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All money, including gold, is based on confidence
All money is a confidence game, including gold. Unless two parties are bartering, money is required to trade. With barter, both parties examine the items to be exchanged and not much confidence is required, just a good inspection of the trade items before acceptance of the transaction. No signed contracts or paper money are required, just both parties agreeing in their minds that they are satisfied with the trade. (I barter all the time, I prefer it because there is no tax, no banker or state control, and no slave wage labor required.)
Modern money is slowly morphing from paper to plastic to electronic entries, the State has a monopoly on the issuance of the currency:
Barter is highly inefficient way to trade and the modern economy could hardly exist without money, because with money you can trade something between more than two parties, a three way or greater trade. This includes trading your labor for money so that you can buy exactly what you want. Money need not be examined very closely either, just a quick glance at the familiar colors and patterns to verify it's authenticity. Think about that for awhile, you wouldn't accept monopoly money for your hard work, would
you? Ha ha ha, aha! In order for money to work there must be confidence that the money can be traded again. Nobody really needs money since it is mostly useless, so the only reason people even accept money is to complete transactions for stuff they actually want. Money is really a confidence game, acceptable money is something that we collectively agree on. In fact in some transactions we might give something away and agree to be paid back in an unspecified amount for unspecified things so long as we trust the other. I try operating this way but my kindness is often met with cynicism and contempt, the other party mistakes my kindness for weakness. In a perfect world of perfect trust no money is required. So if we had a perfectly spiritual culture, no money would be needed in order for us to get what we want, we could just have some sort of Akashic accounting system that we give and take. But we are not perfect or very trusting, in fact we are mostly agnostic, materialistic, and war like so that means because of devolved state of vice we are forced to use money. We hoard and worship the stuff, and put it into accounts hoping to get more of it for doing nothing. Because we are greedy the money becomes unstable and thus we suffer. Now because of our own greed we become easy marks for the money masters to exploit. Those who want to control us do so by controlling our emotions, they tapped our egos and have turned us into wage slaves. We work endlessly to pay down the impossible levels of debt that just keeps accumulating because our wants are being manipulated by the black art of corporate advertising. At this juncture, the debt fraud has reached insane levels of non sustainability, we are drowning in debt for all the depreciating junk we bought. Even if we worked until the end of our lives we would never be able to pay off the debts on depreciating stuff of zero value.
Serrated edges, an American invention by the wonderful Ben Franklin, gave the coin a distinct feature that prevented the fraud of shaving or clipping of the coin:
When shells and beads were abandoned for gold coins, gold was universally accepted because of it's rarity, non corrosiveness, and ease of recognition and assaying it's true weight. That's why the British currency is still referred to as the Pound, a measure of weight. Money was valued in a convenient unit, a $20 American coin being exactly one ounce on gold. After some time we all know the story well, a warehouse receipt was substituted for the gold coin or bar. The note stated that it's purpose as a receipt for the real money:
Gold Note: the paper note is not money, it is a warehouse receipt for gold
Now here's another key point, the irredeemable fiat note was derived from the gold note which was a derivative of the gold coin which was the originally derived from that nebulous human thing called the collective consciousness that gold was better than sea shells! Familiarity Breeds Banker Contempt and Inspires Their Greed The familiarity with the paper receipt allowed the bankers pull a fast one and swindle the public. When the Federal Reserve was created, they first kept the gold backing, but the crash of 1929 conveniently led to the removal of the gold backing. Everyone kept their paper dollars but they could no longer exchanged the receipt for the coin. The trick worked because the public didn't panic when the gold backing was removed, the confidence game was maintained because the public was so familiar with paper and was already accepting it as money. The trick also worked because the switch occurred after the 1929 crash, the devastated public was unable to resist because their emotional energy was already spent.
Gold notes disappeared after 1933, but Silver Certificates were still in circulation:
With that slight of hand, gold was removed from the currency, there was no longer any limit to money creation. A bankers wet dream come true. That was 75 years ago. Since then, the banks lent and lent until everyone got deeply in debt. That's what they want: you in debt and paying. Next key point: the more they lent the more GNP they needed to make sure those debts got paid. The idea with lending is that the borrower actually pays back the loan. Think of the mafia loan shark tactics. If you don't pay then cousin Vinnie roughs you up because the lender is damn insistent on repayment. Now we have the real reason why state sponsored economists are obsessed with a rising GNP. As societal debt grows, so must the economy or the debt bubble will implode. But the government is not god, as they repeatedly
stimulate the corpse with ever more injections of credit yet the GNP does not grow in real dollars because inflation sets in. Inflation becomes the only way for debt to be viable without default. Think of it this way, if there was no debt and we had all the roads, bridges, buildings, houses, businesses built, very little GNP would be needed to maintain parity. A mature society could have flat or declining GNP and enjoy endless prosperity. This is not the case for America because the banker parasite has strapped us to the debt table and is bleeding our life force. Banks Don't Produce a Damn Thing but Violence. Once society gets deeply in debt then they must make sure the state spends (primarily through war) to keep the game going. The authorities always are talking about more GNP as if currency debasement could make that even possible. Since 2000, the neocons started multiple wars and doubled the national debt, running up a $5 trillion deficit more than all previous Presidents combined. The banks are damned serious about repayment, just like those mafia loan sharks. But there is a limit to everything, natural law prevents infinite exponential growth. Bush's tactics have reached a dead end, hyper-spending and lower taxes is not working, the system is imploding from it's own dead weight. All that debt makes the system highly inefficient. More and more debt is barely increasing the GNP. The current crisis is exactly the same as the previous crisis in the sense that the bankers reached a limit and now want more power to keep the game going. Can you see that? The decisions that must be made are entirely predictable because the underlying human emotion of greed remains the same. Whether it's a conspiracy or not (it is, but the real perpetrators remain obscure), every time there's a crisis the authorities give themselves more power and authority to make the creation of money easier. That's all they are doing, every single time! The limited quantity of gold or money or debt is the enemy, what bankers want is the ability to lend infinite amounts of fiction backed by nothing but their bogus guarantees, without hyper-inflation of course because that ruins the game for them. Why central bankers fight inflation The former Fed Chairman, Paul Volker was often called an inflation fighter.
He raised interest rates (actually the Fed follow the market and not vice versa) and made ever increasing inflation decrease. He's your hero if you favor deflation, he's your enemy if you were in debt. Inflation debases debt, that's good for you if you want your debt to go away. Hyperinflation is the last stage to inflation, it's when confidence starts to erode at a faster and faster rate, it follows and exponential curve. At the end all debts are destroyed because a stick of butter costs 100 trillion dollars, anyone with a stick of butter can pay off any amount of debt. Hillarious Zimbabwe note (c. 2008):
Inflation is really about consciousness. Once the sellers realize that money is being printed in vast amounts, they discount it's value, they demand more money for less goods. Inflation is currency debasement, the hypothetical gold value is being removed from the derived note. But here's the sad fact, the money never had any real value to start with, it was only a derivative, a fiction in your mind! So that means currency debasement is a misnomer, a characterization leftover from the previous gold age. Currency debasement is actually about our mind changing perception about the colored piece of paper in our pockets that we trusted as a store of value. Additionally, our egos are invested in the process, we work hard to buy things and do not want to admit to the fraud, we want to believe that we are getting fair value for our efforts. But that is a mistake. The money has no real value. Since the money in your pocket is a mental fiction, the only the value it has is what you assign with your mind and trust with your emotions. This is the primary reason why fiat currencies still circulate when they are severely degraded by inflation. Emotions are the key to understanding fiat currencies.
Pictures of famous political leaders and colored ink help inspire confidence in a central bank note:
So let's review, when you loose trust the value of the fiat money looses value. Isn't that eye opening? Trust is the emotional quality to confidence, so it's our emotional connection to money that allows us to understand the phenomenon of currency depreciation. Aghast? Most believe that it's a monetary phenomenon, that currencies depreciate from printing to much money. It's not about the manipulators, it's about the users changing perception. Whoa dude! So what the authorities are actually doing is trying to console our feelings by the facade of dramatic action so that we remain trustworthy to their money. What they are doing is waving their magic wand in the hope that we go back into a state of trust. That's why we keep hearing about restoring confidence even while they print massive quantities of money.
The problem isn't with the banks anymore it's with the debtors changing their minds about repaying
By the way, they aren't really doing anything. They can't fix the problem because the patient is already maxed out. The problem is with the debtor who can no long make the payment. The toxic debt loans are loans in default, they are not being paid because the debtor is already strapped with payments, going bankrupt because of the increasing adjustable rate mortgage, or they lost income due to the recession. So everyday we hear about all the new money the Fed has put into the banking system. 900 billion dollars so far. So what? They still can't make loans because they're are no qualified borrowers. So all that money just sits there, it's doing nothing. The real problem is that there is no one left to lend to, there are no qualified borrowers, so giving money to banks will not solve the problem. What they need to do is forgive debt or give money to the borrowers so that they can pay their debts. But what do we hear round the clock on the news but all the wonderful things they did to save us? But their intention is to save the system and keep us in debt bondage, they want us to remain working as wage slaves. That's why they are not forgiving the debt or giving us money to pay the debts. If we are to be saved it will be by ourselves refusing to pay or play. Derivatives are the end of the line of a long fictional daisy chain of confidence. First we all agreed that gold was money, then we all agreed that the paper receipts for the gold was ok, then the paper receipts with no gold. Then we agreed to borrow that money from ourselves, we incurred debts of this fictional money based on future earnings, trusting the economy. Then in the ultimate wave of confidence we extended borrowing to everyone, we lowered lending standards to zero. When that became suspect, we bundled the mortgage debt and attached credit default swaps and offed the risk. That means we fully aware of the risk otherwise why would we buy insurance on the mortgage backed securities. The system lacked trust. Then we even sold each other derivatives of derivatives, we insured the purchaser of CDS insurance! But it was all just a long daisy chain of declining trust and evaporating confidence. Yee ha! Cowboy finance. Now it's going bust
because confidence has been shattered. Confidence chain: derivatives are derived from the trust in the mortgage issuer that was derived from trust of in a continuing functioning economy so that the debtor could make uninterrupted payments, that is derived from the trust of the value of fiat money that was originally gold backed.
Modern day derivatives are not new, we've been playing the derivative con game for a long time, but each time we assert a new level to the game, the confidence orbit is pushed higher and becomes more unstable. This absolutely no different than pumping an atom with more and more energy pushing the electrons to higher and higher orbits. The atom is stable in the pumped high energy orbit so long as the energy pumping continues. But the atom's electrons can suddenly cascade back to the original low original state by a hair trigger. If the energy is removed, the atom “crashes”. Well that's exactly what's happening to the world financial system right now, it's crashing, the debt bubble reached a limit where it could no longer be
pumped because every single borrower had been maxed out. The subprime disturbance was the hair trigger that lazed the system into a freefall. The gold bugs are already proclaiming victory because they intuit that the confidence crisis will force abandonment of paper and restoration of gold. Are the gold hoarders right? If they are right then the daisy chain of confidence will unravel all the way back to prehistory. note the governator on the poster, California needs to be bailed
Now the authorities are frantically busy trying to prime the system and get the pump working again. They are like Hans and Franz, they are here to pump you up. Unfortunately the patient is a ragged heroin addict in a coma and flatlining. But regardless they are going to give the system a forced enema until the whole quirken thing blows itself to shit heaven. So watch out. As I write this on Monday night, 13 October 2008 the stock market has rallied, a sigh of relief is felt across the world. Everyone wants to know what will happen next, the world watches the crisis unfold from the edge of their seats, the stock ticker is constantly displayed on their TV screens. Have the authorities won our hearts and restored our confidence, has the stock market
bottomed? Not at all. I am here to tell you nothing has changed, that bounce in the stock market is a perfect normal wave correction that has nothing to do with their actions. Read that again, the bounce is about our e-motion-all wave and not their actions. This is the big one that takes out the whole system. Emotion is e motion or energy in motion, the wave is emotional, it's all our our energy in motion. Here's the metaphysical truth, we are the ones driving the bus over the cliff. We are emotionally tapped out so now the market has to have an intermission and let us catch breath so that we can build up energy and apply the next devastating blow to our collective psyches. Can you see that, we are the ones throwing the lightning bolts and they are the ones reacting? The market was emotionally oversold, it is now going to bounce sideways until the next shoe drops, then the next wave will progress with mathematical precision. The current panic is our assertion, our repudiation and they have lost control, because they have lost the ability to woo our confidence. The panic comes in waves, it has not yet been expended and grounded, it's only started, there's still a long ways to go. Phishna 14 October 2008
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