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A Simple Guide to the Most Important Subject You Never Learned In School, What Our Money Is, Its History, and an Analysis of a Failing System.

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Comments 69

 
Guest - TheGregster881 on Friday, 20 February 2015 03:15

Superb! Best analysis of the system I have read yet. The prospect of a digital currency like the one mentioned is new and completely terrifying.

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Superb! Best analysis of the system I have read yet. The prospect of a digital currency like the one mentioned is new and completely terrifying.
CaptDebtCrash on Friday, 20 February 2015 04:36

@TheGregster881 Thanks for the kind comment, and here is the link in case you were thinking I made up the E-Dollar story. http://www.businessinsider.com/electronic-currency-2013-11

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@TheGregster881 Thanks for the kind comment, and here is the link in case you were thinking I made up the E-Dollar story. http://www.businessinsider.com/electronic-currency-2013-11
Guest - Joe on Saturday, 21 February 2015 01:10

Would 100% reserve banking from the beginning have prevented the current crisis?

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Would 100% reserve banking from the beginning have prevented the current crisis?
CaptDebtCrash on Saturday, 21 February 2015 03:23

Joe, yes it would have, and this was actually suggested by Irving Fisher in the 1930's. With a 100% reserve ratio all of the control of money creation would lie with the central bank. With this complete control also comes complete responsibility and remove the veil of confusion that seem so important to central bankers and bankers in general. So again, yes, it would solve the main issue brought up in the above post of preventing the inevitable crash resulting from fractional reserve banking and debt based money. However it would not correct the undying theme of the dangers of allowing unlimited control over the creation of money in the hands of the government. I do believe that a 100% reserve system would be vastly superior to the current system. Thanks for a great question and here is a link to summary of the 100% reserve banking proposal put forth by Fisher. http://www.fullreservebanking.com/Irving%20Fisher%20and%20the%20100%20Percent%20Reserve%20Proposal.pdf

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Joe, yes it would have, and this was actually suggested by Irving Fisher in the 1930's. With a 100% reserve ratio all of the control of money creation would lie with the central bank. With this complete control also comes complete responsibility and remove the veil of confusion that seem so important to central bankers and bankers in general. So again, yes, it would solve the main issue brought up in the above post of preventing the inevitable crash resulting from fractional reserve banking and debt based money. However it would not correct the undying theme of the dangers of allowing unlimited control over the creation of money in the hands of the government. I do believe that a 100% reserve system would be vastly superior to the current system. Thanks for a great question and here is a link to summary of the 100% reserve banking proposal put forth by Fisher. http://www.fullreservebanking.com/Irving%20Fisher%20and%20the%20100%20Percent%20Reserve%20Proposal.pdf
Guest - Joe on Monday, 23 February 2015 03:22

100% reserve banking will turn banks into mere safe keepers of money. In turn, depositors will be charged small percentage for the services provided, which would have the same effect of negative interests of E-dollar. The power of central banks and banks in fractional reserve banking would be shifted to individuals, as the latter will now have control over which securitised debts to invest in rather than money sitting idly in the banks. Individuals will exercise good judgement over their own investments unlike the irresponsible banks and governments. Well, but those greedy bankers and politicians will never let such powers taken from them.

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100% reserve banking will turn banks into mere safe keepers of money. In turn, depositors will be charged small percentage for the services provided, which would have the same effect of negative interests of E-dollar. The power of central banks and banks in fractional reserve banking would be shifted to individuals, as the latter will now have control over which securitised debts to invest in rather than money sitting idly in the banks. Individuals will exercise good judgement over their own investments unlike the irresponsible banks and governments. Well, but those greedy bankers and politicians will never let such powers taken from them.
CaptDebtCrash on Monday, 23 February 2015 03:55

Joe. In the 100% reserve system you envision what would be the initial money creation mechanism? Milton Friedman was a proponent of having a constant 3% growth of money in circulation which you could attempt to enforce by law. A 100% reserve system based on gold would also curtail money creation, but a 100% reserve system with giving the ability of money creation to the central bankers on a whim might cause its own issues. Commercial banks would lose control to the central bank but in reality they are part of the same entity so I don't see a huge benefit there. It just doesn't appear as if power would made a dramatic shift to the individual. This is not a disagreement I would just like clarification as to how initial money creation would be accomplished in your system? Currently it is done through central banks for base money and debt creation by commercial banks.

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Joe. In the 100% reserve system you envision what would be the initial money creation mechanism? Milton Friedman was a proponent of having a constant 3% growth of money in circulation which you could attempt to enforce by law. A 100% reserve system based on gold would also curtail money creation, but a 100% reserve system with giving the ability of money creation to the central bankers on a whim might cause its own issues. Commercial banks would lose control to the central bank but in reality they are part of the same entity so I don't see a huge benefit there. It just doesn't appear as if power would made a dramatic shift to the individual. This is not a disagreement I would just like clarification as to how initial money creation would be accomplished in your system? Currently it is done through central banks for base money and debt creation by commercial banks.
Guest - Joe on Tuesday, 24 February 2015 11:43

I envision a system where money / credit creation powers will not be centrally controlled rather it should be distributed among individuals. In this way risks will also be spread out, so there will not be too-big-to-fail instances. In ancient times hypothetical debt-based monetary system (rather than commodity-based), if two individuals want to trade where one has nothing while the other has a product, the one with no money will write on stone promising to pay back in order to buy the product, thus money / credit is created. Whoever holds the stone will receive payment + interest. It is up to the individual lender to make good judgement on the promise. So money can be created based on individual willingness to borrow & lend, or one can just go make more products. So the economy will be mainly driven by real supply & demand rather than artificial financial engineering. In current modern digital age, we can invent a system, where everyone is assign a credit account. We create a peer-

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I envision a system where money / credit creation powers will not be centrally controlled rather it should be distributed among individuals. In this way risks will also be spread out, so there will not be too-big-to-fail instances. In ancient times hypothetical debt-based monetary system (rather than commodity-based), if two individuals want to trade where one has nothing while the other has a product, the one with no money will write on stone promising to pay back in order to buy the product, thus money / credit is created. Whoever holds the stone will receive payment + interest. It is up to the individual lender to make good judgement on the promise. So money can be created based on individual willingness to borrow & lend, or one can just go make more products. So the economy will be mainly driven by real supply & demand rather than artificial financial engineering. In current modern digital age, we can invent a system, where everyone is assign a credit account. We create a peer-
Guest - Anonymous on Saturday, 21 February 2015 23:41

Thanks for your thoughts, I've enjoyed reading them. Your analysis about Bitcoin and E-Dollars is particularly interesting. In your opinion, how can an individual best protect and allocate his financial resources now, to prepare for the negative-interest rate future?

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Thanks for your thoughts, I've enjoyed reading them. Your analysis about Bitcoin and E-Dollars is particularly interesting. In your opinion, how can an individual best protect and allocate his financial resources now, to prepare for the negative-interest rate future?
CaptDebtCrash on Sunday, 22 February 2015 01:30

I can best answer this question with what NOT to do. Do not own any debt instruments, particularly sovereign bonds. You may be invested in them and not even know it, read the prospectus even on money market accounts. As far as what TO invest in is a tougher question considering we don’t know if we will go into an inflation or deflation. My bet is on inflation but that can’t be known for sure. If that’s the case the answer is easy, precious metals, no need to purchase investment newsletters because that is the clear solution to anyone who has a grasp of the issue with our current system. A massive deflation is even harder, in that case cash is king…almost. I actually suggest keeping quarters and dimes in your house, and I understand how crazy that sounds. I kind of stumbled onto this one. I started by satisfying the nerd in me. I’d get a few rolls of quarters and dimes to check for silver. As I built a little pile I kind of liked having it rather than cash in the safe.

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I can best answer this question with what NOT to do. Do not own any debt instruments, particularly sovereign bonds. You may be invested in them and not even know it, read the prospectus even on money market accounts. As far as what TO invest in is a tougher question considering we don’t know if we will go into an inflation or deflation. My bet is on inflation but that can’t be known for sure. If that’s the case the answer is easy, precious metals, no need to purchase investment newsletters because that is the clear solution to anyone who has a grasp of the issue with our current system. A massive deflation is even harder, in that case cash is king…almost. I actually suggest keeping quarters and dimes in your house, and I understand how crazy that sounds. I kind of stumbled onto this one. I started by satisfying the nerd in me. I’d get a few rolls of quarters and dimes to check for silver. As I built a little pile I kind of liked having it rather than cash in the safe.
Guest - Joe on Sunday, 22 February 2015 08:03

I hold some gold ETF (IAU), do you think it's safe in the event of crisis? Will the American government confiscate them like it used to do?

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I hold some gold ETF (IAU), do you think it's safe in the event of crisis? Will the American government confiscate them like it used to do?
CaptDebtCrash on Monday, 23 February 2015 02:39

The safest way to own gold is physical bullion in your possession. You will hear this over and over from pretty much every advocate of PM’s, and that’s because it’s true. I have no problem owning certain ETF’s or mining stocks, but only after you have a physical position. If there is a confiscation, which is always possible, they will go after the largest piles of bullion, so that means the ETF’s and major bullion dealers. Thanks.

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The safest way to own gold is physical bullion in your possession. You will hear this over and over from pretty much every advocate of PM’s, and that’s because it’s true. I have no problem owning certain ETF’s or mining stocks, but only after you have a physical position. If there is a confiscation, which is always possible, they will go after the largest piles of bullion, so that means the ETF’s and major bullion dealers. Thanks.
Guest - Tom Taylor on Sunday, 22 February 2015 23:35

If the underlying problem of the system is the expotential nature of intrest, should we not expect the current policy of practical zero intrest combined with inflation and a certain real growth in economy to solve the issue over time? Also in the very nice example for money velocity you have used very different price levels when comparing the flows of money generated. If you consider the price for a porkchop to be 1/26 of a whole pork you end up with no difference?

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If the underlying problem of the system is the expotential nature of intrest, should we not expect the current policy of practical zero intrest combined with inflation and a certain real growth in economy to solve the issue over time? Also in the very nice example for money velocity you have used very different price levels when comparing the flows of money generated. If you consider the price for a porkchop to be 1/26 of a whole pork you end up with no difference?
CaptDebtCrash on Monday, 23 February 2015 02:47

“Should we not expect the current policy of practical zero interest combined with inflation and a certain real growth in economy to solve the issue over time?” There is actually a name for holding interest rates below the rate of inflation to transfer a debt burden from the government to savers, and it is called financial repression. The government actually used it successfully after WW2, and though they are attempting it right now they are not succeeding. Without a doubt they are robbing savers but not to the extent necessary for the scheme to work. There is actually a simple way to determine if financial repression is working. If it is working federal debt would be falling as a percentage of GDP. It’s not, not even close, and will get much worse if we enter a recession which we are overdue for. The spread between interest rates and real inflation would have to be much higher for the scheme to work and since we’re up against the zero bound, interest rates can’t move.

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“Should we not expect the current policy of practical zero interest combined with inflation and a certain real growth in economy to solve the issue over time?” There is actually a name for holding interest rates below the rate of inflation to transfer a debt burden from the government to savers, and it is called financial repression. The government actually used it successfully after WW2, and though they are attempting it right now they are not succeeding. Without a doubt they are robbing savers but not to the extent necessary for the scheme to work. There is actually a simple way to determine if financial repression is working. If it is working federal debt would be falling as a percentage of GDP. It’s not, not even close, and will get much worse if we enter a recession which we are overdue for. The spread between interest rates and real inflation would have to be much higher for the scheme to work and since we’re up against the zero bound, interest rates can’t move.
CaptDebtCrash on Monday, 23 February 2015 05:51

Tom one other thing. Financial repression does not solve the issue of exponentially increasing debt in a debt based monetary system, it just shifts the burden of that debt to the private sector.

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Tom one other thing. Financial repression does not solve the issue of exponentially increasing debt in a debt based monetary system, it just shifts the burden of that debt to the private sector.
Guest - Anonymous on Tuesday, 24 February 2015 12:12

Why would people keep their E-dollars if every year, they take away some of them. Nobody accepts money being taken away from them. It's basically the same than taxing them higher or make inflation higher. Only with taxes you can give it a reason that people might accept (Co2, green blabla tax) and inflation most people don't understand. The one thing people will not accept is having their E-dollars been taken away year after year. It's the same as a 5% wealth confiscation every year for all the money you have in a bank so why would you keep it in a bank. The only backdoor you closed with this system, is to hold it in cash under a matress but all the other backdoors are still open.

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Why would people keep their E-dollars if every year, they take away some of them. Nobody accepts money being taken away from them. It's basically the same than taxing them higher or make inflation higher. Only with taxes you can give it a reason that people might accept (Co2, green blabla tax) and inflation most people don't understand. The one thing people will not accept is having their E-dollars been taken away year after year. It's the same as a 5% wealth confiscation every year for all the money you have in a bank so why would you keep it in a bank. The only backdoor you closed with this system, is to hold it in cash under a matress but all the other backdoors are still open.
CaptDebtCrash on Tuesday, 24 February 2015 14:35

Please re read the section on the E-dollar. The whole point is money held with in the system in the form of e dollars have an exchange rate with paper dollars, so while you have a negative interest rate on your e dollar account paper dollars are losing value faster. It solves the issue of a zero lower bound and eventually paper dollars lose all of their value so you wouldn't want to keep the money under your mattress.

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Please re read the section on the E-dollar. The whole point is money held with in the system in the form of e dollars have an exchange rate with paper dollars, so while you have a negative interest rate on your e dollar account paper dollars are losing value faster. It solves the issue of a zero lower bound and eventually paper dollars lose all of their value so you wouldn't want to keep the money under your mattress.
Guest - Anonymous on Wednesday, 25 February 2015 15:30

You can buy gold and silver and bury it under your basement floor. But someone else has to get the cash, which can't leave the banking system.

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You can buy gold and silver and bury it under your basement floor. But someone else has to get the cash, which can't leave the banking system.
Guest - Anonymous on Wednesday, 25 February 2015 06:27

I have only become financially aware since 2007 and I still have trouble with the concept of money as debt even when it is explained patiently clearly and logically by Captain Debt Crash. Thank you for this excellent education. (I came here via Zero Hedge) What do you make of the accumulation of gold by China and Russia?

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I have only become financially aware since 2007 and I still have trouble with the concept of money as debt even when it is explained patiently clearly and logically by Captain Debt Crash. Thank you for this excellent education. (I came here via Zero Hedge) What do you make of the accumulation of gold by China and Russia?
CaptDebtCrash on Wednesday, 25 February 2015 09:50

LOL, I happen to be a ship captain, and picked debtcrash as the name of my blog but it never occurred to me to put the two together. Refer to me how you wish, but I don't think I'll be changing my moniker just yet. Thanks though, it made me laugh. To answer your question, just as any individual, the Chinese and Russians, are protecting themselves from a perceived threat. First, I respect the Chinese and Russian people. That said, just because their governments may be preparing the same way you are that does not make them the "good guys", I actually trust them less than my own government if that's possible.

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LOL, I happen to be a ship captain, and picked debtcrash as the name of my blog but it never occurred to me to put the two together. Refer to me how you wish, but I don't think I'll be changing my moniker just yet. Thanks though, it made me laugh. To answer your question, just as any individual, the Chinese and Russians, are protecting themselves from a perceived threat. First, I respect the Chinese and Russian people. That said, just because their governments may be preparing the same way you are that does not make them the "good guys", I actually trust them less than my own government if that's possible.
Guest - WKSwanson on Monday, 16 March 2015 21:03

Okay, watch Mike Maloney's Hidden Secrets of Money -google it.

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Okay, watch Mike Maloney's Hidden Secrets of Money -google it.
Guest - Anonymous on Wednesday, 25 February 2015 10:20

You are not the first to come up with the idea of all-electronic currency with negative rates. The "mark of the beast" currency described in Revelations is probably such a system, using some kind of implanted chip/biometric marker for security. More than negative rates, an all-electronic currency can also give money a "color" that defines what kind of goods it can be spent on, much as food stamps can only be used for food. This can be done to compartmentalize inflation. But what happens if the interest rate accelerates more and more negative with time? Does the currency system implode after all units are taxed away by increasing negative rates, until there is no currency left? Is hyperdeflationary collapse possible?

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You are not the first to come up with the idea of all-electronic currency with negative rates. The "mark of the beast" currency described in Revelations is probably such a system, using some kind of implanted chip/biometric marker for security. More than negative rates, an all-electronic currency can also give money a "color" that defines what kind of goods it can be spent on, much as food stamps can only be used for food. This can be done to compartmentalize inflation. But what happens if the interest rate accelerates more and more negative with time? Does the currency system implode after all units are taxed away by increasing negative rates, until there is no currency left? Is hyperdeflationary collapse possible?
Guest - Anonymous on Thursday, 26 February 2015 04:59

Captain this is excellent. I have never seen such a clear and concise summary anywhere. I will be flinging it far and wide.

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Captain this is excellent. I have never seen such a clear and concise summary anywhere. I will be flinging it far and wide.
CaptDebtCrash on Thursday, 26 February 2015 06:10

Thank you very much. Funny, when I wrote it I didn't think anyone would ever read it, but it seems, for the most part, to be getting some pretty good feed back. Please let me know if there are any problems or questions and I will try to correct them or clarify.

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Thank you very much. Funny, when I wrote it I didn't think anyone would ever read it, but it seems, for the most part, to be getting some pretty good feed back. Please let me know if there are any problems or questions and I will try to correct them or clarify.
Guest - Hunt4Steve on Thursday, 26 February 2015 13:33

It "appears" that the only way to really prepare for the coming economic collapse is to have hard assets in hand; food, skills, paid for shelter, etc. However with the "e-dollar" on the horizon, this makes me think about how we will all be forced to use some kind of electronic card or even a RF embedded (more secure) chip in our hand to buy & Sell on the market......if we want to eat. The Gov't has been training people for years to bypass cash and swipe the card. With Debt per person at an all time high, it's become second nature to have a card of some type in your wallet. It also seems like the BRICS nations are putting the PetroDollar on the ropes. Russia and China have already signed an agreement to not use the US Dollar, and it shouldn't be too much longer before those dollars come back home to the US.....devauling the dollar even more..... Interesting times...

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It "appears" that the only way to really prepare for the coming economic collapse is to have hard assets in hand; food, skills, paid for shelter, etc. However with the "e-dollar" on the horizon, this makes me think about how we will all be forced to use some kind of electronic card or even a RF embedded (more secure) chip in our hand to buy & Sell on the market......if we want to eat. The Gov't has been training people for years to bypass cash and swipe the card. With Debt per person at an all time high, it's become second nature to have a card of some type in your wallet. It also seems like the BRICS nations are putting the PetroDollar on the ropes. Russia and China have already signed an agreement to not use the US Dollar, and it shouldn't be too much longer before those dollars come back home to the US.....devauling the dollar even more..... Interesting times...
Guest - Anonymous on Thursday, 26 February 2015 15:04

Fantastic blog post. Great job. My only comments are directed at the bitcoin aspect. You are correct, any significant financial institution, not just the U.S. gov't, could crush the bitcoin market at any time they choose to. The market capitalization there is just too small to self-protect it's own perception as having value. So, bitcoin's only salvation lies in network effect. In plain english this is simply the very thing that makes the USD a worldwide currency, everyone is willing to use it (and it's primary debt instruments, T-bills) as a medium of exchange. When I look at bitcoin's "founders" or "core developers" and what they say, they are taking the cautious nerd approach to the creation. This is a recipe for disaster in the financial realm. Those guys need to be working out all possible bugs towards increasing their transaction speed, and pushing worldwide acceptance as if their life depended on it. Right now the bitcoin ledger system can handle between 3 and 7 transactions.

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Fantastic blog post. Great job. My only comments are directed at the bitcoin aspect. You are correct, any significant financial institution, not just the U.S. gov't, could crush the bitcoin market at any time they choose to. The market capitalization there is just too small to self-protect it's own perception as having value. So, bitcoin's only salvation lies in network effect. In plain english this is simply the very thing that makes the USD a worldwide currency, everyone is willing to use it (and it's primary debt instruments, T-bills) as a medium of exchange. When I look at bitcoin's "founders" or "core developers" and what they say, they are taking the cautious nerd approach to the creation. This is a recipe for disaster in the financial realm. Those guys need to be working out all possible bugs towards increasing their transaction speed, and pushing worldwide acceptance as if their life depended on it. Right now the bitcoin ledger system can handle between 3 and 7 transactions.
CaptDebtCrash on Thursday, 26 February 2015 15:15

Anonymous, Thanks for your comments. I certainly see the benefits of bitcoin and its block chain technology, but I struggle with how it will be accepted by the current power structure and socio-economic system. That could be said for the use of gold as currency as well.

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Anonymous, Thanks for your comments. I certainly see the benefits of bitcoin and its block chain technology, but I struggle with how it will be accepted by the current power structure and socio-economic system. That could be said for the use of gold as currency as well.
Guest - Guy_Incoginto on Tuesday, 10 March 2015 06:39

Hi CaptDetbCrash, did you ever consider that the founders of bitcoin are the US government? I point you towards this - http://groups.csail.mit.edu/mac/classes/6.805/articles/money/nsamint/nsamint.htm

I think you were right that the US would aggressively set upon any threat to its currency, and so, I can think the only rational reason why bitcoin has remained unscathed, and receives quite a lot of media attention which avoids this very question, is because it is a currency created and backed by the US.

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Hi CaptDetbCrash, did you ever consider that the founders of bitcoin are the US government? I point you towards this - http://groups.csail.mit.edu/mac/classes/6.805/articles/money/nsamint/nsamint.htm I think you were right that the US would aggressively set upon any threat to its currency, and so, I can think the only rational reason why bitcoin has remained unscathed, and receives quite a lot of media attention which avoids this very question, is because it is a currency created and backed by the US.
Guest - Debtcrash on Tuesday, 10 March 2015 06:45

I have considered that, it is certainly possible, and I would not put it past them. I used a slightly less conspiratorial example but you are right the end result would be the same.

Good comment, and thanks for reading.

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I have considered that, it is certainly possible, and I would not put it past them. I used a slightly less conspiratorial example but you are right the end result would be the same. Good comment, and thanks for reading.
Guest - Guy_Incoginto on Tuesday, 10 March 2015 08:12

Hi CaptDeptCrash,

Yeah, it is interesting to imagine that might be behind it. I always wondered like you why it was left in peace. Notice the name of some of the referenced authors too 'Tatsuaki Okamoto' sounds a lot like 'Satoshi Nakamoto', the mysterious founder of bitcoin.

Would be great if you added it to your article and if you have time to research a bit more, even better. I would love to know what you find out.

Thanks.

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Hi CaptDeptCrash, Yeah, it is interesting to imagine that might be behind it. I always wondered like you why it was left in peace. Notice the name of some of the referenced authors too 'Tatsuaki Okamoto' sounds a lot like 'Satoshi Nakamoto', the mysterious founder of bitcoin. Would be great if you added it to your article and if you have time to research a bit more, even better. I would love to know what you find out. Thanks.
Guest - Debtcrash on Tuesday, 10 March 2015 07:11

I looked at the link you put in your comment. I loved it, and was not privy to the information. Obviously I have not read all of it but it is earthshattering considering my other theory about the E dollar.
I’m going to use it for a post idea unless you would like to write on it and become a contributor to this site. Let me know but if I do make a post and the info checks out I’ll be sure to give you credit.
Thanks

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I looked at the link you put in your comment. I loved it, and was not privy to the information. Obviously I have not read all of it but it is earthshattering considering my other theory about the E dollar. I’m going to use it for a post idea unless you would like to write on it and become a contributor to this site. Let me know but if I do make a post and the info checks out I’ll be sure to give you credit. Thanks
CaptDebtCrash on Wednesday, 18 March 2015 15:14

Here's the post that resulted from the paper you sent to me. I appreciate it.

http://debtcrash.report/entry/bitcoin-an-e-dollar-beta-test

Thanks again

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Here's the post that resulted from the paper you sent to me. I appreciate it. http://debtcrash.report/entry/bitcoin-an-e-dollar-beta-test Thanks again
Guest - Anonymous on Friday, 27 February 2015 07:42

While much of the above article is great and true, one statement in one of the final paragraphs (fortunately) is not (yet) correct: cash transactions above 1000 EUR are not illegal! Some European countries try to make the daily use of cash more and more difficult but cash is still widely accepted and a lot of people still prefer using it. There are also a lot of early signs that banks try to completely monitor the use of your hard earned money by trying to make people use debt cards and NFC enabled bank cards instead of cash... beware! Personally I believe that both the USD's and the Euro's end is coming rather sooner than later and we may best prepare for it by trying to stay out of debt and anonymously buy as much gold, silver and land as we can (which I understand will sadly not be an option for many).

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While much of the above article is great and true, one statement in one of the final paragraphs (fortunately) is not (yet) correct: cash transactions above 1000 EUR are not illegal! Some European countries try to make the daily use of cash more and more difficult but cash is still widely accepted and a lot of people still prefer using it. There are also a lot of early signs that banks try to completely monitor the use of your hard earned money by trying to make people use debt cards and NFC enabled bank cards instead of cash... beware! Personally I believe that both the USD's and the Euro's end is coming rather sooner than later and we may best prepare for it by trying to stay out of debt and anonymously buy as much gold, silver and land as we can (which I understand will sadly not be an option for many).
CaptDebtCrash on Friday, 27 February 2015 12:22

Anon, Your criticism is partly correct limitations on cash euro transactions are covered under national laws. I would have been more correct in saying Spain limits cash transactions to under 2500 Euro, Italy under 1000 Euro, and France 3000 Euro but there is pressure to change that to 1000 euro. Greece has a 1500 Euro Limit, and Portugal has a limit of 1000 euro between consumers and businesses. Thanks for the clarification, although it seems like the trend toward more capital controls is clear.

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Anon, Your criticism is partly correct limitations on cash euro transactions are covered under national laws. I would have been more correct in saying Spain limits cash transactions to under 2500 Euro, Italy under 1000 Euro, and France 3000 Euro but there is pressure to change that to 1000 euro. Greece has a 1500 Euro Limit, and Portugal has a limit of 1000 euro between consumers and businesses. Thanks for the clarification, although it seems like the trend toward more capital controls is clear.
Guest - Anonymous on Saturday, 28 February 2015 05:07

damn I fucking loved it, especially the afterword, how it's safer to be a sheep and go with the tide than searching for truth. I could observe it in other areas of life. Media for example. If you don't join the anti-Assad, -Putin, -Ghaddafi rethoric, you'll be left sitting on sidewalk, fired if you work for a major newspaper. The same crooks everywhere.

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damn I fucking loved it, especially the afterword, how it's safer to be a sheep and go with the tide than searching for truth. I could observe it in other areas of life. Media for example. If you don't join the anti-Assad, -Putin, -Ghaddafi rethoric, you'll be left sitting on sidewalk, fired if you work for a major newspaper. The same crooks everywhere.
Guest - scott on Sunday, 08 March 2015 16:43

The easiest and most accurate down to earth explanation!! Since our monetary system we use now is guaranteed to fail, i fear with 90 percent certainty that our physical currency will give way to a fully digital fraud. With no more physical fiat what will prevent the fed from just ' deleting' debt instruments at will, with no independent auditors ( what a farce)?
I dont think the negative deposit rates are going to be accepeted by the public. The public is just smart enuf to know if they deposit a dollar and only get 95 cents when they withdraw that something is wrong. My guess is that the fed would have to somehow mask this, how would they do that and calm the masses? any guesses?
I am glad i wont be around for the misery...........

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The easiest and most accurate down to earth explanation!! Since our monetary system we use now is guaranteed to fail, i fear with 90 percent certainty that our physical currency will give way to a fully digital fraud. With no more physical fiat what will prevent the fed from just ' deleting' debt instruments at will, with no independent auditors ( what a farce)? I dont think the negative deposit rates are going to be accepeted by the public. The public is just smart enuf to know if they deposit a dollar and only get 95 cents when they withdraw that something is wrong. My guess is that the fed would have to somehow mask this, how would they do that and calm the masses? any guesses? I am glad i wont be around for the misery...........
Guest - a on Friday, 27 March 2015 13:39

lol
Most people I know are charged for a checking account regardless of how much they keep in it. In fact, at least with banks around my area, the only way to get it free is to be over 50. Hmmm............
Could this be it, ya think?

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lol Most people I know are charged for a checking account regardless of how much they keep in it. In fact, at least with banks around my area, the only way to get it free is to be over 50. Hmmm............ Could this be it, ya think?
Guest - Debtcrash on Friday, 27 March 2015 16:34

Fees and negative deposit rates are two very different things, but I do think that all the fees we have become accustomed to will make the implementation of negative rates much easier.

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Fees and negative deposit rates are two very different things, but I do think that all the fees we have become accustomed to will make the implementation of negative rates much easier.
Guest - Debtcrash on Friday, 27 March 2015 16:34

Fees and negative deposit rates are two very different things, but I do think that all the fees we have become accustomed to will make the implementation of negative rates much easier.

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Fees and negative deposit rates are two very different things, but I do think that all the fees we have become accustomed to will make the implementation of negative rates much easier.
CaptDebtCrash on Sunday, 08 March 2015 19:59

Good post, but the author forgot to point out one important detail. The author forgot to point out that the bogus paper gold receipts that the goldsmith prints and circulates via loans are also fraudulent claims on real property. These extraneous claims show up as inflated demands for goods and services that then push the prices of these goods and services up--price inflation.

Price inflation is the evidence of the goldsmith's, and our present day banksters', prior thefts.

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Good post, but the author forgot to point out one important detail. The author forgot to point out that the bogus paper gold receipts that the goldsmith prints and circulates via loans are also fraudulent claims on real property. These extraneous claims show up as inflated demands for goods and services that then push the prices of these goods and services up--price inflation. Price inflation is the evidence of the goldsmith's, and our present day banksters', prior thefts.
Guest - Kovar on Monday, 16 March 2015 18:24

Why is the problem and solution always made so complicated? The United States supreme laws ~ Constitution/Bill of Rights/Declaration of Independence ~ have been ignored/trashed/demonized. The LAW states that the US Treasury is to create our money INTEREST FREE, NOT a PRIVATE bank. Is that so complicated to comprehend? Go read it for yourself and be amazed at how easy it was to fool an entire nation into slavery with propaganda.

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Why is the problem and solution always made so complicated? The United States supreme laws ~ Constitution/Bill of Rights/Declaration of Independence ~ have been ignored/trashed/demonized. The LAW states that the US Treasury is to create our money INTEREST FREE, NOT a PRIVATE bank. Is that so complicated to comprehend? Go read it for yourself and be amazed at how easy it was to fool an entire nation into slavery with propaganda.
Guest - Dwain Dibley on Saturday, 16 May 2015 22:22

Our money is created interest free by the Treasury, and it is backed by gold certificates and Treasury bonds, which the Fed is required to hold for every note it puts into circulation. Federal Reserve notes represent a first lean on all the assets of the Federal Reserve banks and on the collateral specifically held as backing.

There is no law anywhere that grants the right to create money to the banks or to the Fed.
http://carl-random-thoughts.blogspot.com/

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Our money is created interest free by the Treasury, and it is backed by gold certificates and Treasury bonds, which the Fed is required to hold for every note it puts into circulation. Federal Reserve notes represent a first lean on all the assets of the Federal Reserve banks and on the collateral specifically held as backing. There is no law anywhere that grants the right to create money to the banks or to the Fed. http://carl-random-thoughts.blogspot.com/
CaptDebtCrash on Tuesday, 17 March 2015 23:25

Hi CaptDebtCrash,

Very insightful analysis. Just to clarify are you suggesting that holding PM's in a negative interest rate environments where a "E" dollar is king would still be a good idea? Wouldn't this turn gold back into the barbarous relic the central bankers want it to be? I don't understand the role of gold anymore if an E dollar system was fully embraced.

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Hi CaptDebtCrash, Very insightful analysis. Just to clarify are you suggesting that holding PM's in a negative interest rate environments where a "E" dollar is king would still be a good idea? Wouldn't this turn gold back into the barbarous relic the central bankers want it to be? I don't understand the role of gold anymore if an E dollar system was fully embraced.
CaptDebtCrash on Wednesday, 18 March 2015 15:33

In the current environment PM's are essential. In the event of the E dollar coming to fruition there would be some benefits for PM's and some drawbacks.

To start with the benefits, if low interest rates are good for PM's then negative interest rates would be much better. The uncertainty of a monetary shift similar to the closing of the gold window in '71 could also be beneficial.

These pro's could result in a con though. If PM's benefited to much from the E dollar the government may be more inclined to confiscate. As I mentioned under the E dollar the govt and banks would be even stronger making confiscation easier. Also the E dollar may prove to allow the system to be sustainable, something that isn't the case now, this could also be a negative for PM's.

You certainly need a position in PM's, and a significant one at that, but I don't think there is a clear path for PM's if it were to be implemented.

Thanks for the question, and I hope you come back.

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In the current environment PM's are essential. In the event of the E dollar coming to fruition there would be some benefits for PM's and some drawbacks. To start with the benefits, if low interest rates are good for PM's then negative interest rates would be much better. The uncertainty of a monetary shift similar to the closing of the gold window in '71 could also be beneficial. These pro's could result in a con though. If PM's benefited to much from the E dollar the government may be more inclined to confiscate. As I mentioned under the E dollar the govt and banks would be even stronger making confiscation easier. Also the E dollar may prove to allow the system to be sustainable, something that isn't the case now, this could also be a negative for PM's. You certainly need a position in PM's, and a significant one at that, but I don't think there is a clear path for PM's if it were to be implemented. Thanks for the question, and I hope you come back.
Guest - kevin on Friday, 20 March 2015 09:45

Heave to for a moment please Captain.
Your first example of the annual transactions between the pig farmer and orchard owner I understand.
However, in the second example, where the trade is done weekly, they appear to be using the same gold piece to purchase but 1/26th of the previous goods. Unless gold had dramatically devalued and/or the price of goods had increased, surely they would have used a smaller coin and their income would have remained the same?

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Heave to for a moment please Captain. Your first example of the annual transactions between the pig farmer and orchard owner I understand. However, in the second example, where the trade is done weekly, they appear to be using the same gold piece to purchase but 1/26th of the previous goods. Unless gold had dramatically devalued and/or the price of goods had increased, surely they would have used a smaller coin and their income would have remained the same?
Guest - kevin on Friday, 20 March 2015 11:14

Thank you Cap'n but I seem to be missing the point and can't get past the fact that you're attributing changes in money velocity to incomparable activity.
Surely it doesn't matter whether the coin was plastic or titanium, it was the same coin with the same value was it not? So how does its purchasing power fluctuate like that? If the total purchases were the same over the same period then wouldn't the velocity be also the same?
I'm not trying to be difficult and I do appreciate your attentive response.

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Thank you Cap'n but I seem to be missing the point and can't get past the fact that you're attributing changes in money velocity to incomparable activity. Surely it doesn't matter whether the coin was plastic or titanium, it was the same coin with the same value was it not? So how does its purchasing power fluctuate like that? If the total purchases were the same over the same period then wouldn't the velocity be also the same? I'm not trying to be difficult and I do appreciate your attentive response.
Guest - kevin on Saturday, 21 March 2015 04:08

Aye aye Cap'n.
I shall take your advice and investigate further as I still do not comprehend!
Say I can go to the supermarket once a year, spend $500 and stock up the freezer, or go weekly and spend about $10. Whilst I understand that the weekly shop means much more activity (velocity?) with about 50 times the number of transactions involved, neither the storekeeper nor I are any richer or poorer at the end. (Ignoring fluctuations etc.)
Otherwise, thank you for an excellent site. You are doing important work.

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Aye aye Cap'n. I shall take your advice and investigate further as I still do not comprehend! Say I can go to the supermarket once a year, spend $500 and stock up the freezer, or go weekly and spend about $10. Whilst I understand that the weekly shop means much more activity (velocity?) with about 50 times the number of transactions involved, neither the storekeeper nor I are any richer or poorer at the end. (Ignoring fluctuations etc.) Otherwise, thank you for an excellent site. You are doing important work.
CaptDebtCrash on Sunday, 22 March 2015 05:51

I fully understand why it's a strange concept, but again the illustration shows how money velocity can have a greater effect on the perceived money supply even if the actual money supply has not changed at all.

In the first example the coin only changed hands twice in a year, and each man had an income for the year of 1 coin, in the second it changes hands 52 times and each man has an income of 26 coins. So even if money supply remains the same and even if the amount of goods exchanged remains the same how often the coin changes hands can vastly change income, the prices for goods service and ASSETS, as well as the ability to service debts (a key concept when considering we have a debt based monetary system). Just because the total purchases are similar does not mean the money velocity, and perceived money supply is not rising. Actually the amount of goods changing hands can be going down, as the real economy shrinks, while money velocity and perceived money supply skyrockets resulting in the 'value' of the money dropping, aka hyperinflation. Just because it is the same dollar, coin, or shell, depending how transactions are completed can make vast changes in money velocity and thus perceived value of that medium of exchange.

Monetary authorities, in our case the Fed, have a fair amount of control over the money supply but not money velocity which is determined by market participants how they perform transactions and how they decide to save or spend money. We currently have the highest money supply but the lowest money velocity in modern times, and where the supply of money changes relatively gradually velocity can change in the blink of an eye.

Thanks for your question, if you want more information on money velocity there are countless explanations on the web, it is an essential concept to understand in our current environment.

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I fully understand why it's a strange concept, but again the illustration shows how money velocity can have a greater effect on the perceived money supply even if the actual money supply has not changed at all. In the first example the coin only changed hands twice in a year, and each man had an income for the year of 1 coin, in the second it changes hands 52 times and each man has an income of 26 coins. So even if money supply remains the same and even if the amount of goods exchanged remains the same how often the coin changes hands can vastly change income, the prices for goods service and ASSETS, as well as the ability to service debts (a key concept when considering we have a debt based monetary system). Just because the total purchases are similar does not mean the money velocity, and perceived money supply is not rising. Actually the amount of goods changing hands can be going down, as the real economy shrinks, while money velocity and perceived money supply skyrockets resulting in the 'value' of the money dropping, aka hyperinflation. Just because it is the same dollar, coin, or shell, depending how transactions are completed can make vast changes in money velocity and thus perceived value of that medium of exchange. Monetary authorities, in our case the Fed, have a fair amount of control over the money supply but not money velocity which is determined by market participants how they perform transactions and how they decide to save or spend money. We currently have the highest money supply but the lowest money velocity in modern times, and where the supply of money changes relatively gradually velocity can change in the blink of an eye. Thanks for your question, if you want more information on money velocity there are countless explanations on the web, it is an essential concept to understand in our current environment.
CaptDebtCrash on Sunday, 22 March 2015 05:51

Don't get to stuck on the fact that it's a gold coin and your perceived value of that coin. Look at it objectively only as a place holder, or even as a plastic coin, with my example showing how money velocity can vastly change income with similar amounts of goods changing hands.

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Don't get to stuck on the fact that it's a gold coin and your perceived value of that coin. Look at it objectively only as a place holder, or even as a plastic coin, with my example showing how money velocity can vastly change income with similar amounts of goods changing hands.
CaptDebtCrash on Friday, 20 March 2015 15:07

By acquiring gold you are removing debt soaked, death soaked fiat from the system. Gold (and NOT other PM's) is Anti Fiat and I believe it will be a Major factor in fiats demise (soon, IMHO). The knowledge of the power of Gold has been lost to most, especially in the West (which was a design of the Fiat powers, BTW). The Chinese, Indians, Russians others still have this knowledge or their ancestors did and embedded their knowledge into the customs (buying gold and keeping it in family). The Chinese, deeply aware of money systems, are massively acquiring Physical Gold and powerfully encouraging the people to get it and you must answer this question - WHY? Like most I had only vague notion of Golds importance. I feel extremely fortunate to have found ALL the answers anyone can have about the importance of having Physical Gold in ones possession. It takes some time/attention but I personally can't imagine not having this knowledge. It could literally save you and your family in the hard times to come. Thank you, FOFOA. Blessings to all here on 'The Road' less travelled.

http://fofoa.blogspot.ca

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By acquiring gold you are removing debt soaked, death soaked fiat from the system. Gold (and NOT other PM's) is Anti Fiat and I believe it will be a Major factor in fiats demise (soon, IMHO). The knowledge of the power of Gold has been lost to most, especially in the West (which was a design of the Fiat powers, BTW). The Chinese, Indians, Russians others still have this knowledge or their ancestors did and embedded their knowledge into the customs (buying gold and keeping it in family). The Chinese, deeply aware of money systems, are massively acquiring Physical Gold and powerfully encouraging the people to get it and you must answer this question - WHY? Like most I had only vague notion of Golds importance. I feel extremely fortunate to have found ALL the answers anyone can have about the importance of having Physical Gold in ones possession. It takes some time/attention but I personally can't imagine not having this knowledge. It could literally save you and your family in the hard times to come. Thank you, FOFOA. Blessings to all here on 'The Road' less travelled. http://fofoa.blogspot.ca
Guest - don on Saturday, 21 March 2015 16:12

Freedomroad here;

Yes, yes, yes - FREEGOLD is coming. True settlement. (how many know what that even is?) In fiat, growth is debt, ever rolled, Never settled. This and interest compounding means collapse at some point GUARANTEED as the compounding increases amount owed exponentially, and lowering interest rates only delays this inevitability, yes. See; http://fofoa.blogspot.ca

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Freedomroad here; Yes, yes, yes - FREEGOLD is coming. True settlement. (how many know what that even is?) In fiat, growth is debt, ever rolled, Never settled. This and interest compounding means collapse at some point GUARANTEED as the compounding increases amount owed exponentially, and lowering interest rates only delays this inevitability, yes. See; http://fofoa.blogspot.ca
Guest - Philipp on Sunday, 22 March 2015 13:52

Have you considered the option of stamped money, as per Silvio Gesell. He proposed a negative interest on cash and deposits coupled with a reform on property (land ownership). Stamped money was successfully tested in the 1930s (Wörgl) and it did wonders to the local economy. Naturally, it was shot down by the Austrian Central Bank when other communities started to adopt the model.

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Have you considered the option of stamped money, as per Silvio Gesell. He proposed a negative interest on cash and deposits coupled with a reform on property (land ownership). Stamped money was successfully tested in the 1930s (Wörgl) and it did wonders to the local economy. Naturally, it was shot down by the Austrian Central Bank when other communities started to adopt the model.
Guest - unclear on Monday, 23 March 2015 11:36

Don't under what is meant as debt monetization, especially the comment that if the Fed destroyed the debt (how?) it would be clear debt monetization. Its not at all clear to me Cap'n!.
"As previously stated this is supposed to be temporary and the process, according to the fed can be reversed, but until they show it can be reversed I will assume that they can’t reverse it. And if they can’t I will assume it is debt monetization, ... The fed holds the debt instruments, treasury and mortgage bonds, on their balance sheets and maintains them, handing the interest for the most part on to the treasury, and reinvesting principal. Since the debt still exists they can pretend that they could be sold back into the economy soaking up all of the dollars they had previously put into the economy, more on that later. If the fed just destroyed the debt and told the borrowers they didn’t have to pay it back that would be clear debt monetization. But what makes them think that if this move was so necessary for the economy in the first place that the economy will ever be able to support the bonds being resold? It doesn’t appear with the debt overhang, that the economy could support a move like that, ever.

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Don't under what is meant as debt monetization, especially the comment that if the Fed destroyed the debt (how?) it would be clear debt monetization. Its not at all clear to me Cap'n!. "As previously stated this is supposed to be temporary and the process, according to the fed can be reversed, but until they show it can be reversed I will assume that they can’t reverse it. And if they can’t I will assume it is debt monetization, ... The fed holds the debt instruments, treasury and mortgage bonds, on their balance sheets and maintains them, handing the interest for the most part on to the treasury, and reinvesting principal. Since the debt still exists they can pretend that they could be sold back into the economy soaking up all of the dollars they had previously put into the economy, more on that later. [u]If the fed just destroyed the debt and told the borrowers they didn’t have to pay it back that would be clear debt monetization.[/u] But what makes them think that if this move was so necessary for the economy in the first place that the economy will ever be able to support the bonds being resold? It doesn’t appear with the debt overhang, that the economy could support a move like that, ever.
Guest - Debtcrash on Monday, 23 March 2015 19:09

Unclear

To understand the concept of debt monetization first you must understand that the Fed can create money out of nothing. If the Fed can create money out of nothing they can buy assets with that money right? Now imagine your neighbor takes out a 30 year loan, from you, to buy a vacation home. This is now your asset that can give you income during your retirement. The fed can now create money and pay you a lump sum for that asset/loan at a price that you can't refuse. When you can create money you can also pay top dollar. So if you take that money, that never existed before, the money supply just increased.

Now for the third party in this little money triangle, the borrower, your neighbor. The fed can collect the monthly payments and remove the money they just gave to you above over time, or resell it to another party and remove it more quickly. Or... they can forgive the debt, and tell the borrower he does not have to repay. This would make their prior money injection permanent and would be an example of debt monetization. Debt monetization=The fed creates money and buys someones debt and eventually forgives that debt.

Thanks for the question and I hope I answered it.

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Unclear To understand the concept of debt monetization first you must understand that the Fed can create money out of nothing. If the Fed can create money out of nothing they can buy assets with that money right? Now imagine your neighbor takes out a 30 year loan, from you, to buy a vacation home. This is now your asset that can give you income during your retirement. The fed can now create money and pay you a lump sum for that asset/loan at a price that you can't refuse. When you can create money you can also pay top dollar. So if you take that money, that never existed before, the money supply just increased. Now for the third party in this little money triangle, the borrower, your neighbor. The fed can collect the monthly payments and remove the money they just gave to you above over time, or resell it to another party and remove it more quickly. Or... they can forgive the debt, and tell the borrower he does not have to repay. This would make their prior money injection permanent and would be an example of debt monetization. Debt monetization=The fed creates money and buys someones debt and eventually forgives that debt. Thanks for the question and I hope I answered it.
Guest - Unclear and now confused on Tuesday, 24 March 2015 11:42

Thank you Cap'n. So as a retiree, what does one do? Have you written any blogs? Cannot put money in money market funds, because they are in fact short term debt instruments. Instead of planning to go to a retirement home, plan on joining a society based on a barter system? Retire to a farming community?

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Thank you Cap'n. So as a retiree, what does one do? Have you written any blogs? Cannot put money in money market funds, because they are in fact short term debt instruments. Instead of planning to go to a retirement home, plan on joining a society based on a barter system? Retire to a farming community?
CaptDebtCrash on Monday, 20 April 2015 11:30

Great summary Capt... hope a few more are able to get through your piece than "The Money Changers," which I've shared with many but can't recall even one that got through it, or understood it.

A minor correction... Hoover came after FDR ("The president following Hoover, Franklin D. Roosevelt, attempted to follow Keynes’s economic cure")... but just typo I'm sure.

Couldn't disagree with a word of it, although I would put more focus on the nefarious nature of the entire system (to benefit the bankers... actually, the chosen few who control the banking system). And of course they would fight any and every solution with all the power, and psychotic tendencies on full display... the final, and perhaps the most important step, on the root cause analysis).

Finally, the hands off Bitcoin policy has troubled me as well... we must keep in mind that every cash transaction is lost revenue for the 'Pigman' (I love taking government retirement cheques to a live teller to cash, and explaining why I will not apply for direct deposit... thereby 'lending' my money to the bank at zero interest and paying {through fees} to get it back) and they have been systematically chipping away at the issue for many years.

Oh, and you let these low life creatures off too easy... they are very much the "root cause."

Congratulations on all you've created... I look forward to following your blog.

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Great summary Capt... hope a few more are able to get through your piece than "The Money Changers," which I've shared with many but can't recall even one that got through it, or understood it. A minor correction... Hoover came after FDR ("The president following Hoover, Franklin D. Roosevelt, attempted to follow Keynes’s economic cure")... but just typo I'm sure. Couldn't disagree with a word of it, although I would put more focus on the nefarious nature of the entire system (to benefit the bankers... actually, the chosen few who control the banking system). And of course they would fight any and every solution with all the power, and psychotic tendencies on full display... the final, and perhaps the most important step, on the root cause analysis). Finally, the hands off Bitcoin policy has troubled me as well... we must keep in mind that every cash transaction is lost revenue for the 'Pigman' (I love taking government retirement cheques to a live teller to cash, and explaining why I will not apply for direct deposit... thereby 'lending' my money to the bank at zero interest and paying {through fees} to get it back) and they have been systematically chipping away at the issue for many years. Oh, and you let these low life creatures off too easy... they are very much the "root cause." Congratulations on all you've created... I look forward to following your blog.
CaptDebtCrash on Monday, 20 April 2015 12:04

Mike,

Thanks for your thoughts. I thought I was pretty tough on the powers that be but hey I understand if you think I didn't take it far enough. I don't maintain my control at all times but I try and stick to the facts I see before me in my analysis, and if I do speculate I try to make it clear that is what I am doing.

I may be misreading your correction but Hoover did precede FDR, and Truman followed. Hoover started some of the works programs, ie the Hoover Dam, but FDR just took it to the next Keynesian level. Let me know if I'm mistaken.

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Mike, Thanks for your thoughts. I thought I was pretty tough on the powers that be but hey I understand if you think I didn't take it far enough. I don't maintain my control at all times but I try and stick to the facts I see before me in my analysis, and if I do speculate I try to make it clear that is what I am doing. I may be misreading your correction but Hoover did precede FDR, and Truman followed. Hoover started some of the works programs, ie the Hoover Dam, but FDR just took it to the next Keynesian level. Let me know if I'm mistaken.
CaptDebtCrash on Tuesday, 21 April 2015 09:49

Capt., Great article and great explanation, but I suggest you need to go back a little further in the start to get your readers to see the "big picture". Imagine 5000 years ago, before coins or fiat, but when humans began organizing into towns, cities and nation states. The boss/king/elite saw a lot of people just sitting around enjoying their leisure, and he thought, if I could only get them to work harder for my benefit, for our collective benefit, we would be a great culture (and I would be richer and more powerful)? One way was with bondage and whips. But he/they (elite) determined that only the simpler jobs could be boosted in productivity with slave labor. Voluntary servitude wherein the laborers thought they were getting more than they actually were, was the answer. The whole charade has been evolving ever since. And our dollar/federal reserve/central authority/govt/oligarchs are just the latest incantation. In fact, you could argue that the progress of humanity would not have been nearly as fast without this monetary enslavement - because many more of us would have had much more leisure time to enjoy, rather than struggling to invent and produce and create...

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Capt., Great article and great explanation, but I suggest you need to go back a little further in the start to get your readers to see the "big picture". Imagine 5000 years ago, before coins or fiat, but when humans began organizing into towns, cities and nation states. The boss/king/elite saw a lot of people just sitting around enjoying their leisure, and he thought, if I could only get them to work harder for my benefit, for our collective benefit, we would be a great culture (and I would be richer and more powerful)? One way was with bondage and whips. But he/they (elite) determined that only the simpler jobs could be boosted in productivity with slave labor. Voluntary servitude wherein the laborers thought they were getting more than they actually were, was the answer. The whole charade has been evolving ever since. And our dollar/federal reserve/central authority/govt/oligarchs are just the latest incantation. In fact, you could argue that the progress of humanity would not have been nearly as fast without this monetary enslavement - because many more of us would have had much more leisure time to enjoy, rather than struggling to invent and produce and create...
Guest - Debtcrash on Tuesday, 21 April 2015 10:15

Good points. I agree that the "monetary enslavement" as you called it, or debt based monetary system can cause great progression, but at the same time huge misallocation of resources (waste) and instability. If we had a commodity, or at least free market determined medium of exchange the growth may have been slower, although I don’t know that for a fact, but it would also have been much less wasteful.

Another way to look at it is this, the debt based monetary system got us hear, but now that our economy has gotten so large and ‘eats’ so much we may need to go to a system that utilizes the resources we have in a responsible manner. A system (debt based money) that by its nature is forced to grow and use more and more resources may not be/is not the best system for the future. That is if we want to leave a viable system to our children and grandchildren.

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Good points. I agree that the "monetary enslavement" as you called it, or debt based monetary system can cause great progression, but at the same time huge misallocation of resources (waste) and instability. If we had a commodity, or at least free market determined medium of exchange the growth may have been slower, although I don’t know that for a fact, but it would also have been much less wasteful. Another way to look at it is this, the debt based monetary system got us hear, but now that our economy has gotten so large and ‘eats’ so much we may need to go to a system that utilizes the resources we have in a responsible manner. A system (debt based money) that by its nature is forced to grow and use more and more resources may not be/is not the best system for the future. That is if we want to leave a viable system to our children and grandchildren.
Guest - Smithg720 on Friday, 08 May 2015 05:39

A big thank you for your article.Thanks Again. Great. gbccaeccfabdekag

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A big thank you for your article.Thanks Again. Great. gbccaeccfabdekag
Guest - Flicker on Monday, 18 May 2015 18:30

Well, yes, thank you for the information. Unfortunately, I think the solution you advocate -- and seemingly the only solution -- is a poisoned pill. It has been said that when the crisis is big enough -- or actually, the fear of some future happening is great enough -- men will freely surrender their liberty for the sake of present security.

The problem with a cashless society -- or the e-dollar here -- is that it implies that banks are morally upright and look out for the welfare of depositors, and it pretends to make the financial crimes, or the financial benefit of crimes, impossible. But the truth is that virtual e-crimes exist today, and are apparently at least as hard to solve as physical thefts. Going cashless won't prevent your pocket from being picked even today.

But more importantly, the loss of the anonymity that cash provides is the same as having cameras in your bedroom, or den, or kitchen or in your car. People are inherently bad -- that is a fundamental contention that has existed for millennia -- and the lack of privacy today is not negated by the "you don't need privacy if you have nothing to hide" bromide. The fact is that for any lie to be believable, it only needs a gram of truth. And people will still want to extort and intimidate people for being a nuisance, or to produce a distraction (or whatever). And like the poor guy who is reported to have produced the "Innocence of Muhammad" video and was subsequently vilified and then sent to jail for other charges, and like a particular senator who announced "Word on the street is that [whoever] hasn't paid taxes in ten years!" it only takes a grain of truth to produce a grand and punishing lie.

Add to this that banks are not averse to appropriating deposits for their own advantage. And add to this that law enforcement is more than willing to confiscate account assets -- for a share of the proceeds.

And you end up with a "may I PLEASE have my money" financial structure in which any and every request stands a good chance of being refused.

And then again, what of precious metals? Who will hold them? Only central banks and industries that manufacture using them? And finally, if e-currencies are in any way workable, why are all the central banks recalling their gold and why is JP Morgan Chase(?) allegedly buying up the world's silver? If e-coin is all we in this world will ever need, and therefore precious metals have no intrinsic cash worth, why are banks stocking up on precious metals?

That's because they all know that money is gold and gold is money.

0
Well, yes, thank you for the information. Unfortunately, I think the solution you advocate -- and seemingly the only solution -- is a poisoned pill. It has been said that when the crisis is big enough -- or actually, the fear of some future happening is great enough -- men will freely surrender their liberty for the sake of present security. The problem with a cashless society -- or the e-dollar here -- is that it implies that banks are morally upright and look out for the welfare of depositors, and it pretends to make the financial crimes, or the financial benefit of crimes, impossible. But the truth is that virtual e-crimes exist today, and are apparently at least as hard to solve as physical thefts. Going cashless won't prevent your pocket from being picked even today. But more importantly, the loss of the anonymity that cash provides is the same as having cameras in your bedroom, or den, or kitchen or in your car. People are inherently bad -- that is a fundamental contention that has existed for millennia -- and the lack of privacy today is not negated by the "you don't need privacy if you have nothing to hide" bromide. The fact is that for any lie to be believable, it only needs a gram of truth. And people will still want to extort and intimidate people for being a nuisance, or to produce a distraction (or whatever). And like the poor guy who is reported to have produced the "Innocence of Muhammad" video and was subsequently vilified and then sent to jail for other charges, and like a particular senator who announced "Word on the street is that [whoever] hasn't paid taxes in ten years!" it only takes a grain of truth to produce a grand and punishing lie. Add to this that banks are not averse to appropriating deposits for their own advantage. And add to this that law enforcement is more than willing to confiscate account assets -- for a share of the proceeds. And you end up with a "may I PLEASE have my money" financial structure in which any and every request stands a good chance of being refused. And then again, what of precious metals? Who will hold them? Only central banks and industries that manufacture using them? And finally, if e-currencies are in any way workable, why are all the central banks recalling their gold and why is JP Morgan Chase(?) allegedly buying up the world's silver? If e-coin is all we in this world will ever need, and therefore precious metals have no intrinsic cash worth, why are banks stocking up on precious metals? That's because they all know that money is gold and gold is money.
CaptDebtCrash on Monday, 18 May 2015 19:48

Flicker,

I could not agree more with your comments, but I do want to clarify something. I do not think the E Dollar, or banning cash and implementing negative rates is a good idea or moral. I only believe that a monetary shift of this magnitude is going to be necessary, in the not so distant future, to allow the system to continue. There is no question both of these measures, or whichever the banks and government decide on, will likely curtail our freedoms thus I am wholeheartedly against. That said we can not prepare for what we would like to happen, but for what we think WILL happen, while at the same time trying to effect both the big picture as well as out personal outcome.

Thanks for visiting the site, I hope you read some more of my posts, and CONTINUE TO COMMENT!

Capt

0
Flicker, I could not agree more with your comments, but I do want to clarify something. I do not think the E Dollar, or banning cash and implementing negative rates is a good idea or moral. I only believe that a monetary shift of this magnitude is going to be necessary, in the not so distant future, to allow the system to continue. There is no question both of these measures, or whichever the banks and government decide on, will likely curtail our freedoms thus I am wholeheartedly against. That said we can not prepare for what we would like to happen, but for what we think WILL happen, while at the same time trying to effect both the big picture as well as out personal outcome. Thanks for visiting the site, I hope you read some more of my posts, and CONTINUE TO COMMENT! Capt
Guest - Flicker on Monday, 18 May 2015 19:01

"the coin only changed hands twice in a year, and each man had an income for the year of 1 coin, in the second it changes hands 52 times and each man has an income of 26 coins." Nonetheless, the same amount of goods were circulated in both scenarios.

But you left out an important point: true income did not rise in the second example (except as a statistical point that is of little or no value). The gold coin that was used lost 25/26ths of its value from one year to the next. Frankly, in this type of scenario, whether it involves two people or two countries, promissory notes or IOUs would have worked just as well.

I tell you what: You give me one gold coin for a single cask of cider and I'll go down the road to the next pig farmer and buy a whole pig for that gold piece. I'll butcher the pig, sell it off for 26 more gold pieces. Then I can buy another pig from you for one of my gold pieces. I can keep my cider, keep my pig, and keep my 25 pieces of gold.

In other words, in your example, speed creates inflation, creates devalued gold, but creates no greater income in gold-adjusted earnings.

0
"the coin only changed hands twice in a year, and each man had an income for the year of 1 coin, in the second it changes hands 52 times and each man has an income of 26 coins." Nonetheless, the same amount of goods were circulated in both scenarios. But you left out an important point: true income did not rise in the second example (except as a statistical point that is of little or no value). The gold coin that was used lost 25/26ths of its value from one year to the next. Frankly, in this type of scenario, whether it involves two people or two countries, promissory notes or IOUs would have worked just as well. I tell you what: You give me one gold coin for a single cask of cider and I'll go down the road to the next pig farmer and buy a whole pig for that gold piece. I'll butcher the pig, sell it off for 26 more gold pieces. Then I can buy another pig from you for one of my gold pieces. I can keep my cider, keep my pig, and keep my 25 pieces of gold. In other words, in your example, speed creates inflation, creates devalued gold, but creates no greater income in gold-adjusted earnings.
CaptDebtCrash on Monday, 18 May 2015 19:56

Flicker,

I was only trying to explain money velocity, don't over think it :)

Though your final comment is very close I would change just one thing:

In other words, in your example, speed creates inflation, creates devalued gold, but creates no greater purchasing power in gold-adjusted earnings.

If you don't want to think of it as a gold coin in the example just think of it as a wooden token used as a placeholder between the bartering partners.

0
Flicker, I was only trying to explain money velocity, don't over think it :) Though your final comment is very close I would change just one thing: In other words, in your example, speed creates inflation, creates devalued gold, but creates no greater [b]purchasing power[/b] in gold-adjusted earnings. If you don't want to think of it as a gold coin in the example just think of it as a wooden token used as a placeholder between the bartering partners.
Guest - Matt on Saturday, 23 May 2015 16:35

This is Matt from ShopSquawk... a fellow ZHedgeHog. I'd like to speak with you regarding becoming a content contributor to my non-profit. Check out my LI account or just goog ShopSquawk.

0
This is Matt from ShopSquawk... a fellow ZHedgeHog. I'd like to speak with you regarding becoming a content contributor to my non-profit. Check out my LI account or just goog ShopSquawk.
CaptDebtCrash on Monday, 25 May 2015 14:23

Matt, It looks like a interesting site. How would you like me to participate?

0
Matt, It looks like a interesting site. How would you like me to participate?
Guest - Matt at ShopSquawk on Monday, 25 May 2015 14:38

Great to see your response. I'm really happy you're coming aboard ShopSquawk.org to create a 'system of perspective' that presents youth a framework of seeing that embraces critical thinking, essential 'whys', and a vantage to prevent further programming.

In my judgment, your strength is exhibited right here on DebtCrash, and that's what I'm interested in, because that's all I know of you as yet. Because of this, my suggestions follow, but remember... these are just that. I'd rather you choose whatever your heart pushes you towards. I'm looking to publish text based, video based, power point based presentations (of which some can literally have an integrated test the students can be 'certified' on). After which, we will have webcasts and interactive webcasts.

All I'd ask is that you 'edit' whatever you want to publish with us for a shorter attention span (yeah, I know - it's a challenge!) And perhaps... zany it up a bit as the target it 13-19 who are mainly thinking about mating, food, and complexion.

0
Great to see your response. I'm really happy you're coming aboard ShopSquawk.org to create a 'system of perspective' that presents youth a framework of seeing that embraces critical thinking, essential 'whys', and a vantage to prevent further programming. In my judgment, your strength is exhibited right here on DebtCrash, and that's what I'm interested in, because that's all I know of you as yet. Because of this, my suggestions follow, but remember... these are just that. I'd rather you choose whatever your heart pushes you towards. I'm looking to publish text based, video based, power point based presentations (of which some can literally have an integrated test the students can be 'certified' on). After which, we will have webcasts and interactive webcasts. All I'd ask is that you 'edit' whatever you want to publish with us for a shorter attention span (yeah, I know - it's a challenge!) And perhaps... zany it up a bit as the target it 13-19 who are mainly thinking about mating, food, and complexion.
Guest - AndrewP on Saturday, 11 July 2015 10:23
Only two ways out for the USA

The author describes one way out - negative interest rates in a closed electronic monetary system. While some countries may do this, or even the whole world if a global currency is created, there is another, simpler, more traditional way out for the USA. And that is to, at least temporarily, go from a pure debt-based monetary system to a direct-issue system - similar to Lincoln's greenbacks. This would only require some simple changes in law - a change allowing the Treasury to issue dollars directly to cover Federal deficits, and an increase in taxes (and a transaction excise tax) to provide a stronger return path for the destruction of the excess dollars that are created. In a debt-based system, repayment of debt is the return path that destroys new money. In a direct-issue system, payment of taxes is the return path that destroys new money. The reason old colonial and continental currencies hyperinflated is that they didn't have a strong tax return path. Today's electronic banking system makes sufficient taxation easier to implement, and there is no reason for US Dollars to hyperinflate today if the US properly implemented a partial use of direct seigniorage to wipe away accumulated debt loads.

0
The author describes one way out - negative interest rates in a closed electronic monetary system. While some countries may do this, or even the whole world if a global currency is created, there is another, simpler, more traditional way out for the USA. And that is to, at least temporarily, go from a pure debt-based monetary system to a direct-issue system - similar to Lincoln's greenbacks. This would only require some simple changes in law - a change allowing the Treasury to issue dollars directly to cover Federal deficits, and an increase in taxes (and a transaction excise tax) to provide a stronger return path for the destruction of the excess dollars that are created. In a debt-based system, repayment of debt is the return path that destroys new money. In a direct-issue system, payment of taxes is the return path that destroys new money. The reason old colonial and continental currencies hyperinflated is that they didn't have a strong tax return path. Today's electronic banking system makes sufficient taxation easier to implement, and there is no reason for US Dollars to hyperinflate today if the US properly implemented a partial use of direct seigniorage to wipe away accumulated debt loads.
Guest - Skillyhog on Saturday, 18 July 2015 08:14
Silver?

Wonderfully clear stuff Cap, this has become my new daily reading, where ZH used to be my "Associated Press" of monetary/financial reading, it's slowly getting crowded out by more straight-dope sites for pure monetary and PMs interest: this site and the Miles Franklin blog
Question: in an above post, you say "Gold (and NOT other PM's) is Anti Fiat and I believe it will be a Major factor in fiats demise (soon, IMHO)." This seems to be saying not to fool around with Silver, which is the only PM i can afford at prices today. Does that put Silver in the speculative commodity realm, and not the Anti-Fiat medium of exchange realm? Seriously, i would need several weeks paychecks for the 'disposable' income required to by a little one ounce coin!
Thank you for publishing, I'm enjoying it although it is killing my productivity!
-Skilly

0
Wonderfully clear stuff Cap, this has become my new daily reading, where ZH used to be my "Associated Press" of monetary/financial reading, it's slowly getting crowded out by more straight-dope sites for pure monetary and PMs interest: this site and the Miles Franklin blog Question: in an above post, you say "Gold (and NOT other PM's) is Anti Fiat and I believe it will be a Major factor in fiats demise (soon, IMHO)." This seems to be saying not to fool around with Silver, which is the only PM i can afford at prices today. Does that put Silver in the speculative commodity realm, and not the Anti-Fiat medium of exchange realm? Seriously, i would need several weeks paychecks for the 'disposable' income required to by a little one ounce coin! Thank you for publishing, I'm enjoying it although it is killing my productivity! -Skilly
CaptDebtCrash on Sunday, 19 July 2015 18:36
Silver!

Skilly,
There is no doubt that gold is the premier monetary metal. That said, I’m with you, I prefer silver at these prices. I own both gold and silver but am significantly overweight silver.
Thanks for reading.
Capt

0
Skilly, There is no doubt that gold is the premier monetary metal. That said, I’m with you, I prefer silver at these prices. I own both gold and silver but am significantly overweight silver. Thanks for reading. Capt

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