WHY NOT EMBRACE WORTHLESS CURRENCY?

FREE MONEY MEME LRM

Extremely interesting post from Sprott Money linked at Zero Hedge (Debt-Free Money: NOT A Solution, Zero Hedge, Feb. 10, 2015), in which the lawsuit of COMER v. Bank of Canada is evaluated.  I will confess that until reading the article, I had never heard about the lawsuit, which was filed in 2011 and which an article at Global Research describes thusly (The Case to “Reinstate” the Bank of Canada, globalresearch.ca, Feb. 7, 2015):

Canadian constitutional lawyer, Rocco Galati, on behalf of Canadians William Krehm, and Ann Emmett, and COMER (Committee for Monetary and Economic Reform) on December 12th, 2011 filed an action in Federal Court, to restore the use of the Bank of Canada to its original purpose, by exercising its public statutory duty and responsibility. That purpose includes making interest free loans to municipal/provincial/federal governments for “human capital” expenditures (education, health, other social services) and /or infrastructure expenditures.  The action also constitutionally challenges the government’s fallacious accounting methods in its tabling of the budget by not calculating nor revealing the true and total revenues of the nation before transferring back “tax credits” to corporations and other taxpayers. The Plaintiffs state that since 1974 there has been a gradual but sure slide into the reality that the Bank of Canada and Canada’s monetary and financial policy are dictated by private foreign banks and financial interests contrary to the Bank of Canada Act.

I will be looking further into the lawsuit in the coming days, but for now I wanted to comment on Sprott Money’s take on the ideas contained in the lawsuit, which can be loosely summarized as follows:

1. Fiat money is worthless and faulty

2. Gold standard is superior

3. If money costs nothing it is worthless

4. Supply of money must be artificially scarce

And it is no surprise to find out that Sprott Money is a dealer of gold and silver as stated on its website:

Established in February 2008, Sprott Money Ltd. is a leading precious metals wholesale, institutional and retail dealer selling gold, silver and platinum bars, coins and wafers online and over the phone.

Surely the fact that Sprott Money is a precious metals dealer does not color its perception regarding the objective merits of a metals-backed currency (i.e., a gold standard) vs. a fiat currency.  Surely not.

The Sprott/Zero Hedge article does make some good points and accurately sums up the problem with the fiat system to which we are now enslaved, thanks to the Nixon Shock (see the LRM article:  HOW FAKE MONEY BECAME LEGAL MONEY: THE AFFIRMATION OF THE NIXON SHOCK).  The Sprott article repeatedly refers to the “assassination” of the gold standard, and fingers Paul Volcker—rather than Nixon, then-Treasury Secretary John Connally, or then-Fed Chairman Arthurs Burns—as the murderer.  In my view however, all of these men were nothing more than the puppets of the private banks and to the extent that any one or all of them could be considered to be the assassins of the gold standard and/or the architects of the current “free money for banks and expensive money for the people” system, they were really nothing more than hitmen, goons put up to the task of enslaving the population in debt by Bank of America, among others.

However, Sprott says some pretty outlandish things, which I will briefly address in turn.

Conflation of “Interest” and “Debt”

One major problem with the Sprott article is that it mischaracterizes what COMER wants to achieve.  The COMER is seeking “interest-free” loans, while Sprott says that COMER is seeking “debt-free” money.  Interest-free and debt-free are not the same, as can easily seen in the following example: Bill lends Betty $5 and tells her that he would like her to pay him back just the $5 with no interest.  Betty still owes a debt of $5 to Bill, but without interest.  Therefore, Bill’s loan to Betty is interest-free but is not debt-free.  To relate back to the COMER/BoC suit, it is pretty clear that COMER is not asking that the BoC make loans that don’t have to be paid back, but rather is asking that loans be made without interest.  Again, one can clearly see the distinction—make loans that are interest-free without being debt-free.

This is important because if COMER wins this suit (I predict they unfortunately will not), what will essentially be acknowledged is the following principle, with which I absolutely agree: since money (all money, including gold and silver) is created out of thin air (and is presently required as payment for goods and services and is therefore a basic requirement of life itself), charging interest is both unnecessary and immoral.  Unnecessary because when one loans money created from thin air and that didn’t exist previously, one is not doing without the amount of the loan until it is paid back.  That is to say, there is no risk to a “lender” when that “lender” is “loaning” money created from thin air that didn’t exist prior to the “loan.”  One could argue that a rental fee for a loan—which is what “interest” is—is justifiable if the loan is made from pre-existing funds that the lender will have to make do without until the pre-existing funds are paid back, which is how loans typically work between natural persons (i.e., you and me) as opposed to the way it works between corporate persons and natural persons.  And charging interest is immoral both for the reason just stated, as well as the fact that since money is for better or worse (worse) a necessary component of literally keeping body and soul together, it should be available at no charge, like sunlight or oxygen.

Value and Scarcity

Sprott essentially argues that fiat currencies such as the dollar are worthless because they are not scarce.  Those living paycheck to paycheck and surely even more so, those living in various extremely poverty-ridden areas around the world, may disagree with the idea that dollars are not scarce.  Here’s Sprott on the value/scarcity continuum:

As with all “fiat currencies”, there was no longer anything to give this so-called “money” any value. But while that is the most-obvious deficiency of all fiat currencies, it is arguably not the most-important deficiency. The other reason why (for a thousand years) every fiat currency ever created has been destroyed through hyperinflation (or removed before it could destroy itself) is there is no mechanism to limit supply.

Again, would for example, the people in Detroit who are having their water turned off for failure to pay their water bills agree with Sprott that there is “no mechanism to limit supply” of dollars?  Would the people who can’t get decent jobs with decent pay—i.e., the working poor–to pay their medical bills or their student loans (or both) agree that there is “no mechanism to limit supply” of dollars?  I doubt very much that such people would agree with this premise.

Sprott then takes us into a thought experiment:

“Suppose tomorrow that the Harper government declared that Canada’s new “unit of currency” would be a grain of sand. It was the new “fiat currency” for Canada, and thus officially money.

Obviously, despite the fact that our government had bestowed its “fiat” on this so-called currency, it would quickly (instantly?) become worthless, because of the combination of the two factors previously mentioned. It could be produced virtually for free (since grains of sand, like scraps of paper, have no value), and there would be no mechanism to limit supply – since it is available in virtually infinite amounts.

This example brings us to a fundamental principle of economics (and thus any/all monetary systems): any “currency” produced for free, and in (near) infinite quantities must be worthless. It must be worthless for two practical reasons, which go entirely beyond the fact that the “fiat currency” has no inherent fundamental value.

As a practical matter, if one could produce currency (virtually) for free, and in (virtually) infinite amounts, one person/entity would create a near-infinite amount of this “funny money” – and buy every asset on the planet. It is because of this absurdity that we have the second practical reason which such a currency would be worthless: no one would respect such a currency. Thus they would not accept it as payment for goods/services.”

My first reaction to this is that Sprott’s conclusion that if sand grains were money then one person could buy every asset in the world does not follow from the premise, for two reasons: 1) just because someone wants to buy doesn’t mean the seller has to sell, particularly because 2) the seller will also be able to get enough sand to buy whatever he wants to buy, so he would not be impressed with purchase price offered by Sprott’s theoretical buyer.  Indeed, in Sprott’s sand example, both buyer and seller have equal access to money and as such would be able to trade with each other as true equals.  In my view, this would be positive rather than negative.

Indeed, what is the real point of currency itself having value?  Why should a currency be itself a commodity?  Would that not be essentially barter? If the true purpose of currency is to facilitate exchange, there is no need for the currency itself to have value.  Indeed, money—as opposed to currency—is not a thing at all.  Rather, money is a measuring standard, like a meter or an inch.  Money is a concept which is imprecisely expressed in terms of a “currency,” which could be gold, but doesn’t by definition or out of any real necessity have to be. After all, remember that at one time, salt was traded for gold (but we don’t hear people now saying “salt IS money”).  Therefore, it doesn’t really make much sense nor is it at all necessary for a currency to be a thing of value—unless of course one is in a position to control that thing of value, which would necessarily put one in the position of controlling transfers of money and more importantly, the necessities which money is used to exchange.  In other words, one who holds a lot of gold (like Sprott Money, perhaps?) would have a vested interest in gold being the backing for a currency, or being the currency itself.

That holder of large amounts of gold could make the gold artificially scarce via hoarding and/or otherwise removing it from circulation (or by ending its extraction from the earth).  Then we would see a return to the bad old days of finding it necessary to kill people for gold—neo-conquistadors, in other words.  There is a downside to currency being scarce, and that downside is the same thing that Sprott and others tout as the big upside—the scarcity makes it valuable, which makes people desperate to have it.  And desperate people do desperate things.  Indeed, Ferdinand of Spain was purported to have told the conquistadors (most likely a paraphrase): “Get gold! Humanely, if you can, but at all hazards, get gold.”  Is desperation what we really want in our republics which purport to represent the interests of everyone?

I would argue that no, we the people do not want desperation.  Our overlords, however, are perfectly okay with it.

Worthless currency the answer?

Sprott correctly points out that the currency we now use is in fact worthless:

Every dollar/euro/pound/yen of “quantitative easing” is not merely worthless, but fraudulent – because our central banks have been cranking-out trillions upon trillions of this funny-money knowing that it was fundamentally worthless in every respect. In monetary terms, “QE” is literally identical to counterfeiting. Thus when our governments began their “QE” fraud, they made all of our currencies effectively worthless.

But the answer is not to make the currency something of value.  The answer, as I have said many times before, is to take the power of creating currency away from private banks and from governments and give it to the people.  In other words, embrace, not reject the worthlessness of the currency and thereby encourage cooperation rather than competition.  After all, as in the Sprott sand example, if you and I both have access to all the currency we’ll ever need, what is the problem for us?  There isn’t one.  We don’t have to compete, we can just cooperate.  And that’s a big problem for those who want to control us—money is the ultimate divide and conquer strategy—but you and I won’t have a problem if we embrace worthless currency.

And for those who say that having a worthless currency created out of thin air will be disastrous somehow, I say this: civilization is currently at an unprecedented peak in almost every measurable way yet also currently uses a worthless currency that is created out of thin air.  This is undeniable.  We have computers and a worthless currency.  We have planes and spaceships and worthless currency.  Yet think of the resource-saving projects and ideas for bold new products and cures for diseases that can never get off the ground merely because they are denied access to that worthless currency for one reason or another.  It’s not just a nice idea but vitally necessary to the survival of the species that we take the “out of thin air” money-creation powers out of the hands of the private, criminal banks and give it to the people.

It can only help, not hurt as we already use worthless, self-issued currency from out of thin air.  The problem is not the currency, the problem is who is allowed to issue it and thereby create—no sense in mincing words—absolute debt slavery.

My standard self-issued currency argument:

“Fiat currency is, in short, the most important financial invention ever because of the fact that–as the article states–it “is not backed by any tangible commodities.”  Fiat currency is the perfect form of money because it is admittedly and openly fictional, as all forms of money are (yes, even precious metals).  The problems with fiat only arise when: 1) it is treated as non-fictional and as the primary obligation of a person, taking precedence over life, liberty, and the pursuit of happiness, and 2) when the issuance of it is monopolized, which inevitably leads to the first problem.

Self-Issued Currency

The solution to these problems, then, is self-issued currency.  That is, every citizen in a fiat system ought to have the ability to issue his or her own money, up to any amount needed.  This will solve both of the problems above, because when self-issued currency becomes the norm, paying money will be as easy and as painless and as much as an afterthought as saying “Thank you” is now.  Problem one solved.  And obviously problem two is solved because there would be no monopoly on the issuance of currency, hence no unnecessary control over anyone or anything, either by the state or by the issuer of the state’s currency.

For those that might recoil in horror at such an idea, keep in mind that all money is fictional.  In fact, all money is already self-issued, as will be shown below.  Money must be created by someone, somewhere, because money does not exist in nature–except to the extent that a natural item like gold or salt might be assigned the properties of money.  Despite what the typical Western economics professor might say, money does not just naturally come into being as a consequence of people needing to exchange things.  Indeed, as Bartolome de las Casas observed of the native Cubans in the 16th century:

“…[the natives] put no value on gold and other precious things. They lack all manner of commerce, neither buying nor selling, and rely exclusively on their natural environment for maintenance. They are extremely generous with their possessions and by the same token covet the possessions of their friends and expect the same degree of liberality.”

That is to say, money is a creation of man, and as such, it should serve man, not enslave him.  Can it be that the “uneducated,” “pagan,” and “savage” natives of Cuba from centuries ago were more civilized and wiser about economics than we are today?  It certainly would seem so.”

About eggsistense

Writer, musician, cartoonist, human being
This entry was posted in Crap-italism, Debt, Debt Slavery, Everything Is Rigged, Feudalism, fiat currency, Financial Terrorism, Financialization, Nixon Shock, Reverse socialism, self-issued currency, Wage slavery and tagged , , , , , , , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s