the people” lived in fairly shabby conditions.

      The elite in contrast lived in luxury in places like volvograd in East Berlin. If you have to build a wall to keep people in it’s a prison in fact it probably defines a prison. The food wasn’t fit for dogs and industry as it existed was an environmental disaster. People will tell you it wasn’t “true communism” or “true socialism”. It was an experiment and it failed to deliver on its promises.

      We have a duty to help the less fortunate and care for children, the elderly and people with intellectual and physical disabilities. We have a duty to help people find their way back into paid employment at decent pay levels.We don’t have a duty to provide able bodied people with intergenerational welfare and housing at taxpayer expense. That applies equally to people living in Palaces or halting sites and that’s why I believe in a constitutional republic rather than a constitutional monarchy.

      It absolutely is the people but even Putin said “anybody who doesn’t miss the Soviet Union hasn’t got a heart but anyone who wants it back hasn’t got a brain”.

    • McCawber

      Socialists have earned themselves a bad name.
      The first thing they need to understand and preach is that socialism requires that everyone contributes something.
      It’s not good enough for them to say I’m entitled to a decent standard of living.
      Assume for a minute that they are right.
      You never hear a socialist or socialist politician telling you what they are prepared to do (in a positive way) to earn that entitlement.
      That attitude is what needs to change.

    • “Until the left can learn how to present their financial policies in a way that can be understood ”

      I have been puzzling over this statement , Patricia. How do you categorize the monetary policy of the central banking system? It is a collective and formed for the social good of the people they tell us. In fact it penalizes all except the shareholders of the central banks and the shadowy people pulling the strings.

      Is this left or right? A Ponzi scheme is a Ponzi scheme wherever it originates. Graft is graft. Corruption is corruption. A scam is a scam. A crook is a crook. The money system has all this and more but left or right? I have not a clue.

      • patricia03

        Perhaps I have not written clearly about what I was proposing. The right wing parties have reduced our thinking to single words which have a highly emotive political content. I gave the example of “socialism” as one of those. 99% plus of people have never read anything about socialism but just trot out silly sayings. Any society whether it is capitalist, socialist, democratic or whatever need laws that are enforced on all and without favour. No society will work without such laws no matter how good its policies. Just because people have the right to vote does not make a country democratic. Look at America, look at India, look at England. Nobody can say those countries have a democracy that looks after its people. Those countries have laws that allows a certain group of people to get rich by taking from the poor of that country. And in those countries the right have wonderful slogans that the masses, unthinkingly, not their heads in agreement. Eg “the poor are lazy, they rip the system off, there is intergeneration welfare”. Perhaps we should start asking why. Those slogans, which are effective, divide people into the them and us. Incidently those slogans can apply to the rich just as well. But we envy the rich and not the poor so we apply those slogans to them. All people thrive in environments where they can achieve their goals and that should be a goal of any Government for all its people not just a few.

        • I think division occurs as soon as left and right thinking occurs!

          The divide between the rich and the poor is a direct result of the money system. It is designed to do just that. The widening gap accelerated immediately after Nixon reneged on the gold standard, or what remained of it.

          As soon as the restriction on money production was removed the rich got richer etc.

          The point about the money system is that it is debt based. Not one person with all the comments here has reacted to this one fact.

          Every euro put into existence is a debt. The one exception is money produced as coin. All the Euros are a debt. Why are They a debt. If the holder of that note (note the word) holds an iou who owes them what. Look on the note. It used to say I promise to pay the barer on demand (a demand note) one pound sterling, 10 shillings or one dollar, 10, 20 dollars.

          What was one pound sterling. One pound of Sterling silver, a 92.5% silver alloy coin or part thereof.

          What is a dollar? It is a coin based on a dutch coin, that is constitutionally bound to contain, ning 371.25 grains (troy) of fine silver.

          http://www.constitution.org/mon/what_is_a_dollar.htm

          So in the good olde days our money notes were backed by silver of a specified volume. These notes were redeemable. Problems started when fractional reserve banking allowed more notes to be issued than there was silver to redeem.

          When Nixon finally cut the tie to redemption all currencies were also cut off.

          The currency that used to be backed by a tangible asset is no longer. It is printed and digitally produced to virtual infinity.

          It is however issued, still, as an IOU. This IOU earns interest. The interest goes to the bankers and they pay a 6% dividend to their shareholders but that does not include you. Why Is what we use as money charged interest. Preposterous .
          The initial recipients of this money use it at par value. Average Jo sees nothing but the induced inflation. The average Jo is rendered poorer by this inflation but the bankers and financial elites get to invest in lending out the money created for nothing at interest.

          Recently they when they make a vast mistake they are bailed out by the taxpayer. A double whammy to the average Jo.

          The basic answer is to be rid of the Central Banking fiat Ponzi scheme money. Money should return to being an asset rather than a liability. Then would equity return.

          All countries do the same.

          It is not a left and right issue. It is a Bankster issue. Our system of money is corrupted. It is debt at interest.

        • DB4545

          patricia03

          Explain how socialism or communism delivers useful goods and services that people actually want in an efficient manner. Explain how those goods and services are paid for. You can read Das Kapital and any number of Marxist literature on political theory and economy. Then you look at States that tried to run economies based on those theories and they failed miserably to deliver decent standards of living to their people. There are lots of things that people and governments “should” do. Then the “should” has to deal with the reality of scarce resources. Should is a meaningless platitude.

          • patricia03

            Forget it it. You all miss the bloody point!

          • DB4545

            patricia03

            Explain the point as you see it. You have the right to express your point just as much as anyone else. StephenKenny has made the point about neocons. As he points out people are being given token prison sentences,attempting to delay trials to buy time or being kept out of the jurisdiction possibly to ensure that the public doesn’t get to hear the full extent of what exactly was going on. That’s really no different from the politburos under communism. We’re living under a form of crony corporate communism. Clean government in a market economy offers the best hope but I think clean government is possibly an oxymoron.

        • StephenKenny

          It’s a point that needs to be made more often:

          Until we have a system that can enforce the rules and regulations fairly, then it doesn’t really matter what sort of social and economic organisation is proposed, or even claimed to be being followed.

          Only a very few senior financial services workers have been tried for any of the myriad financial crimes that they have all already admitted they’re guilty of (given the fines that their shareholders – mainly pension funds – have paid) – in Iceland, and one in Spain

          Given that, having new financial regulations and laws is rather pointless. Given that, voting for this ideology or that, seems rather pointless.

          Every right and centre right party in the west have turned into Neo Cons – promoting this ever more absurd debt ponzi scheme, committing untold warcrimes all round the world, and intervening and corrupting everything that gets in their way.

          Democracy? Elections? Politics? Right? Left? They’re dead – I don’t think we have a word to describe the system we’re living under at the moment.

          • patricia03

            As I see it all systems are man made and have to be continually adjusted so that all the people can have a good life. Surely this is what democracy is all about. In my view unless there is a legal system that is enforced with out favour then no system will survive. There Is no point to say it is just the structure of the economic system and that everything will be alright if we reverted to the gold system or that it is the poor who are ripping the system off etc etc. in my view we are all being manipulated by a group of people, the Advertising and PR people, who can, and do, make us believe ANYTHING. Every little prejudice we have is seized upon to achieve a particular goal. People do not seem to be aware that these one liners are actually designed to alter our perception so that we will accept a particular political point of view. A sort of divide and conquer. And, quite frankly, many of the comments here reflect that. The only hope, as I see it, is to use the same methods against them. The people want hope and surely it is not beyond the capabilities of the left to design one liners to reflect that hope. That seems the only way now. There is always a better way and the Neo liberal system that has been foisted on us over the last 30 odd years has had the most dreadful consequences for all peoples. As an aside does anybody read Le Monde diplomatique? The English edition. It is a joy to read.

          • StephenKenny

            I absolutely agree.

            Your point on the ‘one word’ PR is interesting. A lovely example is the derivatives market. It was the instrument that caused the financial crisis, the visible part of which that started 2007. One of the world’s most successful investors, Warren Buffett, describes them as “financial weapons of mass destruction”. They were all over the news in 2008. Then suddenly, inexplicably from a free market point of view, they vanished from sight. They are simply never mentioned.

            The divisions you mention have become extreme: race, sexual orientation, gender, age, wealth, and so on, have become the main axes of politics. These pressure groups are important, and certainly should have a voice, but it’s become completely unbalanced. The UK government has recently announced that they’re going to use their anti-terror laws against school teachers who say that same-sex marriage is wrong, but are quite happy to ignore the massive scale of fraud and money laundering that dominates the UK financial system.
            The media roared their approval of the former, but of course, failed completely to daw any comparisons.

            The independent media and social institutions have been belittled to the point of near extinction.

            Something that the Snowden leaks told us was the US & UK intelligence services have large departments, dedicated to intervening in online forums of debate, with the intention of rendering them effectively irrelevant. At GCHQ in the UK, it’s called JTRIG — the Joint Threat Research Intelligence Group.

            https://firstlook.org/theintercept/2014/02/24/jtrig-manipulation/

          • “There Is no point to say it is just the structure of the economic system and that everything will be alright if we reverted to the gold system ”

            What was said Patricia, is that, if the money system is not changed to an honest money system then all other changes and reforms will be in vain. This point is still not recognised.
            The control and manipulation start with the money. Then all else is bought and paid for and controlled. It starts with the politicians being bought, the media owned and controlled, the educational system subverted.

            Saying on the one hand that we are reveret to communism , an extreme left position and on the other that hopefully the left can counter the current propaganda phrasing is confusing to me.

            I say again. Left right dialog is divisive and confusing and we are not in a left right dialogue here. Extreme right and extreme left result in both being dictatorial and authoritarian.

            Let us concentrate directly on the issues without political reference.

          • StephenKenny

            Her point Tony, is that such reforms are impossible in an environment when the rules and regulations are not being enforced.
            So the debate about which reforms to enact must go hand in hand with equally vehement, lengthy, and well thought out considerations on the need for a properly and fairly run legal and regulatory system.
            I’ve read you pieces for many years, and I would encourage you, as well as others, to give considerable weight to these considerations in your comments.

            Knowing where to go to is one thing, but we also need clarity on the obstacles in our path.

          • DB4545

            Patricia03

            I think most people can see through the bullshit and they know when someone is trying to manipulate or influence them and not to their advantage. I read that article about Darndale and it was a pure joy to read. I was expecting inarticulate rage but what I read was very articulate rage. When that rage is translated into action nothing can stop it. I hope the action is just as articulate.That’s our lesson from history.

          • HI Stephen.

            “Her point Tony, is that such reforms are impossible in an environment when the rules and regulations are not being enforced.”

            I agree with the sentiments. I find confusing the left right dialog, the us of the pat phrases she decries. Neo Liberalism is lost for a definition for example.

            Of course the rules are not enforced. The regulators turn a blind eye , to quote myself several times. The press is biassed.

            The stock market is supported by government/central banks. The bond market too. There is so much interference we agree there is no real price discovery, therefore no market at all.

            My position is yes all these things need attention but to forget and ignore the prime cause of it all is a grave mistake repeated for over a century.

            That is why I harp on and on until finally somebody “gets it”.

            You know we have invited David to discuss this issue of the money system but he stays away as he too is a part of the MSM. However we have the privilege of using his blog to vent for which I thank him.

            So Patricia, too, does not read what is actually said but infers only what she thought it means. I have never disputed her points but I do not this division of people into left and right etc. It is artificial and confrontational. People have varying views on this and that and some may be deemed either left or right. I prefer to see if it is actually right or wrong.

            Nothing personal Patricia, Keep up your fine commentary and argument.

    • goldbug

      @PATRICIA03 GOOD POINTS!

      WHAT IS SOCIETY? ANTI-meAN?

      ALL MEN ARE CREATED EQUAL? -> DO NOT ASK SCIENCE.

      “BEFORE GOD” -> A MORAL AND A FAITHFUL PEOPLE?

      NOW….

      NEVER FORGET -> GREEDY PEOPLE PROPAGATE MEAN IDEAS

      -> WANT THE MORAL MAJORITY TO REPEAT.

      ANSWER = USE DEMONIZATION.

      FAITH AGAIN! HA.

      AND NOW…THE DOUBLE CROSS

      -> DEMONIZATION OF FAITH!
      -> ATTACK MORALS

      CHECKMATE!

      -> THE DEATH OF SOCIETY.

      -> THE BIRTH OF MEAN.

    • coldblow

      I love this comment. It reminds in its earnestness me of CBWeb’s posts here back in the day. He’d surely approve of your desire to raise people’s consciousness (along approved lines of course).

      Which version of socialism had you in mind, or is it all good? Is it the old hopeless utopian kind or what used to be regarded until fairly recently as scientific (but is another of those things, as Stephen Kenny might say, everyone has inexplicably forgotten about, though when I was in my twenties the world was full of experts who demanded (and received) a respected hearing). Do you think Communisms is a great idea in theory only it can’t be put into practice?

      I was reading The Foundation Pit (by Platonov I think) this morning. It is set in the immediate post-Revolutionary period from what I can make out. Here’s a part of what I read:

      ‘Prushevsky took his head away from the planks and thought. Far away a nighttime factory construction site was shining with electricity but Prushevsky knew that there was nothing there except dead building material and TIRED UNTHINKING PEOPLE (my emphasis). It was he who had thought up a single all-proletarian home in place of the old town where to this day e people lived by fencing themselves off into households; in a year’s time the entire local class of the proletariat would leave the petty-proprietorial town and take possession for life of this monumental new home. and after ten or twenty years, another engineer would construct a tower in the middle of the world, and the labourers of the entire terrestrial globe would be settled there FOR A HAPPY ETERNITY.’

  12. http://www.gata.org/node/15625

    Bank of England study: Gold is best money but buying it risks offending U.S.

    • McCawber

      Yeah but just think on this.
      If you ask everyone as in you and me to pay for things in gold we are all goosed.
      So maybe the return of a modified gold standard is required but how do you re-introduce the financial world to a gold standard without precipitating what you are trying to prevent.

      • Examine the previous writings. People do not pay for everything in gold and never did. A system of Real Bills developed which was essentially a credit granted for 91 days to pay the bill.The final purchase was made in cash or as the case was and could be in coin.
        Silver was and will be the coin of day to day transaction.

        Read Hugo Salinas Price on the introduction of the silver Libertad coin to Mexico.

        http://www.plata.com.mx/mplata/articulos/articlesFilt.asp?fiidarticulo=257

        • McCawber

          Stop splitting hairs, it’s money backed by gold.

          • HAHa I don’t have any hair left to split.

            Since when is silver money backed by gold?

            What have you got to say about the basic principle of introducing silver coin as a parallel currency to fiat notes. Did you read the article?

            Gold is traditionally used in international settlement and in large transactions. Silver is the day to day coin.

            It will not be long before a car will be bought for a couple of ounces of gold. BUT a tank of petrol will be a silver one ounce coin.

            Did you read about the Real Bills Doctrine.

            Did you research Antal Fekete or Hugo Salinas Price? Have you read on the history of money? Do you know why the money system must be removed from the control of the central banks.

            We are in trouble and it is not to be avoided. gold or silver will not precipitate an action not already baked into the cake.

            We need an alternate system and we are a sitting duck for the IMF special drawing rights which will hog tie the world economy and we will be a 1000 years getting free again.

          • McCawber

            No No No yes No No and so on.
            Paralysis by analysis.
            Give me your conclusions on what should be done as in how would you actually reintroduce the gold standard.
            The real bills thingee made a lot of sense tbh but it would be a pretty tough regime to re introduce.
            The only people who have the power to change anything are the politicians.
            They gave the CBs their power and they can take it back.
            But if/when they take that power back they have to know why, what where when how etc.
            On top of that they have to tell their electorate (beforehand) as the Tories did re reducing debt that there is going to be prudent management of finances required.
            Having done that they then have to do what they say they will do and it has to work and be seen to work.
            Does that seem like a reasonable brushstroke sort of approach.
            As a prerequisite – Any country contemplating this course of action has to have it’s books balanced because it’s all about confidence at the end of the day.
            And that’s only the beginning.
            Before you can reintroduce the gold standard you have to have the stuff physically stockpiled.
            Just starting the stockpiling process would cause problems. Your currency would start to strenghten and yadayadydadaaa.
            This as they say is not a one year project, it took a long time to dig the hole and it’s going to take a long time to undig it.

          • It is not required to have a stockpile of gold to be a part of a gold standard.

            Just a little will be enough as trade will balance most of the transactions.

            Only countries with something to export will be able to buy. No more buying on central credit will occur. All trade to be settled under a Real Bills doctrine within 91 days. Any o/s balance to be settled in gold transfer.

            Country A produces goods. Sells to B.
            BB proces goods and sells to A If in equal value no adjustment needed.

            Therefore a country not exporting will be unable to import. So such a country will have to innovate and produce a surplus that can be sold. It will not be easy but at least such country will not be indebted to a bank.

            Other countries buying goods or the corporations doing the transactions will use the real bills system. Only when the final sale takes place to the customer is coin used or its equivalent. This coin flows back through the system of bills and redeems them and the final producer is thus paid.

            If currencies are backed by gold then if there is outstanding accounts at the end of the period the adjustment is made in gold.

            Ireland with 6 tonnes would be fine if there was a basic surplus in trade or not too much of a deficit. If the deficit mounted then the gold would be depleted and Ireland would have to start living within its means rather than buying what it can not afford.

            The Gold backed system imposes discipline on to the market place. It produces a stable economy.

            When all is said and done there must be a recognition that the current money system is a scam and a Ponzi scheme. When the people are educated to this then they demand a change from the politicians. It is after all the peoples choice as to what to allow.

            One choice previously discussed is local currency and bypass the fiat and only use it when one must.

            The problem is that there is not a change to a bigger scam like the IMF Special Drawing Rights

  13. Off topic and out in left field, so to speak.

    https://www.dollarvigilante.com/blog/2015/08/06/pope-join-forces-with-obama-for-warmist-propaganda-near-shemitah-end-day.html

    Activities of the one world government elite. Financial collapse, social mayhem, Climate scare mongering, Anti terrorism. etc. We need to pull together to fight these evils and so need a one world government.

    • McCawber

      Will a one world government ban CFDs, Spreads, Shorts, restrict leveraging etc AND regulate CBs.
      At the end of the day CBs were handed their powers by Pontius Pilate’s decendents.
      Methinks a one world government will be like the HSE – we’ll still have all the local politicians feeding at the hospital boards troughs.
      The EC is the template – OMIGOD – Just be careful what you wish for.
      We just need more effective government, simple as.
      And here’s a pointer, the politicians and the civil servants are not one and the same thing.
      Yes Minister is a very accurate portrayal of the reality.
      You have a lot more influence with a politician than you think unless you’re a nut job of course.
      Our TDs and ministers are accessible at their clinics and you will get a chance to talk one to one to them but please don’t waste their time. They don’t want a list of links to whatever they want a condensed sound bite with some practical input.
      IE You’ve to show some commitment.
      You do us all damage if you waste their time much as we don’t like our time being wasted.
      I would urge you all to consider visiting your local TD or minister if possible, just do your homework first. They’re not interested in just having a chat with you.
      Let’s know how you get on and btw they are much more attentive during election year for some reason.
      And yes I will be taking my own advice in about a months time.
      I have a particular interest in mortgage holders in negative equity who have been left high and dry by some foreign banks who have upped anchor and departed our shores.

    • Of course I do not believe in one world government, but that is the projected course.

      I believe in local government. Dispersed authority with a loose federation of cooperation. A canton system of direct democracy. A break up of the state influence and control. One world Government is NOT what I wish for!!! All I was describing was how it is SOLD to the great unwashed.

    • StephenKenny

      I enjoy reading people like Jim Sinclair, they make sensible and rational analyses. The problem is that we’re not living in rational times.
      The more you look at the financial and economic system, the more you realise that market forces play almost no significant role at all.
      This isn’t some crazy conspiracy theory stuff, these are simply statements of intent, and statement of past activity, by central banks and governments.
      Total UK government and consumer debt has risen by £1trn since about 2007, and had also risen by £1trn over the previous 10 years. It’s interest rates have been at a 350 year low for 5 years. Government and consmer debt combined is rising by about £120bn per year at the moment. Over the last 12 to 24 months, it’s government deficit has fallen by about the same amount as the consumer deficit has risen.

      None of this activity has had any effect at all on any of the indices that one would expect it to – interest rates, currency rates, the stock market and bond markets. Western government have repeatedly stated that they are intervening, on a massive scale, to keep all the various rates where they want them.

      The system of price discovery (ie what is the value of things) is completely broken. Increasing inversions of production and retail prices of primary products (food, energy, etc) are starting to appear. In a free market, these things are impossible.

      This system cannot be maintained without the full support and backing of the media – after all, if the intention is to intervene in real estate and stock markets, to persuade the public that all is going well, it’s vital that the public’s news sources support this view. The western media are clearly wholeheartedly behind this.

      In this environment, rational market analysis has no place.

      During the 19th century, the study of ‘economics’ was called ‘political economy’ – it really does seem a more appropriate term for it.

      As Nomi Prins said in her keynote to the BIS conference of the worlds central banks and finance ministers, and to no dissension, the western economies are hopelessly beyond repair.

      Solutions can only be in the policital realm, and with the US & UK in full war mode, the future can be summed up by “war is the continuation of politics by other means” (Carl von Clausewitz).

      • Good Stephen!.

        “Solutions can only be in the political realm,”

        But what is the solution? Are the population educated enough about the problem to get the politician to do what is needed.

        So far, any politician stepping up to do the right thing regarding the money system has been assassinated.

        Abraham Lincoln died after he was going to print treasury bills directly from the Government and tell the London Bankers, House of Rothschild, to take their money and stuff it.

        JFK Died conveniently after introducing a silver backed treasury note that would run parallel to Fed Reserve notes which are unbacked pieces of worthless toilet paper.

        Saddam was invaded and died after saying he would sell Iraq oil in Euros avoiding the US petro dollar.

        Gadaffi dies after declaring that the ancient gold coin, a Dinar, would be the money of a Pan Africa trade area.

        Putin is painted as a monster after making a trade pact with the Chinese to deal solely in bilateral trade ignoring the US Petro dollar.

        There are others. The point is that a politician can go it alone. It requires the people to rise up and demand it. The US et al will defend the current money system to the death of millions as the dogs of war are unleashed.

        Our only hope is that the adversaries are strong enough to resist and exhibit enough restraint that they refuse a physical war.

        That is where WW 111 is already raging, in proxy wars and in the financial world.

        • AH! missed the word NOT
          politician can NOT go it alone.

        • StephenKenny

          You make very good points, I suggest that Patricia’s original point is that this mass movement can be mobilised by bringing the truth, news item by news item, to people’s attention.

          I visited various East European countries in the 70s and 80s, and the general attitude towards the news media was that of general disbelief. They had a saying that to get the truth in the newspaper, you started at the back. If the paper said that Dynamo Moscow beat Dynamo Kiev 3-0, then they had. As you turned the pages, you got less and less truth. I feel something similar today.

          • DB4545

            StephenKenny

            “News is what somebody doesn’t want you to print, all the rest is advertising”.William Randolph Hearst. And he should know.It’s as true today as a century ago. My uncle worked as a proof reader for the old Irish Press. He only read poetry outside working hours because he said it was the only thing he could read that had some truth. It took me a long time to realise the truth of what he said.

          • “by bringing the truth, news item by news item, to people’s attention.”

            Agree 100%. As you point out the MSM is not doing it for us. It will be the alternate media such as us talking to each other.

  14. “In short, French taxpayers will be the ones to pay a hefty price for Hollande’s silent obedience to Washington, but will they take it lightly or will they flood the streets – time can only tell.”

    http://journal-neo.org/2015/08/07/hollande-shot-himself-in-the-foot-by-canceling-the-mistral-deal/

    France, amoungst others is a Vassal State of the US. Again, money and power politics talk to leave the French taxpayer further burdened and France’s reputation in tatters

  15. coldblow

    I used to have a little brightly coloured tin globe when I was about eight or nine years old. The British Commonwealth and former Empire countries were red (there was tiny red smudge at the top of Ireland). You could pull it apart at the equator and stick it back together again and even kick it around the floor if you wanted. I’d spend hours studying it and I was fascintated by the countries lying on the equator.

  16. patricia03

    Thank you all for your interesting comments. I have just had my breakfast and it is snowing here! I’ll be staying inside today methinks.
    I am not trying to bring politics into all of this because I have not read anything on communism or socialism nor have I visited any of the countries of old to see how they practised those sort of ideologies. But I cannot imagine that such bad practices are confined to “socialism” or “communism”. However I do see what has been done to my wonderful little country in the last thirty years where the people have been shafted by both “left” and “right” governments. I can also see how it has been done and how the people have been and are being manipulated by those groups who have a lot of money and who employ the advertising and PR companies to promote what they want to achieve. It is not pretty. It seems to me that every time the world has tried this Neo liberalism form of economics then the consequences have been major wars. I certainly don’t want my grand children being sold a war on the basis of “the greater good” as my father and my grandfather’s generation was.

    • coldblow

      Where are you that it’s snowing? It’s no harm at all to bring politics into it, in my opinion, and to take a risk and push the boat out with a strong argument. It gives others the opportunity to think and reconsider their own positions. You are right about neoliberalism. I’d recommend Michael Hudson’s site.

    • coldblow

      I forgot to ask if that quote was from Maori or some other Polynesian language. I think many of them have a very restricted alphabet, and range of sounds, but they still work (obviously) as languages.

      • patricia03

        I am in Christchurch New Zealand. Where the earthquake was. Some times we have snow but very infrequently. None today. Yes it is a Maori saying, which, I think is very beautiful.
        I don’t know whether it is a good idea to bring politics into a discussion because straight away people take positions. In my first post I just mentioned some words that are used, not to make us think but to make us take a position and straight away some people did and accused me of wanting a political system like Eastern Europe! It was such a brilliant example. There was certainly no thinking there.

        • coldblow

          Language is loaded on both sides of the left-right divide. The neoliberal slogans still dominate mainstream economics while the leftish slogans totally dominate social commentary: tolerance, freedom, etc. You were incorrect in your original post to refer to the former as conservative as they are anything but in social and moral matters. Social conservatives are marginalized to a degree that would have been unthinkable (except to the most perceptive) a few decades ago.

          I know very little about the Maoris but I understand they were warlike and exceedingly cruel to their neighbours in the past.

          • How to define Liberalism.

            The program of liberalism, therefore, if condensed into a single word, would have to read: property, that is, private ownership of the means of production… All the other demands of liberalism result from this fundamental demand. Von Mises

            https://mises.org/library/liberalism-classical-tradition

          • patricia03

            Yes, you are quite right. Language is used on both sides and all such words require thought. Sometimes I wonder whether you can divide slogans into war and peace. On the whole women are more peaceful than men and more women vote “left” policies while men the reverse.
            Yes, I have read that the Maori was very cruel but probably no more than the Anglo Saxon of our era. I don’t think any race could beat the Anglo Saxon in cruelty and violence.

          • Try the Normans, Patricia. Particularly the Anglo Normans. How about the Romans? They destroyed Jerusalem ad 70 today’s date. Razed the city to the ground. Slaughtered all they could reach, over a million by one account I read. Enslaved the rest.

            Any of mankind’s little people are as nice as pie one day and sticking the knife the next. There is no such thing as “The Noble Savage”.

            We are all as good or bad as each other. History is full of massacres anywhere you look. Your statement about cruelty and Anglo Saxons is as general as the one that says all Irish are drunks.

  17. StephenKenny

    People talk a lot about the the stock markets not reflecting the underlying economy, but being some sort of crazy casino, where financial services companies, supported by considerable government intervention, reap enormous profits. This article gives a very lucid description of how this has been happening in the media sector:

    http://www.zerohedge.com/news/2015-08-08/flushing-cash-casino-media-stock-swoon-shows-it-works-until-it-doesnt

    What’s interesting about it, is that the fundamentals (turnover & profit) of the big US media companies are clearly in poor shape. But by using a combination of very cheap money, and co-called ‘financial engineering’ they’ve made their share prices boom and boom and boom.

    I urge you to read it. When you do, bear in mind two things:
    For every buyer there is a seller, so when a share prices rises and someone sells to make a handsome profit, someone has bought at that high price and has made a loss.
    The vast majority of shares in the worlds stock market are owned by pension and savings funds. The places where the majority of people put their savings and pension contributions.

    • coldblow

      You mentioned above about intelligence services disrupting online forums. I had heard this before but wasn’t sure if it was true, or if true exaggerated, but I didn’t realize Snowden had leaked about it. As it happens I was looking at the Irish Economy blog yesterday and this subject came up, with dark references made about one poster having large ECB resources at his disposal. I had just been asking myself what he does for a living as he is always posting there.

      http://www.irisheconomy.ie/index.php/2015/08/03/j-a-hobson-on-the-eurozone-crisis-sort-of/

      Colm McCarthy asked him who he was a couple of weeks ago (he uses initials) in relation to the Greek crisis.

      I suppose anyone who does this probably gets a kick out of it and that this more important than the money. Wouldn’t it be nice if they were exposed?

    • coldblow

      I remember Will Hutton explaining how what he saw happening in the City formed his political outlook, with companies borrowing heavily to asset-strip perfectly good companies. I suppose something similar happened with Arnotts in Dublin recently. Hudson also points this out. Often the main attraction is to buy a company to get hold of the pension fund, apparently. Talking of pension funds, as you say they are (of necessity) heavily involved in the casino yet I think the 1% use the threat of ruin to the pension funds as cover for themselves.

    • coldblow

      Michael Hudson here (6 mins onwards) saying that only 9% of company earning are for new investiment instead of stock buy-backs, dividends etc.

      http://www.nakedcapitalism.com/2014/10/michael-hudson-stock-markets-volatile.html

  18. Afternoon, thanks for all your comments in the past few days, excellent stuff. Cheers David

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