We are at a critical stage in the ‘end-game’ of a monetary system in desperate need of reform, but the government has neither the stomach nor the spine for the job. So instead Uncle Sam is coming after your taxes. Mark GB on why growth and progress is about to run off a cliff.
“Who controls the food supply controls the people; who controls the energy can control whole continents; who controls money can control the world” – Henry Kissinger.
“Sooner or later everyone sits down to a banquet of consequences” – Robert Louis Stevenson.
There’s a pub in the Welsh hills, not far from where I live, called ‘The Tylers Arms’ – pronounced ‘tillers’. The name originated, I believe, in the 18th century. The local villagers, who all worked on the land, would go there to pick up their wages in the form of ‘tyles’ – some of which would be immediately exchanged for beer, and thus returned to the landowner…who also owned the pub…and the local store. Thus, the ‘tyles’ circulated regularly, providing employment & cheap produce for the villagers, a steady and almost ‘captive’ profit for the landowner, and stability for the community. As the industrial revolution progressed some of the larger UK manufacturers adopted a similar system, but using fiat currency – e.g. there is a ‘village’ in Birmingham known as Bourneville, which was built by the Cadbury family.
Now before anyone thinks I’ve got unresolved baggage on feudalism, a ‘downer’ on capitalism, or a yearning for socialism…hold your horses please…this is about something far more serious than the ‘isms’. This is about who controls the money. The folks who do that…can, and do, call the tune for the rest of us. And that’s what I want to talk about here.
These days our monetary masters are much more sophisticated – our ‘tyles’ are pieces of paper backed by government fiat. You can work for pretty much whomever you like, and you can buy from whomever you like, but one way or another the government will take a cut of everything you earn and everything you spend. You can do the odd ‘swapsie’ with your pals but you can’t pay taxes with home grown tomatoes – the IRS don’t do vegetables – they can’t digitise them or create them with a keystroke so veggies would confuse the poor dears.
What happens next is technical and varies between territories, so let’s just deal with the ‘myth’: The taxman’s ‘cut’ is used to boost the economy on your behalf by spending it on useful things like building roads and bridges. It also includes an ever-growing list of things that you didn’t even realise you need, like cruise missiles & other stuff that goes ‘BANG’, along with other seemingly ‘essential’ services like bribing foreign governments and funding ‘moderate rebels’ to remove the foreign governments that can’t be bribed. Clearly we’ve come a long way from tyles, especially in the case of the dollar, which can used to bribe governments on seven continents. The chap who owned the Tillers never dreamt of such power – this is considered to be progress…
Alas, progress is about to run off a cliff. Uncle Sam has a problem that he really doesn’t want you to know about; but it’s getting increasingly difficult to hide it without sounding like a total idiot. Sadly for the government, even though it trawls the Ivy League for the most educated and plausible idiots on the planet, the lie is becoming increasingly obvious to anyone who hasn’t been freeze dried for the past decade.
The problem is this: Uncle Sam can’t confiscate enough tax to pay for all his ‘essentials’. So he has to borrow an increasing amount from ‘selfish’ people like pensioners, who may live another thirty years and have the audacity to expect a decent rate of return on their savings. Clearly, as Uncle Sam’s debt accumulates, the interest rate must be kept very low otherwise the old chap will end up borrowing new paper just to pay the interest on the old paper. Few people realise this…but that ship has already sailed:
If you add up all the interest that the US federal government has paid over the years 1870-2009, it comes to a total of $7.8 trillion. In 2009 the total public debt of the US stood at $12 trillion. In other words 65% of the debt was accumulated interest. Total debt was £38,850 per man, woman and child in the US and interest represented 26% of the federal outlays.
These figures do not include Social Security, Medicare or any of the other entitlements that are ‘hidden’ off-balance sheet. The debt has expanded to $20 trillion in the 7 years since 2009, and according to the Office of Budget and Management (OBM) the curve for interest is expected to go almost vertical between now and 2020. The following comment sums it up rather well:
“Compound interest is the eighth wonder of the world. He who understands it, earns it…he who doesn’t…pays it. Compound interest is the most powerful force in the universe…the greatest mathematical discovery of all time” – Albert Einstein.
The only thing I would add to the old boy’s wisdom is that many people in the governmental/banking cartel understand this very well – and are more than happy to allow banks to earn compound interest whilst you pay it. But let’s be clear of two things:
1. It will never be paid back.
2. It guarantees real power to the people who control it – irrespective of which ‘party’ holds the official power.
Clearly, the monetary system needs to be fundamentally reformed. Equally clearly, governments have neither the stomach nor the spine for the job – too many powerful people are against the idea. Thus, the debt will either be inflated away, or it will collapse. The government want the former. Every insolvent empire in the history of humankind has arrived at the latter. This typically involves an oppressive hunt for taxes, followed by a monetary collapse, usually accompanied by war – see our old friends the Romans for particularly gruesome examples of this.
Which brings me to the nub of this piece. We are at a critical stage in the ‘end-game’ of this system. As such, governmental strategy is focused in two areas:
Strategy 1 – Fiscal: Uncle Sam is now on the hunt for taxes…wherever he can get them…but of course he has to make you think he’s got your best interest at heart. He hasn’t…pun fully intended.
Schemes currently include fleecing the ex-pats who also pay taxes abroad. I.e. People whom no longer benefit from the roads, the bridges or the things that go ‘BANG’. This is a dubious distinction that the US shares with Eritrea.
Other devilish ruses include encouraging police to raise revenue through asset confiscation without proof of crime, and my all-time favourite – fining kids for selling home made lemonade on the roadside during a heat wave. Apparently, if you don’t have a license you’re a risk to ‘Health & Safety’. This ‘nice little earner’ was pioneered in the US but has now been picked up by UK councils such as Tower Hamlets in London.
But all of this is child’s play…sorry about the pun…the really big stuff is far more insidious…
Strategy 2 – Monetary: Enter stage left Kenneth Rogoff – Professor of Economics at Harvard, chess Grandmaster, a man so smart that you’d never be able to guess that he’s a complete idiot, unless you’d spent a few years doing something useful in the real world.
Rogoff wants to abolish cash. His crusade was launched last year with the publication of his book ‘The Curse of Cash’. One of his rationalisations for phasing out cash is the suggestion that it will protect us from terrorists – who use cash to operate off the grid. This would be touching, if we were not already funding them directly, as described above.
Let’s be clear – banning cash will make absolutely no difference to the motivation or ability of Wahhabi Jihadists, or anyone else, to kill people. Getting our arses out of the Middle East is the only way to do that, but that’s another story. Secondly, using Rogoff’s own absurd logic, we should probably ban mobile phones too. If we were really serious we’d ban food and starve them out…which is silly, but you get the point…in short…it’s a crock.
Rogoff is not alone – there is a chorus line of establishment stooges all selling the same snake oil. In the space of one year between May 2015 and May 2016 the FT ran 12 articles attacking cash, each with the same brand of spurious nonsense, including pieces from Andy Haldane, Mario Draghi, and three from the archetypal insider, Larry Summers.
Now, however, it seems that the mainstream media, or at least some elements of it, are finally starting to look at the hidden agenda that some of us have been banging on about for the past two years. Here is Tom Wallace in the Telegraph on 13th August 2017:
“Negative interest rates will be needed in the next major recession or financial crisis, and central banks should do more to prepare the ground for such policies, according to leading economist Kenneth Rogoff. Quantitative easing is not as effective a tonic as cutting rates to below zero, he believes. Central banks around the world turned to money creation in the credit crunch to stimulate the economy when interest rates were already at rock bottom…
The key consequence from an economic point of view is that forcing savers to keep cash in an electronic format would make it easier to levy a negative interest rate. “With today’s ultra-low policy interest rates – inching up in the United States and still slightly negative in the Eurozone and Japan – it is sobering to ask what major central banks will do should another major prolonged global recession come any time soon,” he said, noting that the Fed cut rates by an average of 5.5 percentage points in the nine recessions since the mid-1950s, something which is impossible at the current low rate of interest, unless negative rates become an option. That would be substantially better than trying to use QE or forward guidance as central bankers have attempted in recent years”.
The acknowledgment of this agenda is welcome. In terms of Rogoff’s analysis of the economy and the effect of negative interest rates – it is utter garbage. In the real world negative rates encourage saving not spending and incentivise buy-backs not capital investment – in short they are deflationary not inflationary. Even more importantly, if that is possible – in a world where State and Municipal pensions are already hopelessly underfunded, NIRP is poisonous.
In the longer term, what Rogoff and the rest of the insiders really want is this:
State control over the entire monetary system, the ability to tax everything that moves without the possibility of resistance, and very importantly…the ability to impose negative interest rates whenever the government deems it necessary to make people spend more…or tax the ones who don’t.
If putting this type of control into the hands of any government sounds dangerous to you, it’s because it is. If this agenda is news to you, I suggest that there are a number of possibilities:
a) I am a deeply paranoid ‘conspiracy theorist’ who wears a baseball cap the wrong way round, hoards ammunition & elk meat, and speaks with unfeasibly long vowel sounds
b) You haven’t been paying close attention, probably because you are a busy and conscientious human being, doing the best you can for the people who rely on you, with the expectation that others, particularly your government, will be doing the same for you
c) Governments would prefer you not to know what they are doing until it appears inevitable. This is a common way of doing business if you are a politician. Remember this?
“We decide on something, leave it lying around and wait and see what happens. If no one kicks up a fuss, because most people don’t understand what has been decided, we continue step by step until there is no turning back” – Jean-Claude Juncker.
How about this?
“When it becomes serious, you have to lie” – Jean-Claude Juncker.
I leave it to you to make up your own mind. I doubt you’ll get the same respect from your government.
You would think that the sixth largest economy in the world would be able to organise itself to provide decent school meals for its children, but alas, the UK has faltered.
Could this be the year that sends the silver price to the moon and gives the so-called silver stackers their long awaited moment in the sun?