Today I depart from my usual methodology, wherein I get to my "high octane speculations" at the very end of the blog, after referencing a shared article that prompts the speculation. In this case, there is an article to reference, but it comes in a wider context of activities and so many articles that to reference them all would be impossible. Hence, I start out today's blog with the high octane speculation itself, which I put in the form of a thesis or hypothesis: There is an agenda taking place worldwide, and that agenda is to replace the current financial system with one allowing the banksters even more license to fiddle with money and to walk away from the debts and the money they've stolen over the years. This agenda has two tracks: (1) a move to "cashless" "digital" currencies that are "safe," and (2) in the USSA, to force a constitutional convention, whose ultimate purpose is to allow them to repudiate obligations - pension funds, retirement plans, &c - while simultaneously putting into place a form of "government" more to their socialist-Gramscian liking.
Our concern here today is with the first track, and this very important article shared by Ms. K.M.:
One will note that this "study" is coming from one of the world's and Europe's largest banks, Deutsche Bank, and the conclusions it offers are disturbing and (to economists of a certain school, and to those of us with common sense, a big "we told you so."):
The conclusions? Fiat money and moving off of bullion-based monetary standards are the heart of a looming and very large financial crisis:
Just as striking was Reid's nuanced observation that it was the fiat monetary system itself that has encouraged and perpetuated the current boom-bust cycle, and was itself in jeopardy of becoming extinct when the next megacrash hits:We think the final break with precious metal currency systems from the early 1970s (after centuries of adhering to such regimes) and to a fiat currency world has encouraged budget deficits, rising debts, huge credit creation, ultra loose monetary policy, global build-up of imbalances, financial deregulation and more unstable markets.
The various breaks with gold based currencies over the last century or so has correlated well with our financial shocks/crises indicator. It shows that you are more likely to see crises/shocks when we break from hard currency systems. Some of the devaluation to Gold has been mindboggling over the last 100 years.
None of this is news to gold advocates nor to critics of the whole "monetized debt-as-facsimile-of-money" scheme. In fact, as I attempted to argue in my book Babylon's Banksters, it's not merely fiat money that's the problem. Fiat money is usually monetized debt, and it's the latter that's the real problem, for the inherent problem with such a system, as the ancient Mesopotamians discovered, is that principal on debt never grows as fast as the interest on it, and hence, debt only grows, and "bad money" (monetized debt) pushes out good money (real money representing the actual production of the society), and by "pushing out" good money, one must include the deliberate act of private banks purposefully removing anything from circulation that doesn't represent monetized debt. When was the last time you spent a United States Note? or a Silver Certificate? or a Gold Certificate?
So back to Deutsche Bank's study: strangely, it echoes former German finance minister Wolfgand Schaueble's statement that the debt growth model is over, and that there's no way forward without a reform of the system.
But what's the reform? Here's where it gets interesting:
And here comes the shocking punchline: not only does Reid concede that the fiat system "may be seriously tested over the coming decade and ultimately we may need to find an alternative" but that one such alternative is none other than cryptocurrencues, i.e. bitcoin, ethereum and so on. Which, while it may be a surprise to institutional investors appears to have been all too obvious to buyers of cryptocurrencies.If we’re correct, the fiat currency system may be seriously tested over the coming decade and ultimately we may need to find an alternative. This is not necessarily a story for the next few months or quarters but we think the trend reversal is already slowly in place. Maybe we can explore future alternatives to the current monetary system in a second part sometime in the future. Cryptocurriencies are all the rage at the moment and are as much about blockchain as anything else but there could be an increasing desire for alternative medians of exchange in the years to come if we are correct.