What is truth?

Posts tagged ‘Money Supply’

Mitigating a Credit Crisis Liquidity Crunch 2014

By Nicole_Foss

Despite the media talking up optimism and recovery, people are not   seeing the supposed good news playing out in their own lives. As we have    discussed here many times before, the squeeze continues on Main Street,   while QE has generated asset bubbles at the top of the financial food   chain. Complacency reigns, but this is the endgame. Increasingly    delusional collective optimism, based on illusory wealth for the few,    has ben the driving force for 2013, even as the smart money has been    selling everything not nailed down for most of the year – cheerfully    handing the empty bag to a public that demands it. It’s been a five year   long party, where, demonstrably, no lessons were learned from the    excesses preceding the previous peak, and the consequences that followed  from itNow,  as a result of throwing caution to the wind again (mostly  with   other people’s money of course), we face another set of  consequences,   but this time the hangover will be worse. Timely  warnings are rarely   credible, as they contradict the prevailing wisdom of the time, but it   is exactly at this time that warnings are most  needed – when we are   collectively irrationally exuberant on a grand  scale. We need to   understand the situation we are facing, in order to  see why this period   of global excess will resolve itself as a global  credit implosion, what   this means for ourselves and our societies, and what we can hope to do   about it, both in terms of preparing in  advance and mitigating the   impact once we are confronted with a new,  sobering, reality.

We are facing an acute liquidity crunch, not the warning shot  across   the bow that was the financial crisis of 2008/2009, but a  full-blown   implosion of the house of cards that is the global credit  pyramid. Not   that it’s likely to disappear all at once, but over the  next few years,   credit will undergo a relentless contraction,  punctuated by periods of   both rapid collapse and sharp counter-trend  rallies, in a period of   exceptionally high volatility. The primary  impact will stem from the   collapse of the money supply, the vast  majority of which is credit – a   mountain of IOUs constituting the  virtual wealth of the world.

This has happened before, albeit not on this scale. Since  humanity   reached civilizational scale we have lived through cycles of  expansion   and contraction. We tend to associate these with the rise  and fall of   empire, but they typically have a monetary component and  often involve a   credit boom. Bust follows boom as the credit ponzi  scheme collapses.   Mark Twain commented on one such episode in 1873:

“Beautiful credit! The foundation of modern society.    Who shall say that this is not the golden age of mutual trust, of    unlimited reliance upon human promises? That is a peculiar condition of   society which enables a whole nation to instantly recognize point and   meaning in the familiar newspaper anecdote, which puts into the mouth  of   the speculator in lands and mines this remark: — ”I wasn’t worth a cent two years ago, and now I owe two million dollars.””

full article at source: http://www.marketoracle.co.uk/Article43730.html

“4 Step Social Credi Solution”.

Excerpt: “The Struggle for Money” by H. M. Murray 1957. The 4 Step Social Credit Solution to the World’s Financial Crisis:
1. Set up a National Credit Account. At present we have only a National Debt Account; the banks having usurped all our National Credit—to create our National Debt which “they” own.
2. Institute a National Dividend;
3. Finance New Production by drafts on the National Credit Account, not out of Savings; and
4. Allow a Just Price Discount on all personal purchases, out of income, for final use or consumption—to adjust book prices to actual incomes. (This counters inflation and guides and motivates society as a whole to increase or decrease production).
Reference: http://www.scribd.com/doc/171650693/Struggle-for-Money-by-H-M-Murray-Final-Edit

“Robots Don’t Buy Cars”

 By Christopher M. Quigley B.Sc., M.M.I.I., M.A.

Our world lurches from financial crisis to financial crisis yet very few academics, reporters or commentators point out the fatal flaw in current orthodox economic theory which is the central force behind these crises. The flaw relates to the general LACK OF PURCHASING POWER in contemporary society. This weakness in classical economic theory is not new and many scholars have explained the problem however, increasingly, the issue is being conditioned out of people’s consciousness. The collapse of the international banking system, as a result of the Sub-Prime; “Originate to Distribute” catastrophe, has brought this Achilles heel of Keynesian economics into sharp focus. The elite fear that the prospect of a “greater depression” is forcing change that will eliminate their position of control and privilege. Hence the current “spin” emanating from controlled media outlets. The growth of the “tea party movement” is a case in point. Should this political revolution gain in power the possibility of real change in US economic policy will become increasingly probable thus the perceived need to crush it or at the very least gain ownership and control over it. The end objective of this grass root movement should be the dismantling of FED interest bearing credit policy in favour of treasury cash, the abolition of the “open door” Chinese trade policy  and the redistribution of true purchasing power to the average American citizen for the following reasons:


                A.            The current American national debt stands at 14 trillion dollars and change. Average rate of interest on this debt is 2-3% per annum. Thus if constitutionally allowed zero coupon treasuries were used to systematically replace this debt, over say a decade, approximately 280-420 billion dollars per year would be saved for the American tax payer by the year 2021.


                B.            China is a tyrannical state. For example every year over 40 million forced abortions are carried out on women due to this state’s repressive “one child per family policy”.


                Over the last decade approximately 200,000 American jobs, per annum, have been out-sourced to this tyranny.


                Morals matter. This “favoured nation” policy must be reversed because a communist state that pays an average wage of 50 cents per hour to “national” teams of forced labour should not be allowed to compete on a level playing field with a free democracy. Such mis-guided policy is effectively destroying the productive base of America. Obtaining cheap goods through Wall-Mart for an economy is one thing. National self-destruction is another.


                 Congress must act and remove this “most favoured nation” status. The successful implementation of the fiscal policy mentioned in note A. above would negate any retaliation that the Chinese elite could muster should they threaten to cease purchasing America bonds, thus collapsing the American dollar.


                C.            Without general purchasing power effective demand is neutered. This basic fundamental economic fact is not being addressed by current American fiscal policy. The substitute  policy we mean is not based on a Zimbabwe type action where money is simply released to an economy in an ad hoc manner resulting in rampant inflation. No what we are talking about is a well documented and comprehensively researched theory that binds  real productive resources in a developed economy with an effectively distributed money supply so that the total capability of that economy is fully realised for the benefit of all the community.


                 Quantitative Easing does not do this. It does not reach down to the average American where it would stimulate real demand. This existing QE policy is being used to bail out insolvent institutions but it is nor filtering down to “main street” where it would really give “bang for the buck”. To achieve this QE funds could be spent on American schools, freeways, bridges, jobs training, port re-construction, light-rail systems construction, broadband communications roll-out, youth skills training and research & development.


Fairly remunerated American citizens with real purchasing power need to replace mechanical robots. Capital investment needs to be replaced by human investment. Robots do not buy cars, raise families, and care for the well being of elderly parents. Robots do not use shampoo, eat fast food or watch base ball. They do not watch TV nor change diapers. They do not munch a mars bar nor scoff a pizza slice. Americans must stop looking on their nation simply as a mechanical economy and start to see it in human societal terms. Americans must wake up and smell the coffee.


Why is purchasing power so important? It is fundamental because without money no exchange can take place. In order to understand what I am talking about let us look at the historical example set by Henry Ford. He completely redefined “classical” economics through the policies undertaken by the Ford Motor Company in the 1920’s. Under “normal” theory it was assumed that a corporation could only maximise profits by increasing price and limiting supply. Ford did the exact opposite because he had a more holistic view of the role of the corporation in society. He understood the synergetic relationship between money and goods. He doubled the wages of his workers, decreased the price of the Model T and in the process remade the Ford Motor Corporation. (This policy was not inflationary because he knew he could at least double production through increased efficiencies when he doubled wages. This is the essence of the enlightened policy of credit for communities rather than for monopoly elites). The company boomed. How did this happen. It was axiomatic for he understood the importance of money and purchasing power in communities. With Ford’s workers able to make a good living, their financial anxiety ceased and staff turnover dropped by a multiple of five in one year. This dramatically decreased management expense and increased productivity. Workers finally had peace of mind. With the increased disposable income in the Detroit area the general economy boomed. All classes of economic sectors expanded. As a result more workers, new business owners, company managers, insurance brokers, real estate brokers, bankers, salesmen, craftsmen, delivery men, builders, farmers and retailers could afford Ford cars. Demand for the model T doubled through the increased buying power WHICH HE HAD CREATED. Accordingly profits at the Ford Motor Company dramatically improved as a result of his innovative policy.


Ford understood economics and he understood the issue of PURCHASING POWER. FOR HIM PURCHASING POWER WAS NOT CREDIT BUT CASH.  HE REASLIZED THAT WITHOUT THE MONEY TO PURCHASE HIS CARS POTENTIAL DEMAND WAS IRRELEVANT. THEREFORE HE REDISTRIBUTED DIVIDENDS FROM THE OWNERS TO THE WORKERS. THIS BRILLIANT INSIGHT MADE THE FUTURE FOR THE COMPANY. It built up the economy of Detroit and it helped define America as a country where a factory worker was respected and well paid, not exploited, as had been the case throughout the English industrial revolution. The American dream was Ford’s vision made manifest. It was a dream brought to fruition not through political fantasy but through the laws of accounting, finance, production and marketing. As Ford said:


                “Power and machinery, money and goods, are useful only as they set us

                free to live. They are but means to an end. For instance, I do not

                consider the machines which bear my name simply as machines. If that was

                all there was to it I would do something else. I take them as concrete

                evidence of the working out of a theory of business, which I hope is

                something more than a theory of business—a theory that looks toward

                making this world a better place in which to live. The fact that the

                commercial success of the Ford Motor Company has been most unusual is

                important only because it serves to demonstrate, in a way which no one

                can fail to understand, that the theory to date is right. Considered

                solely in this light I can criticize the prevailing system of industry

                and the organization of money and society from the standpoint of one who

                has not been beaten by them. As things are now organized, I could, were

                I thinking only selfishly, ask for no change. If I merely want money the

                present system is all right; it gives money in plenty to me. But I am

                thinking of service. The present system does not permit of the best

                service because it encourages every kind of waste—it keeps many men

                from getting the full return from service. And it is going nowhere. It

                is all a matter of better planning and adjustment.”


Henry Ford

“My Life and Work”


Compare for one moment the circumstances in Detroit in the 1920’s and mainstream America today. The exact opposite is occurring. Meaningful wage levels are being destroyed and thus the required American buying power is contracting  due to systematic out-sourcing of real jobs and the mis-use of capital investment to destroy human action. This system cannot hold. Society is being hollowed out from the inside. Folk do not fully understand the total implications of what is happening due to “dumbed down” educational policies. To replace falling money (wage) levels to facilitate exchange between goods produced for consumption and potential purchasers the banking elites have tried to substitute credit availability. This credit switch to compensate for real wages is an unstable arrangement because debt is very expensive and is non-liquidating other than through bankruptcy or lotto wins or death. This is no way to run nations. It creates constant anxiety and eventual destitution and depression among citizens and society. It is particularly ineffective now that most banks are actually insolvent and are no longer in the position to provide credit in the form of business loans, credit card facilities, car loans, overdrafts or home equity draw-downs.


Thus in essence the “solution” to “the problem” in America and for that matter in Europe, is enlightened redistribution of purchasing power other than through increasingly non existent credit. Currently too much power over such redistribution is controlled by banks and associate entities. This money centralization is stagnating the system and the fact that this arrangement failed to regulate itself, and caused a credit collapse, has accentuated the speed of failure by multiples. It is time to change. Society must move on. The intellectual framework to effect this change, as demonstrated by Ford, has been known for over 80 years. Its successful implementation today would bring a renaissance to American commerce and societal development. There is no more important function for Academia today other than to disseminate this vital economic truth.


Armed with this knowledge for how long do we allow the folly of present economic “orthodoxy” to continue? To me this situation is akin to an adult perceiving the behaviour of wild and immature teenagers, wondering when the “penny will drop” and wisdom will prevail. To the elites, who must know the truth, this monopoly credit based boom-bust phenomenon is obviously allowed to continue because they have control. Their ownership
motivates them to disregard consequences provided they are protected through privilege.


However, I believe that the truth is too obvious to ignore anymore.  The end result of the current regressive financial policies is the on-going development of a new modality which I call: “Techno-Feudalism”. This “Techno-Feudalism” is bringing with it vast disparities in wealth, ownership and opportunity. It will lead to the eventual obliteration of the middle classes in developed nations. It will allow global corporations engineer the slow Fabian demise of effective democratic institutions as increasingly corporate boardrooms rather than governments will define people’s destinies.  Untamed it will break traditional social cohesion and lead to mass unrest, criminality and despair. Is this not exactly what we are witnessing in Portugal, Spain, Ireland and Greece? But the future does not have to be so bleak. The monetary solution of increasing actual purchasing power for average Americans and European is so obvious it is “madness” not to sort it out. The truth must be allowed to break free.


“The organism has a right in natural law to draw sustenance from its environment. We cannot with impunity abstract humanity from the natural world. ….


Unfortunately, the present financial system creates an ever greater deficiency of effective and unattached purchasing power giving the illusion, through a distorted financial lens, of actual or physical scarcity in the midst of actual and potential abundance…..


We are trying to pass from one type of civilization into another in which the possibilities are such that we cannot begin to imagine. That transition, I believe, will best be facilitated in an environment which provides maximum freedom (immanent sovereignty) for the individual in the context of absolute economic security.”

Wallace Klinck


In the 1930’s the engineer and self-taught economist Major Clifford Douglas claimed that society was intellectually hypnotized and that only a drastic de-hypnotization and re-education could save it. Douglas believed in people. He felt that individuals had far more goodness and potential than society was allowing them for. He reckoned that if common folk were given enough freedom and leadership they could move society and civilization into a new golden age. An age of extended liberty, discovery, art and culture.  The alternative he felt would be booms, busts, over-consumption, under-consumption, excesses, depressions and wars. Eighty years later this is exactly what the world has experienced and is continuing to experience. However, the period between each stage is narrowing and the level of debt, instability and inequality are exploding beyond comprehension. To followers of Douglas this situation is not happening by accident; it is happening inevitably because the conceptual flaws of the monopoly of credit and the fabricated scarcity of money was allowed to be perpetuated by a privileged banking class.


The monetary and economic policies of such people as Henry Ford, Clifford Douglas, E.C. Riegel and E. F. Schumpeter et al are heartfelt attempts to bring about “steady state” change to historical economic orthodoxy. It is incumbent on all interested parties who desire to solve this problem of problems to become educated and aware of the available solutions and to actively participate. Not to do so will allow the current “greater depression” to expand and gain a greater grip on economic activity. History shows that such a development will eventually lead to escalating strife as sure as night follows day. For us who wish to reject regression in favour of progress we must strive to free contemporary economic policy from its death waltz with outmoded Keynesian monetarism.  We must help economic orthodoxy must move on, sanity demands it. The knowledge is there let’s utilise it.




“Flight from Inflation”


The Heather Foundation,

Los Angeles.


“My Life and Work”

Henry Ford

In Collaboration with

Samuel Crowther


“Small Is Beautiful”

E. F. Schumacher


“Social Credit”

Major Clifford Hugh Douglas

Mondo Politico.Com


Wally Klinch

Social Credit Archivist


(c) 2012 Christopher M. Quigley



What Is The Value Of Money?

Money we all know is a medium of exchange Buyers and sellers relate to each other through money The question here is – what is the value of money? Few say money is the root of all evil Many say money is the root of prosperity And how valuable is money Almost everything is measured by money People go to work everyday because of money Wealth of individuals is measured by money

All purchases and transactions are made by money Every country has a name for its own money The importance of some countries In based on the value of their money What is the value of money?

The rise and fall of foreign exchange Is used to measure the value of money Success to many is also measured by money Corporate positions are measured by money There are some people who marry for money What is the value of money? To many, money is everything You cannot get many things done without money Many have pondered and contemplated to ask Can human beings live without money?

Then, how shall we determine and decide The prices of individuals and materials Differences between the rich and the poor Are calculated in monetary terms The power bestowed by money Seems bigger than imagined

Julius Babarinsa

‘The Grip of Death’

By Michael Rowbotham

“The financial system used by all national economies worldwide is actually founded upon debt. To be direct and precise, modern money is created in parallel with debt…

The creation and supply of money is now left almost entirely to banks and other lending institutions. Most people imagine that if they borrow from a bank, they are borrowing other people’s money. In fact, when banks and building societies make any loan, they create new money. Money loaned by a bank is not a loan of pre-existent money; money loaned by a bank is additional money created. The stream of money generated by people, businesses and governments constantly borrowing from banks and other lending institutions is relied upon to supply the economy as a whole. Thus the supply of money depends upon people going into debt, and the level of debt within an economy is no more than a measure of the amount of money that has been created.”


Money Printing Is the Only Thing Keeping the System Afloat

By Alasdair Macleod

Last Monday GoldMoney published my article showing the frightening growth in money-quantities for the US dollar. In that article I stated that the hyperbolic rate of increase, if the established trend is maintained, is now running at over $300bn monthly, while the Federal Reserve is officially expanding money at only $85bn.

The first thing to note is that the Fed issues money because it deems it necessary. The hyperbolic trend increase in the quantity of money is a reflection of this necessity, implying that if the Fed’s money issuance is at a slower rate than required, then strains will appear in the financial system. There are a number of reasons behind this monetary acceleration, not least the need to perpetuate bubbles in securities markets, but there are three major underlying problems.

Government spending

Federal government spending is accelerating, due to rapidly escalating welfare commitments, not all of which are reflected in the budget. Demographics,……

full article at source: http://www.financialsense.com/contributors/alasdair-macleod/money-printing-only-thing-keeping-system-afloat

The Hitch-Hiker’s Guide to Markets, Inflation and Deflation Over the Next 8 Years

I could not go without writing a serious  parody of the above original comedy series, so be prepared to enter this guide,  which will hopefully offer a fraction of information in “the standard  repository for all knowledge and wisdom”.

This planet has a problem – and has had  this problem repeated throughout history – a problem that made most people  living through it unhappy for pretty much all of the time…and this involved  periods of inflation and deflation.

The objective of this article is to provide  what I think is an accurate version of inflation/deflation and what to expect  over the course of the next 8 years, based upon the Contracting Fibonacci  Cycle. Time points will be identified, followed by charts illustrating Elliott  Wave Analysis indicating why we are on the cusp of a major breakout in the  broad stock market indices and commodities. This analysis runs counter to many  deflationist views, which ties into the proposed definition that will be  described. This guide will be subdivided into sections that are based upon  names present within the 6 novels of the Hitch-Hiker’s Guide series.

As Per the Above Title

There are some deflationists who think we  are in a period of deflation…one noted definition of inflation is “a net  expansion of money supply and credit, with credit marked to market” and the  opposite for deflation.

A problem with the above definitions is  that they provide very broad definitions and often, these outcomes do not occur  until a “Tipping Point” has been reached. Malcolm GladWell wrote a book titled  “The Tipping Point” which I would strongly recommend everyone read. In a  nutshell, different systems, problems etc. do not follow linear relationships but  rather, a “tipping point” unique to a given system under study occurs. This  unique “tipping point” changes the balance of things, causing an accelerated  shifted shift to the upside or downside of a trend, based upon the unit of  measure under study.

Applying this thought to deflation, many  things happening in the news such as job layoffs, bankruptcies etc can  overwhelm senses to provide an empirical conclusion that deflation is just  around the corner.

The definition of inflation or deflation I  propose is a scalar model that comprises the integral of all components  (summation of the slope all components chosen to include in broad economic  sectors and measures) based upon the derivative of their measurements (rate of  change, as an example car speed (km/h, m/s) or money velocity). The derivative  components of each part of the equation represent the rate of change for each  chosen item by graphical representation to form a slope ($/month positive or  negative) that has an assigned probability (R2). Each item added up  can provide the integral, or summation as to whether or not inflation or  deflation is evident as a whole across the economy. Examination of individual  components offers visualized trending to determine whether or not a given  sector or defined measure is entering deflation or inflation.

full article at source: http://www.marketoracle.co.uk/Article36061.html

Is the US Killing the Euro?

by  Dr_Volkmar_G_Hable  :

The technical picture of the USD shows a large  descending triangle which is an indication for further downside for the USD. This  chart is in sharp contrast to the repeatedly announced “strong-dollar policy”  by the US administration.

So what is going on  here?  Did the US government surrender to the  power of the Euro, or is it part of a new tactics not yet quite understood by  European policy makers? Fighting an opponent doesn’t always mean opposing his  force. When faced with overwhelming power, good fighters often use their  attacker’s force to their advantage (Sunzi,  1901), like in Judo, for example. In my view that appears to be the case  with US tactics against the Euro.

Let me explain that  view by having first a look at the current situation:It is with utmost  interest that I watch the usually very upbeat news on CNBC, one of the reasons  being to be able to answer anxious questions from nervous investors, who call  in the next morning in order to inquire about the latest CNBC broadcast. So at  the same time I also have the pleasure to regularly watch two fast-talking and  squeaky clowns in the CNBC circus (Vieira  da Cunha, 2001) who, for the last few years, have given their upbeat views  on any economic, financial, and political issues. The “know it  all” duo’s advice has not been particularly rewarding for investors, and  had you invested your money according to their “never in doubt”  bullish mantra, your assets would be worth today at least 78% less than in 2000  (in terms of Euro or in a hard currency such as gold, they would be down in  value by another 25%), (Hable, 2004, and Lefevre, 1994). But since poor advice  is not only endemic to those two relentlessly irritating financial commentators  but is almost a prerequisite for success in the financial service industry, I  shall not hold it against them. Still I have a question relating to a statement  by Mr. Kudlow, which somewhat surprised me and others. In an article he  explained why “the current economic situation is a lot like the start of  the Reagan Boom 30 Years Ago”. Hello?!

Now, I have some serious  reservations about this comparison for the following reasons. If you look at  interest rates over the last 40 years or so, you will see that when, in 1980,  Mr. Reagan became President of the US, rates were near their highs and since  Mr. Volcker (then the Fed chairman) pursued at the time very tight monetary  policies he managed to bring down the rate of inflation, and subsequently also  interest rates, which then fell for the next 22 years and also enabled him to  keep money supply under tight control. Needless to say that whereas interest  rates were sky high in 1980 and significantly above the rate of growth of  nominal GDP, today the Fed Fund rate is significantly below the rate of nominal  GDP, which suggests that short term interest rates can only rise if nominal GDP  continues to expand.

full article at source:http://www.marketoracle.co.uk/Article34407.html

There is another way (David Mc Williams )

This can’t go on. The figures from our economy released in the past few days reveal that the medicine is killing the patient and killing it quickly. From July to September, we saw the biggest fall in the number of people employed in two years.

Some 46,000 fewer people we employed in this country compared with the same figure last year and a further 30,000 left the labour force. These figures are particularly worrying because they show significant numbers of people simply giving up looking for work, because they can’t see the point. When people give up hope, we enter a new phase of the crisis.

Tax revenue is obviously falling behind target and will continue to do so because if the number of people working drops, income tax and spending receipts drop. This means more expenditure cuts to hit budget targets.

Last Friday we saw that GDP fell in the third quarter by nearly 2 per cent and consumer spending for the year was down almost 4 per cent. These are called ‘lagging indicators’. They tell us what has already happened. There are other indicators, ‘leading indicators’, which tell us what is happening now and what is likely to happen. One of the best of these is monetary data. October saw the largest monthly falls in both money supply and domestic credit since the recession started three years ago. When there is less and less money around, it is impossible to hit budget targets because you are trying to extract more out of less. Put simply, things in this economy are getting worse, much worse.

Austerity is doing what it says on the tin: making the economy contract. The deal signed up to with the eurozone last weekend recommends more of this nonsense. But on the bright side, the country is now beginning to look like many others in the last months of a crisis, when the population realises that the game is up.

full article at source: http://www.davidmcwilliams.ie/2011/12/19/there-is-another-way?utm_source=Website+Subscribers&utm_campaign=cb2527d122-Weekly_Roundup_19dec_2011&utm_medium=email

German Central Bank Admits that Credit is Created Out of Thin Air

Most people think that banks lend solely from
their base of deposits. Some also know that with fractional reserve banking,
they can loan out many times more than they actually have in reserves.

But very few people – with the exception of  those in the banking industry and financial experts – know where credit really
comes from.

Germany’s central bank – the Deutsche Bundesbank (German for German Federal
Bank) – has admitted in writing that banks create credit out of thin

see full article at source:http://georgewashington2.blogspot.com/2010/03/german-central-bank-admits-that-credit.html

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