Friday, October 21, 2011

Monetary Madness – The Real Money Bomb!

For the record, there is no such thing as “real” money. All money is a human construct. It doesn’t matter what is behind the money or what the money itself is made of – that’s all bunk. The supposed self-correcting attributes of gold, for example, are complete bunk, very easy to disprove if one simply and objectively examines history.

The “Roaring Twenties” roared because of a flaming credit bubble – and the country was on a gold standard at the time. All gold standards have failed, as have all money systems to date, as will ours soon. In fact gold as money systems last for shorter durations than do non-gold systems if you look back in time – Talley sticks in England, for example, lasted more than 800 years, during which time gold standards came and went.

Of note is that the stock market bubble that crashed in 1929 was one built upon MARGIN, not just general credit growth. I note this because those who wish to eliminate fractional reserves entirely are barking up the wrong tree. It is easy to create leverage, that is to multiply effective money through many, many schemes. Today there are hundreds of them, they are growing unchecked - $600 Trillion just in known derivatives today in the United States alone. In fact, if you eliminate fractional reserves but do nothing to regulate other forms of leverage, then I will guarantee you that I can multiply the money in the system to infinity through other means that more closely resemble gambling.

Again, all money is a human construct; its purpose is to enact trade. The only way to make money a “store of value” is to keep the total quantity of ALL money(ness) under control. That’s it.

All money that is approved by your government is “fiat.” Again, it doesn’t matter what it is made of or what is behind it, since fiat means “by decree.” If your nation decrees that gold is to be used as money, then it is fiat. Gold is only not fiat when it is allowed to trade freely alongside of whatever else has been decried. Gold is the flip-side of the proverbial control-you coin (the other side is debt). Those who own the gold control those who do not – get over it, or own it – most do not.

The most important attribute about money is WHO controls its production. The natural rule-of-law is that its production benefit/not benefit everyone equally. Once you give a few private individuals the power to produce money, they will use that power to buy rules that favor them, and then the government and their money production become intertwined – as has obviously happened today.

The only solution to this is to restore the power of money production to the people. Since it cannot be private people, it MUST be done through your representatives as the Constitution correctly dictates (it does NOT dictate gold money, by the way, read it).

Once the money power correctly rests in your representative’s hands, then the problem becomes vote buying with that money creation power. This is where the Constitution falls short – they failed to get strong enough checks and balances in place to ensure that your representatives cannot cede this responsibility, THE MOST IMPORTANT RESPONSIBILITY THEY HAVE. Not only should they not cede this responsibility, but they MUST keep the quantity of money under control. This is why I say there is only ONE responsible target for the supply of money, that being ZERO percent price inflation (the quantity of money should change up/down to allow for changes in population, etc.). This can be accomplished as I spelled out in Freedom’s Vision.

The entire economy is now saturated with debt – not just the Federal Government, but state and local governments, corporations, and the people collectively too. Addressing any single problem in this regard will NOT cure the economy, it will take unsaturating all levels to reach a real cure – the exact opposite of what the current money producers are doing or attempting to do. Transitioning to an unsaturated condition DOES NOT have to involve “pain” for the people! The ones who rightly should take the pain are the ones who purveyed the fraud in the first place, again it is possible to make them eat the pain, and to restore a proper rule-of-law, money system, and economy without the “pain” they would like you to believe everyone must take! Solutions are found only when you get outside of the central banker box, and stop being a willing party to their lies.

It’s been awhile since I ran a lot of charts by you, here come a lot, but don’t be intimidated – they all revolve around the same subject, our money supply. Stand back and take a big picture look at the supply of money and you will see that a MONEY EXPLOSION is occurring right now!

Below I am displaying charts in order from the smallest measurement of money, Base, to the largest, MZM. The first series is the basic amount expressed in dollars - here you will see a progression - exponential growth that turns into a parabolic shaped curve. Note that the upwards trend did not stop, in fact is now taking off straight up within the smaller measurements and still parabolic on the larger ones:

Base:


M1:


M2:


MZM:


Just to get a handle on the zeros, that MZM equals $10.7 Trillion.

Now let's take a look at each money measurement in terms of how much it has changed in just the past year in terms of dollars. What you will find are one year dollar amounts that rival or surpass the emergency measures taken during 2007/2008:

Base:


M1:


M2:


MZM:


See how changing the parameter of the chart reveals more than just the basic chart itself?

Now let's look at each in terms of the percentage change from a year ago. Here again we see wild numbers, huge numbers in percentage terms, that are certainly disconnected from the inflation statistics pandered by the "Fed."

Base:


M1:


M2:


MZM:


Wow, I'm nauseous just looking at those wild moves! Those moves are dangerous, they are the exact opposite of stability. Remember, when the quantity of money is allowed to grow beyond that necessary to handle REAL expansion, then the value of the money falls. The worst situation is exactly what we're experiencing where the things you hold fall in value, and the things you need rise in value. This is true for the 99% who don't create the money, while the 1% (or less) who do, take from those who don't.

Here's a little fun with numbers, in the year 1980 (230 million people) there was approximately $4,347 of MZM per person in America. Today (310 million people) that number has grown to $35,516, more than eight times as much!! Are you eight times more wealthy? Didn't think so. Now look at debt. Debt has grown multiples of times more, especially if you count unfunded liabilities - that figure is now way beyond $300,000 per person, but just the National Debt has grown from the exact same (coincidence?) $4,347 per person in 1980, to $46,774 per person today - nearly 11 times as much! Wow, we're only talking 30 years here, not even half a lifetime - how's that "Fed" mandate of low inflation looking?

Once again, let's look at the impact that rapid increase in money growth is having on the unemployed - below is the Base Money Supply alongside of the Mean Duration of Unemployment:



Now here's a chart that may startle you - here I told the "fed's" own chartmaker to divide the MZM by the Base Money to see the ratio of Base Money compared to the much larger MZM... and what do you think it shows? It shows a CRASHING ratio from the peak of 10 to 1 to today's 4 to 1. That means that today it takes way more base money to create a commensurate move in MZM.



Since our money is backed by debt, what this is really reflecting is the drop off of velocity caused by macroeconomic debt saturation - yet more proof of the impossible math and that debt saturation has occurred.

While I'm not a fan of GDP because I believe it is VASTLY overstated, I had some fun dividing first Base Money, and then MZM, into GDP. This tells us how much "productivity" we are getting per our money creation... are you ready?

GDP/Base Money


GDP/MZM


Kaboom! Cliff Diving. That, my friends, is called ECONOMIC FAILURE. You are witnessing it in progress. Those charts are VERY telling, and very important to understand, they deserve to go viral.

The root cause of this failure is WHO it is that controls the production of our money. There are solutions, but none can or will be implemented while the same WHO is in charge. Only the people can change the power structure, there is change in progress one way or the other.

To view just how clueless the "Fed" is, below is their latest issue of monetary trends where you find tons of irrelevant charts (except for velocity which is in the gutter), and mundane commentary designed to lack insight - all designed to keep you in the dark.

Monetary Trends - November