According to Thomas Bachheimer, the European states are moving towards a cashless society. If this is the way the ECB wants to go, they could use Greece as a test case for negative interest rates, which, by the way, are nothing but theft.
The world has added approximately $60 Trillion in debt since 2007, much of it sovereign debt created from deficit spending on social programs, wars, and much more. In that time the world has mined perhaps 30,000 tons of gold, or about 950 million ounces, worth at September 2015 prices a little more than a $Trillion. It is easy to create debt. Debt increases, currency in circulation increases, and until it crashes, life is good for the financial and political elite. But debt increasing 60 times more rapidly than gold indicates that debt is growing too rapidly and due for a reset.
Perhaps the central planners will even start mailing us all checks – early tax rebates or the like – so we go out and spend. Buiter’s call for shoving money down everyone’s throat is representative of the philosophy that pervades the Federal Reserve and Washington DC: There can never be too much stimulus or money creation. If stimulus is failing, it is simply because it is inadequate. It is time to double down. Couple Buiter’s request for “helicopter money” with his recent modest proposal to abolish cash – an idea gaining real traction with policy makers and the major banks – and you have everything you need to know about why it is important to hold physical gold and silver.
We started with the statement ‘simply print more Fiat currency, and you inflate away the debt’… and the first part ‘simply print more Fiat currency’ fails the Trinity of Truth test. Under our current system it’s impossible to ‘simply print more Fiat currency’. How about the rest? Can we ‘inflate away the debt’? Well, if each new Dollar created is of necessity accompanied by a newly created Dollars’ worth of debt, this does not seem likely, does it? Any effort to ‘print away’ existing debt will result in ever larger debt. This is the road to bankruptcy.
The abolition of cash currency and the associated implementation of negative interest rates represents a “consistent continuation of misguided monetary policy”. It would pave the way for economic totalitarianism of an Orwellian character. Alternatives like gold and crypto-currencies could of course benefit from this, as long as they manage to escape “regulation” or a ban in the framework of financial repression.
We are currently witnessing one of the greatest experiments in human history. History teaches us: Neither mainstream economics nor central bankers are aware of how to control the specifics of inflationary dynamics. The pitiable attempts to regulate the level of inflation like a thermostat are testament to the hubris of monetary policymakers. Waves of price inflation happen unexpectedly and in very compressed time periods. As the following chart shows, this is confirmed by numerous historical episodes.
China ‘de-pegged’ in a way its currency from the dollar. Make no mistake, this is a HUGE event. The second biggest economy in the world, which is on its way to become THE biggest economy worldwide, did say ‘goodbye’ to the dollar reserve currency. Because of that, it is now more than ever relying on its ‘real’ monetary reserve, i.e. GOLD.
China may never establish a model sound money system; nor is that its goal. China simply appreciates the universality of gold. And, as the saying goes, “gold goes where it’s most appreciated.” Whether you’re a Communist or a capitalist, whether you speak Mandarin or English, gold remains the one permanent, immutable common denominator. Gold’s value has been recognized universally for hundreds of years and will continue to be recognized universally regardless of whatever market gyrations or economic or political strife the future may bring.
Despite another so-called “smash down” of gold and silver, having an awareness of the direction of the trend, as we have been advocating for the past few years, one cannot be surprised by the drop as much as one can be verily surprised by the extent to which the central bankers have had such a relentless stranglehold on gold and silver, and it appears that they have not yet finished playing their manipulated hand.
Years ago gold and silver were money. Physical coins were replaced with gold and silver certificates. Those certificates were replaced with “Notes” or debt of the U.S. government issued by the central bank. Those notes have largely been replaced by more ephemeral digital debts in the form of credit card debt, debit accounts, checking accounts, short term debts (T-bills), longer term debt and derivatives of those debts. The intrinsic value of those notes and debt instruments is minimal – they are accepted because they are accepted, UNTIL THEY AREN’T. When that day arrives, we will wish we still used gold and silver as money.
Texas Governor Greg Abbott signed HB 483, authorizing a state depository for gold (and other precious metals) and a payments system. This bill kicks two roadway barriers to the curb: a lack of infrastructure for gold payments, and widespread distrust.
To Congress and the Administration: Give Bail-UPS and Bail-DOWNS a chance. Clearly bail-outs and bail-ins have been problematic, so let’s progress in a new direction that benefits taxpayers and debtors.
What one will ultimately conclude is the realization that there are no lawful dollars circulating in the United States, today. They were removed from circulation by the Federal Reserve and destroyed during the 1920s and 1930s. At one time, Federal Reserve Notes were specie-backed, just like real United States Notes that were backed by silver and gold.
So how would any of this debt ever be settled were it called in tomorrow? The U.S. currently holds “only” 8,133.5 tonnes of gold in its reserves, a significant decline from the all-time high of over 20,000 tonnes in the 1950s. This amount calculates to about $340 billion—nothing to sneeze at, but a far cry from the current U.S. debt level. It’s unlikely that gold will ever reach $33,900 per ounce but the fact that supply has not kept up with debt levels suggests that prices might very well rise.