Copyright Martin Armstrong All Rights Reserved May 30th, 2012

Electronic Money
The Real Conspiracy
The real conspiracy that is brewing behind the curtain has nothing to do with what is money. Those that see a gold standard as the miracle fail to understand the real devious nature of politics. At least the FREEGOLD side does not advocate gold as money. The real conspiracy is to eliminate the Constitution and with each bill they introduce, that is the end game piece by piece. The real goal is to eliminate even the paper dollars. They want everything electronic so they can capture every penny of taxes. In their mind, THEY are not the problem. I have had to listen so many times to people actually say on the Hill that if everyone paid their “fair share” there would be no problem. Well that is about $300,000 per person. It does not matter what they collect. They would still spend more. Governments DO want the same thing in all countries – to survive. That is not to be confused with the fact that countries like Japan and China are entering into bilateral currency arrangements, bypassing the

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dollar. This is a power play. Only those constantly bearish on the dollar and ignorant of the rest of world fail to understand what is going on. Japan is worse than Greece. If there is any risk to the world economy more so than the dollar – it is the yen. China is trying to build its status as the next Financial Capital of the World. They realize that the dollar as a reserve currency is a status symbol and why bend one’s knee to your enemy when things have changed. The dollar is the RESERVE CURRENCY. I have stated numerous times we are headed toward a ONE WORLD RESERVE CURRENCY. Why? When the dollar is the reserve currency, we are exporting domestic policy objectives to the rest of the world the same as Germany was trying to force austerity upon the rest of Europe. China and Russia are in a political power move away from the reserve status of the dollar. This is not something inherently risky about the dollar per se. It is about power. The US is keeping interest rates low to keep the deficit suppressed to some degree reducing exportation of interest. Because of the reserve status of the dollar, about 40% of interest expenditure goes out of the country. Why allow another nation’s domestic policy objectives influence your own economy? It just makes no sense. Economically, absolutely NO country should serve as the reserve currency. That should be a virtual basket of currency administered by an independent world agency. This would not be cash you spend at the store. It would be a VIRTUAL RESERVE CURRENCY that you have to convert your domestic currency into for foreign payments. This would prevent domestic policy objectives from being exported to the world. China is absolutely correct. The 2007 Mortgage Backed Crisis was exported to the world beyond the fact that foreign banks had purchased such debt. The flooding of the money supply to offset the contraction and the lowering of interest rates to virtually zero, helped to fuel real estate speculation in China and even in places like Canada where the Chinese have bought a large portion of Vancouver and moved off into Toronto even causing a boom in real estate prices there while US prices declined. Some people assume the Fed can buy the debt and keep the game going even if the private sector does not buy. In Japan, most of its debt is internalized. But government perpetuate its own depression that is due to end 26 years from 1990 – 2016. So that will come to an end and the value of the yen will collapse as wealth in Japan begins to shift to private assets. Then you will see interest rates rise. True, the Fed has the authority to create money via its elastic money supply power. But this will carry the day only briefly. The Fed could never absorb everything for long before the end is near. The difference when the dollar is the reserve currency is significant. The core economy cannot move into a hyperinflation that is

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typically in the billions of percent. The system would collapse long before that because EVERYTHING is prices worldwide in terms of dollars. The US could never follow the path of Zimbabwe or Germany in the 1920s. The system would collapse long before that. All of Western Society is headed down the same path. The problem is they think they can borrow their way out of everything. That is what is coming to an end just as Communism collapsed in 1989. Those who think that Freegold is not loss of government power, only loss of the US's exorbitant privilege and all other governments will benefit from a physical only price for gold, assume that other governments are honest somehow. It was Thrasymachus who argued against Socrates on this subject in Plato’s Republic. Thrasymachus said: "the different forms of government make laws democratical, aristocratical, tyrannical, with a view to their several interests; and these laws, which are made by them for their own interests, are the justice which they deliver to their subjects, and him who transgresses them they punish as a breaker of the law, and unjust. And that is what I mean when I say that in all states there is the same principle of justice, which is the interest of the government; and as the government must be supposed to have power, the only reasonable conclusion is, that everywhere there is one principle of justice, which is the interest of the stronger."

All governments are the same. Even China, although it abandoned Communism in the classic sense, it did so without risking political suicide. Governments are like any creature. They will fight when cornered. The Free Markets will ALWAYS prevail providing checks and balances as they took down Communism. We now face the collapse of Socialism in the West 2016-2020 – 31.4 years after the Plaza Accord. What I am saying, the idea that we will see hyperinflation like Zimbabwe or Germany is UNLIKELY because the system would collapse long before that happened. Also, you are underestimating government. Do you really think they would not become more Draconian to prevent that? They would

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increase taxes and confiscate everything they could. They will call the troops out just as they did in 1932 in Washington, DC against veterans. In December they passed a law saying if a foreign company dealt with an America, they had to report what that American was doing to the US government of suffer the confiscation of all their assets in America. If you are an American, you cannot go overseas and open a bank account. Foreign banks are refusing to deal with Americans. Every step they take is designed to force all wealth into the form of electronic deposits – not even paper. Italy has stationed agents in front of jewelry stores monitoring who is buying what. Why does anyone think other government would love gold as some monetary unit? They have the same problem and see the solution as the same thing. Eliminate tangible forms of money and they will eliminate the underground economy and at last collect all the taxes they ever dreamed about. Government is only interested in survival. They will NEVER relinquish power willingly. The idea that the Free Markets will somehow emerge to save the day is not likely. They will be there to pick up the pieces. But they will not prevent the collapse – but encourage it. We are not likely to see a FREEGOLD market anytime soon prior to a collapse and there may be more of a risk of seizure before the end game plays out. The claims that governments other than the USA would love to see gold as a reserve currency is just speculation and ignores that Europe and Japan are far worse than a debt to GDP ratio than the USA. Gold will provide the underground economy and the store of wealth to enable people to make the transition to the other side where the world will be faced with a brand new monetary system. What will that be? The one thing we can count on is it will not be a tangible monetary system. There will be some sort of a One World Monetary Reserve Currency to emerge replacing the dollar. The Floating Exchange Rate System is in effect the Free Market and this will dictate the value of a currency relative to the new reserve currency with each nation floating against it independently. Where perhaps that could have been gold based, today we have gone so far beyond that with the rapid advance in debts worldwide, that there is little hope of keeping politicians honest. I have come to see that the only way to end that sort of chaos requires TERM LIMITS for the political class. If politicians had only one term, then they would suffer like the rest of us. As long as they can occupy offices for life, they are the political class opposed to the people. How many senators stood up and cheered the fall of dictators in the Middle East? What hypocrisy for when you looked at many who had the guts to talk about dictators, who had been in power for 25 years, they failed to see that their own tenure was not much different. Each of the dictators could also claim they were elected when the people had no real choice. The political parties decided who will run and to get party support they have to support their agenda. Where is the free election process even in America? Obama criticized Bush for his signing statements. He has done more than Bush. Obama yelled about Cuba and the lack fair trials for terrorists. He too has reverted to military trials. You can put a bag over the head of virtually every politician for when it comes to increasing government power – sorry! They are all the same! Thrasymachus was correct! It is easy to say other countries would love FREEGOLD. Why? All governments have the same chronic spending disease. Until we eliminate the political class and truly return government to the people, it is always going to be just talk.

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Roosevelt changed the monetary system far more than most give him credit for. He did more than nationalized gold. By removing gold from the domestic backing of money, Roosevelt changed the mindset of generations to come. The nonconformists argue for gold in one form or another. The vast major BELIEVE the dollar is money. Ask them why – they cannot articulate the reason. Roosevelt accomplished what the Chinese and Japanese emperor did back in the 3rd century BC. They created money that was not tangible, but where the value was whatever the emperor said it was. Asia has always had a fiat currency. Only in the West did we have the idea that money should be tangible. Generations post-Great Depression have no idea about gold as money. Many can tell you who is on what sports team, but they cannot even tell you who their local politicians is. The notion that you will be able to convince these people gold is money, is unlikely. Gold should remain free and never money. It is an asset class that is MOVABLE unlike that of real estate. Unfortunately, this is an “us-against-them” situation. No government is interested in anything other than surviving and expanding its own self-interest. Gold will rise and we are going to see an explosive rally. The 2016-2020 period looks completely nuts. I have gone to Capitol Hill many times and spoken behind closed doors. I wish I could be more optimistic. I have tried my best to talk reason. But the sad truth that must be stated – It is What It is. They do not want gold nor even paper dollars. They want debt cards and electronic deposits. Everything will be taxable then! Remember –

Genius has its limits. Stupidity is limitless!
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