Fascinating View Of The Real Value Of The Economy

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HOW INFLATION FOOLS PEOPLE INTO THINKING THEY ARE RICHER THAN THEY ARE

OCTOBER 30, 2015 / JEFF BERWICK / 1 COMMENT

[The following is an excerpt from the October issue of TDV released to subscribers today]

One of the biggest crimes against humanity is central banking and their constant devaluing of their currencies.

Some of the biggest names in history have identified central bank inflation correctly:

-“By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens.” – John Maynard Keynes

-“Inflation is taxation without legislation.” – Milton Friedman

-“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value.” – Alan Greenspan

-“The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists.” – Ernest Hemingway

Note how eloquently Ernest Hemingway described our world today.

But, Lysander Spooner said it best when he said, “In reality there is no such thing as an inflation of prices, relatively to gold. There is such a thing as a depreciated paper currency.”

And so, in this topsy-turvy world of centrally planned banking and printing of fiat currencies it is nearly impossible to gauge the real value of things.

However, as Spooner said above, one good way to gauge things over a longer time frame is to look at things in the price of gold. Luckily, PricedInGold.com, ran by a friend of ours here at The Dollar Vigilante, makes this easy. First, let’s look at the Dow Jones Industrial Average (DJIA) in fiat money terms.

If you were to just look at that chart you would think, “Wow, what an amazing bull market!” But, you have to remember, this is in constantly devaluing dollars. Here is how the DJIA looks since 1985 when priced in gold (a much more stable currency).

All of a sudden things jive much more with reality. When priced in gold the Dow hit a major peak in 1999 and has been in a major bear market since with only a slight bounce since 2012. It should be noted that dividends should be taken into account but even adding them into the equation does not change the story much as this chart shows.

The green line is the DJIA in fiat dollar terms, dividends included. And the blue line is priced in gold, dividends included.

So, let’s look at GDP in “inflation-adjusted dollars” versus GDP when priced in gold. Here is GDP as calculated in 2005 dollars using the Consumer Price Index (CPI) to adjust for inflation.

Again, to the amateur eye it looks like US GDP has been in a near century long bull market.

Not so much when you look at the GDP priced in gold.

When priced in gold, US GDP hit a major peak in 2001 and has only had a slight recovery, similar to the recovery in 1975 before plunging more than 50% by 1980. But that is just a look at the stock market and GDP priced in gold. What does this mean for the average working man?

When looking at US wages since 1965, adjusted for inflation by the CPI, it isn’t terribly pretty. In general, wages in “real terms” are down over time albeit not by too much.

But the real story is looking at wages priced in gold.

Notice how things have been downhill since 1971? 1971 was the year the gold backing was removed from the dollar and the working man has been getting stiffed by inflation ever since.

Maybe things aren’t going as well as the cheerleaders on CNBC seem to tell us!

[Editor’s Note: This is an excerpt from the 50 page newsletter issued to subscribers today which includes information on an option play to short the markets, three new gold stock recommendations by Ed Bugos, information on a new bitcoin ATM/Debit card and potential investment into the company and much more.  Subscribe here to gain access.]

Anarcho-Capitalist.  Libertarian.  Freedom fighter against mankind’s two biggest enemies, the State and the Central Banks.  Jeff Berwick is the founder of The Dollar Vigilante, CEO of TDV Media & Services and host of the popular video podcast, Anarchast.  Jeff is a prominent speaker at many of the world’s freedom, investment and gold conferences including his own, Anarchapulco, as well as regularly in the media including CNBC, CNN and Fox Business.

Are There Bigger Problems Than Who Won The Last Game Or Which Person Is Winning "Dancing With The Stars"

THE US$ 1.5 QUADRILLION DERIVATIVES CATASTROPHE

OCTOBER 21, 2015 / JEFF BERWICK / 2 COMMENTS

An article circulating on the internet and entitled, “When will the Bank Bubble Burst”  makes some good points about the lurking catastrophe of world markets.

Egon von Greyerz writes about an recent that took place at Deutsche Bank (DB), where a junior employee “paid $6 billion to a hedge fund which was the gross value of a position, [where] he should have paid the net.”

We’ve reported on Deutsche Bank’s out-of-control culture and gunslinger mentality. For Greyerz, this incident shows just how slipshod oversight is – even for the largest banks. One of the most powerful and sophisticated banks in the world,hadn’t installed enough controls to prevent – in an instant – a US$6 billion mistake.

He writes, “This is a world gone mad. Governments print trillions, banks issue derivatives in the quadrillions and banks transact in hundreds of billions every week. The zeros no longer mean anything and have no value. This is all routine stuff for the people dealing in these sums and no one has a clue about the risk or the real exposure.”

In 1995, the Barings Bank collapse created a loss of £827 million ($1.3B) and nearly caused a chain reaction of ruin that would have toppled the rest of the City’s big banks. Today the situation is catastrophically, immeasurably, worse.

Deutsche Bank’s derivatives position is $75 trillion but perhaps the figure is closer to $100 trillion. That’s the size of the world’s economy but the risk is held by just one bank. The blunt reality: “It is very likely that the total global derivatives exposure of at least $1.5 quadrillion will not just lead to another financial crisis but to The Great Financial Disaster.”

How can one deny this? The “great disasters” are lurking around the corer. And yes, it is true, the central bankers will do anything to preserve the system.

The deal in propaganda and they are already proposing a guaranteed living wage. The idea is that everyone is entitled to some central bank largess. To begin with they only distributed the opportunity to obtain money at minuscule rates to money center banks. Now they are talking about lending to anyone at zero percent without repayment. Essentially free “money.”

If you received a stipend every month chances are you’d back the system, even though you didn’t realize that sooner or later price inflation would eat through all the “free stuff” you were receiving.

Von Greyerz conclusion:

[Increased money printing] will just lead to a bigger bubble and a bigger collapse and to a temporary hyperinflation before a depressionary deflation. Sadly, I consider the likelihood of this scenario being very high. Therefore wealth preservation is critical. Physical gold (and some silver) is the best protection against both hyperinflation and deflation. Remember with a deflationary implosion, no loans will be repaid and the banking system would not survive. Thus gold will be money as it has been for 5,000 years.   

Unfortunately, we agree. If you want to find solutions to help protect your portfolio and your family from the disasters that lie ahead, please visit us at www.SurviveShemitah.com. The upcoming catastrophe seems unavoidable. But you can take “human action” to prepare for it – and to survive and thrive despite it.

We have answers and provide more than 100 pages of information and solutions in our newsletter every month..

Anarcho-Capitalist.  Libertarian.  Freedom fighter against mankind’s two biggest enemies, the State and the Central Banks.  Jeff Berwick is the founder of The Dollar Vigilante, CEO of TDV Media & Services and host of the popular video podcast, Anarchast.  Jeff is a prominent speaker at many of the world’s freedom, investment and gold conferences including his own, Anarchapulco, as well as regularly in the media including CNBC, CNN and Fox Business.

It Is NOT If The US Could Go Bankrupt, It Is When And How It Will Effect Every American. That Is The Real Question.

Can The U.S. Go Bankrupt?

July 28, 2014 by Bob Livingston

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When an individual goes bankrupt, he has spent more than his income. His debts and the interest on those debts exceed all the income he has to such a degree that they are beyond his ability to repay.

Most people believe that national governments go bankrupt because they spend too much or spend more than their income. This is what colleges and universities teach and propaganda media parrot. Furthermore, when governments “overspend,” they call it “deficit spending.” But there is no such thing as national bankruptcy as the word “bankruptcy” implies or as it applies to the individual.

There are certain key words and phrases cleverly put into use to conceal the source of government finance: Federal budget, government spending, government deficit and Federal income tax. Believe it or not, none of these terms relates to government finance. But they do cover government fraud on an unbelievable scale.

The terms Federal budget, government spending and government deficit are meaningless when the Federal government and the central bank (Federal Reserve) create money in the form of paper and numbers called credit, in unlimited amounts. The government does not want public knowledge of its monetary trickery. This is why universities teach “accounting” and “finance.”

A simple axiom: To go broke or bankrupt in the national government sense implies that there is a finite or limited supply of money available to national governments. But money does not exist, and no one has ever proven that it does. People think that paper “dollars” are money. In truth, no one has ever seen a dollar. A dollar is not a thing. It is a unit of measurement the same as the terms quart or ton.

Don’t believe me? Will you believe the Federal Reserve’s own publications from the 1970s?

• “Today, most coin and currency is ‘fiat’ money — money by virtue of government declaration and public acceptance. Fiat money isn’t valuable in itself and doesn’t represent a claim on gold or silver. Fiat money is acceptable because people know money’s true value is its purchasing power — its ability to buy goods and services.” —The Story Of Money, p. 19, Federal Reserve Bank of New York.
• “Coin and currency are ‘Legal Tender,’ money the Government says has to be accepted if offered to settle a debt. But that approval doesn’t make cash any more ‘real’ than checkbook balances.” — I Bet You Thought… p. 7, Federal Reserve Bank of New York
• “Neither paper currency nor deposits have value as commodities. Intrinsically, a dollar bill is just a piece of paper. Deposits are merely book entries. Coins do have some intrinsic value as metal, but far less than their face amount… What, then, makes these instruments — checks, paper money, and coins — acceptable at face value in payment of all debts and for other monetary uses? Mainly, it is the confidence people have that they will be able to exchange such money for real goods and services whenever they choose to do so.” — Modern Money Mechanics, p. 3, Federal Reserve Bank of Chicago
• “Currency backing isn’t relevant in today’s economy. Currency cannot be ‘redeemed,’ or exchanged, for Treasury gold or any other asset used as backing. The question of just what assets ‘back’ Federal Reserve notes has little but bookkeeping significance.”– I Bet You Thought…, p. 11, Federal Reserve Bank of New York
• “Commercial banks are important financial institutions because they can create money — checkbook money. When we borrow $200 at a local bank to buy a washing machine, we sign an I.O.U. and the banker writes a slip for a $200 addition to our checking account. No one has any less money on deposit, but we have more. The banker has bought our I.O.U. with new demand deposits -­ checkbook money -­ which were created. Bank credit and checkbook money have both increased $200.” — Money and Economic Balance, p. 177, Federal Reserve of New York

The method of money creation is witchcraft. It has been witchcraft for thousands of years. Modern economists and sophisticated eggheads only imagine that they understand money.

Yet nothing that affects our lives could be so all-important. Money is not a dull subject, because the study of money is a study of tyranny. It makes a mockery out of human freedom, property ownership and the accumulation of wealth.

Once we understand money, we then know that any imagined personal freedom that we have is a license or privilege given by the government which can be taken away by the government. The purpose of money is to transfer wealth from the producers to the nonproducer money creators.

John Maynard Keynes revealed a lot in his book, Consequences of the Peace, published in 1919. He stated, “If governments should refrain from regulation (taxation), the worthlessness of the money becomes apparent and the fraud upon the people can be concealed no longer.”

Keynes said in this statement that the system of income tax covers the fraud of the government printing press. What does this mean? It means that the government and its partner the Federal Reserve is printing money (creating credit) out of nothing and paying it into circulation for whatever the government wants, whether it be a fleet of ships or an army or to keep the people fat and happy. To cover the fraud of massive confiscation of wealth with printing press money, we have an income tax system.

The income tax system has a very serious purpose, but contrary to what Americans think the income tax has absolutely nothing to do with funding the government. The income tax is a consumption tax. The income tax regulates consumption. Note Keynes’ word “regulation” above. The income tax system penalizes those who are successful. It is a social and economic leveling system.

The income tax also is used to take as much “money” out of circulation as possible. The more “money” taken out through the income tax, the more the money creators can create. The less “money” there is, the better it keeps its imagined value.

• “Too much money results in excess spending. When consumers, businesses and governments spend excessively, they compete for the available supply of goods and services and force prices up. When prices rise, the purchasing power of money falls. To keep purchasing power strong, then, the supply of money must not increase too rapidly.” — I Bet You Thought…, p. 111, Federal Reserve Bank of New York

The Federal government funds itself with “printing press money.” The income tax does not fund the Federal government. Almost nobody knows this, but it is extremely important to understand. The power to create money is the source of government force and bureaucratic tyranny in our lives.

What does all this mean to us? It means that we live under an authoritarian system and we are at its mercy. The Federal government has monopoly power to create money (credit or debt) backed by force. And it disguises this system from the people with the income tax system explained above. Simply stated, corporate government is transferring unbelievable and unimaginable wealth to itself with “money” that it creates and which costs nothing. Does this not make “organized crime” look like Sunday school?

This is how and why world wars are financed that cost millions of young lives. This is how social and economic policy is forged into so-called public policy, a euphemism for government social engineering and government force.

“Public policy” is government force in our lives based on monopoly power to create “money.”

So can governments experience economic collapse? Yes, but no one is aware of how it comes about. That’s because it is not a bankruptcy as is generally understood.

Here’s how it happens: The process of government “money” creation is a concealed scheme of consuming (stealing) the national wealth. In effect, the government creates its own wealth — not from taxes, but by creating “money” and using it to fund the government and to transfer wealth from the people to itself. The simple equation is that when governments consume all the national wealth of the people, then the government collapses.

Governments produce nothing, so governments must live off of the producers. It is the nature of governments to grow bigger and bigger and consume more and more of the national wealth. Do you see this happening?

At some point, government overconsumes the national wealth and collapses. Government finally consumes more than the people can produce.

So then, modern bankruptcy of national governments is not overspending. It is overconsumption of the national wealth.