January 25, 2016

Lessons from a literary passage to India

Posted in Sunday Business Post · 68 comments ·

I now know what the expression “dirt poor” looks like. It is dawn in Jaipur, India. I am watching crowds of filthy, impoverished men on the side of a dusty road pour buffalo milk from large vats into smaller cups. They are hungry. The masala chai is brewing as emaciated cows graze in rubbish skips, unfazed by the armada of tuck tucks, motorbikes and buses that transports the masses in this extraordinary and extraordinarily beautiful city.

This medieval breakfast scene is only about six hundred yards from the amazing Jaipur Literary Festival, in fascinating Rajasthan. Jaipur is a brilliant festival with excellent talks/panels, wonderful writers and thinkers – at least as interesting, and I’d say definitely more insightful, than Davos. But even here in the middle of India, Davos is in the air.

The collapse in stock markets and the flight of money to the US, as well as comments by Mario Draghi indicating that the EU economy is going backwards, not forwards, dominate this morning’s Hindustan Times.

Even though life on the streets here is about as far away from the trading screens of the financial casino, global financial sentiment matters to this remote city. It matters because India, like all developing countries, needs outside investment. Such is the contagious nature of financial markets, if the climate for global investment changes and the moneymen of Wall Street get nervous, projects that would have been financed in India, don’t get financed.

In addition, as India is a huge exporter, it needs the rest of the world to buy its produce.

Just walking around this city underscores the scale of the challenge the Indian government faces. Quite apart from economics, India faces the resurgence of the ancient Muslim vs Hindu rivalry. The other stories grabbing local headlines this morning is an Islamic fundamentalist terror cell uncovered in Delhi.

These problems apart, the scale of India’s economic and social achievements are staggering. This huge population is undergoing a transition from traditionalism to modernity at breakneck speed and it has managed to do this with practically no violence. And, unlike China, India is a democracy.

The economic stakes in India, like other developing countries, couldn’t be higher. We shouldn’t forget that the vast majority of the world’s population live in the developing world, and most of them live here in Asia. The developing world simply can’t afford a recession. If the material and career expectations of the billions of young people are dashed, the chances of a peaceful transition to modernity could be jeopardised. This is why Davos matters to Jaipur.

Since the start of the year, financial markets are in something like a spasm. This time, the worry is China and the impact of collapsing oil and commodity prices. India – as a massive energy importer – should benefit from this, but it is lumped together with the rest of the developing countries. As these poorer countries are regarded as more risky than Europe and America, international money flees from developing countries at the first sign of worries about the broader global economy.

There are five specific ways in which crises in developing countries can be more amplified than similar crises in, for example, the US or Europe.

The first one is the general trend for emerging countries to issue debts in dollars or Swiss francs or euros – not their own currencies. So when there is a crisis, the first thing that happens is the currency of the developing country falls. This, straight away, makes paying back debt which is denominated in dollars much harder. We saw these problems emerge in Thailand and Mexico in the 1990s. Today, countries like Turkey and Brazil are similarly afflicted.

A second point is that when there is a crisis in a developed country as there was in the US in 2008, interest rates fall to cushion the slump. In developing countries, the opposite happens, amplifying the recession. At the first sign of a crisis in confidence, money leaves the poor country and this drives interest rates up, not down. So the “normal” way in which interest rates fall in a slowdown, doesn’t happen. In fact, interest rates go upwards, making things worse.

The third difference is that when a crisis occurs, the private sector gets nervous and stops spending. Usually, the government of a rich country will react to this by increases in spending to compensate for the fact that people are nervous and are not spending. This, again, helps ameliorate the downturn. However, this crucial option isn’t available to the developing country as it is locked out of the world’s financing markets. Again, you can see how policy doesn’t work in poorer countries as it is supposed to.

A fourth major difference is to do with global priorities. When there is a financial crisis in America, the G7 meets, the rich world’s central banks coordinate activity and old rules are torn up to deal with the emergency.

The aim is always to help the rich country that needs help. But when poor countries get into trouble, they get lectured about their bad behaviour, their dodgy standards or their cronyism. The global economic narrative is totally different if the country is developed or developing – rich countries get help, poor countries get lectures.

A fifth major difference is that developing countries, like India, start any crisis in a worse position. All social and economic indicators such as health, infant mortality, education, literacy, clean water as well as typical financial benchmarks like wages and capital, are much lower in poor countries than the West when the crisis hits. This means that it is harder to rebuild after the crisis because the societies are fundamentally weaker.

Economic growth is the essential background noise for these countries to move forward.

When I look around me at both the chaos and the optimism here on the streets of Jaipur, it is clear that the difference between economic success and failure is wafer-thin; but the human cost of economic failure in this part of the world is almost too dreadful to contemplate.

  1. michaelcoughlan

    Hi David,

    Here is a simple idea and now that the Cubans are embracing that which they were brainwashed into despising; Freedom; to help those misfortunate indian dirt poor men and that is embrace co-ops and build a locally based economy from the bottom up. For example; get them to turn some of the buffalo milk into mozzarella and sell it at the farmers co-op markets.


    The co-ops should create there own currency and as they create wealth they can manage their own currency supply couldn’t they!

    I am just wondering if the indian statistic people also don’t bother counting all those desperate men just like they don’t bother counting many of the unemployed men in the US? Considering that the future for the young in the US and Ireland and many other “developed nations” will be less for the young generation than the previous one do you not think that there is a connection between what you are looking at and where the west is going?

    • Bravo. And many forget that the women are even poorer.

      While extolling co-ops and localism, et’s also remember that many of today’s “developing nations” were doing just fine (or at least a lot better) ,until their supposed benefactors came along with corporate predation and globalization. That these countries can no longer even feed themselves is very much our sin.

      • michaelcoughlan

        They can’t feed themselves because they haven’t been trained to do it. George Carlin; “The people who own everything don’t want an educated citizenry capable of critical thinking”


        • contact23

          it can be hard for small farmers to compete with the scale of big ag, we can all feed ourselves but with food so cheap the incentive is not there for investing in longer term sustainable agriculture

          • michaelcoughlan


            Its not about doing to trade the produce its about having it when you need it when the currency hyper inflates. Put in a few spuds and onion sets in your back garden and it will take less time than the back 9 on a golf course.

          • McCawber

            Broccolli is a great veg. Grows almost all year round but you have to keep picking it.
            Spuds can be stored.
            Pasta in the packet has a fairly long shelf life.
            A full freezer is handy too.
            Should we be buying ourselves wind turbines or PV solar panels or is that a bit OTT.
            Take up fishing maybe.

    • Grzegorz Kolodziej

      Here is a paradox of the Left: the same people who created a growth model based on debt paid by ever-expanding populations (Keynes) were responsible for promoting the homosexual agenda in Western culture:

      Keynes’s “Apostles”, Hollywood – “Hollywood is controlled by homosexual Jewish men who expect favors in return for sexual activit”

      - John Travolta.

      “I bet you 85 percent of those changes, whether it’s in Hollywood or social media are a consequence of Jewish leaders in the industry. The influence is immense, the influence is immense. And, I might add, it is all to the good. ”

      Vice-President of the US, Joe Biden

      which means less kids, deminishing generation renewal and more debt per capita.

      What a paradox it would be if the only people defending gay people and sexual freedom were the conservatists (like Messrs. Peter Hitchens and Jaroslaw Kaczynski) or national socialists (like Madame Marine Le-Pen) because the feminists were tight-lipped when this (and the events in Koeln) was happening:


      The whole Europe is screwed demographically; if anything, Ireland had the best demographics in western Europe when I arrived here; so one had to lock people in half a million euro badly built commuter town 40 year mortgage houses (no “I’ll hand the key to the bank rule here” – a feudal service like peasants in 16 century Poland except the taxes are much higher) and make them postpone their decisions to have kids.

      There was no bondholders referendum in Ireland, the Lisbon Treaty referendum was repeated – but the gay marriage referendum went as swiftly as the German invasion on France and the opponents were not allowed to speak on the “conservative” Fine Gael Ard Fheis.

      There was an interesting documentary on RTL (German TV station) on the pension system. CDU introduced it in the 60s to prevent SPD coming into power; they knew that taxpayers funded pension system will collapse because the demographics, but their prognosis was that this will happen after the year 2,000 by which time they would be dead – following Keynes’s advice.

      • Grzegorz Kolodziej

        And by the way, since France has become he most anti-semitic country in the world according to Israeli university, the Jews started to line up to for Polish passports:


        So Marx was right on one thing: history repeats itself as a farce: conservatives might become the only save haven for gays, transvestites, post-hippies and orthodox Jews.

        When and if Europe starts to counter-act the Muslim infiltration, I propose to lock the left-wing activists in cells with Muslim terrorists – so that their can embrace their multiculturalism, but mainly to pay them in kind for the lack of courage to speak when thousands of German women were molested in Koeln and imposing media censorship in German media for a week on that topic.


      • michaelcoughlan

        “Here is a paradox of the Left: the same people who created a growth model based on debt paid by ever-expanding populations (Keynes) were responsible for promoting the homosexual agenda in Western culture”

        Hi Greg,

        Just so you know I am not of the left and I didn’t take that inference. I am absolutely thrilled you put this up and lets apply the logic to Ireland.

        The banks need an increasing population but a decreasing birth rate which is exactly what they got in Ireland. There is no paradox and I will explain it. They will increase the population in the west by flooding the place with all the desperate refugees from Africa and kill the family unit here in Ireland so that they can reduce workers to indenture slaves which is exactly what suds is preaching. They need to transfer more and more wealth to banks to stop the derivatives bubble from imploding.

        The following two exceptional gay men did something very very brave. They advocated a NO VOTE in the marriage referendum for the specific reason of not allowing the government undermining the rights of the family and protecting the rights of children to a mother and a father.


      • McCawber

        Have to say this.
        Your contributions are most enlightening and all the more valuable because you see us as we are rather as we see ourselves.

  2. michaelcoughlan

    Hi David,

    I wonder when cunt head was talking through his hole at Davos did he neglect to mention the following;

    Many major Irish hospitals are turning away new patients, The largest ever emigration out of Ireland has been 2015,2014,2013, and the native Irish birth rate has dropped consecutively for the last 5 year.


    Stiglitz said at davos he was flabbergasted at the ability of the Irish to suffer pain. If only he knew we are in fact such a race of scum we eat our young as our girls especially are proving by voting with their legs and their fan%ies!

    Sooner or later you won’t have to travel too far from Dalky to witness the same type of scenarios as you are in India.

  3. DButs

    Hi David
    I’am delighted you visited India its truly an amazing country and set you thinking why our small country is proving so so difficult to manage properly by all our elected governments since our independence.

  4. Grzegorz Kolodziej

    “The first one is the general trend for emerging countries to issue debts in dollars or Swiss francs or euros – not their own currencies.” – assuming that the value of the dollar will collapse (because either FED does QE4 and loses its credibility or it goes back to zero interest rates – and loses its credibility)?

    Dollars-denominated debt did screw up Poland which borrowed $20bn in the 1970s (buying overpriced obsolete technologies from France) and had to pay another $20bn in interest rates in the 1980s – which was an opportunity to write-down the interest rates in the early 1990s in exchange for shares in state companies.

    Now when the new Polish government told the German and French supermarkets “you actually have to pay some taxes” (they were exempted from paying taxes) Brussels went insane from rage.

    “interest rates fall to cushion the slump” -m fall from what 0.25%? After 7 years of zero (compared to Greenspan’s 1.5?). And this is supposed to jump start the economy?

    The opposite might happen – the next crisis will be a huge wealth transfer from the most indebted to the least indebted countries.

    “Usually, the government of a rich country will react to this by increases in spending to compensate for the fact that people are nervous and are not spending.”

    But you need jobs and good demograhics for that and new shmucks to buy your government’s bonds. The US and Europe has none of that and Europe does even have proper armies (apart from the UK, France, and Greece, paradoxically, and Poland in 10 years time).

    “central banks coordinate activity and old rules are torn up to deal with the emergency.”

    But you still need shmucks from developing countries to buy their bonds and currencies.

    “All social and economic indicators such as health, infant mortality, education, literacy, clean water as well as typical financial benchmarks like wages and capital, are much lower in poor countries than the West when the crisis hits.”

    Apart from clean water (I and I am not even sure of that) this does not go for China and India may become a new China in the next business cycle.

    • Grzegorz Kolodziej

      “write down” – write-off

    • CitizenWhy

      To the wealthy of this world, the dollar is the only reliable currency. A currency is backed up only by the size of its economy. The huge US economy is not confined to within its borders. It can tolerate mass poverty and still provide very well for the wealthy, US citizens and foreigners. Al the blah-blah about the Chinese yuan, the Russian ruble , the Brazilian whatever replacing the dollar was so much gas and the true unreliability (for the rich) po these currencies has been revealed. The silly Saudi initiative to replace the dollar as the currency of international settlements and oil sales and purchases has collapsed. And who today would trust the Saudi economy? its only strength is its investments in the US. US corporations are hoarding nearly 2 trillion dollars in cash, so they seem to think they can rely on the dollar as Europe continues policies that make the Euro unreliable. perhaps teh US corporations are waiting to buy up businesses and land in Europe when the Euro unravels.

    • McCawber

      I never said getting from Dystopia to Utopia was going to be painless or easy.

  5. coldblow

    David’s article makes a lot of sense.

    Raymond Crotty classed India as ‘undeveloping’ rather than developing. By that he meant that the impact of western colonialism (what he called capitalist colonialism) on non-capitalist (ie non-European) societies. I suppose people would be thinking in terms of the damage done by denying these countries their freedom or their self-determinatino, but he would have been thinking of the effects of alien institutions, in particular the institution of private property, and its accompanying legal system, backed up by metropolitan force of arms, which had developed organically over millenia (his spelling) in Europe. Private property was particularly harmful when it came to land, which when you think of it was by far the most important element, because it had hitherto been a collective reource for the benefit of everyone.

    If I have remembered this right, Crotty put India’s land ownership in the same category as Ireland’s which he condemned as unjust and unproductive. He identified other categories of post-capitalist-colonized land ownership in South America, Africa and East Asia. In all cases output declines.

    Crotty died before India emerged as a major economic power (or this is how she is now portrayed) but progress in this direction had been obvious for some years beforehand. He would have classed the country as undeveloping because, although there was a growing and increasingly wealthy middle and upper class, this would have been outweighed by an increasing number of people, and/ or proportion of the population, living in poverty. He put Ireland in the same boat, just that in her case there was the unique escape valve of immigration to ensure the relative prosperity of those who had secured a foothold and were not obliged to leave.

    I don’t know if Crotty has been proved right but I suspect that he has, or at least I haven’t seen anyone come up with a better set of ideas. (I recall Colm, shortly before he left this weblog to go onto bigger and better things, told me that he was no use because he wasn’t up to date with all the new fangled financial things going on.)

    Crotty also pointetd out that in poor countries the future is heavily discounted and large (what he called ‘biological’) families are the norm. So what you would expect in a poor, undeveloping country is for the population to expand to the limits of food production. This is what the world would have been like until capitalist production (that is, agricultural production) got into its stride only a few short centuries ago, and probably still is like elsewhere. It follows, I suppose, that you would expect to see hordes of half-starved people in undeveloping countries like India. Ireland was presumably like this too a couple of centuries ago. It will have been exacerbated by the ability of modern medicine to cure millions of lives relatively cheaply so that more people can look forward to lives on the very margin.

    Crotty argued that in these countries (of which there are more than a hundred) the state is an aggravating factor as it upholds this state of affairs, in short the enemy of the people. I agree with this in the case of Ireland and it is clearly similar in other former colonies. This is complicated by the fact that the state seems to be behaving like this in the developed world too.

    When you look at report of, say, famines you often see herds of scraggy cattle like ghosts on bare earth. I can I think recall one statsitic from Crotty about stock keeping in Africa. I think it was (and presumably still is) 10% owning half the stock on communal grazing land and 40% owning the remainder. Half of the people owned no stock. Communal grazing would have been arranged in the past for the best interests of the community as a whole, not that some individuals might not have had more rights than others though. With private ownership there is no incentive for stock owners to cull their own stock holdings. Crotty wrote about the highly efficient veterinary service in one of the southern African states which kept alive millions of animals only for them to go back to subsisting as hugely malnourished barely living creatures.

    Last year I heard an Irish missionary (I think) talking about Ruanda and Burundi. He said the funny thing about it is that there is no difference at all between Hutus and Tutsis. According to Crotty the Tutsis invaded from the north (the Sahel) a short few centuries ago. They were pastoral (hence warlike) and lactose tolerant. The Hutus were the indigenous people and were (and presumably still are) lactose malabsorbent crop growers. He wrote that the Tutsis existed on a diet that was almost entirely dairy. I heard on a foreign radio podcast (can’t remember the language) that the Tutsis keep themselves distinct from the Hutus by a complicated and rigorous system of taboos. (I imagine this is similar to the Indian caste system which orginated when the Aryan invaders from teh north sought to preserve their status and identity – they could breed with the indigenous people but any progeny would be in the lower caste – this was a thought that rankled during the hysteria about the Indian dentist whose death by blood poisoning was blamed on this country’s unenlightened abortion laws.) I am pretty sure the Tutsis were a ruling caste, similar I imagine to the Northern settlers here but worse. The Wiki information is very detailed, too detailed to take in unless you have a lot of time and a determination to try to work out what happened in recent years. There was a great deal of coverage of the massacres of Tutsis a few years ago and, as usual, it was a simplistic good versus inexplicable evil story (yet again, as I recall).

    Crotty (A Radical’s Response) said that he was unique among aid advisers. Some of these, he conceded, knew a bit about crops, but Crotty (he was a self-taught farmer as well as a self-taught aristocrat) was the only one who knew anything about stock. His opinion of the value of such advisers was low. (Heaven knows what he would make of Mary Robinson.) He realized (nobody else seemed to) that Indian cows only yield milk in the presence of their live calf. In Europe and other parts of the world cattle are Bovus Taurus and you can milk them even if the calf is dead. In India the trick is to keep the calf alive, only just live enough, for the cow to drop her milk. The starving farmer can then milk the rest for himself and his equally starving family.

    He wrote that the sacred cow cult is surprisingly recent (only about two thousand years) and the taboo against beef eating was to stop India turning into a cattle run. If you eat your cattle and oxen instead of using them for draught then the population you can sustain will be much, much less. Such a sparsely populated country would be an easy target for conquest by aggressive neighbours so in this sense the taboo was vital for national survival.

    In practice the calf (male I think) would be kept barely alive in order for milking to take place and then when a year old (new calves would be born and kept barely alive for the next year’s milk) turned out onto the roads to fend for themselves.

    Now how is all this going to get sorted out?

    • coldblow

      Just to add, there are many who advocate population control. It makes sense but I don’t trust those who do this as I don’t trust their perception, judgement, knowledge or experience and I oppose their ideology.

      • Grzegorz Kolodziej

        I think that population control maybe, and that’s only maybe makes sense for African countries, but not for European countries due to our still-born pension systems, harking back to totalitarian Bismarck and earlier in Scotland (welfare pension system were created to wage wars easier).
        Btw, population control in China resulted in killing infant baby-girls and the fact that they might invade us in the future (so perhaps its better to strike deals with them when they are far).
        Those who talk about the American imperialism did not notice that the US (so the West’s) military advantage is shrinking (apart from the fact that it is used to prop the petrodollar anyway), that China can easily triple its defence budget today and push it up to the US level and that would mean that with their purchasing power they can outspend NATO if they want.

        We have many single males in China and God forbids if they turn as aggressive as those invaders from Africa (fortunately they are less aggressive genetically, but being single and having an army…).

        This is what I think about the population control:


        And this is an article to consider on that:


        Sadly, I have to stop looking at David’s website for the next day or two, even though I would love to respond to everyone (imagine we did not have this website and only had Joe Duffy:


        - I face a 30 hour non-stop no-sleep bout of a computer related work to meet the deadlines for tomorrow and I can hardly see on my eyes already plus I am becoming aggressive to noisy people (if only I could be a gardner, like my friend from an urban farm Dublin city project).

        Only because of my strict behaviour I did not turn to amphetamines yet, limited myself to coffees and Red Bulls

        • Grzegorz Kolodziej

          “strict behaviour” – strict upbringing: self-discipline, postponing gratification, opening doors and moving chairs for girls at the age of 6 (even for the Communist Poland, which was strict enough; btw, my mum taught me my first prayers in Polish and in Latin).

        • michaelcoughlan

          Hi Grzeg,

          You are falling into the same trap as most people re population control being an environmental policy as argued by suds et all. The real agenda is to suit the printing of money created as debt so let me explain. In order to understand you must use Nazi logic and suspend moral judgement.

          This brings me to explain the idiosyncratic posts I make about door gunners in Vietnam. The main machine gun used was the m60 which had its firing and loading mechanism copied from the superlative German mg42 of ww2 vintage and still in service! The more gookes chopped up by the door gunners the higher the door gunners got promoted! It was the same in Poland during the war the more Jews killed by the Nazis the higher the officers were promoted!

          So lets just say Hitler needed to bring down the unemployment rate at home and decided to do so by putting people to work making mg42′s his big problem was he needed money for the production and where did he get this? Out of the jaws (gold fillings) of the Jews and from their stolen money and sold properties! Some profit to be had in depopulating eastern Europe if Jews no doubt.

          So how does Nazi logic in modern depopulation parlance as practised by suds et al work in practice? Well the debts on the bonds created to allow for the increase in the money supply to stop the bond bubble exploding have to be paid for some how so if suds can reduce the population size he can release the capital tied up providing for the humanity no longer in existence and transfer it to his derivatives bubble to keep it from imploding can’t he?

    • coldblow

      Self-taught aristocrat? Economist I meant. What was my unconscious thinking? Immigration should be emigration. And a few others too.

  6. http://inflation.us/new-financial-crisis-much-worse-than-2008/

    India can provide itself with all the currency it needs by issuing money from treasury. India is also one of the richest in terms of gold holdings in private hands. One could say that the currency would be unofficially backed by gold.

    No Indian will part with their private gold as recently requested by their government. The government offered their citizens a cash premium interest if they would allow their gold to be melted down for monetary purposes.


    This is just another scheme for central bankers to try to obtain more gold to meet the physical market that is now beginning to overwhelm the paper market.
    Never underestimate the power of the central banker to screw up the economy of a country. Never under estimate the power of gold to act as money as the average Indian already knows.

    Indian people are the largest annual net importers of gold in the world. There is an interesting topic for you David. In the midst of poverty is plenty (of wealth ).

    • McCawber

      This has been said many times.
      The CBs are not the problem per se. They are a symptom.
      The politicians are the real problem.
      The CBs won’t self regulate themselves properly. If they did they’d been a first.
      The politicians gave them their power and only the politicians can take that power away or at the very least rein it in.
      But to do that the politicians would have to start running their economies properly.
      As you point out dealing with their debt issues and not just on a once off basis but on an ongoing basis.
      Draghi and Yellon are merely frontmen for the politicians.
      They run a lot of interference for the politicians and as long as they do the politicians will be quite happy to leave them at it.
      That is until it all unravels.

      So can I suggest you target the politicians and currency aside tell us what they should be doing about things like balanced deficits, spread bettein (etc).

      • Of course the bankers are the problem. They enable the politicians.
        Of course the politicians can shut down the central banks.
        The politicians do what they came get away with
        People let them get away with anything because they are asleep at the switch.
        People do not understand the problem.
        They have to understand in order to get the change.
        A politician can not go it alone.
        If they do they are assassinated by the bankers.

        Truth is the bankers control the world. they are not a symptom. They need to be dispensed with.

      • Central bankers operate autonomously and need to be removed from that power.

        • McCawber

          Yeah but every government on the planet can decide in the morning that they are going to start balancing their budgets (obviously not overnight) and they don’t need the permission of their CBs to do that.
          The lack of willingness to balance the books is at the core of all our problems.
          BECAUSE that is what created the DEBT mountain in the first place.
          The CBs merely facilitated the politicians and still do.
          Politicians and their electorates have reneged on maintaining both their sovereign and personal fiscal independence.
          How would you propose repairing that mind set?
          You can bring back gold, abolish CBs but I will damn guarantee you that nothing with change.
          History will simply repeat itself.
          The only thing that has changed is that the boom and bust cycles are happening a lot quicker.

          Basically Tony, I don’t believe in free lunches and I want to know what will happen to me personally before I’d sign up to abolishing CBs, bringing back gold etc. Not only that I still don’t know what you are suggesting should be done about all the financial instruments that basically amount to gambling. Preferably before you abolish anything but certainly immediately after.
          My experience tells me that the rich will survive very nicely thank you and me and my ilk who pay for everything will get burned again and still be expected to pay for everything.

          • Politicians may add to the debt but they are not the fundamental problem.

            Every piece of currency except coin is issued as a debt. That is a structure of the money system. That is by design all money is debt.
            Central bank money is designed that way.

            Then commercial banks do that multiple times over with the fractional reserve banking. All funds issued by banks is also debt.

            Therefore there is no escape from debt without destroying this system.

            Simply replacing all central bank money with money issued from treasury will remove the debt. That is a political move that must be backed by the people once the problem is understood, as a politician acting alone to do what is right will be removed by the bankers. Eliminated that is.

            The bankers control the world by force and intimidation. They are more powerful than a standing army.

            The boom and bust cycles are a function of the loosening and tightening of credit. They are manipulated by the bankers. The cycles are more extreme as the debt loads increase.
            The debts are increasing exponentially and we are heading for the collapse whether anything is done or not. It is unavoidable which is exactly where the bankers want us as the debts are secured by assets that fall on default to the bankers hands.

            The financial system is designed to collapse to vastly enrich the bankers as they successfully convert their phony paper money that cost nothing into hard assets that control the earth and all on it. To get your property back will require an armed insurrection as the bankers will not give it back voluntarily.
            Like you said. There is no free lunch. Many times for many people there is no lunch at all.

            The only politicians that had a clue were the founding fathers of the US constitution.
            They got right and for the right reasons.

          • “The amount of gold held by any particular country will not be the important factor in maintaining operating economies, because even a small amount of gold will be sufficient for that purpose; the reason being, that gold coming into newly rediscovered importance, no country will be able to maintain either trade surpluses or trade deficits. The first case would imply that other countries are sending their precious gold to the surplus export countries, but the scarcity of gold and its vital importance will not permit other countries to lose their gold to the (would-be) surplus-producing countries. In the second case, the trade-deficit countries would immediately correct their activity by devaluing their currencies ipso facto, rather than continue to lose their precious gold to cover their trade-deficits: devaluation would put an immediate stop to the excess of imports over exports. Governments resorting to credit-creation to fund their deficits would find themselves limited to balanced budgets; otherwise, their budget deficits funded by credit-creation would spill over into excessive imports and the consequent necessity for immediate devaluation of their currency.”

            Mr Macawber, read Hugo Salinas Price for what happens when gold reasserts itself.


          • cooldude

            Hi Tony have you come across Bo Polny and his work on business cycles and the Shemitah. Very interesting stuff and he is getting all his calls 100% right lately. Check out his interview with TDV below


          • Hi Cooldude
            Bo Polny has made many predictions and has been on a roll lately except his Shemitah event has rolled back to mid 2016 from a specific date in late 2015. He is a friend of Bill Murphy, Midas du Metropole.

            II just had a brief email exchange with HSP and he “feels” things are changing as gold exerts itself.

            We both lament that Our children will not listen to what we say and, we think,will suffer the consequences.

          • cooldude

            Things are definitely changing Tony and in a very big way. The illusion of the phantom recovery is now being shown clearly for what it is. Hot air created by easy money. Big moves are coming now in gold, silver and the US$. Listen to the interview with Bo and keep an open mind.

  7. survivalist

    Although the plight of India and her people sounds like a complex interconnection of various categories of economic descriptions, likely as not, there is nothing unique about the hardships affecting the Indian people aka ‘the economy’.

    The wealth of the ‘dirt poor’ has been stolen. The wealth of the bottom half of the world’s population ‘fell’ by just over a trillion dollars since 2010. Not that this wealth was left where it lay; the CEO of India’s top information technology firm makes 416 times the salary of a typical employee there.

    The mantra that overpopulation is the large cause of ‘developing’ nation’s problems is inevitable, is widespread, is debased and also unfounded; but nonetheless well promoted in the media. Malthus the originator of the idea, to resort to hyperbole, was a lunatic.

    “Instead of recommending cleanliness to the poor, we should encourage contrary habits. In our towns we should make the streets narrower, crowd more people into the houses, and court the return of the plague. In the country, we should build our villages near stagnant pools, and particularly encourage settlement in all marshy and unwholesome situations. But above all we should reprobate specific remedies for ravaging diseases; and restrain those benevolent, but much mistaken men, who have thought they are doing a service to mankind by protecting schemes for the total extirpation of particular disorders.“


    • michaelcoughlan

      “Instead of recommending cleanliness to the poor, we should encourage contrary habits. In our towns we should make the streets narrower, crowd more people into the houses, and court the return of the plague. In the country, we should build our villages near stagnant pools, and particularly encourage settlement in all marshy and unwholesome situations. But above all we should reprobate specific remedies for ravaging diseases; and restrain those benevolent, but much mistaken men, who have thought they are doing a service to mankind by protecting schemes for the total extirpation of particular disorders”

      Indeed. He could of course have led by example by putting a gun in his mouth and blowing his brains out but like all top down psychopaths his ideas and principles always apply to someone else.

      An unadulterated madman if ever one was conceived;


  8. ” The triangle of Iran, Turkey, and India defeated the USGovt sanctions with clever gold trade settlement schemes, using intermediaries, avoiding legal obstacles, and accomplishing the task to make payments for Iranian oil & gas shipments.”

    “The Gold Standard will return, not in bank transfer platforms or currency trading platforms, but in peer-to-peer transactions made in settlement. The world demands a new payment system, an alternative to the deeply flawed USD-centric current system. Even effective viable barter systems are to emerge. It is coming. It will shake the world.”" Jim Willie


    • CitizenWhy

      Relying on gold will keep these countries as backwaters. the only thing keeping oil as valuable is the political influence of certain US corporations. The best US investment advisors are telling everyone not to put their money into the doomed commodity of oil. The US military is committed to getting over oil.Oil may last another hundred years, especially in backward places that think gold is wealth, but it is on the way out. Real currencies are based on the size of the economy that use that currency. Gold is for backward, politically unstable places, as you, perhaps unintentionally, point out.

      • Relying on fiat currency as promoted will keep all of us as indentured financial slaves of the elite who incidentally are as we speak acquiring gold and silver on their own account. (Not countries, but JP Morgan and Goldman Sacks etc)

        The countries that will be the wealthiest are those with the ultimate only real money. Those without any will be unable to import that is trade for goods as their currency will be unacceptable.

        When the US became wealthy it had the largest stash of gold. It has frittered it away the last hundred years and will be the explanation for the US decline.

        Why do you not read some of the essays offered above and then critique them and explain why they are wrong if you disagree.

        This will explain the rise of the Orient and Russia over the next 10 years. The times they are a changing but gold is still the money of rulers and they who have the gold, rule.

        Incidentally the US has rid itself of most of its gold and it is now in private hands rather than the peoples’ hands.

    • CitizenWhy

      Gold settlement schemes are nothing new. They are normal in Muslim countries, and that is one of the reasons they are so backward. Gold settlement schemes work quite well for Islamic terrorists too. But Islamic terrorism is a doomed enterprise.

  9. CitizenWhy

    The private sector in the US has largely ceased to spend money. US corporations are hoarding nearly $2 trillion (yes, trillion) in cash.

  10. CitizenWhy

    The big issue is “Who owns the world revenue producing properties??” (not homes).Those own the most accumulte more wonership. Those who do not own have nothing that assures their security and properity. 62 individuals onw more than 50% of the world’s wealth. Wealth is at its core teh ownership of revenue producing property.Capitalism is about the ownership distribution, not “free markets.” Surely the Irish, with their history, should know about the rion laws of property ownership.

    Liberal democracies were created to assure and enforce the ownership of property by the business/merchant class. There may be attempts at distribution through government action but it won’t last. The big owners own the government of the United States and will use the US government to help them buy up the rest of the world and then dictate what governments can and cannot do. They will gladly recruit some local big owners into their ranks. Labor is not organized globally (and is incapable of doing this) and will be defeated. Capitalists are organized globally and will continue to accumulate more, and gain even more control over governments.

    In a certain sense having valuable skills (medicine, technology, building, for instance) is a form of minor ownership and will ensure such people are well taken care of in the economies more and more controlled by a few individuals and families.

  11. http://www.informationclearinghouse.info/article43813.htm

    Empire of Chaos Preparing For More Fireworks in 2016

    By Pepe Escobar

  12. “Some stunning and sizeable moves within the Comex gold vaults today drops the total registered gold down to just 73,949 troy ounces, slightly more than just two metric tonnes. This raises the “Comex Bank Leverage Ratio” to a new all-time high of 542:1! What the heck is going on here?”

    That means that there is 542 ounces of gold sold for every ounce available for delivery. In other words the COMEX is a farce. Pretending to be an exchange it is a fraud. Just one half of one percent of the gold bought needs to be delivered and COMEX is out of gold. Physical gold that is. There is plenty of paper gold but it is actually worth nothing, just like a fiat paper dollar.

    What would you rather have. A promise to give you the gold or having it in hand.
    Because it is evidently so scarcely available I would personally opt for the real thing. It would appear that an increase of one per cent in the asking for delivery capacity would send the price of physical gold into the stratosphere.


  13. *Economic Activity Is Slowing Down Much Faster Than The Experts Anticipated

    By Michael Snyder, on January 25th, 2016

    We have not seen global economic activity fall off this rapidly since the great recession of 2008. Manufacturing activity is imploding all over the planet, global trade is slowing down at a pace that is extremely alarming, and the Baltic Dry Index just hit another brand new all-time record low. If the “real economy” consists of people making, selling and shipping stuff, then it is in incredibly bad shape. Here in the United States, the dismal economic numbers continue to stun all of the experts. For example, on Monday we learned that the Texas general business activity index just hit a six year low…

    Economic activity in Texas keeps getting worse.

    The general business activity index out Monday from the Dallas Federal Reserve for January was -34.6, a six-year low and much worse than economists had expected.

    The forecast for the monthly index was -14, following a December reading of -21.6 (revised from -20.1) that was also worse than expected…

    X/ref=as _li _tl? ie=UTF8&camp=1789&creativ
    e=390957&creativeASIN=1 50522599X&linkCode=as2&tag=theec
    onomiccollapse- 20&linkId=6BALV7SPNCRTOEPF

    Nice green shoots of the economic recovery. Early Spring and unseasonably warm weather stimulate activity. NOT

    • “The USA is stuttering, its (pallid) recovery running into the twilight and a recession beginning to be signalled by many indicators. A recession in an election year is bad news for the incumbent party.” Brian Lucey.

      Seems David is now a loan voice advocating a US recovery. When will the retraction arrive? The physical evidence to see the downturn is overwhelming whereas the statistical evidence is manipulated to suggest better results than is the fact. TPTB want to fool us and they succeed with 99% but the 1% are aware of the deceit.

      All on this blog should now be aware and a part of the 1%

  14. McCawber

    Hi David,
    Please do us all a big favour and don’t do an article on the Banking Enquiry report.
    One word word cover. “Sham”
    And we all knew beforehand that this would be the case.

  15. McCawber

    Simple Question.
    What do some you Gold Magnates reckon the price of gold will rise to this year.
    Feel free to give an indicative range. Eg between $1500 and $2000 or $2000 and $2500.

    • michaelcoughlan

      Fall I’d say. The worlds economic system is so fucked by the kaensians deflation is going to be here for a lot longer than most people exprct I suspect.

      • McCawber

        If you are being complete, the deflation has also to do with the manufacture of goods, at lower cost with relatively better quality.

        • paddythepig

          The logical conclusion is that Michael, to avoid this deflationary nightmare he thinks he is in, would prefer to pay ten grand rather than 30 quid for his kitchen radio.

          • michaelcoughlan

            No I dont. You misinterpreted my post. Deflation is just as bad as inflation and in Many cased worse.

        • michaelcoughlan


          I don’t subscribe to what’s happening I just answered the question. The bit you didn’t mention was that as prices fall margins will be maintained by accointants who do this by lowering wages.

          McWilliams believes its people postponing purchases to get a better deal later which is the reason but it isn’t. As wages fall people have less kids causing depopoulation. 25 years into QE the japaneese birt rate has collapsed.

    • In order to balance the books and wipe out the debt accumulated gold will have to go to 50,000 or even 100,000 per ounce.

      If there is the great reset, debt jubilee, or similar event that is what must happen. As usual timing is everything.

      Gold will go no bid, no one will want to sell. When the market reopens, the price could be anything.

      So, truth be told, I expect higher prices and no price range will surprise me. 2x, 5x 10x or 100x.

      In the meantime the stock and bond markets will go the other way. 50% 80% 90% 95% drops.

      If the stocks are one twentieth of top value and gold is 20x its low then the DOW will be 90 and gold 20,000 and that will be as many are and have forecast the greatest transfer of wealth from one sector to another ever seen in the history of mankind.

      • McCawber

        I’m curious as to how the share prices will drop so far.
        I’m willing to accept irrationality as at least a part explanation.
        Take a company like GE. Why would it’s share price drop to 10% of it’s current value. Will it be herd mentality or will there be specific reasons for each share or share class?
        I can see why some of the tech and bank shares could go the way you are suggesting. In 3D printing shares have already gone that way with no doubt more downside to come.
        BTW I picked GE with no agenda but purely because it’s GE and it’s been around a while.
        Use Ford or any other “manufacturing” stock or class if you prefer.
        The Pension Funds will be wiped out by such a disastrous drop. Are they capable of reacting to limit losses or are they now the “purveyors of last resort”

        • Pension funds are generally invested in income stocks or bonds. Returns have dropped to nothing and so to pay out the pension funds my be paying pensions from capital (My guess)) or going to riskier investments.

          Part of the reset will be a return to higher interest rates. A reversion to the historical norm of 6% will cause a collapse in bond prices. Funds will lose a high percentage of their capital. Government pension funds will simply borrow via government funds to remain solvent and the central banks will provide the money and the national debt will go higher forcing the reset price of gold, to offset the liabilities, to be even higher. The transfer of wealth here will be from the general population to the holders of gold.Of course the government will say that the gold should be turned in to the government in the national interest. In Canada it would be easier for the government to simply buy the Canadian mined supply and mint it into coin and Sell to the public as legal tender.
          If they get really smart they will coin silver by weight and monetize it by the HSP method . Two things would be accomplished. The Canadians would get an inflation proof currency and the government would earn a seigniorage or profit on the production of the coins adding to the treasury or reducing the national debt. process.

  16. https://www.youtube.com/watch?v=qo9rHYJW8Ek&feature=youtu.be

    Bo Polny….Credit cycle and Shemitah. We will see if Friday is a day of gold spike as calculated!!

    • cooldude

      Looked at it earlier Tony. The FED are now chickening out of their rate rises due to the dire state of the US economy. This should weaken the $US and he could well be right in his timing. Things are definitely different this year.

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